A BILL
TO

Amend the Mandatory Provident Fund Schemes Ordinance and to make consequential amendments to the Insurance Companies Ordinance, the Occupational Retirement Schemes Ordinance, the Employment Ordinance, the Inland Revenue Ordinance, the Banking Ordinance, the Prevention of Bribery Ordinance, the Defamation Ordinance, the Securities and Futures Commission Ordinance, the Rehabilitation of Offenders Ordinance, the Protection of Wages on Insolvency Ordinance and the Estate Duty Ordinance.

Enacted by the Provisional Legislative Council.

1.Short title and commencement

  1. This Ordinance may be cited as the Provident Fund Schemes Legislation (Amendment) Ordinance 1997.

  2. This Ordinance shall come into operation on a day to be appointed by the Financial Secretary by notice in the Gazette.

2.Amendment of Mandatory Provident Fund
Schemes Ordinance--(Schedule 1)

The Mandatory Provident Fund Schemes Ordinance (Cap. 485) is amended as indicated in Schedule 1.

3.Amendment of Insurance Companies

Ordinance--(Schedule 2)

The Insurance Companies Ordinance (Cap. 41) is amended as indicated in Schedule 2.

4.Amendment of Occupational Retirement
Schemes Ordinance--(Schedule 3)

The Occupational Retirement Schemes Ordinance (Cap. 426) is amended as indicated in Schedule 3.

5.Amendment of Employment Ordinance--(Schedule 4)

The Employment Ordinance (Cap. 57) is amended as indicated in Schedule 4.

6.Amendment of Inland Revenue Ordinance--(Schedule 5)

The Inland Revenue Ordinance (Cap. 112) is amended as indicated in Schedule 5.

7.Amendment of Banking Ordinance--(Schedule 6)

The Banking Ordinance (Cap. 155) is amended as indicated in Schedule 6.

8.Amendment of Prevention of Bribery Ordinance--(Schedule 7)

The Prevention of Bribery Ordinance (Cap. 201) is amended as indicated in Schedule 7.

9.Amendment of Defamation Ordinance--(Schedule 8)

The Defamation Ordinance (Cap. 21) is amended as indicated in Schedule 8.

10.Amendment of Securities and Futures Commission Ordinance--(Schedule 9)

The Securities and Futures Commission Ordinance (Cap. 24) is amended as indicated in Schedule 9.

11.Amendment of Rehabilitation of Offenders Ordinance--
(Schedule 10)

The Rehabilitation of Offenders Ordinance (Cap. 297) is amended as indicated in Schedule 10.

12.Amendment of Protection of Wages on Insolvency Ordinance--(Schedule 11)

The Protection of Wages on Insolvency Ordinance (Cap. 380) is amended as indicated in Schedule 11.

13.Amendment of Estate Duty Ordinance--(Schedule 12)

The Estate Duty Ordinance (Cap. 111) is amended as indicated in Schedule 12.

SCHEDULE 1 [s.2]

Amendment of Mandatory Provident Fund Schemes Ordinance

 

Item

Provision affected

Amendment

1.

Section 1(2), 4(2), 35(2),
(5) and (7), 38(2) and 48(1)

Repeal "Governor" wherever it appears and substitute "Chief Executive".

 

2.

Section 2, definition of
"approved trustee"

Repeal the definition and substitute-- " "approved trustee" (核准受託人) means a company or a natural person approved by the Authority as a trustee in accordance with section 20 and, when used in relation to a registered scheme that is administered by 2 or more approved trustees, means (except in sections 33 to 33B) the trustees jointly and severally;".

3.

Section 2, definition of
"Authority"

Repeal the definition and substitute--
" "Authority" (管理局) means the Mandatory Provident Fund Schemes Authority established by section 6;".

4.

Section 2

Repeal the definitions of "auditor", "corporate trustee", "prescribed", "relevant Ordinance", "statutory corporation" and "statutory minimum contribution".

5.

Section 2, definition of
"the court"

Repeal the definition and substitute--
" "Court" means the Court of First Instance;".

6.

Section 2, definition of
"employer sponsored
scheme"

Repeal the definition and substitute--

" "employer sponsored scheme" (僱主營辦計劃) means a registered scheme membership of which is--

  1. in the case of an employer who is not a company, open only to the relevant employees of that employer; or

  2. in the case of an employer that is a company, open only to the relevant employees of that company or an associated company;".

7.

Section 2, definition of
"master trust scheme"

Repeal the definition and substitute--

" "master trust scheme" (集成信託計劃) means a registered scheme membership of which is open to--

  1. the relevant employees of more than one employer; and

  2. self-employed persons; and

  3. persons who, having accrued benefits in another registered scheme, wish to have those benefits transferred to the first-mentioned scheme,

but does not include an industry scheme;".

8.

Section 2, definition of
"maximum level of
relevant income"

Repeal the definition and substitute--

" "maximum level of relevant income" (最高有關入息水平) means the level of relevant income specified in Schedule 3 above which a mandatory contribution is not required to be paid to a registered scheme;".

9.

Section 2, definition of
"minimum level of
relevant income"

Repeal "Schedule 3" and substitute "Schedule 2".



10.

Section 2, definition of
"provident fund scheme"

Repeal paragraphs (a) and (b) and substitute--

"(a)the terms of which are set out in one or more documents; and

(b)that--

  1. provides for the payment of pecuniary benefits to the members of the scheme when they reach the retirement age, or any other prescribed event occurs in relation to them; or

  2. in the case of members who die before reaching that age or before the occurrence of such an event, provides for the payment of those benefits to the personal representatives or beneficiaries of the estates of those members,".

11.

Section 2, definition of
"registered scheme"

Repeal the definition and substitute--

" "registered scheme" (註冊計劃) means a provident fund scheme registered under section 21 as an employer sponsored scheme or a master trust scheme or registered under section 21A as an industry scheme;".

12.

Section 2, definition of
"relevant income"

In paragraph (b), repeal "prescribed and calculated in accordance with regulations made under section 46" and substitute "as ascertained in accordance with the regulations".

13.

Section 2, definition of
"retirement age"

Repeal "or such earlier age as may be prescribed in regulations made under section 46" and substitute "or, if the regulations prescribe an earlier age, that earlier age".

14.

