Study On Governance Structure Of Investment Fund

Chinese security investment fund has developed well in recent years and got a big achievement. Securities investment fund is a kind of collection investment on concentrating fund, professional financial management, assembling investment and risk spreading. But compared with other developed countries, our investment fund is still young, neither our security market is mature enough, nor the law on investment fund is perfect enough. As a result ,there are a lot of problems existing in funds'operation ,such as the low morality of fund's manager ,the conflict of interest transactions'frequent occurrence and so on .The main reason is disadvantages in the governance structure of investment fund .The governance structure plays a crucial role in the development of the investment fund. Therefore, we must intensify the governance structure of investment fund, and create a governance structure that can protect the holder's interests .Chinese fund governance structure is a difficult problem, but is a relatively new topic from new aspect whenever we analyze it. Contractual investment fund, the governance structure of which is the one whose actual investors and real investors separate from each other (i.e. investors, fund trustee, fund custodian), it is in fact a kind of agency relationship, it is a separate situation among asset ownership, right to use, and supervision as a result of development of market economy. As Chinese investment fund governance structure is mainly contractual governance structure, after several years of development, we can see there is serious defects .Because of its internal defects, and inadequate regulatory system, Chinese fund industry was hindered seriously. Chinese fund governance structure, includes funds governance and funds corporation governance. Funds governance structure is mainly about supervision mechanism between thruster and trustee. Fund is operated by fund management corporation, which is the carrier of funds; therefore the governance of fund management company is the core part of governance structure, improvement of the ownership structure, personnel selection and incentives centered on fund management companies.The paper is arranged as follows:Part One mainly analyses the need and urgency for fund governance. The chapter goes from two points, one is from realistic basis for the fund governance and the other is theoretical basis for the interpretation of this issue. The outbreak of the Rat Events and the successive series of violations, reflect the potential moral hazard existing in the industry, the theoretical basis of good faith is mainly to safeguard the principles and laws of the starting values, and then analyzes the occurrence of precondition of moral hazard and the root causes. Finally analyses the performance of moral hazard in fund industry, mainly the transfer of benefits, then lists several types of transfer of benefits. It will damage the company and the interests of fund holders, in particular, allow fund holders lose faith in the managers, but makes the unit holders of the fund lost confidence and trust in management companies and the whole fund industry。Part Two traces the legal basis of funds governance First of all, after a clear understanding of the legal implications of governance structure of investment funds; this part explains the legal basics of the fund governance. The governance of securities investment fund includes the legal status of securities investment funds, property rights structure and the multiple interests of the organization structure of the decision, in which ownership structure of securities investment funds plays a decisive role. This separation of the right and the right to operate the property structural arrangements will inevitably leads to securities investment fund information asymmetry, causing a securities investment fund agency relationship. While securities investment fund is a diversified community of interests, in order to make the fund manager and fund custodian operate and guarantee the fund well, fund governance have to use the incentive and restraint mechanisms, laws and norms to make the interests of the parties checks and balances within the Community, the mechanisms is the core of the governance. Governance structure is based on corporate governance, and governance structure is paid more attention after corporate governance is given more concern. So the third issue analyses the difference between funds governance structure and corporate governance structure in order to have a more in-depth understanding.Part Three first introduces two modes of contract funds and corporate funds and then compares them. Contractual trust fund structure is based on the operation of the legal structure, the principal holders - the fund shares complete investment obligations, withdraw the legal relationship of funds, trustee–manager takes the charge of management and operation of the fund fund assets, the custodian hold fund assets on behalf of all holders in trust, the gains from the fund are shared by holders. The most obvious difference of corporate funds and contract funds is an institution on behalf of the interests of investors - fund Investment Company. The existence of this company is also making corporate governance structure significantly more advance than contractual governance structure of the Fund. But every sword has two sides, the corporate funds are not perfect in all aspect.,it will increase the cost of supervising because of its structure. In addition, it will be taxed by our State Revenue according to related regulation.Part Four points out the current shortcomings of governance structure. Fund holders are obviously in weak position; fund trustees are less independent; fund holders should use the General Assembly to protect their own interests, which cannot be a mere formality. The rights and obligations of fund managers obviously not equal, the fund holder, fund custodian can not in essence checks and balances fund manager. Secondly this chapter introduces some specific proposals on improving our governance structure : firstly, corporate investment model can be introduced to china timely ; secondly fund holders and the fund custodian should improve discipline and oversight mechanism to fund manager and strengthen the pre- and after the intensity of supervision, the General Assembly should be given an independent convening authority, the fund holders should have right to know more about the operation of the fund management company, fund holders should be given the power to propose; as fund management company's internal governance structure is an important part of governance structure, fund governance relies on fund management companies as a carrier.Part Five is the fund management company governance structure, first introduces legislation on fund management of our corporate governance , the provisions of China Securities Regulatory Commission promulgated successively defend the supervision of fund management companies mechanisms. There are four heavy supervision, shareholders monitor the managers through the appointment of Directors and the Board's authorization system ; Board of supervisors monitor all operations of Board of directors and managers through independent director system, improve the independence of fund management company to checks and balances the insiders effectively ; inspectors monitoring system should be functional; finally investment decision Commission and risk control committee should be established to control risk. Then introduces the objectives of corporate fund governance structure and the defects of Chinese fund management company management structure. Finally the paper analyses how to improve the governance structure of Chinese fund management company, makes several recommendations as follows: handling the relations among independent directors properly, Board of supervisors, and inspectors; perfecting compensation, equity and reputation incentives; improving personnel selection and elimination; perfecting market operation mechanism and strengthening the regulatory governance of the fund management companies, including government regulation and industry self-regulation, the paper stresses management between government regulation and self-discipline to be a reasonable division of labor with each other to form an organic unity...