Comprehensive Asset Management and Corporate Fundraising Enabled Through Trusts... Foundation for Fractional Investment Established

[Asia Economy Reporter Lee Jung-yoon] In the future, it will be possible to comprehensively manage assets such as money, stocks, and housing using trusts. The issuance of trust beneficiary certificates for non-monetary assets will support funding through securitization of accounts receivable and factory sites of small and innovative companies, and the institutionalization of fractional investment will also be promoted.

On the 12th, the Financial Services Commission announced the "Trust Industry Innovation Plan" containing these details. Unlike major countries such as the United States, domestic trusts have developed mainly as monetary trusts for financial companies to sell financial products and real estate trusts to expand real estate supply, making comprehensive management of household assets difficult. It is also rare for small and medium-sized enterprises to use trusts to securitize assets and raise funds. Therefore, the FSC will improve the trust industry system to faithfully perform the function of comprehensively and actively managing various assets.

According to the FSC, first, the comprehensive asset management function of the trust industry will be strengthened. Trusts have the advantage of being able to manage various assets such as money, securities, movable property, and real estate. However, in Korea, the assets eligible for trusts are limited, so comprehensive asset trusts have hardly developed. Under current law, the trust of debts is not allowed, making it difficult to establish trusts on assets with collateral. However, highly demanded claims such as insurance claims are also difficult to trust under current law, requiring consultation with the Ministry of Justice.

Accordingly, the FSC decided to add debts and collateral rights to assets eligible for trusts. Considering the reality that trust companies outsource part of trust operations to external specialized institutions, regulations will be revised to allow non-financial specialized institutions such as hospitals, law firms, accounting firms, tax firms, and patent firms to take on part of trust operations and provide services. Even if non-financial specialized institutions handle part of the trust work, the legal responsibility will lie with the trust company, and outsourcing will be limited to non-financial services.

Funding through trusts will also be revitalized. To this end, the issuance of beneficiary certificates for non-monetary asset trusts will be basically permitted to support funding for small and innovative companies and to institutionalize innovative services such as fractional investment. An FSC official explained, "This system improvement establishes the legal basis for issuing beneficiary certificates for fractional investment services," adding, "The distribution of such trust beneficiary certificates through the issuer's own platform is a separate issue beyond the scope of this system improvement."

Until now, restrictions on issuing beneficiary certificates for non-monetary asset trusts have limited small and innovative companies from using trusts to securitize their assets and raise funds. Although fractional investment services issuing beneficiary certificates by trusting non-monetary assets such as real estate and copyrights have been launched, there was no legal basis for issuance, necessitating system improvements. Regulations on issuance, sales, and management will also be revised to protect consumers investing in trust beneficiary certificates.

The FSC will also coordinate with related agencies to revise systems so that types of trusts with high demand in the aging era, such as business succession trusts, housing trusts, and guardianship trusts, can be activated. Voting rights for shares entrusted for business succession are limited to 15%. For entrusted housing, it is difficult to subscribe to housing pensions.

Additionally, consumer protection regulations will be revised, including the establishment of a duty of fairness toward multiple beneficiaries. The duty of care of trust companies will be improved to ensure they handle trust affairs with caution and expertise.

An FSC official stated, "We will proceed with follow-up measures such as preparing related legislative amendments reflecting the trust industry innovation plan, aiming for parliamentary discussion in the first quarter of next year." He added, "Since new matters related to outsourcing will be introduced, we will closely monitor to ensure smooth market settlement."

This content was produced with the assistance of AI translation services.