• the first-mentioned company is a subsidiary of a subsidiary of the other company.

    20.Control of company's board

    (1)For the purposes of section 19 of this Schedule, the circumstances in which the composition of a company's board is to be taken to be controlled by another company include (but are not limited to) the circumstance in which the other company, by exercising a power exercisable by it (whether with or without the consent or concurrence of any other person), can appoint or remove all, or the majority, of the directors of the first-mentioned company.

    (2)For those purposes, the other company is taken to have power to make such an appointment if--

    1. a person can be appointed as a director of the first-mentioned company only by the exercise by the other company of such a power in the person's favour; or

    2. a person's appointment as a director of the first-mentioned company follows necessarily from the person being a director or other officer of the other company.

    21.Matters to be disregarded

    (1)This section applies for the purposes of determining whether a company is a subsidiary of another company.

    (2)Any shares held, or power exercisable, by the other company in a fiduciary capacity are to be treated as not held or exercisable by it.

    (3)Subject to subsections (4) and (5), any shares held, or power exercisable--

    1. by a person as a nominee for the other company (except where the other company is concerned only in a fiduciary capacity); or

    2. by, or by a nominee for, a subsidiary of the other company (not being a subsidiary that is concerned only in a fiduciary capacity),

    are to be treated as held or exercisable by the other company.

    (4)Any shares held, or power exercisable, by a person because of the provisions of debt securities of the first-mentioned company, or of a trust deed for securing an issue of such securities, are to be disregarded.

    (5)Any shares held, or powers exercisable, otherwise than as referred to in subsection (4), by, or by a nominee for, the other company or a subsidiary of it are to be treated as not held or exercisable by the other company if--

    1. the ordinary business of the other company, or that subsidiary, includes lending money; and

    2. the shares are held, or the powers are exercisable, only by way of security given for the purposes of a transaction entered into in the ordinary course of business in connection with lending money.

    (6)The reference in subsection (5)(b) to a transaction does not include a transaction entered into with an associate of the other company or an associate of the relevant subsidiary.

    22.Associated companies

    Companies are related to each other (and thus associates of each other) for the purposes of this Ordinance if one of the companies--

    1. has power to vote in respect of no less than 20 per cent of the voting shares of the other company; or

    2. holds no less than 20 per cent of the issued share capital of the other company; or

    3. is a subsidiary of the other company; or

    4. is a subsidiary of a company that is an associate of the other company.".
    88.

    Long title

    1. Repeal "監督一職" and substitute "管理局".

    2. Repeal "執行" and substitute "管理".

    3. Repeal "管理" and substitute "管控".
    89.

    Sections 4(2) and 48(1)

    Repeal "行政局" and substitute "行政會議".

    90.

    Sections 4(4), 17(3), (6) and (7), 27(2)(e) and (f), 28(1), 30(2), 31(1) and 32(2), (8) and (10)(b)(ii)

    Repeal "監督" wherever it appears and substitute "管理局".

    91.

    Part II, heading

    Repeal "監督" and substitute "管理局".

    92.

    Section 17(3)

    Repeal "該等規例" wherever it appears and substitute "《規例》".

    93.

    Section 17(6)

    Repeal "執行人" and substitute "管理人".

    94.

    Sections 17(6),35(8) and 48(2)

    Repeal "立法局" and substitute "立法會".

    95.

    Section 19(1)

    1. In paragraph (b), add "抄錄或" before "複印".

    2. In paragraph (c), repeal "獲授權人士" and substitute "獲授權人".

    3. In paragraph (d), repeal "獲授權人士" and substitute "獲授權人".
    96.

    Section 28(1)

    Repeal "提供指引" and substitute "提供指導".

    97.

    Section 31(1)

    Repeal "期間" and substitute "限期".

    98.

    Section 35(1)

    Repeal "to be known as the Mandatory Provident Fund Schemes Appeal Board" and substitute "called in English the "Mandatory Provident Fund Schemes Appeal Board" and in Chinese "強制性公積金計劃上訴委員會" ".

    99.

    Section 39(1) and (3)

    Repeal "上訴法院" and substitute "上訴法庭".

    100.

    Schedule 9

    1. In section 1(a), in new paragraph (cj), repeal "監督" and substitute "管理局".

    2. In section 2(a), in new paragraph (cj), repeal "監督" and substitute "管理局".


    SCHEDULE 2 [s. 3] Amendment of Insurance Companies Ordinance
    Item Provision affected Amendment
    1.

    Section 53A(3B)

    1. In paragraph (a), repeal "or" at the end.

    2. In paragraph (b), repeal the full stop and substitute "; or".

    3. Add--

      "(c) the Mandatory Provident Fund Schemes Authority established by section 6 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485).".

    2.

    Third Schedule, Part 1

    1. In paragraph 5(1), repeal "Subject to subparagraph (1A), the" and substitute "The".

    2. Repeal paragraph 5(1)(b)(i)(B) and substitute--

      "(B) if any part of the long term business is of a nature other than that specified in class G or H in Part 2 of the First Schedule, $2,000,000 or its equivalent; or".

    3. Repeal paragraph 5(1A).


    SCHEDULE 3 [s. 4] Amendment of Occupational Retirement Schemes Ordinance

    Item Provision affected Amendment
    1.

    Section 2

    Add--

    "(8)If an employer of relevant employees disposes of a business to another employer and the other employer continues to employ those employees in the business, this Ordinance applies to both employers as if they were the same employer and the employment of those employees by the other employer is taken to be a continuation of their existing contracts of employment.".

    2.

    Section 3(1)

    Add--

    "(aa)the scheme is a registered scheme within the meaning of section 2 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485);".

    3.

    New

    Add--

    "24A.Recovery of arrears in relation to certain registered schemes

    (1)In this section--

    "arrears" (欠款), in relation to a relevant scheme, means the amount of any contributions--

    1. to be made in accordance with the terms of the scheme and (where the scheme is a defined benefit scheme) recommendations, if any, referred to in section 24(1) which relate to the scheme;

    2. which are due and payable; and

    3. which have not been paid by the relevant employer;

    "relevant scheme" (有關計劃) means a registered scheme that is exempted under section 5 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485).

    (2)Where any arrears arise in respect of a relevant scheme--

    1. the arrears constitute a debt due and payable by the relevant employer to the Registrar; and

    2. the Registrar may, in accordance with rules made under section 73 for the purpose, impose on the relevant employer--
      1. a fine that does not exceed the greater of $5,000 and 10% of the arrears; and

      2. a requirement to pay an amount of penalty interest, not exceeding 15% per annum of the arrears.

    (3)Any fine and penalty interest imposed under subsection (2)(b) constitute a debt due and payable by the relevant employer to the Registrar.

    (4)If arrears arise in respect of a relevant scheme, the designated person shall--

    1. take reasonable steps to recover the arrears; and

    2. give notice in writing to the Registrar setting out particulars of the arrears, the scheme and the relevant employer to enable or assist the Registrar to perform any functions imposed on him by this section or rules made under section 73 for the purposes of this subsection.

    (5)The Registrar shall--

    1. on receipt of a notice referred to in subsection (4)(b), give notice in writing to the relevant employer, accompanied by a copy of this section in the Chinese and English languages, requesting him to pay the arrears on or before a date specified in the notice; and

    2. if the relevant employer does not comply with the request, take steps to recover the arrears and any fine and penalty interest imposed under subsection (2)(b).

    (6)The designated person shall--

    1. assist the Registrar to discharge the duty referred to in subsection (4)(b); and

    2. verify the calculation of any amount received from the relevant employer in payment of the arrears or any penalty interest imposed under subsection (2)(b).

    (7)The Registrar shall pay to the designated person any amount received from the relevant employer in payment of the arrears or any penalty interest imposed under subsection (2)(b).

    (8)The designated person shall pay into the scheme any amount referred to in subsection (6)(b).

    (9)The Registrar shall give notice in writing to the Authority, within the meaning of section 2 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485), setting out particulars of the arrears, the scheme and the relevant employer to enable or assist the Authority to perform a function referred to in section 78(1)(ea).

    (10)A designated person who, without reasonable excuse, fails to comply with a requirement imposed on designated persons by this section commits an offence and is liable on conviction to a fine at level 5 and to imprisonment for 1 year.".

    4.

    New

    Add--

    "70A.Certain amounts relating to severance payments and long service payments to be paid from vested benefits

    (1)If--

    1. an employer has paid to or in respect of an employee a severance payment or long service payment in accordance with the Employment Ordinance (Cap. 57), or a part of such a payment; and

    2. vested benefits are held in an occupational retirement scheme in respect of the employee; and

    3. a part of those benefits is attributable to contributions paid to the scheme by the employer in accordance with this Ordinance,

    the employer may make an application in writing to the administrator of the scheme for payment of an amount under subsection (2).

