Provisional Legislative Council

PLC Paper No. CB(1)964
(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
Saturday, 10 January 1998, at 11:15 am
in Conference Room A of the Legislative Council Building

Members present :

Hon Ronald ARCULLI, JP (Chairman)
Dr Hon LAW Cheung-kwok (Deputy Chairman)
Hon LEE Kai-ming
Hon Mrs Peggy LAM, JP
Hon CHAN Yuen-han
Hon Ambrose LAU Hon-chuen, JP

Members absent :

Hon WONG Siu-yee
Hon James TIEN Pei-chun, JP
Hon HO Sai-chu, JP
Hon Henry WU
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 :

Mrs Pamela TAN
Mandatory Provident Fund Office

Ms Maisie CHENG
Assistant Director
Scheme Operations

Mr Raymond TAM
Assistant Director
Regulatory Standards

Mr Alfred LEE
Administrative Officer
Scheme Operations

Miss Shandy LIU
Government Counsel
Law Drafting Division
Department of Justice

Clerk in attendance:

Miss Polly YEUNG
Chief Assistant Secretary (1)3
Staff in attendance :

Mr LEE Yu-sung
Senior Assistant Legal Adviser

Mr Daniel HUI
Senior Assistant Secretary (1)5

I. Meeting with the Administration

Members continued scrutiny of the draft Mandatory Provident Fund Schemes (General) Regulation (the draft Regulation) and deliberated on the following proposed sections :

Proposed section 74

2.In reply to the Chairman, the Assistant Director/Scheme Operations (AD/SO) confirmed that the Hong Kong Society of Accountants (HKSA) had been consulted and their comments taken into consideration in preparing the proposed section, as well as other provisions in Parts VI to VIII of the draft Regulation which pertained to accounting records, functions of auditors and documents to be lodged with the MPF Schemes Authority.

Proposed section 77

3.The Chairman was concerned about the adequacy or otherwise of proposed section 77 which required the financial statement of a registered scheme to include the relevant "amounts" of only two financial periods for comparison purposes, i.e. the period under report and the immediately preceding period. In response, AD/SO explained that the requirement compared more favourably with international practice which required comparative amounts be provided in investment reports but not necessarily in financial statements of retirement schemes. She further confirmed that the approved trustee would be required under proposed section 80 to provide three-year comparative figures in the investment report which would be made available to scheme members upon request.

4.In reply to the Chairman, the Administrative Officer, Scheme Operations supplemented that the appreciation or depreciation in value of the scheme assets due to changes in exchange rates had to be explained in a financial statement or an investment report by way of a footnote. The MPFA would issue guidelines to clarify the reporting requirements in detail.

Proposed section 80

5.Some members questioned the appropriateness of using the word "analysis" in proposed section 80(2)(a). Some members suggested that the proposed requirement should not be reduced to a mere "breakdown" of investment items. In response, the Administration clarified that the wordings of the proposed section had been adopted from the relevant guidelines of the HKSA. As requested by members, the Administration would re-consider the wordings.

Proposed section 82

As requested by members, the Administration would consider improving the drafting of proposed section 82(3) which in essence required that the consolidated report of a registered scheme had to be bilingual.

Proposed section 83

7.In reply to the Chairman, AD/SO confirmed that the consolidated report of a registered scheme should be provided to its scheme members free of charge. Another member added that the question of charges should not arise because the provision of financial statements and reports to scheme members was a mandatory requirement on the trustee.

8.The Chairman doubted the basis for limiting the trustee’s duty under proposed section 83(1) to provide on request a consolidated report in respect of the scheme for any specified period within only seven years preceding the date of the request. As requested by the Chairman, the Senior Assistant Legal Adviser (SALA) would check with the Administration.

As requested by members, the Administration would delete "at any time" from proposed section 83(1) to prevent abuse of the right of scheme members to request information from the trustee.

Proposed section 86

As requested by the Chairman, SALA would check with the Administration the basis for limiting the requisite period for which accounting and other records were to be kept to "at least 7 years" but not to a longer period.

Proposed section 91

11.Elucidating on proposed section 91(1)(a), AD/SO advised that the Administration would delete "who is the holder of a practising certificate issued under that Ordinance" from the proposed section because the Professional Accountants Ordinance did not provide for the issue of such a certificate.

12.The Chairman was concerned about the provisions in proposed section 91(2)(c) and 91(3)(c) which might create difficulties to the operation of an audit firm under sole proprietorship. In response, AD/SO said that the HKSA had been consulted on the proposed provisions but the Administration would re-examine the provisions so that the operations of a sole proprietorship firm acting as the auditor of a registered scheme would not be unduly affected.

13.As regards proposed section 91(10) which specified the detailed arrangements for changes of partnership of an audit firm, members were concerned about the unintended implications of the present elaborative style of drafting. As the proposed section could not be exhaustive, it could be argued that circumstances which had not been specified in the proposed section would not be covered by the law. At members’ request, SALA and the Administration would consider whether the present drafting of the proposed section needed to be modified.

II Any other business

14.The Chairman urged the Administration to defer the resumption of Second Reading debate on the Bill from 11 February 1998 to 25 February 1998 in order to allow sufficient time for the House Committee to consider the report of the Bills Committee on the voluminous Bill and draft subsidiary legislation, and to enable Hon Members to propose Committee stage amendments to the Bill in time. He added that assuming the Bill was passed on 25 February 1998, there would still be adequate time for processing the subsidiary legislation, provided that no substantial changes were made to the present version and the proposed amendments deliberated by the Bills Committee.

15.In response, D/MPFO reiterated the Administration’s intention to enact all the legislative proposals within the current legislative session. She noted members’ concerns and agreed to re-consider the proposed legislative timetable.

16.The meeting ended at 12:30 pm.

Provisional Legislative Council Secretariat
17 February 1998