Source: Author: Date: 08- 1 1-0 1

On the basis of comparing the legal relationship models of various contractual investment funds in foreign mature markets, this paper puts forward some legislative suggestions for China's investment funds: under the overall framework of trust law, establish a * * * legal system with the trustee.

Keywords: investment fund; Trust; Legal relationship; * * * with the trustee

By the end of 2002, the number of China's securities investment funds had reached 7 1 share, including 54 closed-end funds and 7 open-end funds, accounting for more than13 billion shares, reaching more than 10% of the market value of A shares in Shenzhen and Shanghai. With the rapid development of securities investment funds, it is urgent to strengthen the theoretical research on the legal system of investment funds, especially to solve the legal relationship problem of investment funds that has long plagued our theory and practice.

Firstly, it summarizes the legal construction of China's securities investment funds.

With the development of investment funds in China from scratch, the corresponding legal system construction has gone through two stages:

The first stage is from 1987 to 1997. This decade is in the pilot stage, and the development of the fund mainly depends on national policies and some local regulations, and there is no special national legislation.

The earliest fund legislation is the Interim Provisions on the Management of Investment Trust Funds in Shenzhen issued by Shenzhen 1992, which belongs to local regulations. The "Interim Provisions" draws lessons from foreign legislation on funds and is the first legal norm in China to adjust the economic relations such as fund issuance, management and operation. 1993 Shanghai has also promulgated the Interim Measures for the Administration of RMB Trust Funds in Shanghai. 1995, the People's Bank of China promulgated the Measures for the Administration of the Overseas Establishment of China Investment Funds through the State Council, but this is a regulation specifically regulating investment funds issued overseas and invested in domestic industrial projects, and other funds are not applicable. From 65438 to 0995, the relevant departments began to draft the Measures for the Management of Investment Funds, but for various reasons, it has not been promulgated. Therefore, at this stage, the development of investment funds in China basically has no foundation.

The second stage began with the promulgation of the Interim Measures for the Administration of Securities Investment Funds from 65438 to 0997. After ten years of pilot work and accumulated experience, the time is ripe for China's fund national legislation. After years of brewing, the National Interim Measures for the Management of Securities Investment Funds (hereinafter referred to as the Interim Measures) was finally promulgated. The promulgation of the Interim Measures marks that the development of China's investment funds has entered a new stage, and also marks that the supervision of funds by relevant departments in China has reached a higher level in standardization and legalization. 1998 Securities Law, 1999 Contract Law and 200/kloc-0 Trust Law were promulgated and implemented. With the promulgation of the forthcoming Securities Investment Fund Law, China's investment fund legislation will enter a more mature stage.

According to the legislation and practice of various countries, investment funds mainly have two organizational forms: contractual investment funds and corporate investment funds. Corporate investment funds are established on the legal basis of company law, while contractual investment funds usually build their legal relationship on the basis of trust law. China's Interim Measures regulate contractual investment funds. Because there was no trust law in China when the Interim Measures was promulgated, the legal relationship of the parties to the investment fund can only be determined through anonymous contracts, so there are some problems such as unclear legal structure of the investment fund and legal status of the parties. Next, we plan to compare the legal relationship models of various contractual investment funds in foreign mature markets, and analyze the trade-offs and choices that should be made in the legal relationship model of investment funds in China.

Judging from the development of our country at the present stage, the investment funds that are vigorously developed in our country are mainly securities investment funds, and the discussion in this paper is limited to securities investment funds. So the investment funds mentioned below all refer to securities investment funds.

Second, the nature and mode of legal relationship of investment funds

(1) Contractual investment funds and corporate investment funds

According to the different legal basis and organizational forms of funds, investment funds can be divided into corporate and contractual types. Corporate investment fund is an investment company with the same investment goal, which is established by investors in accordance with the company law and takes the form of joint stock limited company for profit. Investors-shareholders of the company enjoy rights, perform obligations and receive dividends and bonuses according to the return on investment in accordance with the articles of association. The structure of corporate investment funds usually has three parties: (1) investors. In other words, the investment company is the owner of the company's fund. The fund is established by issuing shares, and its shareholders are beneficiaries. (2) management. The management is the consultant of the investment company, providing survey data and services. Both parties conclude a management contract, and the management party handles all management affairs and collects management remuneration. However, major issues related to the use of funds and securities trading are still planned by the board of directors of investment companies, and then entrusted to securities brokers for implementation after making decisions. (3) the custodian. The investment company will appoint a bank or trust company as the custodian of the raised funds. Sign custody contracts, keep investment securities, handle daily accounting of net assets per share, pay dividends and transfer procedures.

