The government may adjust the criteria that regulate investment by trusts, even before the Legislative Council begins work on proposed changes to the Trustee Ordinance later this year.
Under the ordinance, the financial secretary may make changes to the list of approved investments - affecting which kinds of listed companies are suitable for investments - to better reflect market developments.
For instance, the minimum market capitalisation of approved listed companies, now set at HK$10 billion, may be lowered to HK$1 billion, a government spokesman said. A company could also be required to pay dividends for five out of six or seven years, instead of the five consecutive years now, he said.
Locally listed shares of mainland companies, or H-shares, may also be approved as they are commonly part of an investment portfolio.
However, the spokesman said, the laws may need to be reviewed as they now allow trusts to invest in products such as Lehman Brothers minibonds, the credit-linked, high-risk derivatives that became worthless in the financial meltdown.
The proposed changes followed a public consultation last year on updating laws that govern trusts in Hong Kong. Critics have long argued that the city cannot compete favourably with jurisdictions such as Jersey, the Cayman Islands and Singapore for trust business until it modernises its Trustee Ordinance, which has remained largely untouched since 1934 and is based on the English Trustee Act of 1925.