Opinion paper concerning "Draft Outline for Revision of Trust Law"

JBA drafted the above opinion paper in the Planning Committee on August 29 and submitted it to the Civil Affairs Bureau of the Ministry of Justice on August 31.

The paper reflects opinions of banks not only as trustees (trust banks) but also as beneficiaries, creditors in trust and arrangers for monetization structures using the trust vehicle. The paper covers twenty subjects, with core opinions and requests indicated below.

(1) Opinions and requests from the viewpoint of trustees
JBA asks that negligence of duty concerning "duty of loyalty" and "duty of fairness" be indicated and clarified concretely, to the extent possible, as these are both critical duties for trustees.

(2) Opinions and requests concerning protecting creditors in trust
JBA welcomes the creation of a "limited liability trust" (tentative name), since the introduction of a limited liability system in the trust system will help create new businesses. At the same time, JBA asks that appropriate creditor protection measures be established for said new trust.

(3) Opinions and requests concerning creating the security trust
JBA believes the utilization of security trust will be useful when multiple creditors require collateral from the same borrower as in the case of syndicated loans.

However, JBA requests that the government make the legal/institutional amendments necessary to eliminate legal ambiguity for trust users. For example, in the case of loan credits, to make it unnecessary to register the credit amount of each creditor if the total credit amount of the syndicated loan is shown in the registration.

(4) Opinions and requests from the viewpoint of promoting securitization / monetization
JBA is in favor of enabling the securitization of beneficiary rights. As for a "trust announcement" (where a settlor itself becomes the beneficiary), the majority of JBA members are in favor of its introduction, though some expressed the need for caution to be exercised.