What Are Trust Shares?

Equity trust refers to the use of trust funds for equity investment in projects by trust companies, and the use of dividends, dividends, and maturity transfers of equity as a form of trust utilization. Compared with loan trusts, trust companies assume greater risks, and generally require the establishment of corresponding measures to avoid risks, including absolute control of projects, phased holdings, etc. ^[1]

Equity trust

Equity as a type of property right can become

(I) Ultimately take equity as

Equity is a special form of property rights and a common form of property rights. Equity includes ownership, voting rights,

I. Investment and wealth management equity trusts Investment and wealth management equity trusts are generally referred to in the industry as "trustees and financial management on behalf of people." The core objective is investment returns, not control of listed companies. The purpose of the client to set up an investment and wealth management equity trust is to achieve appropriate risk-return goals by investing in stocks. The reason why the trustee chooses the equity trust for financial management is because the trustee sees the expert financial management ability of the trust institution as the trustee. In investment-financing equity trusts, the principal itself is not interested in using stock voting rights to participate in the operating decisions of listed companies. Therefore, the principal tends to transfer all voting rights to the trustee. At the same time, because the client trusts the trustee to have expert financial management capabilities, and the client itself lacks expert financial management capabilities, in the investment-finance equity trust, the client also tends to transfer all of the disposition power to determine stock trading to the trustee. Therefore, in investment-finance-type equity trusts, the trustee evaluates the ability of the trustee to realize the return on investment for the trustee by comprehensively using the stock disposal and voting rights. Therefore, for investment and wealth management equity trusts, the stock decisions and voting decisions made by the trust institution reflect the value judgment of the trust institution itself, not the value judgment of the client itself.

The most typical investment and wealth management equity trust is a contractual equity securities investment fund. Contract-type equity securities investment fund is a standardized bulk trust product formed by introducing securities investment fund legislation to standardize its trust relationship structure and operation structure based on the "Trust Law". In contract-type equity securities investment funds, both the trustee and the beneficiary are holders of fund shares, while the trustees are fund management companies and fund custodians. Trust assets mainly exist in the form of stocks of listed companies. In this standardized trust structure, the client transfers all the voting rights and disposal rights of the stocks in the trust property to the fund management company responsible for fund investment decisions, and the property ownership of the fund assets is transferred to the fund custodian institution. The custodian institution fulfills the responsibility of fund asset custody. Therefore, the principal cannot restrict the fund management company from exercising the voting rights of the listed company's stocks. The principal and the listed company are actually isolated from each other, and the principal cannot form a controlling relationship with the listed company. All the client can do is to choose a fund management company by voting at the fund holders' meeting. In addition, because equity securities investment funds adopt a decentralized investment strategy, laws and regulations also stipulate that the investment of a fund in a stock cannot exceed a certain upper limit of the total shares of the listed company's total assets and the fund's net assets. For example, China s Interim Measures for the Administration of Securities Investment Funds stipulates that a fund holding stocks of a listed company must not exceed 10% of the fund s net asset value. All funds managed by the same fund manager may jointly hold shares of a listed company. More than 10% of the company's total shares. Therefore, the securities investment funds will not objectively control the listed companies.

2. Managed equity trusts Managed equity trusts can be said to be trustees' "trusted and managed on behalf of" equity, the core content of which is the entrusted management of voting rights and disposal rights. The purpose of the client to set up an equity trust is to achieve specific equity management purposes through trust holdings. For a managed equity trust, the principal focuses on its own control over the listed company. Therefore, the voting rights and disposal rights related to equity are essentially only partially transferred to the trustee. The client specifies the equity trust contract with the trustee to specify the ways in which the trustee exercises the right to vote and dispose of stocks, so that the exercise of these rights can enable the client or its affiliates to vote on the listed company. Control.

One of the typical managed equity trust structures is a voting right trust as defined in the United States Company Law. The so-called voting right trust means that the trustee transfers the stock to the trust institution through the voting right trust agreement, and the trust institution issues a beneficiary certificate to the client, which can be transferred. In a voting right trust, the trust institution transfers the stock dividends and other period income to the holder of the beneficial certificate. The function of the trust institution is to exercise the voting right and the stock disposal right in accordance with the relevant provisions in the voting right trust agreement. The trust institution uses the voting right trust to participate in the decision-making voting of the listed company or to dispose of the equity. It does not reflect the decision-making judgment of the trust institution itself, but reflects the decision-making party (the beneficiary himself or other third party) specified in the voting right trust contract. ) The will to make decisions.

The Model Business Corporation Act 1984 of the United States of America (1984) made three minimum requirements for the establishment of voting trust agreements. First, the term of the voting right agreement cannot exceed 10 years, but it can be extended during the period, each time extending to 10 years. Second, the voting rights agreement must be signed by the client in writing, and the agreement must be sent to the corresponding listed company for the record. Third, after the equity is transferred from the client to the trust institution, the trust institution must issue a list of beneficiaries of the voting right trust, and send the list and voting right trust agreement to the corresponding listed company for the record. The purpose of such filing is to disclose this voting right trust relationship to other shareholders of the listed company who have not participated in the voting right trust. In addition, many states in the United States require that the basic purpose of a voting trust must be legitimate. Only voting trusts established in compliance with the above statutory requirements are legal voting trusts.

The courts in the United States do not simply judge whether a voting agreement is a voting trust or not based on whether a trust has been adopted. As long as the main essential characteristics of a voting right trust are possessed, the court shall determine that the voting agreement is essentially a voting right agreement as defined by law, and require that the agreement must fulfill the aforementioned statutory establishment and registration procedures.

In the United States, voting trusts are often used in the process of asset reorganization and company spin-offs of listed companies in order to temporarily take over control of the restructured company in order to balance the control of the company among the stakeholders.

The Employee Stock Ownership Plan (ESOP) established under the Employee Retirement Income Protection Act (ERISA) is another typical managed equity trust. A compliantly established ESOP plan can receive tax incentives for deferred payment of capital gains tax. At present, the number of ESOPs established by US companies has exceeded 11,000. The so-called ESOP is that the company's employees as a whole obtain financing in some way (such as a company loan, bank loan or company retirement fund), and use the funds to buy their own company's shares, so that the employees as a whole become a shareholder Employee incentive mechanism. The company's ESOP planning committee entrusts ESOP funds and company shares purchased with ESOP funds to trustees for management. The shares held by the ESOP plan are recorded in the name of the trustee, and the beneficiaries are employees of the company. The voting rights and disposal rights of the stocks held by the ESOP plan are usually not granted to individual employees, but are uniformly exercised by the trustee in accordance with the instructions of the company's ESOP plan committee. Therefore, the voting rights and disposal rights of ESOP plan stocks are usually controlled by the ESOP plan committee. Because the ESOP planning committee is usually controlled by the company's management, the voting rights and disposition rights of the company's own stock held by the ESOP plan are usually controlled by the company's management. The control of the company's management over the voting rights and disposition of the ESOP plan has strengthened management's control over the company, which has a significant impact on the company's acquisitions and anti-acquisitions.