China's National Financial Regulatory Administration (NFRA) issued a draft revised Trust Company Management Measures for public consultation, updating the 2007 regime to steer trust companies back to core trustee functions, support sector reform and transformation, and strengthen risk prevention. The draft would reframe permitted trust activity around asset service trusts, asset management trusts and public welfare and charitable trusts, and seeks to break implicit guarantees by embedding the principles of seller due diligence and buyer risk-bearing, with liability-based compensation for seller misconduct. The proposals also tighten governance and supervision. Governance expectations include stronger internal checks and balances, enhanced Party building, tighter controls on shareholder conduct and related-party transactions, and internal assessment and incentive mechanisms designed to balance risk and return as well as long-term and short-term objectives, with an orientation toward maximising beneficiaries’ legitimate interests. On risk control, trust companies would be required to build a comprehensive risk management framework focused on trustee-duty compliance management and operational risk, alongside end-to-end process requirements covering trust documentation, legality of trust purpose, risk disclosure and marketing, registration of beneficial interests, confidentiality, remuneration and fees, compensation for misconduct, and termination and liquidation. Supervisory requirements would raise minimum registered capital, strengthen capital and provisioning management, expand conduct and look-through supervision across trustee performance and ownership, implement differentiated supervision, and clarify risk resolution and market exit mechanisms. NFRA will revise and finalise the Measures based on feedback received through the consultation process before issuing them for implementation.
China Banking and Insurance Regulatory Commission 2025-04-11
China's National Financial Regulatory Administration launches consultation on revised trust company rules to refocus business scope and raise minimum capital
China's National Financial Regulatory Administration released a draft revision of the Trust Company Management Measures for public consultation. It aims to refocus trust companies on core trustee functions and enhance risk prevention by reframing trust activities, tightening governance, and strengthening supervision. This includes increased capital requirements and comprehensive risk management frameworks. The measures seek to eliminate implicit guarantees by enforcing seller due diligence and buyer risk-bearing principles.