[Direct answer]In the Beijing area, whether trust companies bear responsibility in channel business needs to be judged based on their actual actions and faults, and cannot be generalized. According to Article 965 of the Civil Code of the People's Republic of China (effective January 1, 2021), trustees shall perform their fiduciary duties in accordance with the provisions of the trust documents; the Trust Law of the People's Republic of China (adopted on April 6, 2001 and effective October 1, 2001) stipulates the fiduciary's duty of loyalty and diligence. In practice, the judgment is usually based on the following considerations: if the trust company only sets up a trust according to the instructions of the fund provider and does not participate in investment decision-making and management, it generally does not bear substantive management responsibility; but if the trust company actively designs the transaction structure, promises fixed redemption or guaranteed returns, participates in decision-making, misappropriates trust property, or cooperates with the fund provider despite knowing that the use of the funds is illegal, it may be held liable for failing to fulfill its fiduciary obligations. In addition, the independence of trust property from the trust company's own assets is a basic rule. If the trust company uses its own assets as collateral for trust property, it essentially uses a portion of its own assets to settle debts, which will undermine the independence of trust property. The design of the process can be referred to as follows:Financial capital and cross-border transactions involving foreign entitiesA column.

1. Problem background and typical scenarios

Most of those who consult this issue are funders or trust companies after the emergence of payment risk. There are three common scenarios: funders require trust companies to promise guaranteed payment and demand them to bear responsibility after risks occur; trust assets are used for related-party projects, and the responsibilities of all parties are unclear after risks occur; trust companies use their own assets as collateral for trust assets and claim that it is invalid after risks emerge. In practice, the key to determining responsibility lies not in the name of the channel business, but in the actual actions of the trust company: if the trust company substantially participates in the transaction structure, risk review, fund investment, and project management, it will be difficult to claim that it is just a channel. Therefore, sorting out the relevant behavioral records is the basis for determining responsibility.

II. Key points of contention

Focus One: Whether the trust company's actions constitute substantive fiduciary management. Focus Two: Determining the validity of the guarantee of fixed returns or the no-loss clause. Focus Three: Violations of the independence of trust assets and their consequences. Focus Four: The causal relationship between the trustee's fault and the losses. Focus Five: Whether there is an interest transfer between the trust company and its related parties. Focus Six: The impact of investors' own decision-making errors. Focus Seven: The division of responsibilities among multiple parties. Focus Eight: The application of laws in cross-border trusts. For regulatory arrangements, please refer to the following for reference:Special services and other casesThe instructions in the column.

III. Professional analysis by Henglue Law Firm

Judging from the experience of handling financial disputes, the determination of liability in such cases usually revolves around three main aspects. The first is the fiduciary duty line: checking whether the trust company actively participated or committed major negligence in the design of the transaction structure, investment decision-making, monitoring of fund investment, and information disclosure. If such issues exist, the trust company may be deemed to have failed to fulfill its due diligence obligations. The second is the independence of trust assets: this involves whether the trust assets are mixed with the trust company's own assets, as well as whether there are unauthorized guarantees. Once the independence of the trust assets is compromised, investors' claims may be directly traced back to the trust company's own assets, significantly increasing its liability scope. The third is the line of fault and causality: it is necessary to prove the causal relationship between the trust company's specific actions and the losses, as well as whether the trust company could have avoided the losses if it had fulfilled its obligations. Therefore, in practice, the focus of evidence collection is on the trust company's internal approval documents, meeting records, and risk assessment materials, which often directly reflect its level of involvement.

IV. Practical Suggestions and Legal Basis

Action proposals: 1. Review the written correspondence and internal approval materials between the trust company and all parties; 2. Verify the independence of the trust assets and whether there are any illegal guarantees; 3. Assess the specific content and effectiveness of the "guaranteed redemption" or "principal protection" clauses; 4. Clarify the actual level of participation of the trust company in the transaction; 5. Evaluate the faults and causalities of all parties; 6. Verify whether there are related-party transactions and transfer of benefits; 7. Assess the applicable law of cross-border arrangements. Legal basis: - The Trust Law of the People's Republic of China (adopted on April 6, 2001 and implemented on October 1, 2001), which stipulates the trustee's obligations, the independence of trust assets, and the liability for trust assets; - Articles 146 and 153 of the Civil Code of the People's Republic of China (implemented on January 1, 2021); - Relevant regulations on trust business supervision, based on the currently effective version.

