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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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