Section 2

Add--

" "administer" (管理) includes manage and maintain;

"Advisory Board" (諮詢委員會) means the Mandatory Provident Fund Schemes Advisory Board established by section 6N;

"associated company" (有聯繫公司) has, except in section 12A, the meaning given by Part 3 of Schedule 8;

"authorized person" (獲授權人) means a person appointed or authorized by the Authority in writing to exercise or perform functions, or specified functions, under or for the purposes of this Ordinance;

"casual employee" (臨時僱員) means a relevant employee who is declared by an order made under subsection (2) to be a casual employee for the purposes of this Ordinance;

"chief executive" (行政總裁), in relation to a company, means the person who, either alone or with others, is immediately responsible to the directors of the company for the conduct of the whole business of the company, and includes a person holding office as managing director of the company;

"close relative" (近親), in relation to a natural person, means--

  1. a spouse, former spouse, parent, step-parent, child, step-child, grand parent, grand child, brother, half-brother, sister or half-sister of the person; or

  2. a parent, step-parent, child, step-child, grand parent, grand child, brother, half-brother, sister or half-sister of the spouse or a former spouse of the person;

"company" (公司) means--

  1. a company within the meaning of the Companies Ordinance (Cap. 32); or

  2. an oversea company;

"compensation fund" (補償基金) means the compensation fund established in accordance with section 17;

"controller" (控權人), in relation to a company, means any of the following persons--

  1. the directors of the company;

  2. a person in accordance with whose instructions those directors are accustomed to act;

  3. the chief executive of the company;

  4. a natural person who, alone or together with, a close relative, partner or employee of the person, or a company of which the person is a director, or through a nominee, controls at least 15 per cent of the voting shares of the company;

  5. another company that, alone or with any associate, or any employee of an associate, of that other company, or through a nominee, controls at least 15 per cent of the voting shares of the first-mentioned company;

"Executive Director" (行政總監) means the Executive Director of the Authority appointed under section 6, and includes any person appointed to act as Executive Director when the Executive Director is absent from Hong Kong or through illness or any other cause or when the office of Executive Director is vacant;

"functions" (職能) includes powers, authorities and duties;

"the guidelines" (指引) means guidelines issued under section 6D;

"industry" (行業) includes a trade, profession, occupation or calling;

"industry scheme" (行業計劃) means a provident fund scheme registered under section 21A;

"Industry Schemes Committee" (行業計劃委員會) means the MPF Industry Schemes Committee established by section 6Q;

"mandatory contribution" (強制性供款) means an amount that is required to be paid as a contribution to a registered scheme under section 7A or 7C of this Ordinance;

"occupational retirement scheme" (職業退休計劃) has the same meaning as in the Occupational Retirement Schemes Ordinance (Cap. 426);

"officer" (高級人員), in relation to a company, means--

  1. a director of the company; or

  2. the chief executive of the company;

"oversea company" (海外公司) means a company to which Part XI of the Companies Ordinance (Cap. 32) applies;

"participating employer" (參與僱主) means the employer of relevant employees who are members or prospective members of a registered scheme;

"premises" (處所) includes any place and a part of premises or a place;

"record" (紀錄) means any record of information, however compiled, recorded or stored, and includes--

  1. any book, a register and any other document containing information; and

  2. any disc, tape or other article from which information is capable of being produced;

"the regulations" (《規例》) means regulations made under section 46 and in force;

"remuneration" (酬金) includes travel and subsistence allowances;

"the rules" (《規則》) means rules made under section 47 and in force;

"service provider" (服務提供者), in relation to a provident fund scheme, means an investment manager, custodian of scheme assets or other person appointed or engaged by the trustee of the scheme to provide services for the purposes of the scheme, and includes a person to whom the provision of those services is delegated by such a manager, custodian or other person, but does not include a person so engaged as an auditor, solicitor or actuary;

"share" (股份) means a share in the capital of a company, and includes the stock or any part of the stock of the company;

"spouse" (配偶), in relation to a person, includes a person of the opposite sex with whom the person is cohabiting in a bona fide domestic relationship as man and wife;

"subsidiary" (附屬公司) has the meaning given by Part 3 of Schedule 8;

"total incapacity" (完全喪失行為能力), in relation to a scheme member, means permanent unfitness to perform the kind of work that the member was performing immediately before becoming incapacitated;

"voluntary contribution" (自願性供款) means a contribution paid to a registered scheme in accordance with section 11;

"voting share" (有表決權股份), in relation to a company, means an issued share in the company that confers a right to vote, not being a right to vote that is exercisable only in one or more of the following circumstances--

  1. during a period during which a dividend (or part of a dividend) in respect of the share is in arrears;

  2. on a proposal by the company to redeem or purchase its own shares;

  3. on a proposal by the company to reduce its share capital;

  4. on a proposal that affects rights attached to the share;

  5. on a proposal to wind up the company;

  6. on a proposal for the disposal of the whole of the company's property, business and undertaking;

  7. during the winding up of the company.".


15.

Section 2

(a)Renumber the section as section 2(1).

(b)Add--

"(2)If relevant employees--

  1. are engaged in an industry for which a provident fund scheme is registered as an industry scheme; and

  2. employed in that industry by an employer on a day to day basis or for a fixed period of less than 60 days,

the Authority may, by order published in the Gazette, declare those employees to be casual employees for the purposes of this Ordinance.".

16.

Section 5

Repeal and substitute--

"5.Members of certain occupational retirement schemes to be exempted from this Ordinance

(1)The Authority may, by certificate in writing, exempt the members, or a class of members, of an occupational retirement scheme and their employer from the operation of all, or any specified, provisions of this Ordinance and, in so doing, may specify circumstances in which the exemption is or is not to apply.

(2)The Authority may grant an exemption--

  1. either on its own initiative or on the application of the trustee of the occupational retirement scheme concerned or the employer whose employees are members of the scheme; and

  2. subject to such conditions as the Authority considers appropriate.

(3)If an exemption is granted in respect of an occupational retirement scheme, the provisions of this Ordinance, or the provisions of this Ordinance specified in the exemption certificate, do not apply to the members or relevant class of members of the scheme or to the employer of those members in relation to the scheme.

(4)An exemption may be granted in respect of an occupational retirement scheme under this section whether the scheme is a defined contribution scheme or a defined benefit scheme.

(5)The regulations may--

  1. prescribe the circumstances in which an exemption under this section may be granted; and

  2. prescribe requirements that are to be complied with as a condition for the granting of such an exemption; and

  3. empower the Authority to revoke such an exemption for failure to comply with any requirements imposed as a condition of granting the exemption.

