Core Insights - The wealth management needs of China's first generation of affluent individuals are transitioning from "wealth creation" and "wealth preservation" to "wealth inheritance" [1] - Family businesses face challenges in wealth and business succession due to frequent "family divisions" and internal conflicts [1] Group 1: Wealth Transfer Mechanisms - Balancing equity control and family harmony is a core issue in wealth inheritance [2] - Many listed companies have started to place their equity into trusts to achieve a balance between "wealth inheritance" and "control" [2] - In February, Puyang Huicheng Electronic Materials Co., Ltd. announced a three-layer structure to place most of its shares into a family trust [2] - In April, 361 Degrees International Limited transferred approximately 65.60% of its equity into family trusts through offshore structures [2] - The introduction of the "Notice on the Registration of Equity Trust Property" in April has clarified the requirements and processes for equity trust registration, indicating growing regulatory acceptance [2][5] Group 2: Trust Structures - The typical structure involves a Special Purpose Vehicle (SPV) to achieve tax optimization and control management [3] - The SPV is established with the client as the general partner (GP) and the trustee as a limited partner (LP), allowing for indirect holding of equity in family trusts [3] - The "family trust + limited partnership" model has become mainstream due to its compliance with regulatory requirements for clear and stable control of listed companies [4] Group 3: Challenges and Opportunities - Family trusts can effectively manage complex assets like equity, balancing corporate governance stability and family interests [4] - The current market for equity family trusts in China is relatively underdeveloped compared to international standards, where family trusts account for over 50% of wealth management [5][6] - As of the end of 2024, the balance of family trusts in China was 643.579 billion, but equity family trusts remain limited [5] Group 4: Regulatory Environment - The lack of a clear trust registration system and varying registration processes for different companies pose challenges for equity family trusts [6] - The recent trial registration of equity trusts in Beijing is a positive step towards enhancing the public effectiveness of equity as trust property [6][7] - Compliance issues, such as the recognition of "acting in concert" and the legality of trust structures, are critical for successful trust establishment [7][8]

Core Viewpoint - The article discusses the increasing trend of Chinese listed companies utilizing equity trusts to balance wealth inheritance ("传富") and control ("掌权") as family businesses face challenges in wealth transfer due to internal conflicts and division [1][2]. Group 1: Equity Trust Implementation - Many listed companies have started to incorporate equity into trusts to achieve a balance between wealth transfer and control, as seen in the cases of Puyang Huicheng and 361 Degrees, where significant portions of shares were transferred into family trusts [3][4]. - The introduction of the "Notice on the Registration of Equity Trust Property" by Beijing in April 2023 has clarified the registration requirements and processes for equity trusts, leading to increased recognition and acceptance of this method [3][7]. Group 2: Structural Advantages - The "family trust + limited partnership" model has emerged as a mainstream approach, allowing for the separation of ownership, control, and income rights, thus ensuring stable governance and facilitating intergenerational wealth transfer [5][6]. - This model enables founders to retain control while placing equity into trusts, which can dynamically adjust according to family needs and external conditions, thus enhancing governance stability [5][6]. Group 3: Challenges and Considerations - Despite the potential benefits, the establishment of equity trusts faces challenges, including regulatory hurdles, the need for clear decision-making authority, and tax compliance issues [8][9]. - The lack of a unified registration system for equity trusts and the complexity of tax implications are significant barriers to the widespread adoption of equity trusts in China [7][9].