The market must be improved to overcome legal
uncertainties which are hindering its full
The trust is the most important legal concept behind
asset-backed securitisation (ABS) in China. Under the PRC Trust
Law, a trust is a legal relationship where a settlor entrusts
its asset to a trustee who possesses, utilises, profits from
and disposes of the trust asset in the name of the trustee and
for the benefit of a beneficiary. While a trust, being a legal
relationship instead of a legal entity, is not restricted from
attaining special purpose vehicle status, using a trust
structure for ABS transactions still faces persistent
challenges and uncertainties. Many of those problems are
clearly present in ABS offerings by the real estate industry in
Asset trust v capital trust When the initial trust asset is
capital paid by investors, the trust is called a capital trust.
The investors are both the...