China's National Financial Regulatory Administration published a draft revision to its measures governing trust companies for public consultation, updating the core framework that has been in place since 2007. The draft tightens the sector’s focus on the trustee role, revises permitted activities, and strengthens governance, risk management, supervisory tools and risk disposal arrangements. The proposed measures comprise eight chapters and 77 articles. They would consolidate trust business into three categories (asset service trusts, asset management trusts, and public welfare and charitable trusts) and reinforce the principles of “seller due diligence, buyer bears risk” and compensation for seller misconduct to deter implicit guarantees. The business scope would also be reworked by adding shareholder and shareholder-related liquidity borrowing and private bond issuance under proprietary liabilities, removing external guarantees from proprietary assets, and expanding “other business” to include agency distribution, investment advisory, custody and other technical services for asset management products, while reframing the existing securities underwriting item toward financial advisory and trustee-type services for corporate direct financing tools. Four intermediary businesses viewed as misaligned with the core trust mandate or conflicting with current policy would be removed. Governance provisions include a board-level committee for settlor and beneficiary rights chaired by an independent director, strengthened shareholder assessment and reporting requirements, tighter related-party transaction controls, and more operationally specific pay deferral and clawback triggers. Risk controls would emphasise trustee duty compliance and operational risk, set requirements across the trust lifecycle (including documentation, legality of purpose, risk disclosure, marketing, beneficial interest registration, confidentiality, fees, liability for breach, termination and liquidation), and codify prohibitions including principal or return guarantees, improper sales, channel and fund pool business, illegal guarantees and misappropriation of trust property. The draft also raises the minimum registered capital requirement, strengthens capital and provisioning management, reinforces tiered supervision and look-through expectations, and enhances recovery and resolution planning, dividend restrictions and clawback, with a defined role for the trust industry protection fund company. Public comments are being sought on the consultation draft, with the final measures expected to specify the implementation date and related interpretative arrangements.
China Banking and Insurance Regulatory Commission 2025-04-11
China's National Financial Regulatory Administration launches consultation on revised trust company rules raising minimum capital and reshaping permitted business
China's National Financial Regulatory Administration has released a draft revision of measures for trust companies, updating the framework established in 2007. The draft focuses on tightening the trustee role, revising permitted activities, and enhancing governance, risk management, and supervisory tools. Key changes include consolidating trust business categories, reinforcing risk principles, and strengthening governance and risk controls.