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The Financial Services & the Treasury Bureau has launched today a three-month public consultation on proposals to modernise the Trustee Ordinance.
Reforming the trust law will boost Hong Kong's trust-services industry's competitiveness and attractiveness, and enhance the city's position as a major asset-management centre in Asia by encouraging more local and overseas settlors to choose Hong Kong law as the governing law of their trusts and to administer their trusts here.
A modern and user-friendly ordinance 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 efficient trusts management, the bureau said.
Major proposals
The key proposals include:
* introducing a new statutory duty of care for trustees;
* retaining the range of authorised investments in the ordinance's 2nd Schedule to provide reasonable "safe harbour" limits of investments by trustees;
* enhancing the safeguard in temporary delegation of trustees' powers so the number of trustees will not be reduced to one which is against the will of the settlor;
* providing trustees with a general power to appoint nominees and custodians with necessary safeguards, and with wider powers to insure trust property;
* providing a default charging clause to enable the remuneration of professional trustees of non-charitable trusts;
* providing an alternative court-free route for certain beneficiaries to remove trustees;
* subjecting trustee exemption clauses seeking to exempt professional trustees who receive remuneration for their services to some statutory control, and promulgating a code of best practices regarding the use of trustee exemption clauses by the relevant professional bodies; and
* reforming or abolishing 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.
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.
Download the consultation document here. Consultation conclusions are set for release by the end of this year and law amendments will be introduced to the Legislative Council in 2010-11.
The public can submit their views by mailing to Division 6, Financial Services Branch, Financial Services & the Treasury Bureau, 15/F, Queensway Government Offices, 66 Queensway, Hong Kong, faxing to 2869 4195, or sending an email by September 21.
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