Application Research On Family Trust In Corporate Governance Of Chinese Private Enterprise

Since Chinese economy reform and opening up30years ago, commonwealth accumulated and a lot of billionaires emerged during the high-speeddeveloping period, including private entrepreneurs. According to statistics,the number of multimillionaires reached one million till the end of2012, witha6%increasing rate per year, out of which70%were private entrepreneurs.Since the establishment of Growth Enterprise Market,355private ownedenterprises launched on the board, with a capitalization of970billion RMB.The inheritance of family wealth becomes a buzzword in the society. On theoffshore market, family trust has been developing for many years as anapproach to transmit family capital. However, it is another story in China.Due to the different history, society, and legislative structures, domesticprivate entrepreneurs need another instrument to adjust ownership structureto descend money, differing from the form of offshore family trust. To design a brand new family trust plan that is fitting in the domesticsituation, it is necessary to do some research on the theoretical basis ofownership structures and Chinese trust funds products. Moreover, successfuloffshore family trusts cases could be applied to develop the products. In thispaper, I firstly explore ownership structure’s theoretical principles and familytrusts derivatives. Secondly, offshore family trust is intensively studied,including its essential setup factors, setup reasons and the corecompetitiveness. In addition, I study cases to recognize the structurecharacteristics of offshore family trust. All those are based on the reference tolots of domestic and international theses and the analysis of existing trustproducts. Based on the previous research, the following parts focus ondesigning the first domestic family trust plan catering to Chinese privateentrepreneurs’ needs, combined with China’s current trust fund environment.In the end, this paper elaborates the potential problems that family trust fundmay encounter during its development stage and the respective solutions.