HKTA throws it weight behind amended HKTO
26 July 2013
News, China, Hong Kong
By Hui Ching-hoo
The Hong Kong Trustees’ Association (HKTA) has applauded a recent amendment to the Hong Kong Trust Ordinance (HKTO) that aims to facilitate trustees in their administration of trusts, better protect the interests of beneficiaries, and attract more market players to set up trusts in Hong Kong. The amended bill will take effect on December 1.
The passage of the bill (on July 17) is considered a milestone for the trust industry in Hong Kong given the ordinance has not been modified since 1934. “The move will certainly enhance Hong Kong’s standing as a regional finance hub,” asserts Lau Ka Shi, chairwoman of the HKTA.
Ms. Lau notes that it has taken nine years to complete the whole amendment process, but believes the revised HKTO will firmly establish Hong Kong as a modern trust jurisdiction, and further cement its position as a truly world-class financial centre.
Vivian Chui, partner of KPMG China, said market practitioners broadly expect the amendment of the HKTO to have a positive impact for the industry, citing the results of a survey recently conducted by KPMG which found that 63% of respondents expect the revised HKTO to encourage growth of the local trust industry.
Meanwhile, a joint report by KPMG and the HKTA indicates that compliance and regulations are among the key priorities for Hong Kong’s trust industry. The survey interviewed a variety of institutions including corporate trusts, MPF & ORSO schemes, private trusts, and charitable trusts, of which close to 50% of respondents managed trust assets of over US$1 billion. Fifty five percent of survey respondents rated increasing trust assets as their top priority for the next 12 to 18 months, followed by compliance and regulations (at 42%).
In terms of regulatory challenges, the US-initiated Foreign Account Tax Compliance ACT (FATCA) topped the list, with 28% of the respondents indicating this was a concern. Anti-money laundering was rated second (22%), followed by MPFA regulations (16%) and the HKTO (12%).
“Although some of the respondents feel the impact of the amendments to the HKTO will be limited, close to two-thirds of our survey respondents are optimistic that the revised HKTO will encourage growth in the local trust industry (e.g. new business, new entrants). This level of pre-emptive support could be crucial for better capturing the potential of the refreshed HKTO,” the report states.
The report also highlights talent as challenge facing the industry: “Respondents said a lack of critical business knowledge was a major staffing issue (28%), while salary and compensation pressures, high turnover of staff and lack of succession planning were viewed as additional challenges.”
Ms. Chui concludes: “Industry players are anticipating the benefits from the forthcoming policy initiatives, including HKTO reform, and mutual recognition of the funds by mainland China and Hong Kong.”
She expects more institutions to consider launching Hong Kong domiciled trusts after the implementation of the mutual recognition as they seek to access the mainland market.
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