Measures for Administering Trust Companies

Document Sample
Measures for Administering Trust Companies Powered By Docstoc
					Measures for Administering Trust Companies

Chapter I General Provisions Article 1 In accordance with the Trust Law of the People's Republic of China, the Banking Supervision Law of the People's Republic of China and other laws and regulations, the present Measures are formulated with a view to intensifying the supervision and management of trust companies, regulating the business operations of trust companies and promoting the sound development of trust industry. Article 2 The term "trust company" as mentioned in the present Measures means the financial institutions set up according to the Company Law of the People's Republic of China and the present Measures and mainly conduct the trust business. The term "trust business" as mentioned in the present Measures means the trust companies' business

operations that the trust company commits to trust and handle trust affairs under fiduciary capacity in order to run business and obtain remunerations. Article 3 The trust property may not belong to the

trust company's inherent property, or the trust company's liabilities for the beneficiaries. The trust property may not be a part of the trust company's property to be liquidated when the company is

terminated. Article 4 A trust company shall, when engaging in trust activities, comply with laws and regulations and the stipulations in trust documents, may not infringe upon national interests, public interests or the lawful rights and interests of the beneficiaries. Article 5 China Banking Regulatory Commission shall take charge of supervising and administering trust companies and business activities thereof.

Chapter II Establishment, Alteration and Termination of Trust Institutions Article 6 When establishing a trust company, the form of a limited liability company or a company limited by shares shall be adopted. Article 7 When establishing a trust company, the approval of China Banking Regulatory Commission shall be obtained and a financial license shall be obtained.

No entity or individual may conduct any trust business and no business entity may use the term "trust company" in its corporate name until the approval of China Banking Regulatory Commission is obtained, except it is stipulated otherwise by any law or regulation. Article 8 As regards setting up a trust company, the following conditions shall be met: (1) possessing the articles of association, which comply with the provisions of the Company Law of the People's Republic of China and those of China Banking Regulatory Commission; (2) possessing shareholders, which are qualified for purchasing shares as provisioned by China Banking Regulatory Commission; (3) possessing the minimum registered capital as provisioned by the present Measures; (4) possessing directors, senior mangers and trust employees suitable for their business, who are

qualified for holding corresponding post as prescribed by China Banking Regulatory Commission; (5) possessing a sound organizational structure, instructions for operating trust business and a system

of risk control; (6) possessing a business place as required, safety measures and other business-related facilities; (7) other conditions as prescribed by China Banking Regulatory Commission. Article 9 China Banking Regulatory Commission shall examine an application for establishing trust company in accordance with the relevant laws and regulations and the principle of prudent supervision, and make a decision on whether to approve it or not. In case it decides to disapprove the application, the reasons shall be specified. Article 10 The minimum registered capital of a trust company shall be 300 million Yuan or the equivalent convertible currency, and the registered capital shall be monetary and paid-in. When applying for conducting such businesses as enterprise annuity fund, securities underwriting and asset securitization, etc, the requirements on minimum registered capital prescribed by related laws and regulations shall be met. China Banking Regulatory Commission may, in light of

the needs of development of trust company industry, adjust the minimum amount of trust companies'

registered capital. Article 11 No trust company may set up any branch institution either directly or in any disguised form without the approval of China Banking Regulatory Commission. Article 12 A trust company shall obtain the approval of China Banking Regulatory Commission under any of the following circumstances: (1) to change its name; (2) to change its registered capital; (3) to change its domicile; (4) to change the organization form; (5) to adjust its business scope; (6) to change any director or senior manager; (7) to change any shareholder or adjust equity structure, except for holding the circulated shares of a listed company less than 5% of the total shares of the company; (8) to revise its articles of association; (9) to merger or divide;

(10) other circumstances as stipulated by China Banking Regulatory Commission. Article 13 In case a trust company applies for dissolution owing to division, merger or any other cause for dissolution as stipulated in the articles of association, it shall dissolve upon the approval of China Banking Regulatory Commission and organize liquidating group to conduct liquidation in accordance with law. Article 14 In case a trust company can not pay off its due debts and does not possess enough assets to cover the debts or it obviously lacks repayment ability, it may, upon the consent of China Banking Regulatory Commission, apply for bankruptcy to the people's court. With regard to such a trust company, China Banking Regulatory Commission may directly apply to the people's court for reforming or conducting bankruptcy liquidation. Article 15 In case a trust company is terminated, its duties of managing trust affairs shall be terminated concurrently. The liquidating group shall

appropriately keep the trust property, prepare a report

on the disposal of trust affairs and hand over trust property to the new trustee. In case the trust document makes otherwise stipulations, such stipulations shall prevail.

