Monday, March 26, 2012
Hong Kong’s government has launched a two-month public consultation on its draft legislation on trust law reform, which followed the positive responses it had received from stakeholders in an earlier consultation held in 2009.
The Secretary for Financial Services and the Treasury, Professor K C Chan, said: "The reform seeks to modernize Hong Kong's trust law to better cater for the needs of modern-day trusts and enhance the interests of parties to a trust. It is a major initiative to strengthen the competitiveness of our trust services industry and further consolidate our status as an international asset management centre."
The consultation document sets out draft provisions to amend the Trustee Ordinance and the Perpetuities and Accumulations Ordinance, which seek to clarify trustees' duties and power to provide clearer guidelines on the role of trustees. It is intended that reforming Hong Kong’s trust law will bring its regulatory regime in line with other comparable common law jurisdictions such as the United Kingdom and Singapore.
Specifically, the draft provisions seek to: impose a statutory duty of care on trustees; provide trustees with a general power to appoint agents, nominees and custodians; give trustees wider powers to insure trust property against risks of loss; and allow professional trustees to receive remuneration for services rendered to trusts.
In addition, statutory provisions will be introduced to enhance the protection of beneficiaries' interests. These include provisions to regulate exemption clauses that seek to relieve professional trustees from liabilities for breach of trust, while beneficiaries will also be given the right to remove trustees through a simple, time-saving and court-free process.
The trust law will also be modernized. A provision will be introduced to clarify that a trust will not be invalidated only by reason of a settlor reserving to himself some limited power, and the outdated rules that set time limits on the duration of trusts and the accumulations of income would be abolished.
"The consultation we launched today (March 22) marks another milestone in taking forward the trust law reform,” Chan added. “We look forward to receiving further views on the draft legislation so that we can finalize the amendment bill for introduction into the Legislative Council in the 2012-13 legislative year."
People are asked to submit their comments to the Financial Services and the Treasury Bureau on or before May 21, 2012.