5. Henglue Law Firm's Reminder

First, the determination of liability depends on actual actions rather than business titles. It's difficult to claim that one is merely a channel if they actively participate in the business. Second, the independence of trust property is a core rule, and illegal guarantees will undermine its effectiveness. Third, the effectiveness of the guarantee of fixed redemption needs to be judged based on specific statements and performance. Fourth, the internal documents of trust companies are often key evidence for determining the degree of participation. Fifth, investors' decision-making errors may also affect the allocation of liability. Sixth, the fairness of related-party transactions requires thorough verification. Seventh, cross-border trusts also involve issues of legal application and registration, which need to be assessed separately.\nFinancial capital and cross-border transactions involving foreign entitiesThe column also includes explanations of relevant arrangements.

VI. Frequently Asked Questions

Q1: Are trust companies necessarily liable in channel business?

Not necessarily. The key to making a judgment lies in the actual actions of the trust company: if it only sets up a trust according to the instructions of the fund provider and does not participate in investment decision-making and management, it usually does not bear substantive management responsibilities; but if there are situations such as actively designing structures, promising fixed returns and principal protection, participating in decision-making, illegally misappropriating property, or knowingly cooperating with illegal activities, it may be held liable for failing to fulfill its fiduciary obligations. Therefore, it is necessary to analyze its behavioral track in detail. The relevant judgment approach can be referred to for reference.\nFinancial capital and cross-border transactions involving foreign entitiesColumn.

Q2: Does the trust company's promise of guaranteed returns have legal effect?

The independence of trust property is a fundamental principle of trust law. If a trust company pledges to guarantee the principal with its own inherent assets, it is essentially using its own assets to provide a guarantee for the trust property. Such arrangements may undermine the independence of the trust property and may be deemed invalid. In judicial practice, courts generally take a negative attitude towards "guaranteed redemption" clauses. Investors cannot require the trust company to pay off the debt with its own assets based on such commitments. Therefore, when signing relevant clauses, attention should be paid to the risk of their legal validity.

Q3: What should I do if the trust property is misappropriated?

It can be claimed that the trustee violated the duty of loyalty and diligence, and demanded that he/she bear compensation liability and restore the trust property. In practice, attention should be paid to the fixation of evidence: the flow of funds, the approval records, and the explanations of relevant personnel are often key. At the same time, it should be evaluated whether it is possible to hold the relevant personnel accountable through criminal channels, because the misappropriation of funds may involve embezzlement or misappropriation of funds. For specific protection paths, please refer to the relevant provisions.Creditor's rights and debts, and enforcementColumn.

Q4: What if the investor himself is also at fault?

This may affect the division of responsibilities. If an investor provides funds despite knowing that there are problems with the use of trust property, or demands a fixed return despite knowing that the trust company lacks substantial management capabilities, the court may determine that the investor is at fault and accordingly reduce the scope of the trust company's liability. Therefore, when assessing the likelihood of winning a lawsuit, one should objectively evaluate the degree of fault on all sides, rather than focusing solely on the other party's responsibilities. For related defense strategies, you can refer to the following sources for reference:Business and contract disputes in enterprisesColumn.

Q5: Who is responsible if there are problems with the associated projects?

It is necessary to verify the relationship and interest arrangements between the trust company and its related parties. If the trust company pays property to the related party, engages in interest transfer with it, or fails to review the fairness of the related-party transactions, it may be deemed to have failed to fulfill its fiduciary duty and bear corresponding responsibilities. If the fund provider directly designates the investment targets and the trust company does not participate in the process, the division of responsibilities needs to be determined based on the specific actions. Therefore, the verification list of related-party transactions should be regarded as an important task.

The above questions and answers are mainly based on the judicial practice in the Beijing area. There may be differences in the interpretation of the law in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials to avoid missing the statutory time limit. →Financial capital legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in a timely manner.