Provisional Legislative Council
PLC Paper No. CB(1)1289
(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 Monday, 23 February 1998, at 8:30 am in the 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 HO Sai-chu, JP
Hon LEE Kai-ming
Hon Mrs Peggy LAM, JP
Hon CHAN Yuen-han
Hon CHAN Kam-lam
Hon Paul CHENG Ming-fun, JP
Dr Hon TANG Siu-tong, JP
Hon NGAN Kam-chuen
Members absent :
Hon James TIEN Pei-chun, JP
Hon Henry WU
Hon MA Fung-kwok
Dr Hon Mrs TSO WONG Man-yin
Hon YEUNG Yiu-chung
Hon Ambrose LAU Hon-chuen, JP
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 Duncan BERRY
- Senior Assistant Law Draftsman
- 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
- Miss Connie FUNG
- Assistant Legal Adviser 3
- Mr Daniel HUI
- Senior Assistant Secretary (1)5
I. Confirmation of minutes of meetings
(PLC Paper No. CB(1)963, 964 and 965)
The minutes of the meetings held on 10 and 12 January 1998 were confirmed.
II. Committee stage amendments (CSAs) to the Bill
CSAs to be moved by the Administration
(PLC Paper No. CB(3)676)
2. Members deliberated on the Administration ' s CSAs to the following proposed sections of the Mandatory Provident Fund Schemes Ordinance (MPFSO).
Proposed section 6AC
3. Noting that under proposed section 6AC, an executive director of the MPF Schemes Authority (MPFA) might be appointed as chairperson of the Authority, the Chairman indicated intention to move a CSA to specify that only a non-executive director could be appointed as chairperson of the MPFA and that the Managing Director of the MPFA would be the deputy chairperson.
4. Miss CHAN Yuen-han considered that both the chairperson and deputy chairperson of the Authority should be non-executive directors so as to achieve real checks and balance on the executive arm of the MFPA. She also indicated intention to move a CSA to this effect.
5. Mr WONG Siu-yee recapitulated his view that the Managing Director should also assume chairmanship of the MPFA in order to enhance efficiency. He requested to put on record his strong dissatisfaction with the Administration ' s revised CSAs which had not provided for this arrangement. He indicated that in view of the Administration ' s latest CSAs, he might seek approval from the President of the Provisional Legislative Council for submitting a new set of CSAs to be moved by himself. He also stated his objection to the resumption of Second Reading debate on the Bill on 25 February 1998 as members should be allowed more time to study the various revised proposals.
6. In explaining the Administration ' s position, the Assistant Director/Scheme Operations (AD/SO) advised that the Administration ' s proposal would enable the Chief Executive to appoint either an executive director or a non-executive director to be the chairperson of the MPFA. If the person appointed as chairperson was a non-executive director, the person appointed as deputy chairperson had to be an executive director. This arrangement would ensure that the best administrative support would be provided to the non-executive director appointed as chairperson of the MPFA.
Proposed section 15
7. AD/SO advised that to address members ' concerns about the vesting of unclaimed benefits of scheme members, the Administration had proposed to add a new subsection (6) to specify that the periods of limitation prescribed by the Limitation Ordinance would not apply to unclaimed benefits of scheme members.
Proposed section 18
8. AD/SO informed members that having considered the comments of the Hong Kong Bar Association, the Administration would replace the expression "penalty interest" with "contribution surcharge".
Proposed section 22B
9. AD/SO said that in response to a suggestion from the Hong Kong Bar Association, the Administration would move a CSA to allow "a court of competent jurisdiction", instead of only the "District Court", to hear cases on recovery of annual registration fees from approved trustees. The same rationale would also be extended to cases concerning recovery of contributions and contribution surcharges from employers so as to avoid overloading the District Courts. Related proposed sections in the MPFSO would be amended accordingly.
Proposed section 42A
10. AD/SO advised that the wordings of the proposed section had been revised in response to concerns raised by the Hong Kong Society of Accountants (HKSA).
11. In reply to members, the Senior Assistant Legal Adviser (SALA) advised that apart from the CSAs relating to the reconstitution of the MPFA, the other CSAs proposed by the Administration sought mainly to address members ' concerns and to improve textual clarity. He confirmed that the legal and drafting aspects of the CSAs were in order.