    (2)As soon as practicable after receiving an application under subsection (1) and on being satisfied as to the employer's entitlement to a payment under this subsection, the administrator of the occupational retirement scheme concerned must--

    1. if the severance payment or long service payment paid to the employee is not more than the amount of the part of the employee's vested benefits that is attributable to the employer's contributions, pay to the employer from those benefits an amount equal to the amount of that severance payment or long service payment; or

    2. if that severance payment or long service payment is more than the amount of the part of the employee's vested benefits that is attributable to the employer's contributions, pay to the employer from those vested benefits an amount equal to the amount of that part.

    This subsection is subject to subsection (5).

    (3)If--

    1. an employer has not paid the whole of a severance payment or long service payment to or in respect of an employee as required by the Employment Ordinance (Cap. 57); and

    2. vested benefits are held in an occupational etirement scheme in respect of the employee; and

    3. a part of those benefits is attributable to contributions paid to the scheme by the employer in accordance with this Ordinance,

    an application may be made in writing by or in respect of the employee to the administrator of the scheme for payment of an amount under subsection (4).

    (4)As soon as practicable after receiving an application under subsection (3), the administrator of the occupational retirement scheme concerned must, on being satisfied that an employer has not paid the whole of a severance payment or long service payment required to be paid to or in respect of the employee concerned--

    1. if the amount of the severance payment or long service payment that has not been paid to the employee is not more than the amount of the part of the employee's vested benefits attributable to the employer's contributions, pay to or in respect of the employee from those vested benefits an amount equal to the amount of that severance payment or long service payment to the extent that it has not been paid; or

    2. if the amount of the severance payment or long service payment that has not been paid is more than the amount of the part of

    the employee's vested benefits attributable to the employer's contributions, pay to or in respect of the employee from those benefits an amount equal to the amount of that part.

    (5)If--

    1. only a part of a severance payment or long service payment has been paid to or in respect of an employee; and

    2. the amount of the employee's vested benefits attributable to the employer's contributions is more than the unpaid part of the severance payment or long service payment but less than the total payment that is required to be made,

    the employer is entitled to be paid under subsection (2) the amount of those vested benefits only to the extent that they exceed the unpaid part of the severance payment or long service payment.

    (6)If--

    1. a change has occurred (whether by virtue of a sale or other disposition or by operation of law) in the ownership of a business in which a person is employed, or in a part of such a business, and either --
      1. the person's contract of employment (with the substitu-tion of the new owner of the business for the previous owner) is renewed by that new owner; or

      2. the person is re-engaged by that new owner under a new contract of employment; or

    2. a person is taken into the employment of an associated company of another company by which the person was employed immediately before the person was taken into that employment,

    this section applies to a severance payment or long service payment, or a contribution, paid by the previous owner as if it had been paid by the new owner or the associated company. This subsection has effect whether or not the previous owner may have terminated the employee's contract in accordance with section 6 or 7 of the Employment Ordinance (Cap. 57).

    (7)For the purposes of subsection (6), 2 companies are taken to be associated companies if one is the subsidiary of the other, or both are subsidiaries of a further company.

    (8)This section also applies, with any necessary modifications, to an occupational retirement scheme within the meaning of the Employment Ordinance (Cap. 57) that is not an occupational retirement scheme within the meaning of this Ordinance.".

    5.

    Section 73(1)

    Add--

    "(ea) for the purposes of section 24A;".

    6.

    Section 78(1)

    Add--

    "(ea) to the Authority, within the meaning of section 2 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485), if, in the opinion of the Registrar, the disclosure will enable or assist the Authority to perform a function conferred or imposed on the Authority by that Ordinance or any other law;".

    SCHEDULE 4 [s. 5] Amendment of Employment Ordinance
    Item Provision affected Amendment
    1.

    Section 2(1)

    1. Repeal the definition of "retirement scheme".

    2. Add--

    " "mandatory provident fund scheme" (強制性公積金計劃) means a provident fund scheme registered under the Mandatory Provident Fund Schemes Ordinance (Cap. 485);

    "occupational retirement scheme" (職業退休計劃) means a scheme or arrangement under which benefits, based on length of service, are payable in respect of employees on retirement, death, incapacity or termination of service, but does not include a mandatory provident fund scheme;

    "relevant mandatory provident fund scheme benefit" (有關強制性公積金計劃權益), in relation to an employee, means the accrued benefits of the employee held by the approved trustee of a mandatory provident fund scheme in respect of the employee, but does not include any part of the benefit that is attributable to the contributions paid to the scheme by the employee;

    "relevant occupational retirement scheme benefit" (有關職業退休計劃利益), in relation to an employee, means a benefit payable under an occupational retirement scheme on the retirement, death, incapacity or termination of service of the employee, but does not include any part of the benefit that is attributable to the contributions paid to the scheme by the employee;".

    2.

    Sections 31I and 31IA

    Repeal and substitute--

    "31I.Severance payment to be reduced by amount of gratuities and benefits in certain cases

    If an employee becomes entitled to payment of a severance payment under this Part and--

    1. because of the operation of the employee's contract of employment, one or more gratuities based on length of service or one or more relevant occupational retirement scheme benefits have been paid to the employee; or

    2. a relevant mandatory provident fund scheme benefit is being held in a mandatory provident fund scheme in respect of the employee,

    the severance payment is to be reduced by the total amount of all of the gratuities and benefits to the extent that they relate to the employee's years of service for which the severance payment is payable.

    31IA. Gratuity or benefit to be reduced by amount of severance payment in certain cases

    (1)If--

    1. because of the operation of the employee's contract of employment, an employee has become entitled to payment of a gratuity based on length of service, or to payment of a relevant occupational retirement scheme benefit; or

    2. a relevant mandatory provident fund scheme benefit is being held in a mandatory provident fund scheme in respect of the employee,

    and the employee has been paid a severance payment under this Part, the gratuity or benefit is, to the extent that it is attributable to the same years of service as those for which the severance payment is payable, to be reduced by the whole amount of the severance payment.

    (2)Subsection (1) has effect even though the years of service for which the severance payment was made exceed those to which the gratuity or benefit is attributable.

    (3)Section 70A of the Occupational Retirement Schemes Ordinance (Cap. 426) and section 12A of the Mandatory Provident Fund Schemes Ordinance (Cap. 485) have effect in relation to this section.".

    3.

    Sections 31Y, 31YAA and

    31YA

    Repeal and substitute--

    "31Y.Long service payment to be reduced by amount of gratuities and benefits in certain cases

    If an employee becomes entitled to payment of a long service payment under this Part and--

    1. because of the operation of the employee's contract of employment, one or more gratuities based on length of service or one or more relevant occupational retirement scheme benefits have been paid to the employee; or

    2. a relevant mandatory provident fund scheme benefit is being held in a mandatory provident fund scheme in respect of the employee,

    the long service payment is to be reduced by the total amount of all of the gratuities and benefits to the extent that they relate to the employee's years of service for which the long service payment is payable.

    31YAA.Gratuity or benefit to be reduced by amount of long service payment in certain cases

    (1)If--

    1. because of the operation of the employee's contract of employment, an employee has become entitled to payment of a gratuity based on length of service, or to payment of a relevant occupational retirement scheme benefit; or

    2. a relevant mandatory provident fund scheme benefit is being held in a mandatory provident fund scheme in respect of the employee,

    and the employee has been paid a long service payment under this Part, the gratuity or benefit is, to the extent that it is attributable to the same years of service as those for which the long service payment is payable, to be reduced by the whole of the long service payment.

    (2)Subsection (1) has effect even though the years of service for which the long service payment was made exceed those to which the gratuity or benefit is attributable.

    (3)Section 70A of the Occupational Retirement Schemes Ordinance (Cap. 426) and section 12A of the Mandatory Provident Fund Schemes Ordinance (Cap. 485) have effect in relation to this section.

    31YA.Reduction of long service payment and other amounts on employee's death

    (1)If--

    1. an employee has died; and

    2. as a result of the death, a person becomes entitled to payment of a long service payment and--
    1. because of the operation of the employee's contract of employment, one or more gratuities based on length of service or one or more relevant occupational retirement scheme benefits have been paid to the person in respect of the employee; or

    2. a relevant mandatory provident fund scheme benefit is being held in a mandatory provident fund scheme in respect of the employee, or has been paid to or in respect of the employee,

    the long service payment is to be reduced by the total amount of all of the gratuities and benefits to or in respect of the employee to the extent that they relate to the employee's years of service for which the long service payment is payable.

