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Hong Kong Studies Listing Of Business Trusts

Tuesday, June 14, 2011

In answer to a question in the Legislative Council, Hong Kong’s Secretary for Financial Services and the Treasury, Professor K C Chan, disclosed that the Securities and Futures Commission (SFC) and Hong Kong’s Stock Exchange (HKEx) are looking into the potential listing of active business trusts.

Given that Hutchison Whampoa had announced in March this year that it will spin off its port business to a separate business trust listed in Singapore, while a real estate investment trust is the only kind of trust allowed to be listed in Hong Kong at present, the question was posed whether HKEx was discussing the introduction of business trust listing in Hong Kong.

Professor Chan confirmed that the SFC and HKEx have been in discussions with market practitioners and a number of entities seeking to list active businesses by way of a trust over the potential listing of business trusts in Hong Kong and the factors that should be taken into account in the relevant regulatory framework.

Firstly, given that business trusts effectively operate as business enterprises, HKEx is proposing to consider their listing applications and regulate them by applying the same principles in the listing rules as those applicable to any company seeking a listing. To achieve this, HKEx would have to modify the current regulatory framework for listed companies to apply them to business trusts in a manner that fully preserves all the current rule requirements on investor protection, disclosure and corporate governance.

Secondly, it was said that a key part of the regulatory regime for listed companies is provided in the Securities and Futures Ordinance (SFO). At present, some provisions in the SFO applicable to a listed corporation do not apply to a business trust, notably insider dealing and disclosure of interests in shares. The SFC considers it essential for investor protection that listed business trusts are subject to the relevant SFO provisions.

The SFC and HKEx are therefore exploring with entities seeking to list an active business by way of a trust whether a structure that meets their commercial requirements can at the same time ensure that the relevant SFO provisions apply.

Chan pointed out that the primary business reasons advanced for listing by way of a trust are the tax benefits in some jurisdictions; an ability to make distributions if spare cash is available, in that trusts are not limited to only paying dividends out of realized profits; and that the trust can specify that surplus funds are paid out to investors, thus providing certainty to investors.

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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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