Chapter III Business Scope Article 16 A trust company may apply for conducting part or all of the following businesses of domestic or foreign currency: (1) trust of capital; (2) trust of movable property; (3) trust of real estate; (4) trust of negotiable instruments; (5) trust of any other property or property rights; (6) to engage in investment fund business as a promoter of a investment fund or fund management company; (7) to conduct such businesses as the reorganization, purchase and merger of enterprise assets, fund-raising for project, corporation finance and financial

consultation, etc; (8) to conduct the securities underwriting businesses upon commission as approved by the related departments

under the State Council; (9) to conduct such businesses as brokerage,

consultation and credit investigation, etc; (10) to provide safe-keeping services upon commission and to operate the business of safety-deposit boxes; (11) other businesses as prescribed in any law or regulation or approved by China Banking Regulatory Commission. Article 17 A trust company may, in accordance with the provisions of the Trust Law of the People's Republic of China and the relevant laws and regulations, conduct charitable trust activities. Article 18 A trust company may, according to different trust purposes, different varieties of trust property and different management styles of trust property, set up different varieties of trust business in light of market demand. Article 19 A trust company may, according to the stipulations in the trust documents, manage, use or dispose its trust property by means of investment, sales, inter-bank deposits, purchasing for reselling, lease or loans, etc. Where China Banking Regulatory

Commission makes otherwise provisions, the related provisions shall prevail. No trust company may manage or use trust property in manners of selling out for repurchasing. Article 20 Such businesses as inter-bank deposits, inter-bank offers, loans, lease and investment may be conducted by a trust company under the item of inherent business. The investment business shall be limited to investment in financial companies in form of equity as well as investment in financial products and self-use inherent assets. Except it is otherwise stipulated by China Banking Regulatory Commission, no trust company may make industrial investment with its inherent property. Article 21 Except it is stipulated otherwise by China Banking Regulatory Commission, a trust company may not conduct the liability businesses other than the business of inter-bank loans with the balance of its inter-bank loans not more than 20% of its net assets. Article 22 A trust company may provide guarantee for outsiders, provided that the guarantee balance may not be more than 50% of its net assets.

Article 23 A trust company shall, when operating foreign exchange trust business, conform to the related provisions of the state on foreign exchange control and subject itself to the examination and supervision of the competent foreign exchange department.

Chapter IV Operating Rules Article 24 A trust company shall, when managing, operating or disposing perform its its trust property, its

scrupulously

duties,

fulfill

obligations of honesty, good faith, prudence and effective management as well as safeguard the

beneficiaries' best interests. Article 25 A trust company shall, when handling trust affairs, avoid the conflict of interests. When it is impossible to avoid such conflict, it shall fully release the related information to the trustors and the beneficiaries or refuse to conduct such business. Article 26 A trust company shall dispose of trust affairs by itself. In case any trust document

stipulates otherwise or it has any reason of necessity, it may entrust others to dispose of trust affairs on

behalf of it, but the trust company shall fully fulfill the obligation of supervision and be responsible for the acts carried out for disposing trust affairs by the entrusted party. Article 27 Except it is stipulated otherwise in any law or regulation or trust document, a trust company has the obligation of keeping secret the information and the relevant situation on its trustors and beneficiaries as well as that on its handling of trust affairs in accordance with law. Article 28 A trust company shall appropriately completely record its disposing of trust affairs and report its trustors and beneficiaries the situation on trust property and its management, operation, disposal as well as revenue and expenditure on a regular basis. A trustor or beneficiary has the right to be informed of the situation on the management, operation, disposal as well as revenue and expenditure of his/her/its trust property by the trust company and require the trust company to make related explanations. Article 29 A trust company shall manage its trust property and inherent property separately and keep