    (2)If--

    1. an employee has died; and

    2. as a result of the death, a person--
    1. because of the operation of the employee's contract of employ-ment, becomes entitled to payment of a gratuity based on length of service or to payment of a relevant occupational retirement scheme benefit; or

    2. becomes entitled to payment of a relevant mandatory provident fund scheme benefit; and
    1. a long service payment under this Part has been paid to the person in respect of the employee,

    the gratuity or benefit is, to the extent that it is attributable to the same years of service as those for which the long service payment is payable, to be reduced by the whole of the long service payment.

    (3)Subsection (2) has effect even though the years of service for which the long service payment was made exceed those to which the gratuity or benefit is attributable.

    (4)If--

    1. the employer of an employee who has died is, as a result of the employee's death, required to make a long service payment under section 31RA to a person; and

    2. another person is entitled to one or more gratuities, relevant occupational retirement scheme benefits or relevant mandatory provident fund scheme benefits as a result of that death,

    that other person is entitled to be paid the gratuities, relevant occupational retirement scheme benefits and relevant mandatory provident fund scheme benefits relating to the employee's years of service only to the extent that the total amount of those gratuities and benefits exceeds the amount of the long service payment.

    (5)If--

    1. the employer of an employee who has died has made a long service payment under section 31RA to a person as a result of the employee's death; and

    2. the administrator of an occupational retirement scheme has paid a relevant occupational retirement scheme benefit, or the approved trustee of a mandatory provident fund scheme has paid a relevant mandatory provident fund scheme benefit, to another person as a result of that death,

    that other person must repay the benefit to that administrator or trustee except for the amount of the excess referred to in subsection (4).

    (6)On being repaid the benefit, the administrator or trustee must pay it to the employer concerned.

    (7)Section 70A of the Occupational Retirement Schemes Ordinance (Cap. 426) and section 12A of the Mandatory Provident Fund Schemes Ordinance (Cap. 485) have effect in relation to this section.".

    SCHEDULE 5 [s. 6] Amendment of Inland Revenue Ordinance
    Item Provision affected Amendment
    1.

    Section 2(1), definition of "recognized occupational retirement scheme"

    In paragraph (e), repeal "any Ordinance" and substitute "an Ordinance other than the Mandatory Provident Fund Schemes Ordinance (Cap. 485)".

    2.

    Section 2(1)

    Add--

    " "mandatory contributions" (強制性供款), in relation to a mandatory provident fund scheme, means mandatory contributions paid to the scheme in accordance with the Mandatory Provident Fund Schemes Ordinance (Cap. 485);

    "mandatory provident fund scheme" (強制性公積金計劃) means a provident fund scheme registered under the Mandatory Provident Fund Schemes Ordinance (Cap. 485);

    "voluntary contributions" (自願性供款), in relation to a mandatory provident fund scheme, means voluntary contributions paid to the scheme in accordance with section 11 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485);".

    3.

    Section 2

    Add--

    "(4)Whether or not a person who is or was formerly a member of a mandatory provident fund scheme has permanently departed from Hong Kong is, for the purposes of this Ordinance, to be determined by reference to regulations in force under the Mandatory Provident Fund Schemes Ordinance (Cap. 485).".

    4.

    Section 8(2)

    Repeal paragraph (cb) and substitute--

    "(cb)so much of accrued benefits received from the approved trustee of a mandatory provident fund scheme on a person's retirement from employment, death or incapacity or permanent departure from Hong Kong as is attributable to mandatory contributions;

    (cc)subject to subsections (4) and (5)--

    1. any sum (not being a pension) withdrawn from a recognized occupational retirement scheme on retirement, death, incapacity or termination of service; and

    2. a sum equal to so much of the accrued benefit received from the approved trustee of a mandatory provident fund scheme on retirement, death, incapacity, termination of service, or taken to have been received from the approved trustee of such a scheme as provided by subsection (9), as is attributable to voluntary contributions paid to the scheme by an employer;".

    5.

    Section 8(3)

    Repeal "(cb)" and substitute "(cc)".

    6.

    Section 8(4)

    Repeal and substitute--

    "(4)For the purposes of paragraphs (c) and (cc) of subsection (2), an amount that a person--

    1. has received from a recognized occupational retirement scheme on the person's termination of service; or

    2. has received, or is taken to have been received, from a mandatory provident fund scheme on termination of service,

    may be excluded under those paragraphs to the extent that it is attributable to voluntary contributions made by the person's employer and does not exceed the proportionate benefit calculated in accordance with subsection (5). However, where, in the case of a recognized occupational retirement scheme approved by the Commissioner under section 87A before its repeal by the Inland Revenue (Amendment) (No. 5) Ordinance 1993 (76 of 1993), an amount payable on termination of service in accordance with the rules of the scheme (as approved by the Commissioner before that repeal) exceeds the proportionate benefit so calculated, that amount is to be taken to be the proportionate benefit.

    (5)For the purposes of subsection (4), the formula for calculating the proportionate benefit is--

    PB= CMS /120×AB

    where--

    PB is the proportionate benefit to be calculated;

    CMS is the number of completed months of service that the person has completed with the employer; and

    AB the amount of the person's accrued benefit.

    (6)In subsection (5), "accrued benefit" (累算權益), in relation to a person, means--

    1. if the person is a member of a recognized occupational retirement scheme, the maximum benefit that the person would have been entitled to receive from the scheme for the person's service recognized for the purposes of the scheme if, at the date on which the person's employment was terminated, the person had retired (within the meaning of subsection (3)); and

    2. if the person is a member of a mandatory provident fund scheme, the person's accrued benefits attributable to voluntary contributions paid to the scheme in respect of the person for that service.

    (7)If--

    1. the recognized occupational retirement scheme referred to in subsection (2)(cc)(i) is established by an employer who is not chargeable to tax under Part IV; or

    2. the employer who contributes to the mandatory provident fund scheme referred to in subsection (2)(cc)(ii) is not so chargeable,

    the sum excluded by subsection (2)(cc) must not, with respect to the part of the sum that is attributable to the employer's voluntary contributions to the scheme exceed the amount calculated in accordance with subsection (8).

    (8)For the purposes of subsection (7), the formula is--

    A=[(EI×15)×YCS]-RAB

    [( 100) ]

    where--

    A is the amount to be calculated;

    EI is the employee's income from the employee's office or employment for the period of 12 months preceding the date on which the relevant benefit is received or taken to have been received;

    YCS is the employee's completed years of service with the employee's employer;

    RAB is--

    1. in the case of a recognized occupational retirement scheme, zero; or

    2. in the case of a mandatory provident fund scheme, so much of the relevant accrued benefit that the employee has received from the scheme as is attributable to mandatory contributions paid to the scheme by the person's employer.

    (9)If--

    1. the service of a person in respect of whom an employer has paid voluntary contributions to a mandatory provident fund scheme is terminated; and

    2. the accrued benefit attributable to those contributions is retained within the scheme or is transferred to another mandatory provident fund scheme,

    the person is, for the purposes of subsection (2)(cc), taken to have received from the scheme on the date of termination of service such part of the person's accrued benefit as is attributable to those contributions.

    (10)Subsection (4) does not apply to a part of a person's accrued benefit in a mandatory provident fund scheme that has previously been taken to have been paid to the person because of the operation of subsection (9).".

    7.

    Section 9(1)

    1. In paragraph (aa), repeal ",as represents" and substitute "or mandatory provident fund scheme, as is attributable to".

    2. In paragraph (ab)--
      1. repeal "as represents" where it twice appears and substitute "as is attributable to";

      2. repeal "by reason other than" and substitute "otherwise than because of ";

      3. add "or" after "in respect of the employee;";

      4. repeal "section 8(4)(b)" and substitute "section 8(5)".

    (c)Add--

    "(ad) so much of the accrued benefit that an employee has received, or is taken to have received, from a mandatory provident fund scheme (otherwise than on retirement, death, incapacity or termination of service) as is attributable to contributions paid to the scheme by the employee's employer;

    (ae) so much of the accrued benefit that an employee has received, or is taken to have been received, from a mandatory provident fund scheme as is attributable to voluntary contributions paid to the scheme by the employee's employer that exceeds the proportionate benefit calculated in accordance with section 8(5);".

    8.

    Section 9(6)

    Add--

    " "accrued benefit" (累算權益) has the same meaning as in section 8(6);".

    9.

    Section 15(1)(h)

    Repeal and substitute--

    "(h) sums received by or accrued to a person as a refund to the person of--

    1. contributions paid as an employer to a recognized occupational retirement scheme; or

    2. voluntary contributions paid as an employer to a mandatory provident fund scheme,

    but only to the extent that the sums are allowed as deductions in ascertaining the person's assessable profits under this Part;".

