Research On Chinese Trust System Of The Right Of Return On Equity

The trust system of the right of return on equity is a newly developed trust system in recent years, which enjoys a growing popularity in practice. Currently, Chinese academic study on it is still in its infancy, which lags far behind than that in abroad. The thesis mainly consists of four parts:The first part presents the definition of the trust of the right of return on equity in law. From the author’s perspective, the trust of the right of return on equity refers to actions that the shareholder transfers the right of return of its stock option to the trustee and the trustee, pursuant to trust agreement, manages or handle with the right of return for specific purposes. Since the establishing of right of return on equity trust, the grantor continue exercise all the shareholders’rights except for right of return; the right of return of the equity shall be exercised and enjoyed by the trustee, who manages and handles the return on equity and hand over the earnings generated at last to the beneficiary. Right of return on equity is a kind of special trust and the trust of the right of return on equity is a redistribution of the shareholder’s right. The time limit of the trust is comparatively short and the beneficiaries are the large number of investors in the society. The return on investment of this trust is high. So is the risk. It employs repurchase agreement of right of return, which are its characterized legal feature and also the important one differing from other trusts. In practice, the typical differences are generated between the trust of the right of return on equity and fund trust, voting right trust. Except for the above mentioned features, the trust of the right of return on equity also enjoys the functions of social financing, reserving the control power, gain sharing, assets managements, etc. It is in favor of protecting the interests of the beneficiaries.The second part probes into the determination of nature of right of return on equity trust. Currently, the educational circles hold different views concerning the nature of right of return on equity trust. The significant views include creditor’s right, double rights and power of attorney. Scholars holding the view of creditor’s right think that after the transference of trust property, the trustee has the right of ownership of the trust property whereas the beneficiary, who does not enjoy the ownership of the trust property any longer, has the right to claim of receiving the loan of trust earning. Hence, trust right of return belongs to creditor’s right. Those holding the view of double rights regard that the trust right of return homogeneously enjoys real right potency and creditor’right potency. The relation between the trustee and the beneficiary is of creditor’s right and debt. The trustee manages and handles the trust property for the beneficiary and the beneficiary enjoys the right to require the trustee paying the trust interests. The trustee has the right to practically manage and control the trust property. But, the beneficiary also enjoys the right to repeal the trustee’s right for violating the trusted objective of handling the trust property and the beneficiary can recover the trust property. This right is of real right property.From the views above, it is concluded that the determination of the nature of right of return on equity trust differs from each other. In the practice of legislation and administration of justice, it is of great importance to determine the nature of it. In this paper,the right of return of trust is a newly-generated special right, simultaneously enjoyi ng real right property and that of creditor’s right. With regard to the right of claim aiming at the trustee individually, it is of creditor’s right property; in terms of the right to repeal the trustee’s right for mishandling the trust property and, under certain circumstance, to recover the trust property, it is of real right property. The right to supervise and the right to be informed implemented on the trustee is neither the creditor’s right nor the real right.The third part mainly analyzes the status quo of Chinese right of return on equity trust system. The Trust Law of the People’s Republic of China entered into force in2001, the legislation mode of which adopts legal relation’s parties’rights and obligations. There are many articles regulating the establishment, change and termination of trust legal relationship and the rights and obligations between the grantor, trustee and beneficiary. However, the law still has many defections. Firstly, there is no recognition and adjustment for right of return on equity trust and it lacks clear and definite regulations on public notification of the trust. Secondly, no explicit regulations on trust tax are included in the law. The articles concerning trust contract are too simple and the names of trust products are not clear-cut. Hence, it is of realistic significance to perfect Chinese right of return on equity trust system. The fourth part mainly expound on thoughts to perfect Chinese right of return on equity trust system in four aspects:perfection of right of return on equity trust contract system, the registration and public notification of shareholders’ right of return trust, perfection of system for trust plan duration and the perfection of system for trust plan termination. The establishment of the system is of reference value for promoting the right of return on equity system reform.The last is the conclusion. The trust of the right of return on equity system enjoys special function as social financing, sharing of return on equity, etc. It has comparatively favorable promising future. The Chinese right of return on equity trust is still in its primary phase. Through the perfection of establishment system for right of return on equity trust, duration system and ineffectiveness system, the system will definitely play its role in a better way. It will also be of great significance in fostering Chinese trust system development.