accounts thereof separately. And it shall also manage the trust property of different trustors separately and keep accounts thereof separately. Article 30 A trust company shall set up accounts in accordance with law, make business accounting for the trust business and non-trust business respectively and make business accounting for each trust business separately. Article 31 The trust business department of a trust company shall be independent from the company's other departments, this department's personnel may not concurrently hold any post in any other department of the company, and the business information of this department may not be shared with this company's other departments. Article 32 In case a trust is established in the form of trust contract, the following items shall be indicated in the trust contract: (1) the trust purpose; (2) name or title and domicile of the trustor and that of the trustee; (3) beneficiaries or scope thereof;

(4) scope, variety and situation of trust property; (5) rights and obligations of the parties to the trust; (6) release and assuming of the risks involved in the management of trust property; (7) management style of trust property and the trustee's management right ; (8) trust interests calculation as well as the form and method for delivering trust interests to the beneficiaries; (9) calculation and payment of remunerations for the trust company; (10) assuming of the tax on trust property and the calculation of other expenses; (11) trust period and termination ; (12) ownership of trust property at the time of the termination of the trust; (13) reporting of trust affairs; (14) liabilities for breaching contract by the parties to the trust and the method for settling dispute; (15) method for choosing new trustee; (16) other items that is necessary to be indicated as considered by the parties to the trust.

In the case of establishing a trust in the form of any written document other than trust contracts, the items to be indicated in the written document shall accord with the related laws and regulations. Article 33 When conducting inherent business, no trust company may commit any of the following behaviors: (1) to contribute funds or transfer property to any of its associated parties; (2) to provide guarantee for any of its associated parties; (3) to raise funds by pledging the equity held by any this company's shareholder. The associated parties of a trust company shall be defined according to the Company Law of the People's Republic of China and the related enterprise accounting standards. Article 34 When conducting trust business, no trust company may commit any of the following activities: (1) to seek improper interests by taking advantage of its status as trustee; (2) to misappropriate its trust property for any non-trust purpose;

(3) to promise that the trust property would suffer no loss or guarantee a minimum return; (4) to provide guarantee with trust property; (5) other activities prohibited by any law or regulation or China Banking Regulatory Commission. Article 35 A trust company shall, on the basis of fair market price, conduct associated transactions, report each transaction in to China and Banking release Regulatory the related

Commission

advance

information according to the related provisions. Article 36 Except it is otherwise stipulated by China Banking Regulatory Commission, a trust company shall collect remunerations in the form of commission charge or brokerage expense as agreed to in the trust documents when operating any trust business. A trust company shall inform the beneficiaries of the fact of collecting remunerations and shall explain the detailed charging rates to them. Article 37 In case a trust company handles its trust property by disobeying the original trust purpose, or causes any loss to the trust property owing to its violation of management duties or improper handling of

the trust affairs,

it

may not ask

for paying

remunerations before it recovers the trust property's original status or makes compensates correspondingly. Article 38 The expenses spent and the liabilities assumed by a trust company for its disposal of trust affairs shall be undertaken by the trust company with the trust property, Provided that they are listed in the trust contract or expressly notified to the beneficiary. A trust company shall enjoy the priority of being compensated with the trust property, if it makes advance payment with its inherent property. The liabilities born and damages suffered by the trust company from its disobeying of management duties or improper management of trust affairs shall be

undertaken by the trust company with its inherent property. Article 39 In case a trust company handles its trust property with violation of the trust purpose, or if it has gross negligence in the management, operation or disposal of its trust property, the trustor or beneficiary has the right fire the trust company as stipulated in the trust document or applies for the