5A.Register of exempt schemes to
be kept

(1)The Authority must establish and maintain a register of occupational retirement schemes in respect of which an exemption has been granted under section 5. The register may be in such form, and contain such information, as the Authority may determine.

(2)The register is to be kept at the head office of the Authority in Hong Kong.

(3)Members of the public are entitled, without charge, to inspect the register during the ordinary business hours of the Authority.".

17.

Section 6

Repeal and substitute--

"6.Establishment of Mandatory Provident Fund Schemes Authority

(1)There is established by this section corporation with the corporate name of the "Mandatory Provident Fund Schemes Authority".

(2)The Authority--

  1. has perpetual succession; and

  2. may take legal proceedings and be proceeded against in its corporate name; and

  3. may, for the purpose of enabling it to exercise or perform its functions, acquire, hold and dispose of real and personal property; and

  4. may do, and be subject to, all other things that bodies corporate may do and be subject to and that are necessary for, or are incidental to, the exercise of its functions.

(3)The Chief Executive may appoint a person, other than the Financial Secretary, to be the Executive Director of the Mandatory Provident Fund Schemes Authority.

(4)The Executive Director is responsible for managing the affairs of the Authority.

(5)Any act, matter or thing done in the name or on behalf of the Authority by the Executive Director, or with the Executive Director's authority, is taken to have been done by the Authority.

(6)The Authority is required to have a seal.

6A. Functions of Authority

(1)The functions of the Authority are as follows--

  1. to be responsible for ensuring compliance with this Ordinance;

  2. to register provident fund schemes as registered schemes;

  3. to approve qualified persons to be approved trustees of registered schemes;

  4. to regulate the affairs and activities of approved trustees and to ensure as far as reasonably practicable that those trustees administer the registered schemes for which they are responsible in a prudent manner;

  5. to make rules or guidelines for the payment of mandatory contributions and for the administration of registered schemes with respect to those contributions;

  6. to exercise such other functions as are conferred or imposed on the Authority by or under this Ordinance.

(2)The Authority has such ancillary powers as may be necessary to enable it to exercise its functions.

(3)The Chief Executive may give directions, either generally or in a particular case, with respect to the exercise by the Authority of its functions. The Authority must comply with any such directions unless they are inconsistent with this Ordinance.

6B.Authority may delegate functions

(1)The Authority may delegate to a designated person any of its functions, other than this power of delegation.

(2)In this section--

"designated person" (指定人士) means a member of staff of the Authority or a person of a class prescribed by the regulations.

(3)Schedule 1A has effect in relation to a delegation under this section.

6C.Power to appoint staff and consultants

(1)The Authority may employ such staff as it requires to exercise or perform its functions.

(2)The Authority may, after consultation with the Financial Secretary, fix the salaries, wages and other conditions of employment of its staff.

(3)The Authority may enter into arrangements (additional to those provided for by this Ordinance) for the provision of retirement benefits to its staff and their dependants spouses and children. Those arrangements may (but are not required to) include provisions requiring members of the Authority's staff to make contributions towards those benefits from their own funds.

(4)The Authority may engage consultants for the purposes of obtaining expert advice.

6D.Authority may issue guidelines

(1)The Authority may issue guidelines for the guidance of approved trustees, service providers, participating employers and their employees, self-employed persons and other persons concerned with this Ordinance.

(2)A guideline--

  1. may consist of a code, standard, rule, specification or provision relating to provident fund schemes or a class of such schemes; and

  2. may apply, incorporate or refer to any document that has been published by a person, either as in force at the time when it is issued under this section or as amended or published from time to time.

(3)The Authority must publish a guideline issued under this section in the Gazette or in some other publication determined by the Authority.

(4)The Authority may amend or revoke a guideline issued under this section. Subsection (3) applies to the amendment or revocation of a guideline in the same way as it applies to the issue of a guideline.

(5)A person does not incur a civil or criminal liability only because the person has contravened a guideline issued under this section. However, if in any legal proceedings the court is satisfied that such a guideline is relevant to determining a matter that is in issue in the proceedings--

  1. the guideline is admissible in evidence in the proceedings; and

  2. proof that the person contravened or did not contravene the guideline may be relied on by any party to the proceedings as tending to establish or negate the matter.

(6)In any legal proceedings, a document that purports to be a copy of a guideline issued under this section is, in the absence of evidence to the contrary, to be presumed to be a true copy of the guideline.

6E.Authority to prepare annual report

(1)As soon as practicable after the end of each financial year of the Authority, the Authority must prepare a report as to--

  1. the operation of this Ordinance during that year; and

  2. the activities of the Authority during that year.

(2)As soon as practicable after preparing a report in accordance with this section, the Authority must deliver the report to the Financial Secretary, together with--

  1. the financial statements of the Authority for the financial year to which the report relates; and

  2. the report of the Authority's auditor on those statements.

(3)The Financial Secretary may publish the documents delivered in accordance with subsection (2) in such manner as the Financial Secretary thinks fit.

6F.Authority to prepare corporate plan

(1)The Authority must, before the end of each financial year of the Authority, prepare a corporate plan for its next financial year.

(2)A corporate plan must specify--

  1. the objectives of the Authority's activities for the financial year concerned; and

  2. the nature and scope of the activities to be undertaken in order to achieve those objectives; and

  3. a budget of estimated expenditure for achieving those objectives.

(3)Before completing the preparation of a corporate plan, the Authority must submit a draft of the plan for approval by the Financial Secretary and must take into account any comments made by the Financial Secretary on the draft.

(4)As soon as practicable after completing the preparation of a corporate plan, the Authority must deliver the plan to the Financial Secretary.

(5)The Financial Secretary may publish the corporate plan delivered in accordance with subsection (4) in such manner as the Financial Secretary thinks appropriate.

   

6G. Preparation of other reports by

Authority

(1)The Authority may, whenever it considers necessary, provide the Financial Secretary with a report as to any improvements that it considers to be necessary for the effective or efficient operation of the Authority.

(2)The Financial Secretary may, from time to time, request the Authority to provide the Financial Secretary with a report as to--

  1. the operation of this Ordinance; or

  2. the activities of the Authority.

(3)The Authority must comply with a request made under subsection (2) as soon as practicable after receiving it.

   

Financial provisions

 

6H.Financial year of the Authority

The financial year of the Authority is--

  1. the period beginning with the commencement of this section and ending with 31 March next following; and

  2. the period of 12 months ending on 31 March in each subsequent year.

