Consultation with industry and trust professionals will play a key part.
Contributor: Matthew Corbin
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.
To urge the HKSAR Government to reform trust law, The Hong Kong Trustees Association (HKTA) and the Hong Kong branch of Society of Trust & Estate Practitioners (STEP) established The Joint Committee on Trust Law Reform (JCTLR) in 2007 and have since been lobbying the Government. The JCTLR carries on the work of SCOT (Steering Committee on Trust Law Reform) and has gained popular support from many professional and industry bodies that support reform.
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. However, the new 2008 Guernsey Trust Law has also 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 has the ability to ‘cherry pick’ and improve upon the best sections from each to become a leading fiduciary jurisdiction 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, 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 regulation of trustees in Hong Kong is being dealt with separately and is not covered within this consultation process. However, the FSTB does wish to receive further views from industry members before agreeing to proceed on the following:
- defining the role of protector
- reserved powers of settlors
- governing law provisions
- forced heirship provisions
- recognition of non-charitable purpose trusts
You can be sure that my colleagues and I together with fellow members of STEP will actively be helping these reforms along.