    10.

    Section 16A(1)

    "(a) In paragraph (b), repeal "scheme," and substitute "scheme; or".

    (b)Add--

    "(c)a contribution, other than regular contributions, paid to a mandatory provident fund scheme,".

    11.

    Section 16A

    Add--

    "(3)For the purposes of subsection (1)(c), contributions are regular contributions if they are made to the mandatory provident fund scheme at regular intervals and are either of similar or substantially similar amounts or of amounts calculated by reference to a scale or a fixed percentage of a person's salary or other remuneration.".

    12.

    Section 17(1)

    1. Repeal paragraph (a) and substitute--

      "(a) domestic or private expenses, including--

      1. the cost of travelling between the person's residence and place of business; and

      2. contributions made to a mandatory provident fund scheme in the person's capacity as a member of the scheme;".
    2. Repeal paragraph (h) and substitute--

      "(h)any sums that the person has, as an employer, made in respect of an employee as--

      1. an ordinary annual contribution to a fund established under a recognized occupational retirement scheme; or

      2. an ordinary annual premium for a contract of insurance under such a scheme; or

      3. regular contributions made to a mandatory provident fund scheme,

        to the extent that the total of the payments exceeds 15 per cent of the total emoluments of the employee for the period to which the payments relate;".



    3. Repeal paragraph (k) and substitute--

      "(k)any sum that the person has, as an employer, made in respect of an employee as--

      1. a contribution to a fund established under a recognized occupational retirement scheme; or

      2. a premium for a contract of insurance under such a scheme; or

      3. a contribution to a mandatory provident fund scheme,

      where provision for payment of the sum has been made in a prior year of assessment and a deduction has been allowed for the provision in that or another prior year of assessment; or".

    4. In paragraph (l)(i), repeal "made by an employer" and substitute "that the person has, as an employer, made".

    5. In paragraph (l)(ii), repeal "made by an employer" and substitute "that that person has made as an employer".

    13.

    Section 17(2)

    Repeal and substitute--

    "(2)In computing the profits or losses of a person carrying on a trade, profession or business, no deduction is allowable for--

    1. salaries or other remuneration of the person's spouse; or

    2. interest on capital or loans provided by that spouse; or

    3. a contribution made to a mandatory provident fund scheme in respect of that spouse; or

    4. in the case of a partnership--
      1. salaries or other remuneration of a partner or a partner's spouse; or

      2. interest on capital or loans provided by a partner or by a partner's spouse; or

      3. a contribution made to a mandatory provident fund scheme in respect of a partner or a partner's spouse.

    (3)In this section--

    "regular contributions" (固定供款) has the same meaning as in section 16A(3).".

     

    SCHEDULE 6 [s. 7]
    Amendment of Banking Ordinance

    Item

    Provision affected

    Amendment

    1.

    Section 120(5A)

    1. In paragraph (a), repeal "or" at the end.

    2. In paragraph (b), repeal the full stop and substitute "; or".

    3. Add--

      "(c)the Mandatory Provident Fund Schemes Authority established by section 6 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485).".

    --------------------

    SCHEDULE 7 [s. 8]
    Amendment of Prevention of Bribery Ordinance

    Item

    Provision affected

    Amendment

    1.

    Schedule

    Add--

    "86.Mandatory Provident Fund Schemes Authority.".



    SCHEDULE 8 [s. 9]
    Amendment of Defamation Ordinance

    Item

    Provision affected

    Amendment

    1.

    Schedule, Part II

    Add--

    "15.A copy of a fair and accurate report or summary of any report prepared and supplied for the purposes of section 30 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485) or prepared and published under section 32 of that Ordinance.".

    --------------------

     

    SCHEDULE 9 [s. 10]
    Amendment of Securities and Futures Commission Ordinance

    Item

    Provision affected

    Amendment

    1.

    Section 59(2)(e)

    Add "the Mandatory Provident Fund Schemes Authority established by section 6 of the Mandatory Provident Fund Schemes Ordinance (Cap. 485)," after "Insurance Authority,".

    --------------------

     

    SCHEDULE 10 [s. 11]

     

    Amendment of Rehabilitation of Offenders Ordinance

    Item

    Provision affected

    Amendment

    1.

    Section 4

    (a)In subsection (1), add--

    "(ea) proceedings under the Mandatory Provident Fund Schemes Ordinance (Cap. 485)--

    1. relating to a person's suitability to become or continue to be an approved trustee or a controller of an approved trustee; or

    2. relating to a person's suitability to become or continue to be a trustee or controller of a trustee of an occupational retirement schem exempted under section 5 of that Ordinance or the subject of an application referred to in subsection (2)(a) of that section;".

    (b)Add--

    "(8)For the purposes of subsection (1)(ea), "controller" (控權人), in relation to an approved trustee of a mandatory provident fund scheme, or a trustee of an occupational retirement scheme, that is a company, has the same meaning as in section 2(1) of the Mandatory Provident Fund Schemes Ordinance (Cap. 485).".

    2.

    Schedule, Part 1

    Add--

    "13.Any office occupied by the executive, professional, managerial, technical, inspectorate or secretarial staff of the Mandatory Provident Fund Schemes Authority.".

    --------------------

     

    SCHEDULE 11 . 12]

     

    Amendment of Protection of Wages on Insolvency Ordinance

    Item

    Provision affected

    Amendment

    1.

    Section 2

    1. Repeal the definition of "retirement scheme".

    2. Add--

    " "mandatory provident fund scheme" (強制性公積金計劃) means a mandatory provident fund scheme registered under the Mandatory Provident Fund Schemes Ordinance (Cap. 485);

    "occupational retirement scheme" (職業退休計劃) means a scheme or arrangement under which benefits, based on length of service, are payable in respect of employees on retirement, death, incapacity or termination of service, but does not include a mandatory provident fund scheme;".

    2.

    Section 24(2B) and (2C)

    Repeal and substitute--

    "(2B)If--

    1. an applicant is entitled to a payment under an occupational retirement scheme or is a person for whom accrued benefits in a mandatory provident fund scheme are held; and

    2. an ex gratia payment in the form of a severance payment is made to the applicant under section 16,

    the applicant's rights and remedies are, to the extent of the amount of the ex gratia payment, transferred to, and vested in, the Board for the benefit of the Fund. The Board may take such steps as it considers necessary to enforce those rights and remedies.

    (2C) Subsection (2B) applies to a payment under an occupational retirement scheme or to the accrued benefits held in a mandatory provident fund scheme only to the extent that the payment is, or the benefits are, attributable to contributions made to the scheme by the employer who was liable to pay the relevant severance payment to the applicant.".

    SCHEDULE 12 [s. 13]

     

    Amendment of Estate Duty Ordinance

    Item

    Provision affected

    Amendment

    1.

    Section 10

    1. In paragraph (h), repeal the full stop and substitute a semicolon.

    2. Add--
    1. any property consisting of the accrued benefits of a deceased member of a provident fund scheme registered under the Mandatory Provident Fund Schemes Ordinance (Cap. 485) that are to be paid in accordance with section 15(4) of that Ordinance.".

  • Explanatory Memorandum

     

    This Bill amends the Mandatory Provident Fund Schemes Ordinance (Cap. 485) ("the MPFS Ordinance") for the following purposes--

    • to reconstitute the Mandatory Provident Fund Schemes Authority ("the MPFA") as a corporation, to provide for the finances of the MPFA so that it can operate independently of the Government, and to impose requirements on the MPFA to make it more accountable for its performance;

    • to establish the Mandatory Provident Fund Schemes Advisory Board to provide advice on matters relating to the operation of the MPFS Ordinance and to the administration and operation of mandatory provident fund schemes;

    • to establish the MPF Industry Schemes Committee to provide advice on matters concerning industry schemes;

    • to provide for the establishment, registration, administration and operation of industry schemes;

    • to provide for the payment and recovery of penalty interest from employers and others who are in arrears with the payment of contributions required to be paid under the MPFS Ordinance;

    • to enable employers who have paid severance payments or long service payments to or in respect of their employees to recover the amounts of those payments from the accrued benefits of those employees who are scheme members and to enable employees who are scheme members to recover from their accrued benefits amounts due to them from their employers as severance payments or long service payments;

    • to impose financial penalties for non-compliance with certain duties and requirements imposed by or under the MPFS Ordinance;

    • to empower the Court of First Instance to make orders for the enforcement of undertakings given by approved trustees for the purpose of the MPFS Ordinance and to make orders requiring persons to comply with requirements imposed by or under the Ordinance and to restrain persons from contravening provisions of that Ordinance;

    • to enable authorized persons to enter and inspect premises used in connection with the administration of a registered scheme;

