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Hong Kong Gazettes Trust Law Reform

Wednesday, February 13, 2013

The Trust Law (Amendment) Bill 2013, gazetted on February 8, is aimed at modernizing trust law in Hong Kong by enhancing trustees' default powers while providing for appropriate checks and balances, thereby making trusts administration more effective.

Secretary for Financial Services & the Treasury, Prof KC Chan, said Hong Kong must modernize its trust laws to enhance its status as an international asset-management center. "The bill, if passed, will bolster the competitiveness of Hong Kong's trust services industry and attract settlors to set up trusts in Hong Kong," he said.

At the end of 2011, Hong Kong’s trust industry held assets of an estimated HKD2.6 trillion (USD335bn), and more than 60% of the city’s asset management business originated from funds from non-Hong Kong investors.

Hong Kong trust law is based mainly on common law, supplemented by the Trustee Ordinance and the Perpetuities & Accumulations Ordinance, which have not been substantially reviewed or modified since they were enacted in 1934 and 1970. Some of their provisions are outdated and cannot meet present-day trusts' needs.

Following a review of the Trustee Ordinance and the Perpetuities and Accumulations Ordinance, and in response to the various modernization proposals put forward by the trust industry and recent trust law reform in the United Kingdom and Singapore, the Government conducted public consultations in 2009 and 2012, respectively, on the reform proposals.

The reform package seeks to clarify trustees' duties and powers and better protect beneficiaries' interests. The major proposals would therefore introduce a statutory duty of care on trustees; provide trustees with general powers to appoint agents, nominees and custodians, as well as to insure trust property against risks of loss; allow professional trustees to receive remuneration; provide for a court-free process for the retirement of trustees on beneficiaries' directions; and impose statutory control on exemption clauses that seek to relieve professional trustees from liabilities.

In addition, the bill would also allow settlors to reserve to themselves some limited power; abolish outdated rules against perpetuities and excessive accumulations of income; and relax the market capitalization and dividend requirements for investment in the equity market.

Respondents were generally in support of the legislative proposals, considering that the reformed regime would provide a more robust legal framework facilitating the effective operation of present-day trusts, which is important for enhancing Hong Kong's status as an international asset management center.

The Government has taken into account feedback from the industry and other stakeholders when drawing up the legislative proposals. The bill will be presented to the Legislative Council for first reading on February 20, 2013.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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