Although the characteristics of the legal relationship of investment funds are basically the same as those of trust relationships, they are only designed based on trust principles, so they cannot be equated with trusts. Especially in terms of the subject of the legal relationship, although it follows the subject structure of the trust relationship, its unique features

It is different from having only three parties in a trust relationship. Instead, it consists of four parties (fund share holders, fund managers, fund custodians, and beneficiaries) to form a three-party legal relationship of entrustment, trustee, and beneficiary.

Under this feature, clarifying the relationship between the four parties is crucial to determining the rights and obligations of each party and their legal responsibilities. This is precisely an issue that is unclearly debated in theoretical circles and has not yet been given a clear conclusion in legislation.

(It’s hard to buy a cow with a lot of money, I don’t need to hesitate anymore) From the perspective of the relationship between investment fund entities, fund share holders are the principals. This has been recognized by the trust theory of the two major legal systems, but in the case of fund managers,

On the relationship between fund custodians and the relationship between them and the client, the two major legal systems have different views on trust theory, and there are also different views within the same legal system. In summary, there are mainly the following theories: (Analysis of the mainstream

The true purpose of funds, discover the best profit opportunities! ) Separation theory.

This is a more popular theory in civil law countries.

This theory advocates the existence of a dual structure in investment funds and believes that fund managers and fund custodians are not at the same level, so the functions of the two need to be separated.

This theory is further divided into self-benefit trust separation theory and other-benefit trust separation theory.

The former, represented by German scholars, believes that there is a first-level trust relationship between investors (fund share holders) and managers (fund managers), and a second-level trust relationship between managers and custodians.

According to this structure, the investor combines the settlor and the beneficiary, which is a separation of self-benefit trusts; the latter is represented by scholars from Japan, South Korea and Taiwan, and believes that although the investor is the settlor, it is only in name.

The settlor, while the actual settlor is the manager, the trustee is the manager’s trustee, and the investors are the beneficiaries. In this structure, the actual settlor and the beneficiary are not the same person, which is a separation of trusts for the benefit of others.

The view of separatism is actually a transplantation of the British and American trust theory.

According to the dual property theory of trusts in Anglo-American law, the trustee has common law ownership of the trust property, which is the fundamental criterion for judging whether the fund manager is a trustee.

Although the fund manager has huge rights to manage and dispose of the trust property, there is no doubt that in fact it is the fund custodian and not the fund manager who has the legal ownership of the trust property.

Because of this, no matter how many levels the separation theory decomposes the trust relationship of an investment fund, its ultimate or legal trustee still boils down to the fund custodian.

At this point it is consistent with the standards for determining trustees in common law.

Passive trust theory.

Anglo-American law divides trusts into passive trusts and active trusts based on whether the trustee has active behavioral obligations.

The so-called passive trust means that although the trustee is the nominal owner of the trust property, he has no active obligation to act on the trust property.

This theory holds that in an investment fund relationship, the custodian is called the trustee and is not essentially responsible for the actual operation of the fund, but accepts the instructions of the manager to use and dispose of the fund property.

The reason why British and American countries recognize passive trusts is to make people more flexible in using trusts to benefit themselves and others.

Although passive trusts originated from common law, common law considers unit trusts to be active trusts rather than passive trusts.

According to the British Financial Services Regulations 1991, the fund trustee has the responsibility to supervise whether the behavior of the fund supervisory manager is consistent with the regulations, trust instruments, and plan details; the fund trustee has the right to reject instructions from the fund manager that violate the trust.

The use of passive trust theory to explain the legal status of fund managers and fund custodians is mainly the view of some Japanese scholars, but has not been adopted by Japanese law.

The trust requirements stipulated in Article 1 of the Japanese Trust Law are: the management and disposal of property must be transferred to another party, and passive management by the trustee is not allowed.

In fact, not only Japanese law has this provision, but also Article 169 of the U.S. Restatement (Second Edition) of Trust Law has a similar provision: Once the trustee accepts the trust, he has an obligation to the beneficiary to manage the trust.

Because of this, there has been considerable controversy over whether passive trusts can be applied.

***said the same trustee.

This theory holds that fund share holders are trustees, and fund managers and fund custodians are co-trustees.

Many scholars in our country hold this view.

Inverted separatism.

This theory is similar to the hierarchical structure of separatism, but the levels are opposite, so I call it inverted separatism.

This theory believes that the fund custodian is the trustee (the first trustee), and at the same time, the fund custodian also acts as the trustee, entrusting the fund property to the fund manager (the second trustee) for investment operations.

Independence is trusted said.

This theory holds that the fund manager is neither a trusted person as a principal nor a trusted person as a trustee, but an independent trusted person.

Our country's legislators have paid great attention to the definition of the legal relationship between the parties to contractual securities investment funds.