    • to require approved trustees of registered scheme to lodge annual statements relating to those schemes and to pay annual registration fees in respect of those schemes;

    • to make fresh provision for the winding up of registered schemes;

    • to enable existing registered schemes to be merged and to enable an existing registered scheme to be divided so as to create 2 or more new schemes;

    • to make further provision with respect to the disclosure of information by the MPFA to public officers and other public authorities;

    • to protect auditors and others from the consequences of disclosing information to the MPFA;

    • to make fresh provision with respect to forms required for the purposes of the MPFS Ordinance;

    • to insert provisions in the Schedules to the MPFS Ordinance that were not completed when the Ordinance was originally enacted;

    • to make minor, ancillary or consequential changes to existing provisions of the MPFS Ordinance.
    1. The Bill also makes consequential amendments to the following Ordinances--
    • the Insurance Companies Ordinance (Cap. 41);

    • the Occupational Retirement Schemes Ordinance (Cap. 426);

    • the Employment Ordinance (Cap. 57);

    • the Inland Revenue Ordinance (Cap. 112);

    • the Banking Ordinance (Cap. 155);

    • the Prevention of Bribery Ordinance (Cap. 201);

    • the Defamation Ordinance (Cap. 21);

    • the Securities and Futures Commission Ordinance (Cap. 24);

    • the Rehabilitation of Offenders Ordinance (Cap. 297);

    • the Protection of Wages on Insolvency Ordinance (Cap. 380);

    • the Estate Duty Ordinance (Cap. 111).

    3. Clause 1 specifies the short title of the proposed Ordinance and provides for its provisions to come into force on a day to be fixed by the Financial Secretary.

    4. Clause 2 gives effect to Schedule 1, which contains amendments to the MPFS Ordinance.

    5. Clause 3 gives effect to Schedule 2, which contains consequential amendments to the Insurance Companies Ordinance (Cap. 41).

    6. Clause 4 gives effect to Schedule 3, which contains consequential amendments to the Occupational Retirement Schemes Ordinance (Cap. 426).

    7. Clause 5 gives effect to Schedule 4, which contains consequential amendments to the Employment Ordinance (Cap. 57).

    8. Clause 6 gives effect to Schedule 5, which contains consequential amendments to the Inland Revenue Ordinance (Cap. 112).

    9. Clause 7 gives effect to Schedule 6, which contains consequential amendments to the Banking Ordinance (Cap. 155).

    10. Clause 8 gives effect to Schedule 7, which contains a consequential amendment to the Prevention of Bribery Ordinance (Cap. 201).

    11. Clause 9 gives effect to Schedule 8, which contains a consequential amendment to the Defamation Ordinance (Cap. 21).

    12. Clause 10 gives effect to Schedule 9, which contains consequential amendments to the Securities and Futures Commission Ordinance (Cap. 24).

    13. Clause 11 gives effect to Schedule 10, which contains consequential amendments to the Rehabilitation of Offenders Ordinance (Cap. 297).

    14. Clause 12 gives effect to Schedule 11, which contains a consequential amendment to the Protection of Wages on Insolvency Ordinance (Cap. 380).

    15. Clause 13 gives effect to Schedule 12, which contains a consequential amendment to the Estate Duty Ordinance (Cap. 111).

    16. Schedule 1, items 1 to 15, amend the MPFS Ordinance, section 2 (Interpretation)--

    1. by replacing the definitions of "approved trustee", "Authority" (the MPFA), "Court" (the Court of First Instance), "employer sponsored scheme", "master trust scheme", "maximum level of relevant income" and "registered scheme" with new definitions; and

    2. by adding the new definitions of "administer", "Advisory Board" (the proposed Mandatory Provident Fund Schemes Advisory Board), "authorized person" (appointed or authorized by the MPFA), "casual employee" (employed on a day to day basis or for a fixed period of less than 60 days in an industry for which an industry scheme is registered (proposed section 2(2) of the MPFS Ordinance), "close relative", "chief executive" (of a company), "company", "compensation fund" (established in accordance with section 17 of the MPFS Ordinance), "controller" (of a company), "Executive Director" (of the MPFA), "functions", "the guidelines" (issued by the MPFA), "industry", "industry scheme" (a registered scheme that is open to persons engaged in a particular industry or class of industries), "Industry Schemes Committee", "mandatory contribution" (which replaces the expression "statutory minimum contribution" in the MPFS Ordinance), "occupational retirement scheme" (under the Occupational Retirement Schemes Ordinance (Cap. 426)), "officer" (a director or the chief executive of a company), "oversea company", "participating employer", "premises", "record", "the regulations" (regulations made by the Chief Executive in Council under section 46 of the MPFS Ordinance), "related company" and "subsidiary" (in relation to a company), "remuneration", "the rules" (rules made by the MPFA under section 47 of the MPFS Ordinance), "service provider" (appointed or engaged by the approved trustee of a registered scheme to provide services for the purposes of the scheme), "share" (in relation to a company), "spouse", "total incapacity" (of a scheme member), "voluntary contribution" and "voting share"; and

    3. by repealing the definitions of "auditor", "corporate trustee", "prescribed", "relevant Ordinance", "statutory corporation" and "statutory minimum contribution" because they will become redundant on the enactment of this Bill; and

    4. by substituting for the references to "Governor" in the MPFS Ordinance references to the Chief Executive; and

    5. by amending the definitions of "minimum level of relevant income", "provident fund scheme", "relevant income" and "retirement age".

    17.Schedule 1, item 16, substitutes for section 5 (Exemptions in respect of occupational retirement schemes) a new section which will enable the MPFA to exempt from the operation of the MPFS Ordinance the members of certain occupational retirement schemes and the employers of those members if the schemes comply with regulations to be made for the purposes of the section. The item also adds proposed section 5A, which provides for the establishment of a register of occupational retirement schemes in respect of which the MPFA has granted an exemption under the new section 5.

    18.Schedule 1, item 17, replaces section 6 of the MPFS Ordinance (Establishment of Mandatory Provident Fund Schemes Authority) with the following new sections--

    • Proposed section 6, which will reconstitute the MPFA as a corporation and provide for the appointment of the Executive Director of the MPFA;

    • Proposed section 6A, which prescribes the functions of the MPFA.

    • Proposed section 6B, which will enable the MPFA to delegate its functions under the MPFS Ordinance;

    • Proposed section 6C, which will empower the MPFA to appoint staff and consultants to enable it to perform its functions;

    • Proposed section 6D, which will empower the MPFA to issue guidelines for the purposes of the MPFS Ordinance;

    • Proposed section 6E, which will require the MPFA to prepare annual reports with respect to the operation of the MPFS Ordinance and its activities;

    • Proposed sections 6F and 6G, which will require the MPFA to prepare a corporate plan for each year and certain other reports;

    • Proposed section 6H, which provides for the financial year of the MPFA;

    • Proposed section 6I, which provides for the establishment at a bank located in Hong Kong of the "MPFA Administration Account";

    • Proposed section 6J, which will require the MPFA to keep proper accounting records;

    • Proposed section 6K, which will require the MPFA to appoint an auditor to audit its accounts;

    • Proposed section 6L, which will require the MPFA to have its accounts audited by its auditor;

    • Proposed section 6M, which will enable the MPFA to invest its surplus funds;

    • Proposed sections 6N, 6O and 6P, which respectively establish the Mandatory Provident Fund Schemes Advisory Board, prescribe the Board's functions and provide for the conduct of the Board's meetings;

    • Proposed sections 6Q, 6R and 6S, which respectively establish the MPF Industry Schemes Committee, prescribe the Committee's functions and provide for the conduct of the Committee's meetings.

    19.Schedule 1, item 18, substitutes for section 7 (Establishment of a provident fund scheme and obligation to contribute) the following new sections--

    • proposed section 7, which will require an employer of relevant employees to arrange for those employees to become members of a registered scheme;

    • proposed section 7A, which will require an employer to make contributions from the employer's own resources in respect of those employees who are members of a registered scheme, to make deductions from the salaries or wages ("relevant income") of those employees and to pay both the employer's contributions and employees contributions to the approved trustee of the scheme;

    • proposed section 7B, which provides that proposed sections 7 and 7A are not, except in the case of a casual employee, to apply to an employee who has not been employed by the relevant employer for at least 60 days;

    • proposed section 7C, which will require self-employed persons to become members of a registered scheme and to contribute to those schemes.

    20.Schedule 1, items 19 and 83, will respectively repeal section 8 and Schedule 4, which contain the prescribed percentage contributions of employers, employees and self-employed persons. Those provisions are now covered by proposed sections 7A and 7C.