Contractual investment fund refers to the form of investment fund based on the principle of trust, which is composed of three parties: manager, custodian and beneficiary. It consists of three parties: (1) administrator (client). It is the sponsor of the fund, issues the beneficiary certificates of the fund, raises funds, and then gives the raised funds to the trustee for safekeeping, and at the same time makes specific investment and use of the raised funds. (2) Custodian (trustee). The trustee is generally a trustee or a bank. According to the regulations of trust deed, the trustee accepts the entrustment and keeps the raised funds and other agency business and accounting business. (3) Beneficiary (investor). Is an investor who subscribes for beneficiary certificates. He subscribed for beneficiary certificates, participated in fund investment, became a party to the fund, and shared the investment income of the fund according to the share of beneficiary certificates held.

China's securities investment funds are contractual.

(B) the nature of the legal relationship of investment funds

Investment fund is a kind of property management system developed by trust in the commercial field. China's "Interim Measures" defines the securities investment fund as "a collective securities investment mode with * * * returns and * * * risks, that is, by issuing fund shares, investors' funds are concentrated, managed by fund custodians and managed and used by fund managers, and they are engaged in investing in financial instruments such as stocks and bonds". Japan's Securities Investment Trust Law defines a securities investment fund as "a trust whose purpose is to invest trust property in the use of specific securities based on the instructions of the client, so as to divide its beneficial rights and make it available to an unspecified majority". From these definitions, we can see that investment funds have the general elements and legal characteristics of trust.

Trust means that the trustor transfers the property right to the trustee, and the trustee manages or disposes of the trust property for the beneficiary according to the trust purpose. Trust relationship includes two basic components: first, the client transfers special property to the trustee's name; Second, the trustee manages the trust property according to the purpose of the trust. Investors of contractual investment funds immediately transfer their funds to the custody company after subscription, and the management company and the custody company will operate the fund assets according to the purpose agreed by trust deed, and the rights and interests obtained will be given to the investors (beneficiaries). It can be seen that the legal relationship between the parties to a contractual investment fund conforms to the two elements of a trust relationship, and the relationship between the parties is a trust relationship. This trust relationship is the institutional framework for the operation of securities investment funds. The advantage of this system lies in clear property rights and clear responsibilities. It is a multilateral incentive and restraint mechanism with both division of labor and supervision, so it has strong vitality. In Asian countries with civil law system, whether Japan or South Korea, trust has become the only legal organization form of investment funds after the introduction of trust system by legislation.

It is precisely because the securities investment fund is essentially a trust that many countries have incorporated the investment fund into the trust law for adjustment. However, it should be pointed out that investment funds are the development and innovation of trust system, and this trust relationship has its particularity. This particularity is manifested in the universality and uncertainty of the client, the special requirements of the trustee's qualification, and the division of labor and mutual supervision of the trustee. These particularities make all countries strictly supervise it, and many countries regulate it by special legislation outside the trust law. For example, the American Investment Company Law 1940. Japanese, Korean, Hongkong and Taiwan Province all have special securities investment fund legislation.

(C) Comparison of legal relationship models of contractual investment funds

Contractual investment funds in developed countries and regions such as Britain, Japan, Germany, South Korea and Hong Kong should be regulated by relevant trust laws and regulations, and trust deed, which stipulates the rights and obligations of the three parties, is its typical feature. Judging from the situation of relevant countries, there are three types of specific trust structure arrangements for contractual funds: Swiss model, Japanese model and German model, each with its own advantages and disadvantages.

1, Swiss mode. The Swiss model regulates the rights and obligations of all parties (fund managers and investors) through a "collective investment contract", which may or may not have a trustee. If a custodian bank is designated, the custodian bank is also the signatory of the contract. The Swiss model regards investment funds as portfolio assets and keeps them in a separate account. Therefore, although the fund contract has no obvious new subject except the signing subject, it is a trust with only two necessary parties, but the independent account actually exists independently of the investor and the manager. The independence of this contractual fund is not clear, which represents the legal treatment of investment funds in civil law countries that have not introduced the trust system.

