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Article 1. In order to regulate the trust and investment companies' operation of trust fund and to safeguard the lawful rights and interests of the parties to the transaction of trust fund, these Measures have been formulated in accordance with the relevant provisions of the Trust Law of the People's Republic of China, the Law on the People's Bank of China of the People's Republic of China and the Measures of the People's Bank of China for the Administration of Trust and Investment Companies. Article 2. The trust fund used in these Measures shall refer to the acts of the trustor to entrust the capital under its legal ownership to a trust and investment company based on his/her confidence in the company, which shall, in the company's own name, manage, operate and dispose of the capital for the benefits of the beneficiary or any other specific purpose according to the intent of the trustor. No organ or individual other than the trust and investment companies established upon the approval of the People's Bank of China may operate the business of trust funds, except there are otherwise provisions in laws and regulations. Article 3. The capital obtained by a trust and investment company through the operation of trust funds shall not be the company's debts; and the assets formed from the management, use and disposal of the trust capital shall not be the company's assets. Article 4. Trust and investment companies shall observe the following provisions in the transaction of trust funds: (1) Not to, by any means, absorb deposits or absorb deposits in disguised forms; (2) Not to issue bonds, or raise funds and operate obligations by issuing documents of trust investment, documents of agent investment, documents of benefits, certificates of deposit of negotiable securities, or other means; (3) Not to borrow money; (4) Not to commit to no loss of the trust capital or minimum profits of the trust capital; and (5) Not to market through newspapers, television, broadcasting or other public media. Violations of the above-mentioned provisions by trust and investment companies shall be dealt with as illegal fund raising, the capital losses caused shall be borne by the investors. Article 5. In the transaction of trust fund, the trust and investment companies may, in accordance with the terms of the trust documents and based on the trustor's intent, separately or collectively manage, operate and dispose of the trust capital. Separate management, operation and disposal of trust capital shall refer to the acts of trust and investment companies to accept the entrustment of a singular trustor and separately manage and operate the trust capital according to the management methods specified by the trustor. Collective management, operation and disposal of trust capital shall refer to the acts of trust and investment companies to accept the entrustments of two or more than two trustors, and manage and operate the trust capital according to the management methods specified by the trustors or the methods specified by the trust and investment companies on the trustors' behalf. Article 6. In collective management, operation and disposal of trust capital, the trust funds contracts accepted by a trust and investment company from the trustors shall not exceed 200 pieces (including 200 pieces), and the value of each contract shall not be less than RMB 50,000 (including RMB 50,000). Article 7. In the transaction of trust funds, the trust and investment companies shall sign trust contracts with the trustors. Where the trust is established in other written forms, the establishment shall be in accordance with the provisions of laws and regulations. A trust contract shall include the following matters: (1) Trust purpose; (2) Names (or titles) and places of residence of the trustor and trustee; (3) Name (or title) and place of residence of the beneficiary, or the scope of beneficiaries; (4) Currency and value of the trust capital; (5) Trust period; (6) Management methods of the trust capital and the limit of authority of the trustee to manage, operate and dispose of the trust capital; (7) Specific methods or arrangements for the management, operation and disposal of the trust capital; (8) Calculation of the trust profits, and the time and methods of the delivery of profits to the beneficiary; (9) Bearing of taxes of the trust property, and the calculation and method of payment of other expenses; (10) Calculation methods of remuneration of the trustee, and period and method of payment; (11) Ownership and distribution method of the trust property at the termination of the trust; (12) Report on the trust matters; (13) Rights and obligations of the parties to the trust; (14) Disclosure of risks; (15) Liable party for the loss of trust capital and the method to bear the loss; (16) Responsibilities for breach of contract and settlement of disputes between the parties to the trust; and (17) Other matters that the parties to the trust regard as necessary to be included. Article 8. In the transaction of trust funds, the trust and investment companies shall, when signing the trust contract, sign a declaration of risks of management and operation of trust capital. The declaration of risks shall include the following contents: (1) Where losses are incurred when the trust and investment company manages and operates the trust capital in accordance with the terms of the trust documents, such losses shall be borne with the trust property; and (2) Where losses are incurred because the trust and investment company manages, uses or disposes of the trust capital in violation of the trust documents, the trust and investment company shall be liable to compensate for such losses, and bear the shortfall with the trust property. Article 9. When drawing up the trust contract or other trust documents, the trustee shall indicate the following words in eye-catching characters at the right top of the preface: "In the management of trust property, the trustee shall be devoted to its duties and perform the obligations of honesty, good faith, prudence and effective management. Risks arising in the management of trust capital which is in accordance with this trust