The approval had been anticipated, and was eagerly-awaited by trust industry practitioners in particular, who have cited the laws’ obsolescence for some time.
Two and a half years ago, at a gathering of the Hong Kong Trustees’ Association, the Secretary for Financial Services & the Treasury Board, KC Chan, observed that “many provisions” of the existing laws were outdated, “as you would expect from a trust law that was enacted in 1934”.
As reported, the effort to update the trust laws evolved out of a consultation process that began in 2008.
The reforms passed by the Legislative Council clarify trustees’ duties and powers, better protect beneficiaries’ interests, and modernise the trust law by means of amendments to the Trustee Ordinance (Cap 29) and the Perpetuities and Accumulations Ordinance (Cap 257), which date back, respectively, to 1934 and 1970.
Other common law jurisdictions such as the UK and Singapore have already significantly modernised their trust law in recent years, “leaving Hong Kong at a competitive disadvantage”, according to an analysis of the changes published by Withers, the London-based, globally-focused law firm.
“Following these changes, families should consider reviewing their succession planning, both wills and trusts,” the Withers analysis adds.
“This is also an opportunity for international trust companies to consider setting up a Hong Kong operation.”
Philip Munro, a Withers partner based in Singapore, said the changes “are very significant for Hong Kong as a trusts jurisdiction”, and should make it “a contender” in any international trust planning exercise.
According to a briefing paper prepared for the Legislative Council, the Hong Kong Trustees’ Association estimates that Hong Kong’s trust industry held assets of around HK$2.6trn ($335bn,£220bn) at the end of 2011.
To read and download the Withers analysis, click here.