What Is a Defective Trust?

From the perspective of the basic channels for the securitization of non-performing assets internationally, securitization can be accomplished through the establishment of special purpose trusts (SPT) and special purpose companies (SPC). Special purpose trusts are financial assets that are entrusted to trustees-institutions that can engage in trust business to solve the problem of securitization of non-performing assets; while special-purpose companies are banks with non-performing assets that sell assets directly to a special-purpose company , And the company to solve the securitization of non-performing assets.

Special purpose trust

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Internationally accessible

Special purpose trust, SPT

In terms of special-purpose operations and legal structures, it refers to the owner of a particular asset (

Special purpose

To accurately grasp the use of special purposes

Summary

Although China introduced the "

Suggestions on Overcoming the Current Legal System Restricting the Operation of Special Purpose Trusts

In view of the negative status of the current legal system, it is believed that to play the positive role of special purpose trusts in disposing of non-performing assets of banks, the following points should be noted:

New Disposal of Special Purpose Trust

First, the supervisory authority should encourage and support the promotion of commercial banks to try new ways of disposing of non-performing assets in the current legal framework. The disposal of non-performing assets of commercial banks will be a fundamental issue for China's stable financial order and the healthy development of financial institutions. The Wanshang method restricted by higher-level legal systems (such as the laws formulated by the National People's Congress and its Standing Committee and the administrative regulations of the State Council) should be treated with caution; for new methods that are restricted by regulatory rules, consideration can be given to modifying the supervision Regulations to facilitate the use of these methods.

Special regulations for special purpose trusts

Secondly, it is necessary to formulate special "regulations on the certification of financial asset certificates." This is mainly because China's current "Trust Law" does not leave appropriate space for the development of special purpose trusts. In addition, many problems in the accounting and tax laws of commercial banks are not problems that can be solved by the banking regulatory authority, the China Banking Regulatory Commission. Therefore, the practice of applying special purpose trusts to commercial banks' disposal of non-performing assets is best regulated by the Standing Committee of the National People's Congress through legal methods, and it can draw on the legislative experience of Japan and Taiwan.

Special Purpose Trust Procedure Issues

Thirdly, the issues of change of rights, notification of debtors and guarantee procedures involved in the transfer of non-performing assets of banks can be resolved individually through the judicial interpretation of the Supreme Court. In fact, the Supreme Court has issued a number of specialized judicial interpretations for asset management companies' disposal of non-performing assets, which is also applicable to commercial banks.

Special approval for special purpose trust cases

Fourth, it is not worth implementing special purpose trusts to operate special purpose trusts. After all, China has joined the World Trade Organization, and market entities must not violate existing effective laws and regulations and rules. This is a basic requirement of the economic legal system and a basic requirement of the legal system of the World Trade Organization. The special approvals for individual subjects will not only trigger multiple special approvals, but also cause Chinese and even the international community to question the Chinese legal system and the principles of the rule of law.