contract shall be borne with the trust property, i.e. be borne with the capital delivered by the trustor and the property formed from the trustee's operation of that capital; and the trustee shall compensate for the losses of trust capital due to its violation of the trust contract and improper handling of the trust matters. " Article 10. During the valid period of the trust documents, the beneficiary may transfer its beneficial right to the trust in accordance with the trust documents. The trust and investment company shall handle the relevant procedures for the transfer for the beneficiary. Article 11. In the transaction of trust funds, the trust and investment companies shall establish departments in charge of operation of trust capital, information process, etc. that serve the trust funds business especially. The department of operation of self-owned capital and that of operation of trust capital in a trust and investment company shall be managed by different senior executives. Article 12. In the transaction of trust funds, the trust and investment companies shall appoint the executive managers of trust and the relevant staff members. The persons assuming the executive manager of trust shall have the Certificate of Qualification of Trust Manager issued by the People's Bank of China. Article 13. Where a trust and investment company, in violation of the terms of trust documents, manages, operates and disposes of the trust capital and causes losses to the trust capital, it shall be liable to compensate for such losses. As for the losses caused to the trust and investment company thereby, the directors, supervisors and senior executives of the company may be requested to be liable for the compensation in accordance with the relevant provisions of the Company Law of the People's Republic of China. Article 14. The trust and investment companies shall establish separate accounting books for the different trust funds to make separate auditing; and as for the different trusts, they shall open separate bank accounts in the banks and separate securities accounts and capital accounts in the securities institutions. Article 15. The trust property shall belong to the person specified in the trust documents upon the termination of a trust fund. The trust and investment company shall notify that person in written form to take the trust property in accordance with the provisions of the trust documents. The trust and investment company shall be responsible for keeping the trust property that hasn't been taken. During the period of keeping, the keeper may not operate that property. Proceeds obtained during the period of keeping shall belong to the owner of the trust property. Keeping expenses incurred shall be borne with the kept trust property. Article 16. Trust property delivered to the owner may, in accordance with the provisions of trust contract, be in the form of cash or in its original status upon the termination of the trust or in the mix form of both. Where the cash form is adopted, the trust and investment company shall cash the trust property prior to the date of delivery prescribed in the trust contract or the date of expiration of the trust (which shall be postponed if it is a statutory holiday or vacation), and shall deposit the cash into the account specified in the trust documents. Where the form of the trust property's original status at the termination of trust is adopted, the trust and investment company shall, within the prescribed time period after the expiration of trust, finish the procedures for property transfer with the owner. Article 17. When a trust fund is terminated, the trust and investment company shall, within 10 days after the termination, make out the liquidation report on the handling of trust matters, which shall be serviced to the owner of the trust property. Article 18. In the transaction of trust fund, the trust and investment companies shall, on a quarterly basis or in accordance with the provisions of the trust contract, notify in written form the persons specified in the trust documents of the reports on the management of the trust capital and the statements of the operation and proceeds of the trust capital. Where the trust period exceeds one year, at least one report shall be made every year. The trust and investment companies shall, in accordance with the Measures for the Administration of Trust and Investment Company, submit the materials related to the operation of trust fund to the People's Bank of China. Article 19. Report on the management of trust capital shall include the following contents: (1) Management, operation, disposal and proceeds of the trust capital; (2) Composition and proportion of the operation of trust capital; (3) Information about the top 10 projects with the highest value in the operation of trust capital; (4) Explanations to the change of executive managers of trust; (5) Explanations to the major alteration of the operation of trust capital; (6) Situations of involvement in lawsuits or those that damage the trust property or the interests of the trustor or beneficiary; and (7) Other matters specified in the trust contract. Article 20. The trust and investment companies shall keep all the materials of trust fund transactions in good condition, and the period of keeping shall be not less than 15 years from the date of termination of the trust. Article 21. The trust and investment companies that violate the provisions of these Measures shall be punished by the People's Bank of China in accordance with the Measures for the Punishment of Illegal Financial Acts and the relevant provisions. If the circumstances are serious, their qualification for operation of trust fund shall be suspended or even cancelled. As for the relevant senior executives, the People's Bank of China may cancel their qualification for the post for a certain period of time or even their lifetime; as for the directly responsible personnel, their qualification for trust practice shall be cancelled. Article 22. The People's Bank of China shall be responsible for the interpretation of these Measures. Article 23. These Measures shall come into force as of July 18, 2002. |
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