Trust Law of the People's Republic of China

Trust Law of the People's Republic of China Order of the President of the People's Republic of China(No.50) Trust Law of the People's Republic of China was adopted at the 21st session of the Standing Committee of the Ninth National People's Congress on April. 28, 2001, and is hereby promulgated and shall come into force on Oct.1, 2001. President of the People's Republic of China: Jiang Zemin Trust Law of the People's Republic of China (Adopted at the 21st Meeting of the Standing Committee of the Ninth National People's Congress on April 28, 2001) Contents Chapter 1. General provisions Chapter 2. Establishment of a trust Chapter 3. Trust property Chapter 4. Parties to a trust Section 1. Trustor Section 2. Trustee Section 3. Beneficiary Chapter 5. Change and termination of trust Chapter 6. Public trust Chapter 7. Supplementary provisions Chapter 1. General Provisions Article 1. This law is formulated in order to regulate the trust relationship, normalize trust acts, protect the lawful rights and interests of the parties to a trust and promote the healthy development of the trust business. Article 2. Trust in this Law refers to the act in which the trustor, on the basis of confidence on the trustee, entrusts certain property rights it owns to the trustee and the trustee manages or disposes of the property rights in its own name in accordance with the intentions of the trustor and for the benefit of the beneficiary or for specific purposes. Article 3. This Law applies to the trustor, trustee and beneficiary (hereinafter referred to in general as parties to a trust) conducting civil, business or public trust activities within the boundaries of the People's Republic of China. Article 4. Trustees engage in trust activities by way of fiduciary institutions, the specific measures for the organization and management of which are to be formulated by the State Council. Article 5. When conducting trust activities, the parties to a trust must abide by the laws and regulations, comply with the principle of willingness, equality and being honesty and trustworthiness, and must not harm the state interest and the social public interest. Chapter 2. Establishment of a Trust Article 6. The establishment of a trust shall serve a legitimate purpose of trust. Article 7. To establish a trust, there must be certain trust properties and the properties must be properties lawfully owned by the trustor. Property in this Law includes lawful property rights. Article 8. Written form shall be adopted for the establishment of a trust. Written form includes trust contracts, wills or other written documents as provided by laws and regulations. A trust established in the form of trust contract shall come into existence when the trust contract is concluded. A trust established in other written forms shall come into existence when the trustee promises to accept the trust. Article 9. The written documents by which a trust is to be established shall provide the following information: 1)Purposes of the trust; 2)Names and addresses of the trustor, the trustee and the beneficiary; 3)The beneficiary or the scope of the beneficiary; 4)Scope, type and status of the trust property; 5)Ways and methods by which the beneficiary get the trust proceeds; Apart from the information listed in the above paragraph, duration of the trust, methods of management of the trust property, remuneration of the trustee, methods of designation of new trustees, reasons for terminating a trust and other information may be provided. Article 10. Where trust property shall be registered according to the provisions of laws or administrative regulations for the establishment of a trust, such property shall be registered. If the trust registration fails to be made as required in the previous paragraph, it shall be made up later; the trust shall be invalid if no make-up trust registration is effected. Article 11. The trust is void under any of the following circumstances: 1)The purposes of the trust are against laws or regulations, or harm the public interest of the society; 2)The trust property can not be identified; 3)The trustor establishes a trust by using illegal properties or properties that are prohibited by this Law from being used to establish a trust; 4)Establishing a trust especially for the purpose of litigation or of demanding the payment of a debt or loan; 5)The beneficiary or the scope of beneficiaries cannot be identified; and 6)Other circumstances provided by laws and regulations. Article 12. If the trust a trustor establishes has harmed the interests of the creditor, the creditor shall have the right to apply to the people's court for canceling the trust. Trust benefits already obtained by a goodwill beneficiary shall not be affected if the people's court cancels the trust according to the provisions of the previous paragraph. The right to apply shall extinguish if the creditor doesn't exercise it in one year since he knows or should know the reasons for cancellation. Article 13. The establishment of testamentary trust shall abide by the provisions of the Succession Law on testament. If the person appointed by the testament refuses or doesn't have the capacity to act as trustee, the beneficiary may appoint other trustees; if the beneficiary is a person without civil capacity or a person with limited capacity, his guardian shall appoint the trustee on his behalf according to law. If there are other provisions on the appointment of the trustee in the testament, those provisions shall be followed. Chapter 3. Trust Property Article 14. The properties that the trustee obtains as a result of accepting the trust are trust property. The properties that the trustee obtains by way of managing, utilizing, disposing of the trust property or by other means shall also be deemed as trust property. Properties forbidden to circulate by laws or regulations shall not be used as trust property. Properties limited in circulation by laws and regulations may be used as trust property with the approval of relevant departments in charge according to law. Article 15. Trust property differs from other properties with which the trustor hasn't established a trust. After the trust is established, if the trustor dies or disbands according to law, or is canceled or declared bankrupt according to law, and if the trustor is the only beneficiary, the trust shall terminate and the trust property shall be deemed as his heritage or liquidation property; if the trustor is not the only beneficiary, the trust shall continue to exist and the trust property shall not be deemed as his heritage or liquidation property; but if the trustor, as a joint beneficiary, dies or disbands according to law, or is canceled or declared bankrupt according to law, the beneficial right of the trust shall be deemed as his heritage or liquidation property. Article 16. The trust property differs from the property owned by the trustee (hereinafter referred to as inherent property for short) and shall not be deemed as the inherent property of the trustee or become part of the inherent property. If the trustee dies or disbands or terminates as a result of being canceled or being declared bankrupt according to law, the trust property shall not be deemed as his heritage or liquidation property. Article 17. Trust property shall not be enforced except under any of the following circumstances: 1)The creditor has already gotten the priority of compensation from the trust property before the trust is established and exercised the right according to law; 2)The debts incurred from the trustee's handling of the trust affairs and the creditor requires the debts to be paid off; 3)The taxes that the trust property are due; and 4)Other circumstances provided by law. If the trust property is enforced against the provisions of the preceding paragraph, the trustor, trustee or beneficiary has the right to make an objection to the people's court. Article 18. The creditor's right obtained by the trustee through the management, utilization and disposition of the trust property must not offset the debt caused by his inherent property. The creditor's right and the debt caused when the trustee manages, utilizes and disposes the trust property of dif......