2. German model. The German model is also called the dual model. 1956 Germany promulgated the investment company law, which made it clear that all its investment funds are contractual. The two special designs of this law are "special property" and "custody bank". Special property is funds raised and managed by investment companies. Because of its special legal status, investment companies and custodian banks are not allowed to request it to be enforced, and the rights and interests of this special property division are represented by beneficiary securities. In this way, there is no difference between special property and "trust property" in trust law, and the status of investors is no different from that of trust beneficiaries. The difference is that the legal relationship between investors, investment companies (managers) and custodian banks is stipulated by the coexistence of two contracts: First, investors and investment companies conclude trust deed. When investors buy beneficiary securities, they gain the status of trust deed's principal and beneficiary, while the investment company is in the position of trustee, that is, the nominal holder of "special property" and is responsible for the operation of the property; Second, the investment company signed a custody contract with the custody bank. The custodian bank is responsible for the safety and integrity of "special property", and disposes of the property according to the instructions of the investment company. It is also responsible for supervising the investment company to act in accordance with trust deed, and bringing a lawsuit against its specific illegal acts, and even has the right to stop exercising the rights of the investment company. Therefore, focusing on special property, the law stipulates the legal relationship among investment companies, custodian banks and beneficiaries. The custodian bank is the guardian of the fund, which is different from the custodian bank of the American investment company law, with wider authority and greater functions.

Under this dual mode, the three parties of investment funds are not unified in a legal relationship like Japanese law, but are regulated by the relationship between trust deed and custody contract. Through the trust relationship between investors and managers, this model ensures that investors can directly claim rights from managers in case of disputes, which effectively protects the interests of investors. The disadvantage is that there is no contractual relationship between investors and custodians. Once the custodian bank violates its obligations, investors cannot directly claim their rights, which is not conducive to protecting the rights of investors.

3. Japanese model. The Japanese model is also called the single model. According to the Japanese Securities Investment Trust Law of 195 1, the overall structure takes the securities investment trust deed as the core, and the contract connects the manager, custodian and beneficiary, forming a trinity relationship. Specifically, after issuing beneficiary certificates to raise the securities investment trust fund, the fund manager will sign a securities investment trust deed with the fund custodian (custodian bank) as the trustee, with the fund investor as the beneficiary. Accordingly, the trustee obtains the nominal ownership of the fund assets, and is responsible for the custody and supervision, while the trustor reserves the command right to invest and use the fund assets, and the beneficiary enjoys the investment income right of the trust fund according to the records of the beneficiary securities. It can be seen that the Japanese practice is to use trust deed to regulate the rights and obligations of all stakeholders. This is obviously different from the structure in German law. South Korea and Taiwan Province Province also adopted the Japanese model.

The structure of Japanese law simplifies the legal relationship between fund stakeholders and defines the trust relationship between managers and investors and between managers and custodians. These are undoubtedly more progressive than the structure of German law, but there are also many problems in actual operation. First of all, the principal status of fund managers is contrary to the jurisprudence of trust law. In a typical trust relationship, the client should have the original ownership of the trust property (which is also stipulated in China's Trust Law), but the fund manager obviously does not have this condition. Secondly, the role of the trustee is also debatable. According to trust jurisprudence, the trustee should actively participate in property management, while the trustee in the Japanese model only has custody and supervision over the fund assets, which leads to "negative trust". The above problems lead to unclear rights and obligations of beneficiaries, administrators and custodians. In the event of a dispute, the beneficiary may lack the legal basis for claiming rights from the administrator, and it is difficult to achieve results because the latter is only a passive trust.

From the comparison of the above models, it can be seen that the legislative difficulty of contractual fund organization structure in dealing with the legal relationship between the parties focuses on the determination of the legal status of fund managers, while the difficulty in determining the legal status of fund managers comes from the particularity of investment fund governance structure, that is, in addition to the separation of fund property ownership and beneficial rights, there is also the separation of fund property ownership and management rights. However, no matter how countries determine the legal status of fund managers, they all stipulate that fund managers have the obligation of good faith to fund beneficiaries or holders without exception, in order to make managers bear the same obligations as trust trustees.

The legislative form of regulating the legal relationship between the parties of contractual investment funds should be consistent with the operating mechanism of contractual investment funds to protect investors. This is the starting point for China's relevant legislation to learn from other countries' models.

Three, China investment fund legal relationship analysis and mode choice.

