The Research On Legal Risks And Regulation Of The Trust Of The Right To Equity Interests

The issue of “trust law” in 2001 means our country has formally introduced the trust system. Just over 10 years, China’s trust industry has developed rapidly, and at the end of 2012, the trust industry has exceeded the insurance industry, becoming the second largest financial sector after the bank. In recent years, with the encouragement and promotion of financial innovation, there have appeared various kinds of new and novel trust products in the market. The trust of the right to equity interests has become the hot pursuit to financier, the trustee and the investor because of its good financing and revenue function, At present, the trust products named as "return on equity right" have been widespread in practice and some cases about the property right trust named as “return on equity right” has also appeared, to which in stark contrast are those: the regulation on such trust in legislation is still blank; and there’s few systematic research and expositions on this new trust; even judicial cases on the trust has not yet appeared in judicial practice, which leads to the legal validity of this trust is questioned. Besides, the vague regulations of trust property and the blur registration procedure bring the problems of lack of recognition of the trust and nonstandard operation in practice, which no doubt, cause the greater challenge and risks in the use and promotion of this trust.So it is very necessary to analyze the legal risks existing in the trust of the right to equity interests and put forward the measures of prevention and control of risks. This is not only the certain claim to clarify the confusion, regulate the operation of the inevitable requirement, but also the ultimate guarantee to its long-term development.Around the core issue of the legal risks of the trust, this article can be divided into the following parts:The first part is introduction, in this part the author briefly analyzed the issue, and introduced the background and the status qua of this research. In addition, the authors introduced the research ideas, research methods, innovation and deficiency.The main body consists of three chapters.Chapter I is mainly about the analysis of the trust of the right to equity interests. This chapter begins with two cases about this particular trust to make clear that the equity right trust includes two type: property right trust and fund trust and summarize its concept; Then on the basis of understanding what is the trust of the right to equity interests, the author discusses their respective operating procedure on the two mentioned cases, and to drew up their trading structures. Lastly, the author attempts to demonstrate the trust legal relationship and fiduciary duty of such trust.Chapter II is mainly about the legal risks contained in the trust of the right to equity interests. The legal risks here is a concept of broad sense, including the legal uncertainty of the trust itself, that is, the legal risk, and the legal uncertainty of its operation practice which is called operational risk in this paper. For the legal risks, the author firstly focuses on the risk of legality of the trust property, and through the analysis of the nature of the right of return on equity, the author expresses the nature of the right of return on equity is future claim. Thus the right of return on equity meets the characteristics of certainty, independence and alienability, so the right of return on equity can be trust property, and should be no legal obstacles; then the author explores the compliance risk of the transferring the beneficial right, and thinks that transferring the beneficial right is not illegal; lastly, the author analyzes the legitimacy of the trust, and although the author also agrees that the equity right trust is essentially a trust loan, but the author believes that we should be open to look at the trust. The operational risks mainly include the risk of validity on mandatory enforcement of repurchase agreement, the disposition risk of equity during trust duration; and the risk of trust registration because of the defects in current trust registration system.Chapter Ⅲ focus on the measures on how to avoid such risks. The author suggests that regulating the risks can start from two aspects: macro regulation and specific regulation. In view of the legal risks of the trust, macro regulation mainly includes: use legislation to standardize the trust; improve our existing supervision system and strengthen the supervision of the trust. Specific regulation is aimed at operational risks of the right. As to the risk of validity on mandatory enforcement of repurchase agreement, the author holds that although mandatory enforcement of repurchase agreement has certain feasibility, but also combined with the much legal risk, thus, the author advises peeling away the repurchase obligation technically from the agreements of such trust; for the disposition risk of equity during trust duration, the author argues that the equity owners shall be still the shareholder after the set-up of the trust, and it is in accordance with the company law and trust law principle. In order to minimize the legal risk of the equity disposal, the author suggests should enable shareholders bear fiduciary duty to the social investors. And for the risk of trust registration, the suggestions are that: on the macroscopic level, trust registration effectiveness mode should be changed to trust registration confrontation mode; and on the micro level, relevant supporting system of trust registration should be established from the registration agencies, registration contents and continuous publicity system, etc., so as to the legal risk of trust registration of the trust of the right to equity interests can be effectively reduced.On the basis of in-depth study, this paper draws the following conclusions:As the financial innovation product, there are high legal risks existing in the trust of the right to equity interests because of the absence of legislation and theoretical research. The author believes that its existence has certain legitimacy foundation, but also faces much legal risks; therefore, the author puts forward some measures to regulate the legal risks, to provide some ideas for the healthy development of this trust.