people's court to fire the trust company. Article 40 In case the trustee is terminated in accordance with law, a new trustee shall be chosen as stipulated in the trust document; in the case of no such stipulations in the trust document, the trustor may make a selection at its own will; if the trustor is unable to make a selection, the beneficiary shall do it; in case the beneficiary is a person of no or limited capacity for civil conduct, his/her guardian may make a selection in accordance with law. Prior to the selection of a new trustee, China Banking Regulatory Commission may design a temporary trustee. Article 41 A trust company shall, when conducting trust business, terminate a trust where it faces any of the following circumstances: (1) a cause for termination stipulated in the trust document occurs; (2) the continuous existence of the trust goes against the trust purpose; (3) the trust purpose has came true or can't be realized; (4) the parties to the trust agree to do so upon

negotiations; (5) the trust period has expired; (6) the trust has been rescinded; (7) the trust has been canceled; (8) all the beneficiaries of the trust have abandoned the beneficiary right. Article 42 In case a trust is terminated, the trust company shall make a liquidation report on disposing trust affairs as stipulated in the trust document. In case no objection to the liquidation report is presented by the beneficiary of the trust or the person entitled to owning the trust property, the trust company may be absolved from the items listed in the liquidation report, except for any misconduct

committed by that the trust company.

Chapter V Supervision and Management Article 43 A trust company shall build up an organizational structure mainly composed of the shareholders' meeting, the board of directors, the board of supervisors and senior management level, etc, whose respective duties and responsibilities clearly

defined so as to guarantee their independent operation and effective check and balance, and form a scientific and highly efficient policy-making, incentive and constraint mechanism. Article 44 A trust company shall, in accordance with the principle of the separation of duties, arrange corresponding posts, ensure that the company may prevent risks from occurring in advance, control the emerging risks and supervise and correct the occurred risks, and form a sound inner control system and supervision system. Article 45 A trust company shall formulate the rules for operating trust business and other businesses according to the related provisions, set up and perfect its business management system and inner control system and report them to China Banking Regulatory Commission for record. Article 46 A trust company shall set up and perfect its financial and accounting system according to the related provisions of the state and factually record and comprehensively reflect its business activities and financial situations. Its annual financial

accounting statement shall be audited by a well qualified intermediary institution. Article 47 China Banking Regulatory Commission may check any trust company's business activities on a regular or irregular basis; it may require any trust company to provide the related auditing report issued by a well qualified intermediary institution when necessary. A trust company shall provide the related statements and materials on its business activities and financial situation as required by China Banking Regulatory Commission and factually introduce the related

business situation. Article 48 Net capital management shall be adopted by China Banking Regulatory Commission over trust

companies. The specific measures shall be formulated by China Banking Regulatory Commission separately. Article 49 5% of its annual after-tax profits shall be drawn by a trust company as trust compensation reserve, but when the accumulated amount of the compensation reserve accounts for 20% of the registered capital of this company, it is not required to do so

any longer. A trust company's compensation reserve shall be deposited in a domestic commercial bank that possesses stable operation and certain strength or used to purchase treasury bonds or other forms of securities with low risk and high liquidity. Article 50 An examination system shall be adopted by China Banking Regulatory Commission for the

post-holding qualifications of the trust companies' directors and senior managers. No director or senior manager who has not been examined or fails to pass the examination may hold the post. In case a director or senior manager leaves the post, a trust company shall conduct a post-leaving audit and report auditing China Banking Regulatory Commission the

result

for record. In case the legal

representative of a trust company is changed, the original legal representative may not leave his/her post until China Banking Regulatory Commission

examines and approves the post-holding qualification of the new legal representative. Article 51 A trust business qualification management

system shall be adopted by China Banking Regulatory Commission with regard to the trust practitioners of trust companies. A qualification certificate shall be issued to anyone satisfying the conditions; those failing to obtain a qualification certificate for trust practitioners may not engage in the trust business. Article 52 In case a director, senior manager or trust practitioner of a trust company violates any law, administrative regulation or any related provision of China Banking Regulatory Commission, China Banking Regulatory Commission has the power to cancel his/her post-holding qualification. Article 53 China Banking Regulatory Commission may, in light of the needs for performing its duties, hold talks on supervision and management with any director or senior manager of a trust company and requires him/her to explain the major issues involved in the business activities and risk management of the trust company. Article 54 In case a trust company goes against the prudent operation rules, China Banking Regulatory qualification or professional

