Real estate securitisation needs improving

Author: | Published: 15 Dec 2016

The market must be improved to overcome legal uncertainties which are hindering its full development

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 China.

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...



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