(A) Analysis of the legal relationship of China's investment funds from the current laws and regulations

There is no trust legal system in civil law countries. Starting from Japan, some civil law countries tried to remove the obstacles of different legal systems and successfully introduced the trust system into their own countries. As far as China's current actual situation is concerned, before the promulgation of the Trust Law, China has not yet established a trust legal system. Therefore, all new funds after 1997 are in the form of contracts, with the provisions of the Interim Measures as a guide to the rights and obligations of the fund parties, and the rights and obligations between the parties are embodied and bound by the terms of the fund contract. From the practice of China's "Interim Measures", to set up a fund, the sponsor must conclude a Fund Contract with the fund manager and fund custodian, and the fund manager and fund custodian must conclude a Custody Agreement, which is more similar to the German model in form. However, due to the lack of the guidance of trust law and the complexity of the legal structure of securities investment funds, there are some problems in the legal structure of securities investment funds in China, which are mainly reflected in the fact that the interests of investors cannot be fully guaranteed by contracts and legal remedies due to the absence of trustees.

The biggest problem of contract funds in China is the unclear relationship between the parties, especially the relationship between fund holders, fund managers and fund custodians. If the Fund Contract is the "fundamental law" of investment fund operation, it should be based on the rights and obligations among the core parties-managers, custodians and investors after the actual operation of the fund. However, the Interim Measures did not clearly define the meaning of the securities investment fund contract. Interim Measures Implementation GuidelinesNo. 1 Summary of Contents and Forms of Securities Investment Fund Contracts (Trial) (hereinafter referred to as the Summary of Fund Contracts) However, at this time, investors have not yet determined, and it is even more impossible to sign fund contracts. Therefore, some scholars believe that an investor is not a party to a fund contract, cannot enjoy the contractual rights, and has no right to hold the fund manager or custodian liable for breach of contract. Another scholar believes that although investors have not signed a fund contract, their purchase and holding of fund shares make them parties to the contract and thus enjoy contractual rights. However, the author believes that the latter view is only legal reasoning from the perspective of protecting investors. At present, most fund contracts do not list investors (holders) as the parties to the fund contract. Even if they do, it is not clear how investors become the parties to the contract, that is, there is a lack of a clause similar to "investors who subscribe for or purchase fund shares and hold the fund shares after being confirmed by the fund manager become the parties to the contract". In China's current investment fund laws and regulations, the fund promoters, managers and custodians are regarded as the parties to the fund contract, while the practice of excluding investors undoubtedly violates the principle of taking investors as the core, which is suspected of putting the cart before the horse.

The Fund Contract Summary does not stipulate that the manager and custodian manage and use the fund according to the authorization of the fund share holders, nor is it authorized by the sponsors. Literally, according to article 15 of the Interim Measures, it is entrusted by the "securities investment fund", but according to the general jurisprudence of our country, the securities investment fund is not a natural person, legal person or partnership, and the relevant entrustment is made by the holder. According to the fund contract, the holders make resolutions on some important matters through the holders' meeting, including replacing the manager and custodian. But in fact, the holders are quite scattered, and the sense of speculation is better than investment. There is no sound and feasible proxy voting mechanism in China, and the role of the holders' meeting has not been brought into play. What investors can do is to "vote with their feet" and cannot form effective supervision over custodians and managers. This ambiguity of legal subject also leads to the following two problems: on the one hand, who represents the fund. The Interim Measures and other relevant regulations identify the custodian as the nominal holder of the fund assets, but it is the fund manager who represents the fund at the shareholders' meeting of listed companies. In practice, fund managers basically employ external auditors, accountants and lawyers of the fund; If the fund account is frozen or deducted by law enforcement agencies, the manager shall be responsible for handling it. So, who should represent the fund? On the other hand, it is the question of who claims for compensation from the responsible party on behalf of the fund holder when the fund interests are damaged. Articles 9 and 10 of the Summary of Fund Contracts stipulate that when the fund custodian causes the loss of fund assets due to its fault, the fund manager shall recover from the fund custodian, and vice versa. Then, in the case that both the manager and the custodian are at fault, resulting in the loss of fund assets or both parties are too lazy to recover from each other because of their relationship, who will recover on behalf of the fund? Obviously, China's "Interim Measures" and other fund-related laws and regulations fail to clearly define the rights and obligations between fund managers and fund custodians, resulting in the absence of fund interest spokespersons; Moreover, it is very unfavorable to protect the legitimate rights and interests of investors because the fund holders are not given the status of parties to the contract and the right to directly investigate the responsibilities of managers and custodians.