    21.Schedule 1, items 20, 21, 81 and 82, make minor amendments of a consequential nature to sections 9 and 10 and Schedules 2 and 3. Those provisions prescribe the maximum and minimum levels of mandatory contributions for the purposes of the MPFS Ordinance.

    22.Schedule 1, item 22, substitutes for section 11 a new section, which provides for the payment of non-mandatory contributions (referred to in the new section as voluntary contributions). The existing subsections dealing with voluntary contributions made to a registered scheme after employees or self-employed persons have reached the retirement age are recast so as to make them consistent with the other provisions of the section. The substituted section will also allow self-employed persons to contribute more than the relevant mandatory contributions (proposed section 11(5)) and self-employed persons as well as employees to make voluntary contributions even if their "relevant income" is less than the minimum level of income (proposed section 11(6)). The existing subsections (5) and (6) have been found to be unworkable and so have been replaced by subsections (7), (8) and (9) of the substituted section. The new subsections make it clear that both the MPFS Ordinance (with certain exceptions) and the governing rules of the registered scheme concerned apply to voluntary contributions in the same way as they apply to mandatory contributions. Proposed subsection (9) confers power to make regulations dealing with matters covered by the exceptions referred to above.

    23.Schedule 1, item 23, substitutes a new section for section 12 (Vesting of contributions as accrued benefits). The new section simplifies and clarifies the existing section and makes it clear that the vesting of accrued benefits is to be subject to proposed section 12A. (See Schedule 1, item 24.)

    24.Schedule 1, item 24, inserts proposed section 12A into the MPFS Ordinance. The proposed section will enable an employer who has paid a severance payment or long service payment to an employee to recover an equivalent amount from that part of the employee's accrued benefits in the mandatory provident fund scheme that is attributable to contributions made in respect of the employee by that employer. The proposed section will also enable an employee who is entitled to a severance payment or long service payment that has not been made to recover from that part of those benefits an amount equal to the payment that has not been made.

    25.Schedule 1, item 25, substitutes a new section for section 14 (Portability of accrued benefits). The proposed section specifies the respective circumstances in which the accrued benefits of members of an employer sponsored scheme, a master trust scheme or an industry scheme are to be transferred to another scheme or another account within the same scheme. The new section will also require those transfers to be made in accordance with the requirements prescribed by the regulations. A member of an employer sponsored scheme who leaves his or her employment will be required to transfer the member's accrued benefits to another registered scheme. With that exception, a scheme member will not be required to transfer the member's accrued benefits to another registered scheme when the member's employment with an employer is terminated. The proposed section will also provide more flexibility by allowing scheme members to transfer their accrued benefits derived from former employment to other registered schemes at any time and not, as present, only on the occurrence of a specified event, such as a change of employer.

    26.Schedule 1, items 26 and 27, amend section 15, which prescribes the circumstances in which the accrued benefits of a scheme member can be paid and will allow the payment of those benefits only in those circumstances. Item 26 makes minor consequential amendments to subsection (1) of the section. Item 27 replaces subsection (3) of the section (which has been found to be unworkable) and subsection (4) with clearer and simpler provisions. The question of "set-off" (referred in the existing subsection (3)) is now dealt with in proposed section 12A. (See Schedule 1, item 24.)

    27.Schedule 1, item 28, amends section 16 (Protection of accrued benefits) so as to provide that only those accrued benefits of a scheme member that are derived from mandatory contributions are protected from execution of a judgement debt, a charge, a transfer or other disposition.

    28.Schedule 1, items 29 to 33, amends section 17 (Compensation for losses in respect of accrued benefits). The substituted subsections (1) and (2) clarify and simplify the existing subsections and will enable the compensation fund (which is to be established by the MPFA) to be applied for the purpose of compensating not just members of registered schemes but also other persons who have beneficial interests in those schemes for losses of accrued benefits where those losses are attributable to misfeasance or illegal conduct of trustees or other persons concerned with the administration of the schemes. Proposed subsection (5) will enable regulations to be made so as to provide for--

    • the administration of the compensation fund; and

    • the appointment of persons to be administrators of the fund; and

    • the payment of claims against the fund.

    29.Schedule 1, item 34, inserts into the MPFS Ordinance the following new sections--

    1. Proposed section 17A, which sets out--
    • the conditions and procedures for lodging a compensation claim from the compensation fund with the MPFA; and

    • the MPFA's duty to investigate the claim; and

    • the circumstances in which the claim should be dismissed.
    1. Proposed sections 17B and 17C, which provide for--
    • the MPFA's application to the Court (the Court of First Instance) to have a claim determined; and

    • the hearing and determination of the application; and

    • the payment of compensation (including interest) by the administrators as ordered by the Court.

    30.Schedule 1, item 35, substitutes a new section for section 18 (Default contributions). The substituted section extends and clarifies the provisions of the existing section and provides for--

    • the recovery of mandatory contributions that are in arrears (with penalty interest) by the MPFA through proceedings in the District Court; and

    • payment of the recovered amount to the approved trustee of the relevant scheme for crediting to the account of the scheme member concerned.

    31.Schedule 1, items 36 and 37, amend section 19 (Powers of Authority in relation to mandatory contributions). The amendments to subsection (1) are consequential on amendments made to other provisions of the MPFS Ordinance. Subsection (2) is being replaced by new subsections that clarify and expand the provisions of section 19 that relate to the exercise of an authorized person's powers under the section (including the power to enter and inspect premises in order to find out whether or not the requirements of the Ordinance are being complied with).

    32.Schedule 1, item 38, repeals sections 20 to 22 and substitutes the following new sections--

    • Proposed section 20 (Approval of trustees) clarifies the provisions of the existing section and adds further provisions on application for approval of trustees of a scheme. The substituted section contains new provisions that are intended--
      1. to preclude applications for approval from certain persons, such as undischarged bankrupts; and

      2. to give the applicant an opportunity to show cause why the MPFA should not refuse an application; and

      3. to require an applicant to give an undertaking not to refuse scheme membership to a person who complies with the relevant requirements; and

      4. to empower the MPFA to require an applicant to give other undertakings; and

      5. to require the MPFA to give reasons for rejecting an application.
    • Proposed sections 20A and 20B will empower the MPFA to suspend and to revoke the approval of trustees under section 20. The sections deal with the procedures that the MPFA will be required to follow in suspending or revoking such an approval. The MPFA will be required to give opportunities to trustees to make representations to it before suspending or revoking an approval and to give reasons for suspending or revoking an approval.

    • Proposed section 20C provides for a register of approved trustees to be established.

    • Proposed section 21 recasts the existing section 21 (which provides for the registration of provident fund schemes by the MPFA) so as--

    (a)to make different provision for applications to register schemes as employer sponsored schemes and master trust schemes; and

    (b)to require the MPFA to allow an applicant to register a scheme an opportunity to make representations to the MPFA before rejecting the application; and

    (c)to require the MPFA to give reasons for rejecting an application to register a scheme; and

    (d)to require the MPFA to issue certificates of registration on registering a scheme under the section.

    • Proposed section 21A provides for the registration of industry schemes. The proposed section will empower the MPFA to invite existing approved trustees (which must be companies) to lodge applications for the registration of an industry scheme. That section also specifies the requirements for making applications by corporate trustees and the selection criteria and procedures. Applicants will be allowed to make representations to the MPFA when it is considering their applications under the section.

    • Proposed section 21B provides for the establishment of a register of registered schemes.

    • Proposed section 22 revises the provisions relating to compliance with the requirements and standards on matters that may be prescribed in the regulations as set out in proposed section 21C. Failure to comply with the section will be a ground for revoking a trustee's approval.

    • Proposed section 22A will require approved trustees to lodge annual statements with the MPFA.

    • Proposed section 22B will require approved trustees to pay annual registration fees to the MPFA. Those fees are to be one of the principal means for enabling the MPFA to meet the costs incurred in performing its functions under the MPFS Ordinance.

    33.Schedule 1, item 39, amends section 23 (Residual Provident Fund Scheme) in consequence of the substitution of section 7 by Schedule 1, item 18.

    34.Schedule 1, item 40, makes minor and consequential amendments to section 24 (Trustee's covenants in respect of governing rules).

    35.Schedule 1, item 41, substitutes a new section for section 25 (Duty of officers of corporate trustees). The substituted section clarifies and simplifies the existing section 25 so as to enhance compliance by the approved trustee of a registered scheme with the various requirements and duties stipulated by the regulations and the governing rules of the scheme. The operation of the existing section will be extended to cover the chief executive of a company that is an approved trustee as well as the directors of the company.