6I.MPFA Administration Account

(1)The Authority must establish and maintain at a bank located in Hong Kong an account called in English the "MPFA Administration Account" and in Chinese "強制性公積金計劃管理局行政帳戶".

(2)There is payable into the Account all money received by the Authority (other than money recovered by the Authority for the benefit of a scheme member), including interest received in respect of investments and all money directed to be paid into the Account by this or any other Ordinance.

(3)There is payable from the Account all payments made on account of the Authority or otherwise required to meet the expenditure incurred in relation to the functions of the Authority (including the remuneration of the Executive Director and the other staff of the Authority) and all money directed to be paid from the Account by this or any other Ordinance.

6J.Authority to keep proper
accounting records

(1)The Authority must keep such accounting records as correctly explain its financial transactions and financial position and so that--

  1. true and fair financial statements can be prepared from time to time; and

  2. those statements can be conveniently and properly audited in accordance with section 6L.

(2)The Authority must ensure that the following financial statements are prepared as soon as practicable after the end of 1each financial year of the Authority--

  1. an income and expenditure account that gives a true and fair view of the Authority's income and expenditure for that year;

  2. a balance sheet as at the end of that year that provides a true and fair view of the Authority's financial position as at the end of that year.

(3)The Authority must ensure that the financial statements comply with any accounting standards notified to the Authority in writing by the Financial Secretary.

6K.Authority to appoint auditor

(1)As soon as practicable after the commencement of this section, the Authority must appoint an auditor to audit the accounts of the Authority.

(2)As soon as practicable after a vacancy occurs in the office of auditor, the Authority must appoint another auditor to fill the vacancy.

(3)An appointment under this section does not take effect until it is approved by the Financial Secretary.

(4)The Authority may terminate the appointment of an auditor of the Authority but only with the prior approval of the Financial Secretary.

6L.Authority's financial statements
to be audited

(1)As soon as practicable after the end of each financial year of the Authority, the Authority must submit the financial statements prepared for the financial year to the Authority's auditor for auditing.

(2)As soon as practicable after receiving financial statements submitted by the Authority, the Authority's auditor must audit the statements and prepare a report of the audit.

(3)The auditor's report must state whether or not the financial statements are, in the auditor's opinion, properly drawn up so as to provide a true and fair view of the matters referred to in section 6J(2) and in accordance with the accounting standards (if any) notified under section 6J(3) and, if not, the reasons for that opinion.

(4)The Authority's auditor is entitled--

  1. to have access at all reasonable times to the Authority's accounting records; and

  2. to require the Executive Director and any member of the staff of the Authority to provide the auditor with such explanations and information as the auditor considers necessary for the purpose of conducting the audit.

(5)As soon as practicable after completing the audit and preparing the auditor's report, the Authority's auditor must--

  1. attach the report to, or endorse the report on, the financial statements that were audited; and

  2. deliver those statements and the report to the Authority.

(6)On receiving the audited financial statements and auditor's report on those statements, the Authority must deliver a copy of those documents to the Financial Secretary.

6M.Investment of surplus funds

The Authority may invest money held in the MPFA Administration Account in any manner in which trust funds may be lawfully invested or in any other manner approved by the Financial Secretary.

Advisory Board

 

6N.Appointment of Advisory Board

(1)There is established by this section a board called in English the "Mandatory Provident Fund Schemes Advisory Board" and in Chinese "強制性公積金計劃諮詢委員會".

(2)The Advisory Board is to consist of--

  1. the Executive Director or a member of the staff of the Authority designated by the Executive Director; and

  2. no fewer than 9, and no more than 11, other members appointed by the Chief Executive.

(3)One of the members is to be appointed as chairperson and another is to be appointed as deputy chairperson.

(4)The Chief Executive must consult with the Authority before appointing the persons referred to in subsection (2)(b).

(5)The Authority must publish in the Gazette a notice of the appointment of members of the Advisory Board.

(6)The appointed members hold office for such periods, and on such terms, as the Chief Executive may specify in the documents by which they are appointed.

(7)The Chief Executive may, at any time, remove an appointed member from office by notice given to the member in writing.

(8)An appointed member may, at any time, resign from membership of the Advisory Board by notice in writing given to the Chief Executive.

6O.Meetings of the Advisory Board

(1)The procedure for convening meetings of the Advisory Board and for conducting business at those meetings is, subject to this section, to be as determined by that Board. The chairperson is to convene the first meeting of the Advisory Board.

(2)A meeting of the Advisory Board is to be presided over by--

  1. the chairperson; and

  2. in the absence of the chairperson, the deputy chairperson; and

  3. in the absence of the chairperson and deputy chairperson, a member elected by the members present at the meeting.

6P.Functions of Advisory Board

(1)The functions of the Advisory Board are--

  1. to make recommendations to the Authority as to the operation of this Ordinance and the effectiveness or efficiency of the Authority; and

  2. to advise the Authority with respect to any matter referred to that Board by the Authority.

(2)The Advisory Board has such ancillary powers as may be necessary to enable it to exercise its functions.

(3)The Advisory Board may exercise its functions at the request of the Authority or, with the approval of the Financial Secretary, on its own initiative.

Industry Schemes Committee

6Q.Establishment of Industry Schemes Committee

(1)There is established for the purposes of this Ordinance a committee called in English the "MPF Industry Schemes Committee" and in Chinese "強制性公積金行業計劃委員會".

(2)The Industry Schemes Committee is to consist of the following members--

  1. a chairperson;

  2. at least 1, but no more than 2, representatives of the approved trustee of each industry scheme nominated by that trustee;

  3. the Executive Director or an employee of the Authority designated by the Executive Director;

  4. no less than 6, and no more than 10, other persons.

(3)The members (other than the member referred to in subsection (2)(c)) are to be appointed by the Financial Secretary.

(4)The Financial Secretary must consult with the Authority before appointing the members referred to in subsection (2)(a) and (d).

(5)The Authority must publish in the Gazette a notice of the appointment of members of the Industry Schemes Committee.

(6)The appointed members hold office for such periods, and on such terms, as the Financial Secretary may specify in the documents by which they are appointed.

(7)The Financial Secretary may, at any time, remove an appointed member from office by notice given to the member in writing.

(8)An appointed member may, at any time, resign from membership of the Industry Schemes Committee by notice in writing given to the Financial Secretary.

