A Study On Legal System Of Business Trust

Seeing from the traditional Continental Legal System, “trust” is a kind of property management system, while “company” and “partnership” are forms of enterprise organization. Therefore, “trust” may not have any kind of connection with “company” or “partnership”. However, this kind of assumption is proved to be wrong in such developed countries as the United States, Singapore, etc., where business trust has been regarded as organizational entity and statue law has already been established from the perspective of Organization Law for business trust. As a profit-making tool, business trust has been widely applied to asset management. The independence of trust property makes sure that business trust has such commercial organizational features like asset partitioning and limited liability. If business trust does have “organizational characteristics” and China’s trust law has not yet defined it from the perspective of Organizational Law, this is worthy of studies.As for Securities Investment Fund, Private Equity Fund, and Special Purpose Trust, whether they are pre-selected company type, contract type, or partnership type, the operation of their framework always return to the trust relationship in the end. Those Funds use a variety of ways to raise property which is committed to the care of some professional trustees. Those trustees would manage and invest those property and the beneficiaries would enjoy the benefit. In that way, the right to administrate and the right to benefit have been separated. The use of trust enables trust property to achieve bankruptcy remoteness, limited liability, benefit securitization, popularity, etc. Those funds can also be invested in listed companies, in that way, their beneficiaries are made into shareholders. Practically speaking, trust has already highlighted its characteristics as an organizational entity and it has already gained a high level of organization. However, theoretically speaking, trust still remains at the contractual relationship phase in China. Contracts and Property Law are still the main ways to regulate the operation of commercial organizations. Under this circumstance, it is inevitable for the emergence of inconvenience. Therefore, China is in great urgency to establish business trust law from the perspective of Organizational Law. It is advisable for China’s “Business Trust Law” to adopt a model of specific regulations, which ensures that business trust holds the dominant position. Business trust enjoy the trust property and do foreign business in its name. Professional trustees are committed to trust property and the benefit are assigned to the beneficiaries of the trust. The right of benefit is able to be transferred. The establishment of business trust is the establishment of a kind of commercial organization. Therefore, it must follow strict guidelines. Business trust should also be under unified administration. Trustees are exclusively entrusted with the administrative right. The status of trustees must be highlighted with institutional restraints so as to ensure the interest of the investors.