Research On Legal Issues Of The Trusts Involving The Right Of Return On Equity

The so-called “trust of the right of return on equity” is not wholly the trust in which a settlor entrusts the right of return on equity to a trustee. Instead, it is a collective fund trust in which social investors entrust their funds to the trustee and the trustee buys certain right of return on equity, as known as the collective fund trust investing the right of return on equity. However, the real trust of the right of return on equity in the trust market is not pure. Instead, it is a commercialized trust product in which the beneficiary right is divided and sold to social investors. These two kinds of trusts involving the right of return on equity are very different in essence, but they all involve the right of return on equity and the mode of transfer and buy-back. Furthermore, the goal of these two trust products is financing and providing a loan to the owner of the right of return on equity.The collective fund trust investing the right of return on equity or its product has a premium buy-back mechanism along with the risk control methods as equity pledge, third party guarantee and the notarization of the relevant agreements as credit documents. As such products can control the risks effectively and has a predictable revenue, such trust products are popular among all the participants in the trust market. However, due to imperfection of relevant laws and regulations and the specialty of the right of return on equity, there are controversy and issues in relevant theory and operation. This thesis intends to find some basis to such issues through analyzing the legal theory and practice of the trust of right of return on equity.First, this thesis makes a general statement about the history, definition and deal structure of relevant trust product, and then analyzes and establishes the legal nature of the “right of return on equity” which is a future creditors’ right instead of a function of equity. Second, this thesis analyzes the legal issues of such trusts which are whether the right of return on equity can be trust property, whether the right of return on restricted shares can be trust property and whether relevant agreements in the trust can be notarized as credit documents. Last, this thesis provides some suggestions to the restructure of such trusts. For legislation, the laws and regulations shall be adopted with respect to the right of return on equity and trust registration. For trust practice, relevant agreements shall provide the rights and obligations of shareholders, trust companies and social investors specifically.