6R.Meetings of Industry Schemes Committee

(1)The procedure for convening meetings of the Industry Schemes Committee and for conducting business at those meetings is, subject to this section, to be as determined by that Committee. The chairperson is to convene the first meeting of the Committee.

(2)The quorum for a meeting of the Industry Schemes Committee is a majority of the members and must include--

  1. for each industry scheme, at least 1 of the members referred to in section 6Q(2)(b); and

  2. the member referred to in section 6Q(2)(c).

(3)A meeting of the Industry Schemes Committee is to be presided over by--

  1. the chairperson; and

  2. in the absence of the chairperson, a member elected by the members present at the meeting.

6S.Functions of Industry Schemes Committee

(1)The functions of the Industry Schemes Committee are as follows--

  1. to make recommendations to the Authority as to a matter relating to the operation of industry schemes generally or to the operation of any particular industry scheme;

  2. to examine reports provided by the Authority and by approved trustees of industry schemes to ascertain whether or not those trustees are complying with the requirements and standards that apply to industry schemes;

  3. to determine whether or not the provisions of this Ordinance that apply to industry schemes in particular are effective and, if they are found to be ineffective, to advise the Authority as to the measures that need to be taken to render them effective;

  4. to advise the Authority as to ways in which the administration or operation of industry schemes could be improved;

  5. to advise the Authority as to ways in which the interests of members of industry schemes could be protected or better protected.

(2)The Industry Schemes Committee has such ancillary powers as may be necessary to enable it to exercise its functions.

(3)The Industry Schemes Committee may exercise its functions at the request of the Authority or, with the approval of the Financial Secretary, on its own initiative.".

18.

Section 7

Repeal and substitute--

"7.Employer to arrange for employees to become scheme members

(1)Every employer of a relevant employee must take all practicable steps to ensure that the employee becomes a member of a registered scheme within the permitted period after the relevant time.

(2)Nothing in this section prevents an employer of 2 or more relevant employees from procuring for those employees membership in different registered schemes.

(3)For the purposes of subsection (1)--

  1. the permitted period is the period specified by the Authority by notice published in the Gazette for the purposes of this section; and

  2. the relevant time is--
    1. in the case of an employer who is employing a relevant employee at the commencement of this section, the time of that commencement; and

    2. in the case of an employer who enters into a contract of employment with a relevant employee after that commencement, the date on which the employment begins.

7A.Employer and relevant employees required to contribute to registered scheme

(1)An employer who, at the commencement of this section, is employing a relevant employee must, for each contribution period occurring after that commencement--

  1. from the employer's own funds, contribute to the relevant registered scheme the amount determined in accordance with subsection (3); and

  2. subject to subsection (7), deduct from the employee's relevant income for that period as a contribution by the employee to that scheme the amount determined in accordance with subsection (4).

(2)An employer who enters into a contract of employment with a relevant employee after the commencement of this section must, for each contribution period occurring after the commencement of the employment--

  1. from the employer's own funds, contribute to the relevant registered scheme the amount determined in accordance with subsection (3); and

  2. subject to subsection (7), deduct from the employee's relevant income for that period as a contribution by the employee to the scheme the amount determined in accordance with subsection (4).

(3)For the purposes of subsections (1)(a) and (2)(a), the amount to be contributed by an employer for a contribution period is--

  1. in the case of a relevant employee (other than a casual employee who is a member of an industry scheme), an amount equal to the prescribed percentage of the employee's relevant income for that period; and

  2. in the case of a casual employee who is a member of an industry scheme, an amount determined by reference to a scale specified in an order made in accordance with subsection (6).

(4)For the purposes of subsections (1)(b) and (2)(b), the amount that an employer is required to deduct in respect of a relevant employee for a contribution period is--

  1. in the case of a relevant employee (other than a casual employee who is a member of an industry scheme), an amount equal to the prescribed percentage of the employee's relevant income for that period; and

  2. in the case of a casual employee who is a member of an industry scheme, an amount determined by reference to a scale specified in an order made in accordance with subsection (6).

(5)For the purposes of subsections (3)(a) and (4)(a), the prescribed percentage is 5 per cent or, if some other percentage is prescribed by the regulations, that other percentage. The regulations may prescribe different percentages for those purposes.

For the purposes of subsections (3)(a) and (4)(a), the prescribed percentage is 5 per cent or, if some other percentage is prescribed by the regulations, that other percentage. The regulations may prescribe different percentages for those purposes.

(6)For the purposes of subsections (3)(b) and (4)(b), the Authority must, as the occasion requires, prescribe by order published in the Gazette scales of amounts of contributions by reference to amounts of relevant income of casual employees who are members of industry schemes.

(7)An employer must not, in respect of an employee who is not a casual employee, make a deduction under subsection (1)(b) or (2)(b) in respect of the employee's income for the first 30 days of the employee's employment after the relevant time.

(8)An employer must ensure that contributions required to be made in accordance with this section in respect of an employee of the employer are paid to the approved trustee of the registered scheme of which the employee is a member within the period and in the manner prescribed by the regulations.

(9)A relevant employee does not have a claim against the employee's employer only because that employer has, in accordance with this section, deducted amounts from the employee's income and has paid those amounts to the approved trustee of a registered scheme. However, nothing in this subsection affects any entitlement that the employee has in respect of those amounts under the rules governing the scheme.

(10) In this section--

"contribution period" (供款期)--

  1. in relation to an employer of a relevant employee (not being a casual employee), means each period for which the employer pays relevant income to the employee, and includes such a period occurring within, or that coincides with, the first 60 days of employment after the relevant time; and

  2. in relation to a relevant employee (not being a casual employee), means each period for which the employer pays relevant income to the employee, but does not include such a period occurring within, or that coincides with, the first 30 days of employment after the relevant time; and

  3. in relation to an employer and a relevant employee who is a casual employee, means each period for which the employer pays relevant income to the employee;


"relevant time" (有關時間) has the same meaning as in section 7(3).

(11)This section is subject to sections 9 and 10.

7B.Sections 7 and 7A not to apply to certain employees

Sections 7 and 7A do not, except in the case of a casual employee, apply to or in respect of an employee who is employed by an employer for less than 60 days.

7C.Duty of self-employed person to become scheme member

(1)Every self-employed person--

  1. must, within the permitted period after the relevant time, become a member of a registered scheme; and

  2. must, before the end of each contribution period, pay to the approved trustee of the scheme from the person's own funds for the person's own benefit a contribution equal to the prescribed percentage of the person's relevant income.