The reasons for this situation are, on the one hand, indifference to the interests of beneficiaries, and on the other hand, lack of grasp of the nature of investment funds. When we legislate, we must first grasp the trust nature of the legal relationship between the parties to the fund. The variety, structure, management mode and scale of securities investment funds are constantly developing and changing with the development of the securities market and even the whole financial economy, but no matter how they change, the economic relationship formed by them is stable. The direct consequence of violating the trust essence of the fund is that the legitimate rights and interests of investors cannot be effectively protected. Some fund management institutions use fund property to seek benefits beyond the limits of the trust itself, and some fund management institutions regard setting up funds as a means to obtain funds needed for speculative stocks and futures. It can be seen that when we formulate the Investment Fund Law, we must always grasp the trust essence of securities investment funds, establish the trust concept, act according to the objective laws of trust itself, and standardize securities investment funds.

(B) the choice of legal relationship model of investment funds in China.

As Scott, a famous American trust law scholar, said: "The legal structure and form of securities investment funds are as infinite as the imagination of lawyers." Countries can design the legal structure of securities investment funds in various forms. But no matter what form it takes, discussing the legal structure of securities investment funds is inseparable from the core principle of the legal system of investment funds, that is, protecting the legitimate rights and interests of investors. Article 1 of China's Investment Fund Law (Draft) clearly points out that its legislative purpose is to "standardize the management of investment funds and protect the legitimate rights and interests of investors". Therefore, when designing the legal structure of China's investment funds, we should try our best to embody the investor-oriented principle to facilitate investors to exercise their rights. In order to reflect this purpose, according to the existing legal system of investment funds in China and the provisions of the Trust Law, combined with the advantages of dualism and monism, the author advocates "* * * the same trustee model", that is, investors are the principal and beneficiaries, and fund managers and fund custodians are the same trustee. The reason is that the separation of the ownership and management rights of fund assets is essentially the division of the rights of the client. Except for the different contents of management affairs, the obligations of fund managers and fund custodians are basically the same as those of trust trustees, and they both have dual obligations in kind and in person. In terms of obligations in kind, both parties have the obligation to manage the assets of the fund. In terms of obligations to people, both parties have the obligation to do their duty for the best interests of fund holders. * * * Through the trustee's design, both the fund manager and the fund custodian are included in the trust relationship, which not only conforms to the actual situation of fund management, but also helps to strengthen the obligations of fund managers and fund custodians to fund holders and solve a deadlock that has long plagued legislation.

In the trust law, * * * the same trustee refers to several people who are responsible for the management or handling of trust property for others because of accepting the entrustment of the trustor or the designation of the relevant state organs in the state behavior. Trust laws in most countries have no restrictions on the number of trustees. Neither Japanese trust law nor Korean trust law sets a maximum limit on the number of trustees, and American trust law also holds such an attitude towards the number of trustees. According to the laws of these countries, the number of trustees in a specific trust relationship is completely determined by the client, the court or the relevant administrative organ according to the actual needs when establishing this relationship. Therefore, in these countries, there is a widespread phenomenon that * * * has a trustee. In the case of * * * executing the trust with the trustee, each trustee has the obligations entrusted to the trustee by law, and once these obligations are violated, they will bear corresponding responsibilities according to law. The starting point of "* * * the same trustee model" is to give investors the dual identity of trustee and beneficiary in trust law, so as to protect their rights and interests to the maximum extent, and to give both fund managers and fund custodians the so-called "fiduciary obligation" to facilitate the realization of the above objectives.

To sum up, after the promulgation of the Trust Law, we should update the previous design ideas of the legal relationship of China's securities investment funds, and shape the legal relationship of China's securities investment funds into a trust relationship with the fund contract as the core according to the principles of the Trust Law. In the choice of trust mode, because the * * * and trustee system better reflect the characteristics of the trust legal system, the rights and obligations of all parties are clear, which is convenient for investors to exercise their legitimate rights; The checks and balances between managers and custodians, and the establishment of joint and several liability mechanism for investors are conducive to curbing the existing phenomenon of "manager control" in China's securities investment fund market, completely eliminating the chronic disease of "trust" without "management" of custodians, especially clarifying the legal status of investors as both principals and beneficiaries, strengthening the protection of their interests, fully embodying the legislative purpose of securities investment funds, and worthy of being endowed by relevant legislative and judicial institutions in China.

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