The right to equity income in an equity income trust

In pooled funds trust plans and single capital trusts it is a common that a trust plan is established with the right to the equity income being its investment objective. The essence of such trust plans lies on the equity itself to which the right to the income is attached while such equity is unsuitable or unable to be transferred directly. For example, a financed party has a need to fund and cannot directly transfer its self-owned non-transferable shares. A trust company therefore issues a trust plan with the income of the non-transferable shares being its objective. After the investors entrust funds to the trust company, the trust company, as trustee, uses the funds to invest in the right to the income of the non-transferable shares. This achieves the target of providing funds for the financed party. Meanwhile, for the safety of the trust assets, the trust plan usually requires the financed party to counter-pledge said shares to the trust company and ultimately the dividends from the shares obtained within the trust period or the proceeds of the transfer of such shares will be used as the return for the investors. In such a trust plan, it is worthwhile discussing the legal nature of the “right to the equity income”.