(2)In this section--

"contribution period" (供款期) means a period prescribed by the regulations as a contribution period;

"permitted period" (特准限期) means the period specified by the Authority by notice published in the Gazette for the purposes of this section;

"the relevant time" (有關時間) means--

  1. in the case of a person who is a self-employed person at the commencement of this section, the time of that commencement; or

  2. in the case of a person who becomes a self-employed person after that commencement, the date on which the person becomes self-employed.

(3)For the purposes of subsection (1)(b), the prescribed percentage is 5 per cent or, if some other percentage is prescribed by the regulations, that other percentage. The regulations may prescribe different percentages for those purposes.

(4)For the purposes of this section, the regulations may--

  1. require self-employed persons to report their relevant income to the Authority; and

  2. prescribe the matters that must be included in those reports.

(5)This section is subject to sections 9 and 10.".

19.

Section 8

Repeal.

     

20.

Section 9

Repeal "Schedule 3 shall not be" and substitute "Schedule 2 is not".

21.

Section 10

  1. In subsection (1), repeal "Schedule 2 shall not be" and substitute "Schedule 3 is not".

  2. Repeal subsection (2) and substitute--

"(2) If a relevant employee referred to in subsection (1) elects to make contributions to a registered scheme in respect of the employee's excess relevant income, the employee's employer--

  1. must give effect to the election by making deductions and paying contributions in respect of the employee in accordance with section 7A; and

  2. may also make contributions to the scheme in respect of that excess relevant income, but is not obliged to do so.".

22.

Section 11

Repeal and substitute--

"11. Voluntary contributions

(1)A person who is a member of a registered scheme and continues in employment after reaching the retirement age may continue to pay contributions to the scheme. The person's employer may also continue to pay contributions to the scheme in respect of the person, but is not obliged to do so, even if the person continues to pay contributions to the scheme.

(2)A self-employed person who is a member of a registered scheme and continues in business after reaching the retirement age may continue to pay contributions to the scheme.

(3)A relevant employee may pay contributions to a registered scheme exceeding the amount of contribution deductible in respect of the employee under section 7A(1)(b) or (2)(b).

(4)An employer may pay contributions to a registered scheme in respect of a relevant employee employed by the employer exceeding the amount of contribution required by section 7A(1)(a) or (2)(a) to be paid in respect of the employee, but is not obliged to do so, even if the employee continues to pay contributions to the scheme.

(5)A self-employed person may pay contributions to a registered scheme exceeding the amount of contribution payable in respect of the person under section 7C.

(6)A relevant employee or a self-employed person whose relevant income is less than the minimum level of relevant income specified in Schedule 2 may nevertheless contribute to a registered scheme.

(7)Any contributions paid to a registered scheme as provided by this section are voluntary, but are subject to the governing rules of the scheme.

(8)The provisions of this Ordinance (sections 12, 13, 14 and 15(1) to (3) excepted), and the governing rules of the scheme (in so far as those rules are not inconsistent with this Ordinance), apply to accrued benefits derived from voluntary contributions paid to a registered scheme in the same way as they apply to accrued benefits that are derived from mandatory contributions.

(9)The regulations may provide for all or any of the following matters--

  1. the vesting of voluntary contributions in the scheme member concerned;

  2. the preservation of accrued benefits derived from voluntary contributions;

  3. the transfer from one registered scheme to another or from one account within a registered scheme to another account within the same scheme of accrued benefits derived from voluntary contributions;

  4. the payment to or in respect of a scheme member of accrued benefits derived from voluntary contributions.".

23.

Section 12

Repeal and substitute--

"12. Contributions to vest in scheme member as accrued benefits

(1)Subject to section 12A, a contribution in respect of a member of a registered scheme vests in the member as accrued benefits as soon as it is paid to the approved trustee of the scheme.

   

(2) Subject to section 12A, income or profits derived from the investment of the accrued benefits of a member of a registered scheme by or on behalf of the approved trustee of the scheme also (after taking into account any loss arising from any such investment) vest in the member as accrued benefits as soon as they are received by that trustee.

(3)The total amount of accrued benefits vested in a scheme member from time to time is to be calculated as provided by the rules.".

24.

New

Add--

"12A. Certain amounts relating to severance payments and longservice payments to be paidfrom accrued 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. accrued benefits are held in a registered 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 approved trustee of the scheme for payment of an amount under subsection (2).

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

  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 accrued 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 accrued benefits that is attributable to the employer's contributions, pay to the employer from those 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. accrued benefits are held in a registered scheme in respect of the employee; and

  3. a part of those benefits are 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 approved trustee of the scheme for payment of an amount under subsection (4).

(4)As soon as practicable after receiving an application under subsection (3), the approved trustee of the registered 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 is not more than the amount of the part of the employee's accrued 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 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 accrued 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 accrued 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 accured 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--

  2. the person's contract of employment (with the substitution of the new owner of the business for the previous owner) is renewed by that new owner; or

  3. the person is re-engaged by that new owner under a new contract of employment; or
  1. a person is taken into the employment of a company that is 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.".

25.

Section 14

Repeal and substitute--

"14. Portability of accrued benefits

(1)A member of an employer sponsored scheme who ceases to be an employee of an employer who is participating in the scheme must, in accordance with the regulations, elect to have the member's accrued benefits transferred to another registered scheme. This subsection does not apply if the member exercises an entitlement to have the member's accrued benefits paid in accordance with section 15 or regulations made for the purposes of that section.

(2)A member of a registered scheme, other than an employer sponsored scheme, may, in accordance with the regulations, elect to have the member's accrued benefits transferred--

  1. to another registered scheme; or

  2. to another account within the same registered scheme.

(3)If a member of a registered scheme makes an election under this section for the transfer of the member's accrued benefits--

  1. the approved trustee of the scheme; and

  2. where the election is for the transfer of those benefits to another registered scheme, the approved trustee of that other scheme,

must comply with such requirements with respect to the transfer of those benefits as are prescribed by the regulations for the purposes of this subsection.

(4)If a member of a registered scheme who makes an election under this section for the transfer of the member's accrued benefits--

  1. ceases to be an employee of an employer; or

  2. becomes an employee of an employer; or

  3. does both of those things,

the employer or employers must comply with such requirements with respect to the transfer of those benefits as are prescribed by the regulations for the purposes of this subsection.

