Hong Kong Gazetted Trust Law Amendments

Hong Kong Gazetted Trust Law Amendments

The Trust Law (Amendment) Bill 2013 was published in Hong Kong Gazette last week.  It is aimed at modernizing trust law in Hong Kong by enhancing trustees powers, providing for appropriate checks and balances, which will make trusts administration more effective.

Hong Kong trust law is based on common law and supplemented by the Trustee Ordinance and the Perpetuities & Accumulations Ordinance, which have not been substantially reviewed or modified since they were enacted in 1934 and 1970. Many of their provisions are outdated and cannot meet present-day needs.

The trust law reform package will clarify trustees' duties and powers and better protect beneficiaries' interests. The major proposals would therefore introduce a statutory duty of care on trustees; provide trustees with general powers to appoint agents, nominees and custodians, as well as to insure trust property against risks of loss; allow professional trustees to receive remuneration; provide for a court-free process for the retirement of trustees on beneficiaries' directions; and impose statutory control on exemption clauses that seek to relieve professional trustees from liabilities.

The bill will also allow settlors to reserve to themselves some limited power; abolish outdated rules against perpetuities and excessive accumulations of income; and relax the market capitalization and dividend requirements for investors.

The bill will be presented to the Hong Kong’s Legislative Council for first reading on February 20, 2013.

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