Outdated trust laws to be modernised in search for investors

Hong Kong's antiquated trust laws are to be modernised under a planned reform to help develop the city into an asset-management hub.

A three-month consultation was launched yesterday on the Trustee Ordinance, which has been largely untouched since its enactment in 1934. The business sector has been urging reform for years, warning that the city was losing trust business.

Trust services have been growing in importance as part of an array of wealth-management services on offer. In recent years, many offshore jurisdictions have made business-friendly amendments to their laws, such as allowing trustees to subcontract some responsibilities.

A deputy secretary for financial services and the treasury, John Leung Chi-yan, said the planned overhaul was modelled on reforms in Britain, Singapore and New Zealand.

'Modernising our trust law will strengthen the competitiveness and attractiveness of our trust-services industry,' Mr Leung said. 'It will encourage more local and overseas settlors to choose Hong Kong law as the governing law of their trusts and to administer their trusts here.'

The proposals include the introduction of a statutory duty of care for trustees so that settlors can have a better idea of the standard of care to be expected from trustees. But Mr Leung said the government would keep the so-called Schedule 2 of the law that aimed to disallow trustees from making high-risk investments.