(5)The regulations may--

  1. include requirements as to--
    1. the notices that are to be given; and

    2. the procedure that is to be followed,

      in connection with the transfer of accrued benefits in accordance with this section; and

  2. prescribe the procedure to be followed if a scheme member who is a relevant employee fails to comply with subsection (1).".


26

Section 15(2)

  1. Repeal "the form prescribed by the Authority in rules made under section 47" and substitute "a form approved by the Authority".

  2. Repeal "regulations made under section 46" and substitute "the regulations".


27.

Section 15(3) and (4)

Repeal and substitute--

"(3) The regulations referred to in subsection (2) may specify the circumstances in which a scheme member's entitlement under that subsection may be exercised. Those circumstances include (but are not limited to)--

  1. the scheme member's permanent departure from Hong Kong; and

  2. the scheme member's total incapacity.

(4)When a member of a registered scheme has died, the approved trustee of the scheme must pay the whole of the member's accrued benefits as a lump sum--

  1. to the member's personal representatives; or

  2. if there are no personal representatives of the member's estate or if they are unwilling to act, to such person, or to a person of such class, as is specified in the regulations.


(5)For the purposes of subsection (4), "personal representatives" (遺產代理人) has the same meaning as in the Probate and Administration Ordinance (Cap. 10).".

28.

Section 16

  1. Repeal "shall be void and of no effect" and substitute "is void".

  2. Renumber the section as section 16(1).

  3. Add--

"(2)Subsection (1) applies only to accrued benefits derived from mandatory contributions.".

29.

Section 17(1) and (2)

Repeal and substitute--

"(1)The Authority is required to establish a compensation fund for the purpose of compensating members of registered schemes and other persons who have beneficial interests in those schemes for losses of accrued benefits that are attributable to misfeasance or illegal conduct committed by the approved trustees of those schemes or by other persons concerned with the administration of those schemes.

(2)The compensation fund is to be administered by such number of administrators as the Authority may appoint for the purpose but, if there are no such administrators, the Authority must administer the compensation fund.".

30.

Section 17(3)

Repeal "regulations made under section 46" and substitute "the regulations".

31.

Section 17(5)

Repeal and substitute--

"(5)Regulations may be made under section 46 for the purposes of this section. Those regulations may include provisions for--

  1. the administration of the compensation fund; and

  2. the appointment of persons to be administrators of that fund; and

  3. the payment of claims to make good losses of accrued benefits.".


32.

Section 17(6)

Repeal "moneys" and substitute "money".

33.

Section 17(7)

Repeal "court" and substitute "Court".

34.

New

Add--

"17AScheme member may claim
compensation from
compensation fund

(1)A person who is a member of a registered scheme, or who claims to have a beneficial interest in the accrued benefits of a scheme member in such a scheme, may lodge with the Authority a claim for compensation from the compensation fund on the ground that--

  1. the person has suffered a loss of accrued benefits in the scheme; and

  2. the loss was attributable to misfeasance or illegal conduct committed by a person concerned with the administration of the scheme.

(2)A claim--

  1. must be made in writing and specify the particulars of the claim (including the name of the registered scheme concerned and the name of the approved trustee of that scheme); and

  2. must be lodged with the Authority within 6 months after the claimant became aware of the loss to which the claim relates.

(3)A claim that is not made in accordance with subsection (2) is barred unless the Authority otherwise determines.

(4)On receiving a claim made under this section, the Authority must investigate the claim to determine its validity.

(5)The Authority must dismiss a claim if, after investigating the claim, the Authority is satisfied that--

  1. there are no reasonable grounds for believing that a loss of accrued benefits has occurred; or

  2. if there were such grounds, there is no evidence of misfeasance or illegal conduct on the part of the trustee of the scheme or any other person referred to in subsection (1)(b).

(6)If the Authority dismisses a claim, it must notify the claimant of its decision, together with a statement of the reasons for it.

17B.Application to Court

(1)If the Authority reasonably believes, whether as a result of a claim made under section 17A or otherwise, that--

  1. a loss of accrued benefits has occurred; and

  2. there is evidence of misfeasance or illegal conduct on the part of the trustee of the scheme or some other person referred to in section 17A(1)(b); and

  3. the matter has not been resolved to the satisfaction of the person who may have suffered the loss of accrued benefits,

the Authority must make an application to the Court to have the matter determined by it.

(2)An application under subsection (1) must contain such information, and be accompanied by such documents, as may be prescribed by the regulations for the purposes of this section.

(3)If the application is made as a result of a claim made under section 17A, the application must be accompanied by a copy of the claim.

(4)At the hearing of the application--

  1. the approved trustee of the scheme; and

  2. any person concerned with the administration of the scheme who is alleged to have committed misfeasance or to have engaged in the relevant illegal conduct,

are entitled to appear and be heard in the proceedings.

(5)On the hearing of an application made under this section, the Court must--

  1. determine whether or not the person who is alleged to have suffered a loss of accrued benefits in the scheme concerned has in fact suffered that loss; and

  2. if so, determine whether or not the loss was attributable to misfeasance or illegal conduct committed by a person concerned with the administration of the scheme.

(6)If the Court makes determinations under subsection (5), it must, by order--

  1. declare the fact and the date of the misfeasance or illegal conduct and the amount of compensation to be awarded; and

  2. direct the administrators of the compensation fund to pay that amount to such person as, in its opinion, appears to be properly entitled to receive the amount.

(7)The Court must not make an order for the payment of an amount of compensation directly to a person, unless the person has been paid or is entitled to be paid the relevant accrued benefits as provided by section 15 of the Ordinance or by regulations made for the purposes of that section.

(8)The Rules Committee constituted under section 55 of the Supreme Court Ordinance (Cap. 4) may make rules, not inconsistent with this section, with respect to the making of applications under this section and the hearing and determination of those applications and may amend those rules as and when necessary.

17C.Administrators to pay compensation to specified person

(1)If the Court makes an order under section 17B for the award of compensation, the administrators of the compensation fund must pay the compensation to such person as is specified in the order.

(2)The administrators of the compensation fund must pay the compensation within the period, and in the manner, prescribed by the regulations.

(3)If the Court makes an order under section 17B for the award of compensation, the administrators of the compensation fund must add interest to the compensation.

(4)The interest is to be calculated in accordance with the regulations.".

35.

