The Legal Research On The Trust Design Of Equities Charities

With the development of economy,the traditional way of wealth accumulation has changed.Equity has been the main form of wealth of the entrepreneurs nowadays,which leads to the change of charitable practices directly.In recent years,from Bill Gate,Buffett,Mark Zuckerberg to Cao Dewang,Equities Charities,the new form of charity,has played an increasing important role around the world.Based on the case-Cao Dewang’s Equities Donate,the article follows the way of “study case-present ideas-analyze dilemmas-propose solutions” to start on,and put forward the trust as the new path to achieve the goal of Equities Charities beside the mode of “Equities Donate + Charitable Foundation”.The first part of this paper analyzes the institutional barriers of “Equities Donate + Charitable Foundation” in China based on the case-Cao Dewang’s Equities Donate,such as unable to donate equities and be registered as public fund,high taxes as well as financial difficulties.Furthermore,based on the structural defects and imperfect institutional system,this part analyzes the legal nature and the realistic predicament of the Equities Donate of Cao Dewang and the Heren Foundation set up by him.And then,the author puts forward the trust as the new way to solve the dilemma faced by the Equities Charities,as well as the solution to settle the predicament faced by Cao Dewang’s Equities Donate.The second part of this paper analyzes the structure of the Trust Design of Equities Charities in China based on the nature of equity and the existing legal system,which can be named as the structure of the “hierarchical beneficiary” and the “asset servicer” respectively.With the benefit of arrangement of “hierarchical beneficiary” and “asset servicer”,the mixed goal-charity and management can be achieved by the Trust Design of Equities Charities.The arrangement of mixed goal is of great significance to the realization of Equities Charities,but may influence the identification of charity at the same time.I argue that whether the Trust Design of Equities can be defined as charity with the following standards: the purpose of charity,the effect of charity and the absoluteness of charity.In my opinion,if the charitable beneficiary is nonspecific,then the Trust Design of Equities can be identified as the charitable trust.But if the charitable beneficiary is a specific charitable organization,whether the Trust Design of Equities can be identified as the charitable trust is uncertain.And I tend to define the said Trust Design of Equities as the charitable trust.Based on the above comparison and consideration,the regulators and the trustee are more likely to accept the “assets servicer” structure because of the precedent practice of Asset Backed Security.Accordingly,in the infancy of Trust Design of Equities Charities,it is suggested to adopt the “assets servicer” structure to promote the development of Equities Charities.The third part of this paper analyzes the obstacles of the Trust Design of Equities Charities in China.Firstly,the complex arrangement of rights and obligations under the Trust Design of Equities Charities causes the imbalance of powers and responsibilities;The arrangement of beneficiary or asset servicer may influence the legal status of the trust because the said parties take an actual control over trust property;The trustee bear a higher responsibility;No one can force the trust property because there is no specific beneficiary.Secondly,the unsound system set barriers on the development of the Trust Design of Equities Charities,such as the lack of registration system of trust property,the imperfect tax system of trust as well as the lag legal system.The fourth part of this paper analyzes the way to improve the Trust Design of Equities Charities in China.Firstly,as to the internal rights and obligations of trust,we shall clear the responsibilities of the parties who bear the similar responsibilities of trustee and the trustee who transfer part of his responsibilities to others,perfect the protection mechanism of beneficiary and improve the relief system of stakeholders.However,I think that the imbalance of powers and responsibilities can be corrected by the trust document.Thus,the unsound system is the key barrier of the Trust Design of Equities Charities in China.To solve this problem,we shall set up the well-run registration system of trust property,the perfect tax system of trust and other related legal system.With the continuous optimization of the trust structure,improvement of the legal system,the Equities Charities would develop smoothly and continuously.