IIIRevised draft MPF subsidiary legislation
(PLC Paper No. 903, 913 and 944)
12. Members noted that the Administration had issued revised drafts of the MPF Schemes (General) Regulation (the General Regulation) and the MPF Schemes (Exemption) Regulation. They deliberated on the following proposed sections of the General Regulation.
Proposed section 2
13. On the difference between "approved overseas bank" and "eligible overseas bank", the Assistant Director/Regulatory Standards (AD/RS) explained that the two expressions had different meanings and were used in different contexts. An "approved overseas bank" as defined in proposed section 2A could act as a substantial financial institution providing continuous financial support to a corporate trustee for the purpose of its application to become an approved trustee. On the other hand, "eligible overseas bank" was used in the context of permissible investments for MPF funds. For example, as provided in proposed section 11(1) of Schedule 3 of the General Regulation, the funds of a constituent fund of a MPF scheme might be deposited with an "eligible overseas bank".
Proposed section 3
|14. Referring to the definition of "approved overseas insurer" which specified inter alia that the insurer concerned was authorized to carry on insurance business in its place of incorporation, the Chairman was concerned about possible anomaly arising from the case where the overseas insurer concerned did not carry on insurance business in its place of incorporation. The Administration undertook to re-examine the wordings of the proposed section.
Proposed section 4
|15. Similar to proposed section 3, the Chairman opined that the definition of "overseas trust company" might also need to be revised. The Administration agreed to re-examine the proposed section.
Proposed Part XIV
16. AD/SO advised that Part XIV of the General Regulation on winding up of MPF schemes had been revised taking into account comments from members of the Bills Committee and the HKSA. The comments of the Official Receiver had also been sought in preparing the revised draft.
17. In response to a member ' s enquiry, AD/SO confirmed that the revised draft provisions in Part XIV of the General Regulation relating to winding up of MPF schemes would not be incompatible with existing legislation on liquidation of companies.
Members ' proposed amendments to the General Regulation
18. Miss CHAN Yuen-han said that the Democratic Alliance for Betterment of Hong Kong (DAB) might propose amendments to relevant sections in the General Regulation to cap the investment in shares of a MPF constituent fund at 50% of the total market value of the constituent fund. The DAB would also consider proposing amendments to provisions on the capital preservation product (CPP) to require a benchmark investment return of 1% below the prime interest rate.
19. The Deputy Chairman indicated that the Hong Kong Association for Democracy and People ' s Livelihood might propose the following two amendments to the General Regulation:
- to require that securities acquisition and disposal transactions between an investment manager and its associated stock broker or bank in any one financial year must not exceed 30%, instead of 50% as currently proposed, of the total value of the transactions; and
- to prohibit a MPF constituent fund to invest in shares listed in a stock exchange which was not a recognized stock exchange.
20. Mr WONG Siu-yee said that he might propose the following amendments:
- to delete provisions which allowed MPF custodians to enter into securities lending agreements; and
- to require at least 50%, instead of 30% as currently proposed, of the assets of a constituent fund to be held in Hong Kong dollar denominated investments.
The way forward
|21. As regards the way forward in examining the revised draft subsidiary legislation, members agreed that SALA should prepare a written report to advise whether the revisions made therein had addressed members ' concerns raised at past meetings. The report should be ready before the first meeting of the Subcommittee to be formed upon passage of the Bill to take up further scrutiny of the subsidiary legislation.
IV. Any other business
22. The Chairman concluded that the Bills Committee had completed its deliberation on the Bill and the draft MPF subsidiary legislation. Members noted that the Second Reading debate on the Bill would be resumed on 25 February 1998.
|23. The Chairman also reminded members that as agreed by the House Committee on 23 January 1998, a Subcommittee would be formed, subject to the Bill being passed on 25 February 1998, to continue scrutiny of the subsidiary legislation. The first meeting of the Subcommittee had tentatively been scheduled to be held on 11 March 1998.
24. The meeting ended at 10:30 am.
Provisional Legislative Council Secretariat
30 April 1998