    36.Schedule 1, item 42, substitutes a new section for section 26 (which invalidates provisions in the governing rules of a scheme that purport to exempt or indemnify the trustee from or against certain kinds of liability). The substituted section clarifies and simplifies the existing section and extends the section so that it will invalidate attempts to limit an approved trustee's liability for certain actions, such as a breach of trust.

    37.Schedule 1, items 43 to 45, amend section 27 (Duties of approved trustees to comply with regulations). The amendments to section 27(1) are consequential on proposed sections 45 to 45D (which relate to the payment to, and the recovery of, financial penalties for failure to perform certain duties or to comply with certain requirements and standards) and the amendments to section 46 (which confers on the Chief Executive in Council power to make regulations for the purposes of the MPFS Ordinance). Additional duties are added in section 27(2) so that the regulations may impose duties on individual trustees or officers of companies that are approved trustees to make disclosures affecting the schemes. Section 27(3) is revised so as to subject approved trustees of registered schemes to duties imposed on trustees by law except in so far as they are modified by or inconsistent with the MPFS Ordinance. Proposed section 27(4) provides that the fact that an approved trustee delegates a duty to a service provider does not absolve the trustee from responsibility to ensure that the duty is complied with or from the consequences of the service provider's failure to perform the duty.

    38.Schedule 1, items 46 and 47, amends section 28 relating to the publication by the MPFA of guidelines on forbidden investment practices. Section 28(3), which empowers the MPFA to suspend or terminate an approved trustee is administration of a registered scheme who engages in forbidden investment practices, is transferred to the substituted section 33. (See Schedule 1, item 61.)

    39.Schedule 1, item 48, amends section 29 (Restricted investments). The amendment substitutes for subsection (1) a new subsection that will clarify the conditions under which an approved trustee can invest scheme members' accrued benefits in restricted investments.

    40.Schedule 1, item 49, amends section 30, which empowers the MPFA to require the approved trustee of a registered scheme to arrange for an auditor to investigate and to provide the MPFA with a report as to whether circumstances exist that may prejudice scheme members' accrued benefits. The amendment substitutes for subsection (1) a new subsection which is designed to clarify and simplify the existing subsection.

    41.Schedule 1, item 50, adds proposed section 30A. The section will, for the purpose of securing compliance with the MPFS Ordinance, confer power on an authorized person to enter certain premises and, on entering the premises, to exercise powers such as examining and copying records and taking photographs.

    42.Schedule 1, items 51 and 52, amend section 31 (Information and documents) so as to clarify the section and rectify certain errors.

    43.Schedule 1, items 53 to 60, amend section 32 (Investigation) to clarify the section and rectify certain errors.

    44.Schedule 1, item 61, substitutes the following new sections for section 33 (Suspension or removal of approved trustees), which has been found to be unworkable:

    • Proposed section 33, which--
      1. will empower the MPFA to suspend or terminate an approved trustee's administration of a registered scheme; and

      2. if the approved trustee's administration of the scheme is suspended, will require the MPFA to hold an inquiry to determine if the trustee's administration should be terminated; and

      3. will require such an inquiry to be held in accordance with procedures set out in the proposed Schedule 5A (inserted by Schedule 1, item 85); and

      4. specifies circumstances in which an approved trustee's administration is automatically terminated by operation of law.
    • Proposed section 33A will require the MPFA to appoint an administrator in certain specified circumstances to replace an approved trustee whose administration of a registered scheme is suspended on termination under proposed section 33.

    • Proposed section 33B will require the MPFA in certain specified circumstances to appoint another approved trustee to replace an approved trustee whose administration of the scheme has been terminated.

    45.Schedule 1, item 62, substitutes for section 34 (which relates to the winding up of registered schemes) the following new sections--

    • Proposed section 34 will enable an employer sponsored scheme to be wound up voluntarily, but only with the consent of the MPFA, which may be given only in limited circumstances.

    • Proposed section 34A provides that, except as provided by section 34, a registered scheme may be wound up only by the Court (of First Instance).

    • Proposed section 34B will, in certain circumstances, enable an existing registered scheme to be merged with another registered scheme of the same kind.

    • Proposed section 34C will, in certain circumstances, enable an existing registered scheme to be divided into 2 or more new schemes of the same kind.

    46.Schedule 1, items 63 and 64, amend the supplementary provisions under section 38 relating to appeals made to the Mandatory Provident Fund Schemes Appeal Board so as--

    • to make clear the persons who may represent an appellant and the MPFA at the hearing of an appeal by the Appeal Board under Part V of the MPFS Ordinance; and

    • to specify the ways in which the costs awarded to or against the MPFA can be recovered.

    47.Schedule 1, item 65, amends section 39 (Case may be stated for Court of Appeal) as to how the Court of Appeal may dispose of cases referred by the Appeal Board for determination on a question of law.

    48.Schedule 1, item 66, corrects some minor grammatical errors in section 40 (Offences relating to appeal).

    49.Schedule 1, item 67, substitutes new sections for section 41 (Preservation of secrecy) and section 42 (Disclosure by Authority). Proposed section 41 redefines the circumstances in which a person is prohibited from disclosing information obtained in exercising or performing functions under the MPFS Ordinance. Proposed section 42 redefines the circumstances in which the MPFA will, despite section 41, be able to make disclosures to specified public officers and to other public authorities. Proposed section 42 extends the existing section so as to allow the MPFA to make disclosures under that section to additional public officers and public authorities in Hong Kong and, in certain circumstances, to public officers and public authorities located in places outside Hong Kong.

    50.Schedule 1, item 68, adds proposed section 42A. The section provides that an auditor or service provider appointed by an approved trustee will not be in breach of confidentiality owed to the trustee if the breach relates to disclosing certain information to the MPFA.

    51.Schedule 1, item 69, substitutes for the existing sections 43 (Offences) and 45 (Penalties) the following new sections--

    • Proposed section 43, which will create new offences for unapproved persons to carry on business as approved trustees and for persons who are not approved trustees to purport to administer registered schemes.

    • Proposed section 43A, which prescribes certain offences that may be committed by approved trustees.

    • Proposed section 43B, which prescribes certain offences that may be committed by employers.

    • Proposed section 43C, which prescribes certain offences that may be committed by self-employed persons.

    • Proposed section 43D will make an offence for a person to obstruct, hinder or interfere with certain persons (such as the MPFA or an authorized person) in the exercise or performance of their functions under the MPFS Ordinance.

    • Proposed section 43E will make it an offence to make a false or misleading statement in documents given to the MPFA or an approved trustee.

    52.Schedule 1, items 70 and 71, amend section 44 (which provides that, if a company or a member of a partnership commits an offence against the MPFS Ordinance, a director of the company or another member of the partnership, also commits the offence). The amendments will extend the application of the section to officers of a company other than the directors.

    53.Schedule 1, item 72, repeals the penalty provisions in section 45. (The penalties are now set out in proposed sections 43A to 43G: see Schedule 1, item 69.) The following sections are substituted for the section--

    • proposed section 45, which defines certain terms used in proposed sections 45B and 45C; and

    • proposed section 45A, which provides for the making of regulations for the purposes of those sections;

    • propsed section 45B, which will allow the MPFA to serve notices on certain persons (including approved trustees, employers and self-employed persons) requiring payment of a prescribed financial penalty for failing to perform certain duties, or to comply with certain requirements or standards specified in the MPFS Ordinance and the regulations, or to pay on time a fee, contribution or other amount required to be paid by or under the Ordinance;

    • proposed section 45C, which will enable the MPFA to recover unpaid financial penalties by proceedings brought in the District Court;

    • proposed section 45D, which provides financial penalties paid or recovered under proposed section 45B or 45C to be paid into the MPFA Administration Account;

    • proposed section 45D, which provides for a financial penalty to be paid into the MPFA Administration Account;

    • proposed section 45E, which will enable the MPFA to apply to the Court to enforce an undertaking given by an approved trustee under the MPFS Ordinance;

    • proposed section 45F, which will empower the Court to make an order restraining a person from contravening the MPFS Ordinance or requiring a person to do an act required by the Ordinance;

    • proposed section 45G, which will make it clear that a person will be able to recover, by civil proceedings, a financial loss attributable to a contravention of the governing rules of a scheme or a failure to comply with a requirement or standard imposed by or under the MPFS Ordinance.

    54.Schedule 1, items 73 to 76, amend sections 46 and 47 so as to redefine and extend the regulation-making powers of the Chief Executive in Council and the rule-making powers of the MPFA. Certain matters that are currently covered by section 47 (Rules) are being transferred to section 46 (Regulations). Those matters include the following--

    • requiring approved trustees to obtain insurance against the risk of loss of scheme assets;

    • requiring the preservation of accrued benefits;

    • providing for the transfer of accrued benefits among different schemes;

    • providing for the disposal of unclaimed accrued benefits;

    • making arrangements with respect to the custody of scheme assets;

    • requiring adequate reserves for providing investment guarantees to be maintained;

    • prescribing internal control procedures for registered schemes;

    • requiring approved trustees to provide scheme members with information relating to the scheme and to their accrued benefits in the scheme.

