Financial markets have become the main drivers for legal change. Investors are interested in in funds which promise high returns while assuring protection from moral hazard and immunity against third party claims, irrespective of whether the fund is organized as a trust, a corporate entity or contractual investment scheme. Global finance has forced legislators into regulatory competition for the most investor-friendly regulatory pattern, including trusts or trust-like structures. Most civil law jurisdictions are newcomers to the law of trusts and fiducie. This provokes the policy question to what extent the market for investments into trusts should be regulated without frustrating investors and organizers of funds. The US regulatory approach towards investment trusts will be explored before the analysis moves to the European Union (EU)’s law on Undertakings for Collective Investment Schemes in Transferable Securities (UCITS). The transposition of the EU’s UCITS law by Ireland and the United Kingdom is assessed in order to explore the interface between trust law, the freedom of contract and mandatory capital market law. A regulatory choice emerges that supplements trust law by mandatory standard terms for the trust deed in the interest of market transparency and investor protection.
Kulms, Rainer, Trusts As Vehicles for Investment (2016). European Review of Private Law (ERPL), Vol 24, No 6, pp 1091-1118, 2016; Max Planck Private Law Research Paper No 17/7.