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The Government today (February 22) published the conclusions drawn from the public consultation on the review of the Trustee Ordinance (TO) and related matters.
"The Government conducted a three-month public consultation from June to September last year to gauge views on the proposals to reform the Trustee Ordinance and related matters. The reform aims to strengthen the competitiveness of Hong Kong's trust services industry and to enhance Hong Kong's position as an international financial centre. We received 36 submissions," a spokesman for the Financial Services and the Treasury Bureau said.
Most of the reform proposals were supported by the respondents, including trust service providers and practitioners, professional bodies, chambers of commerce and other stakeholders.
"An overwhelming majority of the respondents supported the proposal to introduce in the Trustee Ordinance a new statutory duty of care for trustees. As for trustees' default power of investment, a majority of the respondents supported the proposal to retain the list of default ¡¥authorised investments' which are currently specified in the Second Schedule to the TO. Nevertheless, we will review and update the Second Schedule to make it less prescriptive to meet the evolving market needs. In this regard, we will invite input from relevant professionals and financial regulators," the spokesman said.
"We will also provide trustees default powers to delegate, employ agents, nominees and custodians and take out insurance, and introduce statutory charging clause for professional trustees to receive remuneration. On the other hand, we will subject certain trustee exemption clauses to statutory control if the clauses seek to exempt professional trustees, who are remunerated for their service, from liability for breach of trust due to fraud, wilful misconduct or gross negligence.
"We will provide beneficiaries with the right to remove trustees by way of a court-free process under certain conditions. We will also amend the Perpetuities and Accumulations Ordinance to abolish the rule against perpetuities and that against excessive accumulations of income except for charitable trusts. Both abolitions will apply to new trusts to be set up after the amendments come into force," he said.
In addition to the Government's reform proposals, a number of respondents also proposed certain amendments to sections 8, 11, 12 and 34 of the Trustee Ordinance which seek to clarify and modernise the provisions to meet current market needs. The Government considers these proposals reasonable and will include them in the legislative amendments.
"Nonetheless, certain issues would require further study before a decision could be made on their way forward. One of the issues is beneficiaries' rights to trust information which are highly complex and controversial, and the relevant case law is still developing. We shall further study the subject and keep in view the evolution of the relevant law in comparable jurisdictions," the spokesman said.
"Another issue concerns whether our law should allow the creation of non-charitable purpose trusts. In view of diverse views gathered from the public consultation and that the issue involves a fundamental change to the common law concept of trust law and a new piece of legislation would be required to implement the proposal, we would consider the subject matter separately before deciding whether and how they should be taken forward.
"Based on the consultation conclusions, we shall implement the reform proposals by legislative amendments and we aim to introduce the relevant amendments into the Legislative Council in 2010-11. We believe that a modern and user-friendly Trustee Ordinance will benefit key parties of trusts including the settlors, trustees and beneficiaries by providing more clarity and certainty in law. It will provide trustees with modern powers necessary for the efficient management of trusts," the spokesman said.
The key proposals and issues raised in the consultation paper and the Government's conclusions are summarised at the Annex. The consultation conclusions are also available at (www.fstb.gov.hk/fsb/topical/index.htm).
Ends/Monday, February 22, 2010
Issued at HKT 15:00
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