Thu, Sep 06, 2012 - Page 8 News List

Don’t trust assets in trusts to end problem

By Yu Ying-fu 尤英夫

The Executive Yuan has just passed a draft political party act, stipulating that political parties cannot invest in profit-making operations or engage in profit-making activities. Any party that has these kinds of investments must transfer ownership of them or sell their shares within two years. If they are unable to do so, they have to turn them over to a trust, or face a fine.

The National Communications Commission has recently given the Want Want China Times Group approval, subject to certain conditions, to acquire several cable TV services from China Network Systems. These conditions are: Want Want needs to drop CtiTV’s news channel, and China Television’s (CTV) digital news channel must be changed to a non-news channel that has an independent news editorial system.

According to Next Magazine, Want Want chairman Tsai Eng-meng (蔡衍明) is considering handing CtiTV and CTV over to a trust to comply with the commission’s conditions.

Both the draft political party act and the Want Want acquisition involve the use of trusts. As the author of a book on the subject, Trusts and You (信託與你), there are a few things I would like to say about this:

Article 1 of the Trust Act (信託法) states: “The term ‘trust’ refers to the legal relationship in which the settler transfers or disposes of a right of property and causes the trustee to administer or dispose of the trust property according to the stated purposes of the trust for the benefit of a beneficiary or for a specified purpose.”

Not everyone is comfortable with “legalese,” so to put it into layman’s terms, the article is saying: “I have complete trust in you, so I will, on the face of it, register my property under your name, although it will still be, for all intents and purposes, mine. I am simply entrusting you to take care of my property, and while you are, I expect you to do so according to my directions and in the way that I tell you to.”

The “stated purposes” referred to in the article depend entirely on the agreement signed between the settlor and the trustee. It goes without saying that the settlor will benefit from the agreement and the way in which it is carried out. With the exception of public trusts, which are for the benefit of society as a whole for charitable, cultural, academic, technological or religious reasons, the benefit is aimed entirely at the settlor, so they are the sole beneficiary.

If this is what a trust means — that a political party can keep its money in this way to enable it to conduct unfair election campaigns, and Want Want can still control, directly or indirectly, CtiTV and CTV— and if this really is the case, then the stipulations of the political party act as well as the commission’s conditions for the deal are a bit of a joke, are they not?

Yu Ying-fu is a lawyer.

Translated by Paul Cooper

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