Provisional Legislative Council
PLC Paper No. CB(1)901
(These minutes have been
seen by the Administration)
Ref : CB1/BC/3/97
Bills Committee on
Provident Fund Schemes
Legislation (Amendment) Bill 1997
Minutes of the meeting held on
Thursday, 8 January 1998, at 4:30 pm
in Chamber of the Legislative Council Building
Members present :
Hon Ronald ARCULLI, JP (Chairman)
Dr Hon LAW Cheung-kwok (Deputy Chairman)
Hon WONG Siu-yee
Hon LEE Kai-ming
Hon Mrs Peggy LAM, JP
Hon Henry WU
Hon CHAN Yuen-han
Hon Ambrose LAU Hon-chuen, JP
Members absent :
Hon James TIEN Pei-chun, JP
Hon HO Sai-chu, JP
Hon MA Fung-kwok
Dr Hon Mrs TSO WONG Man-yin
Hon CHAN Kam-lam
Hon YEUNG Yiu-chung
Hon Paul CHENG Ming-fun, JP
Dr Hon TANG Siu-tong, JP
Hon NGAN Kam-chuen
Hon CHOY So-yuk
Public officers attending :
Clerk in attendance:
- Mrs Pamela TAN
- Mandatory Provident Fund Office
- Ms Maisie CHENG
- Assistant Director
- Scheme Operations
- Mr Raymond TAM
- Assistant Director
- Regulatory Standards
- Mr Duncan BERRY
- Senior Assistant Law Draftsman
- Department of Justice
- Miss Shandy LIU
- Government Counsel
- Law Drafting Division
- Department of Justice
- Miss Polly YEUNG
- Chief Assistant Secretary (1)3
Staff in attendance :
- Miss Connie FUNG
- Assistant Legal Adviser 3
- Mr Daniel HUI
- Senior Assistant Secretary (1)5
I.Meeting with the Administration
1.Members continued scrutiny of the draft Mandatory Provident Fund Schemes (General) Regulation and deliberated on the following proposed sections.
Proposed section 64
|2.Members noted that the Administration would delete
delete �............... �in the Chinese version of the proposed section 64(3) in order to rectify a drafting error.
|3.In response to members enquiry on whether the expression "overseas bank" in proposed section 64(4) would include a bank in China, the Assistant Director/Regulatory Standards (AD/RS) confirmed that the Administrations intention was that a bank in China should be covered by the expression and would check whether the present drafting had reflected the policy intent.
4.As regards the rationale for the lack of a minimum net asset requirement for an overseas financial institution to become an eligible custodian of MPF assets, AD/RS explained that the proposed requirements in sections 64(4)(a) and (b) which required overseas financial institutions to have a paid up capital of at least US$200 million and to have satisfied a credit rating as approved by the MPF Schemes Authority (MPFA) should have provided adequate safeguards. Moreover, there would be technical difficulties to enforce a net asset requirement on overseas financial institutions. In reply to members, AD/RS supplemented that the proposed capital adequacy requirements on custodians of MPF scheme were in line with similar requirement in the United States and Canada for mutual funds.
|5.On proposed section 64(4)(a), the Assistant Legal Adviser 3 (ALA3) would, as requested by members, examine whether the use of "or" would give rise to any ambiguity.
|6.In response to members enquiry on proposed section 64(4)(b), the Administration clarified that the credit rating of the overseas financial institutions as determined by a credit rating agency would be subject to the approval of the MPFA. The Administration would make the necessary amendments to the proposed section to reflect this policy intent.
Proposed section 69
|7.The Chairman was concerned about the adequacy of control on central securities depositories, particularly a central depository in an overseas country, which might be delegated with the responsibility of safekeeping MPF scheme assets. In response, the Administration agreed to amend proposed section 69 to the effect that the depository concerned had to be approved by the MPFA.
Proposed section 70
8.Members noted that for the purpose of proposed section 70(3), the accounting records of a MPF scheme could be kept outside Hong Kong provided that such records could be readily accessible in Hong Kong should the MPFA request for such records for the purpose of the Ordinance. In reply to members, the Assistant Director/Scheme Operations (AD/SO) advised that the proposed section was intended to provide some flexibilities to approved trustees in setting up record keeping systems which were cost-effective and which could satisfy the MPFAs requirement at the same time. As requested by members, the Administration would check whether other ordinances such as the Banking Ordinance also allowed accounting records to be kept outside Hong Kong.
9.In reply to the Chairmans enquiry on proposed section 70(4), AD/SO confirmed that the MPFA was empowered under proposed section 30A(4) of the principal Ordinance to make copies of accounting records of the scheme during inspection visits to the approved trustee.
Proposed section 73
10.In reply to the Chairman, AD/SO confirmed that the accounting policies to be used in preparing financial statements of MPF schemes had to comply with accounting guidelines issued by the Hong Kong Society of Accountants.
II.Any other business
11.In reply to the Chairman, D/MPF Office indicated the Administrations preliminary intention to resume Second Reading debate on the Bill on 11 February 1998.
12.Members agreed that the Committee should hold the following additional meetings after 12 January 1998:
13 January 1998, 8:30 am - 10:30 am;
13 January 1998, 10:45 am - 12:45 pm;
17 January 1998, 8:30 am - 10:30 am;
17 January 1998, 10:45 am - 12:30 pm;
19 January 1998, 10:45 am - 12:45 pm;
20 January 1998, 10:45 am - 12:45 pm; and
20 January 1998, 2:30 pm - 4:30 pm.
13.The Chairman reminded members that the next meeting would be held on 10 January 1998 at 8:30 am.
14.The meeting ended at 6:00 pm.
Provisional Legislative Council Secretariat
9 February 1998