Jul-29-2009 Revision to Hong Kong Trust Laws

 

The Hong Kong Trustees Association (“HKTA”) and the Hong Kong branch of Society of Trust & Estate Practitioners (“STEP”) have been lobbying the HKSAR Government to revise the trust law in Hong Kong for many years. Hong Kong has not substantially revised its trust law since 1937 and as such the current legislation is now extremely dated and limited in scope when compared to many other competing offshore jurisdictions.

 

In 2007 The Joint Committee on Trust Law Reform (“JCTLR”) was established by the HKTA and STEP with a view to urging the HKSAR Government to reform trust law in Hong Kong. The JCTLR carries on the work of SCOT (Steering Committee on Trust Law Reform) this gained popular support from many professional and industry bodies who also supported the idea of reforming Hong Kong’s trust law.

 

On 22 June 2009, the Financial Services and the Treasury Bureau (FSTB) produced a Consultation Paper entitled “Review of the Trustee Ordinance and Related Matters”. This consultation paper documents the need for change to many aspects of the existing trust law.

 

The paper specifically makes mention and reference to existing Singapore, Cayman, Jersey, UK and BVI trust laws. Additionally the new 2008 Guernsey Trust Law has been suggested by STEP and HKTA as a template for any new trust legislation in Hong Kong. With these modern pieces of legislation to learn from Hong Kong will have the ability to product improve and “cherry pick” the best sections from each. Hong Kong therefore has the chance to become a leading trustee centre with the most modern and effective trust law.

 

The proposal made by the FSTB is to reform the following areas of the Hong Kong trust law, which is anticipated to be implemented by 2010 - 2011:

 

·        trustees’ statutory duty of care

·        short term delegation by a single trustee

·        trustees’ power to employ nominees, custodians and to insure

·        remuneration of professional trustees

·        regulation of exemption clauses of professional trustees

·        beneficiaries’ rights to trust information

·        beneficiaries’ rights to remove trustees

·        abolition or simplification of both the rule against perpetuities and the rule against excessive accumulation of income

 

The FSTB wishes to receive further views from industry members before agreeing to proceed on the following matters:

 

·        defining the role of protector

·        reserved powers of settlors

·        governing law provisions

·        forced heirship provisions

·        recognition of non-charitable purpose trusts

 

The regulation of trustees in Hong Kong is being dealt with separately and is not covered within this consultation process.

 

AFP welcomes this move by the Government to reform the trust law. Our STEP qualified staff members and directors will be active in helping Hong Kong adopt modern and effective trust legislation.