Hong Kong Reviews Its Trust Reforms
Wednesday, November 20, 2013
In his speech at the recent Hong Kong Trustees' Association Conference 2013,
the Secretary for Financial Services and the Treasury, Professor K C Chan, confirmed
that the Government is keen to promote Hong Kong as a global center for trust
Chan called the trust industry "an indispensable pillar that cements our
standing as a premier international asset management center." It offers
a diverse range of services and products, including individual wealth and estate
planning, as well as corporate trust services, such as trust administration
and acting as a custodian. In addition, financial structures and products have
been developed that utilize trusts, such as pension funds, real estate investment
trusts and hedge funds.
He cited the many advantages that have set Hong Kong apart as a premier trust
administration center. In particular, its proximity to the Mainland means the
industry can offer its services to ultra-high-net-worth Chinese individuals
who are seeking ways to manage their assets, as well as looking to preserve
wealth and family businesses for passing on to future generations.
Chan noted that it is the Government's goal to develop Hong Kong "as the
most competitive and dynamic wealth management business center in Asia,"
and that, with the setting up of the Private Wealth Management Association in
September this year, "it is of vital importance that our regulations are
up to date in order to take on new opportunities."
The Government launched a trust law reform exercise in 2008, which sought to
modernize the Trustee Ordinance and the Perpetuities and Accumulations Ordinance,
the two main pieces of legislation in Hong Kong's trust law regime. The exercise
was brought to completion with the passage of the Trust Law (Amendment) Ordinance
2013 in July 2013.
The Amendment Ordinance, which, he said, "will put Hong Kong's trust law
on par with those of other major comparable common law jurisdictions,"
will come into effect on December 1 this year. Amongst other benefits, it will
enhance trustees' default powers and introduce a host of measures that can better
In the Government's opinion, it should itself attract trusts to be set up in
Hong Kong. In particular, through the abolition of the Rule against Perpetuities,
settlors will be able to set up perpetual trusts in Hong Kong (which is still
not possible in most major common law jurisdictions), and, through the introduction
of the anti-forced heirship rule, settlors will not need to worry that the assets
in the trusts would be clawed back by their heirs against their wishes in the