Legal Analysis On Asset Income Right And Its Application

Recently, asset income right has become popular in the financial field in our country, and has been widely used in financing activities. Since the asset income right is not originally a legal concept, and its legal nature has not been defined by our laws, there is much inconsistency when constructing, using and understanding different income rights, which causes risks to commercial transactions. When used in financing activities, asset income right needs to be transferred inevitably. In practise, for the ambiguity of the legal nature of asset income right, the rights and obligations of parties involved in the transferring of asset income right often lack certainty. As a result, the design of transaction structure and the arrangement of rights and obligations are frequently inappropriate in specific financial products concerning asset income right, which takes trust of asset income right as a typical case. The case, Anxin Trust v. Kunshan Chungao, taking place in 2012, caused dispute on the legitimacy of trust of asset income right. The court did not reach the point of the legal nature of asset income right, or the legitimacy of taking asset income right as the trust property. So far we are unable to tell the stand of judicial authority on the legitimacy of trust of asset income right. Meanwhile, several scholars raised doubt on the legitimacy of trust of asset income right from the certainty of trust property and other aspects. In addition, the financial products concerning asset income right, including trust and securitization, tend to be homogeneous with secured loans, to which has not been paid enough attention by the theory and practise.Therefore, in order to clarify the legal nature of asset income right, so as to provide legal basis for the design of relevant financial products and reduce the risks that the parties involved take, this paper conduct analysis on the aspects below.1. The legal nature of asset income right. This sector studies the history of the legislation, policies and theories concerning asset income right. Substantially asset income right is the future income of certain assets based on reasonable anticipation. Thus, the legal nature of asset income right should be future creditor’s right. As a result, many so-called income rights grew out of the misuse of income right.2. The transferring of asset income right. This sector illustrates that the asset income right can be transferred through a comparative law study. On this basis, the effect of transferring of asset income right is that the transferee replace the transferor as the creditor whenever the future creditor’s right becomes realistic creditor’s right. Also, there is some mistakes during the transferring of asset income right in practice.3. The the legitimacy of trust of asset income right. This sector analyses the the legitimacy of trust of asset income right from three dimensions, the certainty of trust property, the control of trust property by the trustee, and the effect of bankruptcy remoteness. Then the conclusion is reached that trust of asset income right is legitimate, as long as the trust property is correctly identified, the trustee effectively controls the trust property, and the risk of bankruptcy of trustor is fully announced.4. The homogenization of asset income right financing and secured loans. This sector include an insight into the trust of asset income right and the securitization of asset income right. It is discovered that the asset income right financing in practise is much similar with secured loans, as a result of that the financing subject promises to make up the balance and guarantees are provided. This phenomenon makes asset income right financing deviate from using the income realized to meet the payment.