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The Government announced today (June 22) a three-month public consultation on proposals to modernise the Trustee Ordinance (TO).
A Government spokesman said, "Reforming the trust law is a key component in the Government's strategy to enhance Hong Kong's position as a major asset management centre in Asia.
"Modernising our trust law will strengthen the competitiveness and attractiveness of our trust services industry. It will encourage more local and overseas settlors to choose Hong Kong law as the governing law of their trusts and to administer their trusts in Hong Kong," he added.
A modern and user-friendly TO will benefit key parties of trusts including the settlors, trustees and beneficiaries by providing more clarity and certainty in law. It will provide all modern powers necessary for the efficient management of trusts.
Following are the key proposals in the consultation paper:
1. To introduce a new statutory duty of care for trustees.
2. To retain the range of authorised investments in the 2nd Schedule to the Trustee Ordinance to provide reasonable "safe harbour" limits of investments by trustees.
3. Enhance the safeguard in temporary delegation of trustees' powers so that the number of trustees will not be reduced to one which is against the will of the settlor.
4. Repeal section 8(3)(a) of the Enduring Powers of Attorney Ordinance so that the power of delegation by an individual trustee is entirely governed by the TO.
5. To provide trustees with a general power to appoint nominees and custodians with necessary safeguards.
6. To provide trustees with wider powers to insure trust property.
7. To provide a default charging clause to enable the remuneration of professional trustees of non-charitable trusts.
8. To provide some basic rules on beneficiaries' right to information.
9. To provide an alternative court-free route for certain beneficiaries to remove trustees.
10. To subject trustee exemption clauses seeking to exempt professional trustees who receive remuneration for their services to some statutory control and to promulgate a code of best practices regarding the use of trustee exemption clauses by the relevant professional bodies.
11. To reform or abolish the rules against perpetuities and accumulations of income.
Other proposals concerning more unconventional trust concepts which are commonly practised in off-shore jurisdictions, such as defining the role of protectors in statutes and permitting non-charitable purpose trusts, are also included in the consultation paper. Some of these proposals, which are currently not adopted in other comparable common law jurisdictions, may provide further flexibility in the creation of trusts. The Government would like to hear more views before deciding how they should be taken forward.
Slightly different proposals are put forward for charitable trusts since they may need to be treated differently in several areas, such as trustees' power to employ agents and professional trustees' entitlement to receive remuneration. They will also benefit from the review.
"In drawing up these modernisation proposals, we have sought inputs from the Hong Kong Trustees' Association Limited and the Society of Trust and Estate Practitioners (Hong Kong Branch). We have also made reference to the recent reforms in comparable common law jurisdictions including the United Kingdom and Singapore," the Government spokesman said.
"We aim to release consultation conclusions by the end of this year and introduce legislative amendments to the Legislative Council in 2010-11," he added.
The consultation document can be downloaded from www.fstb.gov.hk/fsb. Members of the public are welcome to submit their comments by mail to Division 6, Financial Services Branch, Financial Services and the Treasury Bureau, 15/F, Queensway Government Offices, 66 Queensway, Hong Kong, or by fax to (852) 2869-4195 or by email to to_review@fstb.gov.hk on or before September 21, 2009.
Benefits of the key proposals are at Annex.
Ends/Monday, June 22, 2009
Issued at HKT 16:34
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