Commission shall order it to make corrections within a certain time limit; if it fails to do so or its behavior seriously threatens its stable operations or infringes upon the lawful rights and interests of the beneficiaries, China Banking Regulatory Commission may, in accordance with the Banking Supervision Law of the People's Republic of China and other relevant laws, adopt such regulatory measures as suspending its business or restricting its shareholders' rights, etc. in light of different circumstances. Article 55 In case a credit crisis has already or may be encountered by a trust company and the lawful rights and interests of the beneficiaries are severely infringed upon, China Banking Regulatory Commission may take over the trust company in accordance with law or urge it to conduct structural reorganization. Article 56 In Case China Banking Regulatory Commission, after approving the establishment, alteration or termination of a trust company, discovers that there is any concealing or fabrication in the application materials, it may order the trust company to make up or correct or it may cancel the approval.

Article 57 A trust company may join China Trustee Association to be a member therein and accept

industrial self-discipline. China Trustee Association shall, when conducting activities, be subject to the guidance and supervision of China Banking Regulatory Commission.

Chapter VI Penalty Provisions Article 58 In case any entity or individual sets up any trust company without the approval of China Banking Regulatory Commission, China Banking Regulatory

Commission shall cancel the trust company in accordance with law; if any crime is committed, criminal

liabilities shall be investigated on it or him; where no crime is committed, China Banking Regulatory Commission shall confiscate the illegal proceeds, and in case the illegal proceeds are 500,000 Yuan or more, a fine of not less than the illegal proceeds but not more than five times that shall be imposed; if there are no illegal proceeds or that are less than 500,000 Yuan, a fine of not less than 500,000 Yuan but not more than 2 million Yuan shall be imposed.

Article 59 In case any trust company sets up any branch institution without the approval of China Banking Regulatory Commission or conducts any business as prohibited in Articles 19, 20, 21, 22, 33 or 34 of the present Measures, China Banking Regulatory Commission shall order it to make corrections, confiscate its illegal proceeds (if any) and impose a fine of not less than the illegal proceeds but not more than five times that if the illegal gains are 500,000 Yuan or more; if there are no illegal proceeds or that are less than 500,000 Yuan, a fine of not less than 500,000 Yuan but not more than 2 million Yuan shall be imposed; if the circumstance is especially severe or the trust company fails to correct within the provisioned time limit, China Banking Regulatory Commission shall order it to suspend its business for rectification or cancel its financial license; and where any crime is committed, criminal liabilities shall be investigated. Article 60 In case any trust company violates any other provision of the present Measures, China Banking Regulatory Commission shall, in accordance with the Banking Supervision Law of the People's Republic of

China and other relevant laws and regulations, take corresponding punishment measures. Article 61 In case a trust company commits any illegal operation or poor management, and if the trust company is not cancelled, the financial order or the public interests would be seriously damaged, China Banking Regulatory Commission shall cancel it in accordance with law. Article 62 As regards a director, senior manager or any other personnel directly held liable for the trust company's violation, such punishment measures as imposing a fine, canceling his/her post-holding qualification or professional qualification shall be made by China Banking Regulatory Commission in light of the different circumstances and according to the Banking Supervision Law of the People's Republic of China and other related laws and regulations. Article 63 Any entity or individual that has objection to the punishment decision made by China Banking Regulatory Commission may apply for administrative review or lodge an administrative lawsuit to the people's court in accordance with law.

Chapter VII Supplementary Provisions Article 64 If a trust company does not perform its management duties by itself, namely, not undertaking the duties of investment manager, its registered may not be less than 100 million Yuan or the equivalent convertible currency. The present Measures shall be applicable to trust companies of this category by analogy. Article 65 China Banking Regulatory Commission is responsible for interpreting the present Measures. Article 66 The present Measures shall go into effect as of March 1, 2007. The Measures for Administering Trust and Investment Companies (Decree No.5, 2002 of the People's Bank of China) shall be repealed.


				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:191
posted:9/22/2008
language:English
pages:27
Description: Measures for Administering Trust Companies