A planned modernisation of Hong Kong's antiquated trust law aims to allow the city to better attract wealthy individuals and companies who want to set up investment and estate planning vehicles.
The reform plan includes introducing a statutory duty of care for trustees, giving those who set up the trusts a better understanding of their rights and responsibilities. The planned changes come after a consultation on the drafting of the law in 2009.
A two-month public consultation on the new draft legislation began yesterday
'The trust law in Hong Kong is very outdated, which is not favourable to the development of the asset management business,' said Paul Chan Mo-po, the legislator for the accountancy sector.
Hong Kong is jostling for the role of Asia's asset management centre with rivals such as Singapore. At the end of 2010, combined fund management business amounted to HK$10.1 trillion in Hong Kong, up by 18.6 per cent year on year.
Trusts, which play a vital role in asset management business, are used in family estate planning and as a tool for various commercial transactions. For example, several real estate investment trusts, have been listed in Hong Kong.
Under the existing trust law, which was enacted in 1934 and originated from Britain, a trustee's duty of care is only covered by the common law.