Update or lose out
THE HONG KONG Trustees' Association (HKTA) and the Society of Trust and Estate Practitioners (STEP) believe the Trustee Ordinance requires updating to keep Hong Kong competitive. Therefore, they commissioned attorney Mark Lea to write a paper on the proposed amendments.
The law was originally enacted when the main focus was property. Times and investment needs have changed, and the feeling is that the law should be revised.
After a public consultation session with invited members of the Bar and the Law Society, the HKTA and STEP, 15 key areas were identified for possible amendment. The next step will be to lobby the government.
The proposed changes include providing reserved powers to give the creator of a trust some continuing role without invalidating its terms, and to abolish the need for a maximum trust period, which is 80 years.
Another proposal is to permit income to be accumulated throughout the trust period, which is not the case in Hong Kong.
Nowadays, trusts are a crucial part of the wealth management industry. With the government promoting the financial services sector, an updated 'user friendly' trust law would also help to attract inward investment from the mainland and around the world. This, in turn, means more money under management in Hong Kong and more jobs.
Other common law jurisdictions have recently revised their trust laws. Mr Lea said doing the same would substantially raise Hong Kong's international profile in the sector and make it truly competitive.
Failure to enact changes to the Trustee Ordinance would result in missing an opportunity to tap into a growing global market.
'If we don't enact changes, the situation will be pretty sad,' Mr Lea said.