Efforts are underway to promote the amendment of Trust Law. A motion was submitted to the fifth session of the 13th National People's Congress (NPC) this March, proposing to revise the law and ensure the healthy development of trust undertakings.
The current Trust Law, which came into force on Oct 1, 2001, plays an important role in establishing and improving China's trust system as well as promoting the regulation and growth of the trust industry.
Amending the law is critical to meeting people's ever-growing needs for a better life and helping prevent and defuse financial risks, according to the motion.
It suggested forming a sound trust registration system, which includes clearly defining the property under the trust and building a credible system to guide the registration and circulation of trust beneficiary right.
For the current law's general principle that the trust property shall be segregated from the property owned by the settlor, the motion called for exceptions, such as in situations where the settlor retains such rights of replacing the beneficiary, terminating the trust and managing or utilizing the trust property to the effect, which means the trustee is in de facto control of the trust property. Forming this kind of balance between segregation and exceptions in the amended law prevents the settlor from debt evasion and rescission, said the motion.
The motion also called for extending the law's scope of application and improving supervision of the trustee.
Some national lawmakers also proposed the law's amendment during the fourth session of the 13th NPC last year. In response, the People's Bank of China, together with the China Banking and Insurance Regulatory Commission and other related departments, have started the ex-post evaluation of the law. Meanwhile, the NPC's Financial and Economic Affairs Committee has proposed to accelerate the research for the amendment.