    55.Schedule 1, item 77, adds the proposed section 47A, which will enable the MPFA to specify or approve the forms and contents of documents to be submitted under the MPFS Ordinance.

    56.Schedule 1, item 78, amends Schedule 1 (which lists persons who are exempt from the operation of the Ordinance). The list of persons exempted from the MPFS Ordinance under Part I of Schedule 1 is being amended so as to provide that a casual employee (as defined in proposed section 2(2)) who has worked for an employer is covered by the MPFS Ordinance even though the employee has been employed by the employer for less than 60 days. Part I of the Schedule is also amended to remove the references to "Notes" as to avoid any suggestion that the provisions following that heading are not part of the Ordinance.

    57.Schedule 1, item 79, also amends Schedule 1 by amending the list of persons exempted from specified parts of the MPFS Ordinance under Part II of the Schedule so as--

    • to include in the list the employer of an employee who enters Hong Kong to work for a limited period only or who has joined a provident or similar scheme outside Hong Kong; and

    • to make it clear that such an employee and an employer of such an employee, a domestic employee and the employer of a domestic employee, and a self-employed hawker are exempt from the operation of the Ordinance only as to the income that is derived from the relevant employment.

    Part II of the Schedule is also amended to remove the references to "Notes" as to avoid any suggestion that the provisions following that heading are not part of the Ordinance.

    58.Schedule 1, item 80, inserts into the MPFS Ordinance proposed Schedule 1A. The Schedule provides for matters concerning the delegation of functions by the MPFA under proposed section 6B. Among the matters covered by the Schedule are the manner in which a delegated function is to be exercised and the scope of an authorized sub-delegation.

    59.Schedule 1, items 81 and 82, substitutes new Schedules for Schedules 2 and 3 of the MPFS Ordinance. The substituted Schedules clarify the existing Schedules and extend their operation to casual employees who are members of industry schemes.

    60.Schedule 1, item 84, inserts in Schedule 5 to the MPFS Ordinance, covenants that are to be implied in the governing rules of a registered scheme.

    61.Schedule 1, item 85, inserts into the MPFS Ordinance proposed Schedule 5A, which prescribes the procedure to be followed at inquiries held under proposed section 33. (See Schedule 1, item 61.)

    62.Schedule 1, item 86, amends Schedule 6 to the MPFS Ordinance so as to specify the decisions against which an aggrieved person may appeal to the Appeal Board under section 35.

    63.Schedule 1, item 87, amends Schedule 8 so as to specify the persons who are to be treated as associates of approved trustees and others for the purposes of the MPFS Ordinance.

    64.Schedule 1, items 88 to 100, contain minor consequential amendments to the MPFS Ordinance.

    65.Schedule 2 amends the Insurance Companies Ordinance (Cap. 41) so as--

    • to allow disclosure of information to be made to the MPFA under section 53A; and

    • to include retirement scheme management scheme management categories 1 and 2 as the classes of long term business in respect of which an actuary's certificate on the fund asset value is required under paragraph 5 of the Third Schedule to that Ordinance.

    66.Schedule 3 amends the Occupational Retirement Schemes Ordinance (Cap. 426) ("ORS Ordinance) so as--

    • to exempt from the ORS Ordinance a scheme registered under the MPFS Ordinance (proposed section 3(1)(aa)); and

    • to provide for recovery of arrears of contribution in respect of occupational retirement schemes that are exempted under the MPFS Ordinance (proposed section 24A); and

    • to enable employers who have paid severance payments or long service payments under the Employment Ordinance (Cap. 57) to recover the amounts of the payments from the vested benefits of employees who are occupational retirement scheme members and to allow employees who are scheme members to recover from their benefits amounts of severance payments and long service payments payable under that Ordinance (proposed section 70A); and

    • to allow information to be disclosed to the MPFA under section 78 of the ORS Ordinance.

    67.Schedule 4 substitutes new sections for sections 31I, 31IA, 31Y, 31YAA and 31YA of the Employment Ordinance (Cap. 57). Proposed sections 31I and 31Y will, as at present, provide that a severance payment or long service payment payable to an employee under that Ordinance is to be reduced where the employee has been paid gratuities or occupational retirement scheme benefits. Those sections will also provide for the reduction of severance payment or long service payment by the employee's accrued benefit in a mandatory provident fund scheme to the extent that the benefit is attributable to contributions made by the employee's employer. Similarly, proposed sections 31IA and 31YAA will provide for the reduction of a gratuity, an occupational retirement scheme benefit or mandatory provident fund scheme benefits (so far as they are attributable to contributions made by the employee's employer) where the employee has been paid a severance payment or long service payment. Proposed section 31YA provides for similar reductions to be made in relation to a person who has been paid to a long service payment or to a gratuity, occupational retirement benefit or mandatory provident fund scheme benefit in consequence of the death of an employee. The Schedule also adds new definitions to section 2 of that Ordinance to cater for the substituted sections.

    68.Schedule 5 makes amendments to sections 2, 8, 9, 15, 16A and 17 of the Inland Revenue Ordinance (Cap. 112) ("IR Ordinance") in consequence of the enactment of the MPFS Ordinance. An amendment to section 8 of the IR Ordinance provides that accrued benefits received by an employee under the MPFS Ordinance are to be excluded from the computation of the employee's income for the purpose of determining the amount of salaries tax payable by the employee under the IR Ordinance to the extent that those benefits are attributable to mandatory contributions paid under the MPFS Ordinance. A further amendment excludes from an employee's income for salaries tax purposes part of accrued benefits that are attributable to voluntary contributions paid to a mandatory provident fund scheme by the employee's employer. Consequential amendments are made to section 9 of the IR Ordinance (Definition of income from employment). Amendments to section 16A of the IR Ordinance(Special payment under an approved retirement scheme allowable as a deduction) will provide that, in determining the amount of a person's profits derived from carrying on a trade, profession or business in Hong Kong, certain amounts paid as non-regular contributions to a mandatory provident fund scheme in respect of the person's employees are to be allowed as a deduction, but spread over a 5-year period. An amendment to section 17 of the IR Ordinance (Deductions not allowed) provide that, for the purposes of ascertaining profits in respect of which a person is liable to pay profits tax, amounts paid to a mandatory provident fund scheme in respect of the person's employees are not deductible if those amounts exceed 15 per cent of the total emoluments of those employees for the period to which the contributions relate. A further consequential amendment is made to section 15 of the IR Ordinance (Certain amounts deemed to be trading receipts). The Schedule also adds new definitions to section 2 of the IR Ordinance to cater for the amended provisions.

    69.Schedule 6 amends the Banking Ordinance (Cap. 155) so as to allow disclosure of information to be made to the MPFA under section 120 of that Ordinance.

    70.Schedule 7 amends the Schedule to the Prevention of Bribery Ordinance (Cap. 201) so as to include in the Schedule the MPFA as a public body for the purposes of that Ordinance.

    71.Schedule 8 amends the Defamation Ordinance (Cap. 21) so as to add to Part II of the Schedule to that Ordinance a reference to a fair and accurate summary of a report prepared by an auditor or investigator under the MPFS Ordinance as a privileged statement under section 14 subject to explanation or contradiction.

    72.Schedule 9 amends the Securities and Futures Commission Ordinance (Cap. 24) so as to allow the Securities and Futures Commission to disclose certain information to the MPFA.

    73.Schedule 10 amends the Rehabilitation of Offenders Ordinance (Cap. 297) so as--

    • to except from section 4 of that Ordinance certain proceedings under the MPFS Ordinance that are designed to protect rehabilitated offenders; and

    • to include in Part 1 of the Schedule to that Ordinance various officers and staff of the MPFA as prescribed offices for the purposes of that Ordinance.

    74.Schedule 11 amends section 24 of the Protection of Wages on Insolvency Ordinance (Cap. 380) so as to provide for the subrogation of the Protection of Wages on Insolvency Fund Board to an employee's rights and benefits under an occupational retirement scheme or a mandatory provident fund scheme to the extent of an ex gratia payment made to that employee under section 16 of that Ordinance. The Schedule also adds new definitions to section 2 of that Ordinance to cater for the amended provisions.

    75.Schedule 12 amends section 10 of the Estate Duty Ordinance (Cap. 111) so as to exempt the payment of certain accrued benefits of a deceased member of a mandatory provident fund scheme from the payment of estate duty.