Trust law consultation opens in Hong Kong

23.03.2012

22» of March, 2012 the Government launched a two-month public consultation on the draft legislation on trust law reform. Secretary for Financial Services & the Treasury Professor KC 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.  

The consultation document sets out draft provisions to amend the Trustee Ordinance and the Perpetuities & Accumulations Ordinance. The 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.

It also invites views on the introduction of statutory provisions to enhance the protection of beneficiaries' interests, including provisions to regulate exemption clauses that seek to relieve professional trustees from liabilities for breach of trust. Beneficiaries will be given the right to remove trustees through a simple, timesaving and court-free process. Another 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.

The outdated rules that set time limits on the duration of trusts and the accumulations of income would be abolished. The Government will finalise the amendment bill for tabling at the Legislative Council in the 2012-13 legislative year.

You may send your comments till 21st of may 2012 to Financial Services & the Treasury Bureau to review@fstb.gov.hk.  

Expert’s opinion

«The main purpose will be achieved after amending of legislation of Honking. It is strengthening and easing of beneficiary’s control for trustee’s activity with simplification at the same time of trust management by trustee. World practice is that these processes should be followed by strengthening of beneficiary’s liability against fiscal authorities. It appears that, draft law will include these amendments as well».

On the basis: www.news.gov.hk

Lomakin Yaroslav ( Managing partner of Honest & Bright)