Section 18

Repeal and substitute--

"18.Recovery of mandatory contributions that are in arrears

(1)A mandatory contribution is in arrears if it is not paid within the period prescribed by the regulations and, on the expiry of that period, becomes due and payable to the Authority.

(2)The Authority may, by proceedings brought in the District Court, recover as a debt to the Authority a mandatory contribution that is in arrears, together with the amount of penalty interest that is payable under subsection (3) in respect of those arrears.

(3)If a mandatory contribution is in arrears, the person who is liable to pay the contribution is also liable to pay to the Authority as penalty interest a further amount equal to the prescribed percentage of the amount that is in arrears. The prescribed percentage is the percentage prescribed by the regulations. That percentage must not exceed 15 per cent.

(4)The Authority must pay to the approved trustee of the registered scheme to which the relevant mandatory contribution was payable any arrears and penalty interest that are paid to or recovered by the Authority.

(5)On receiving a payment under subsection (4), an approved trustee must credit the amount of the payment to the account of the scheme member for whom the relevant mandatory contribution should have been remitted in accordance with this Part.

(6)In this section, a reference to a mandatory contribution includes a part of such a contribution.".

36.

Section 19(1)

  1. Repeal "Any person authorized by the Authority in writing ("authorized person") for the purpose, and on production of that authority, may" and substitute "An authorized person may,".

  2. Add "do all or any of the following" after "no other purpose".

  3. In paragraph (a), repeal "or place, in which he" and substitute "in which the person".

  4. In paragraph (b), repeal "register, record, form or other document" and substitute "record".

  5. In paragraph (c), repeal "may" where it secondly appears.

  6. In paragraph (d), repeal "any regulations made under section 46" and substitute "the regulations".

37.

Section 19(2)

Repeal and substitute--

"(2)If premises are being used as a private dwelling, an authorized person may enter those premises only under the authority of a warrant issued under subsection (3).

(3)A magistrate may, on an application made by or on behalf of an authorized person, issue a warrant authorizing the person to enter premises referred to in subsection (2) if satisfied by information made on oath that there are reasonable grounds for suspecting--

  1. that an offence under this Ordinance has been, is being or is about to be committed in those premises; or

  2. that there is in those premises any thing that appears to the person to be or to contain evidence of such an offence.

(4)A person may exercise a power conferred by subsection (1) only if the person is in possession of a written authority issued by the Authority and produces that authority to the occupier of the premises sought to be entered, inspected or examined or to any other person in relation to whom it is sought to exercise that power.".


38.

Sections 20 to 22

Repeal and substitute--

"20.Approval of trustees

(1)A person may apply to the Authority for approval as a trustee for the purposes of this Ordinance.

(2)A company is not eligible to make an application under this section unless at least 1 of the company's directors is an independent director. The regulations may prescribe the qualifications of independent directors for the purposes of this subsection.

  1. (3)A natural person is not eligible to make an application under this section if this a public officer; or

  2. is, in accordance with the Mental Health Ordinance (Cap. 136), found by the High Court to be of unsound mind and incapable of managing himself or herself and his or her affairs; or

  3. is an undischarged bankrupt or has entered into a composition with the person's creditors without paying the creditors in full.

(4)An application must--

  1. be in a form approved by the Authority; and

  2. contain such information, and be accompanied by such documents, as may be prescribed by the guidelines; and

  3. be accompanied by an application fee of such amount as may be prescribed by the regulations.

(5)The Authority may, by written notice, require an applicant to provide additional information and documents as is reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a reasonable time specified in the notice, the Authority may reject the application.

(6)The Authority may approve an application only if satisfied that the applicant--

  1. is likely to be able to perform, in a proper manner, the duties that an approved trustee required by this Ordinance in relation to registered schemes; and

  2. enters into an undertaking with the Authority that the applicant will not, in relation to a registered scheme of which the applicant becomes the approved trustee, refuse an application for membership of the scheme that is made by or on behalf of a person who--
    1. is not precluded by a provision of this Ordinance from being a member of the scheme; and

    2. is required by this Ordinance to be a member of a registered scheme; and

  3. complies with such requirements as are prescribed by the regulations.

(7)The regulations referred to in subsection (6)(c) may include requirements as to the following matters--

  1. the qualifications that an applicant must have;

  2. the financial resources that an applicant must have (including capital adequacy);

  3. in the case of an application by a company--
    1. the membership of the company; and

    2. the objects of the company as set out in its constitution; and

    3. the suitability of the company's controllers (including their reputation and character and their knowledge of, experience in and qualifications for administering provident fund schemes); and

    4. in the case of a company that is an oversea company, requirements that the place where the company is incorporated has in force laws that provide for the establishment and operation of corporations and trusts and that there must be in that place an effective regulatory authority to supervise those corporations and trusts and to enforce those laws;

  4. in the case of an application by a natural person--
    1. the suitability of the applicant to be an approved trustee (including the applicant's reputation and character and the applicant's knowledge of, experience in and qualifications for administering provident fund schemes); and

    2. the need to provide a performance guarantee and the contents of such a guarantee.

(8)In approving an applicant as an approved trustee, the Authority may impose such conditions with respect to the conduct of the applicant's business as it considers appropriate.

(9)On approving an applicant as an approved trustee, the Authority must issue the applicant with a certificate of approval and, if the Authority has imposed conditions on the applicant under subsection (8), must specify those conditions in the certificate or in a document accompanying the certificate.

(10)The Authority must not reject an application under this section without giving the applicant an opportunity to make representations (either orally or in writing or both) as to why the application should not be rejected.

(11)If the Authority rejects an application made under this section, it must give written notice of the rejection to the applicant and must include in the notice a statement setting out the reasons for the rejection.

20A.Suspension of approval of approved trustee

(1)The Authority may suspend the approval of an approved trustee if it reasonably suspects that--

  1. the trustee has failed to comply with a condition to which the approval is subject; or

  2. the trustee is for any reason unable to carry out any of the duties of an approved trustee in relation to a registered scheme; or

  3. if the regulations specify requirements that are to be complied with as to the financial resources (including capital adequacy) or the qualifications of approved trustees, the trustee is not, or is no longer, able to satisfy those requirements; or

  4. the trustee has failed to comply with section 22.

(2)The Authority must not, unless it appears to it that the interests of scheme members would otherwise be detrimentally affected, suspend the approval of an approved trustee without giving the trustee an opportunity to make representations (either orally or in writing or both) as to why the approval should not be suspended.

(3)If the Authority suspends the approval of an approved trustee, it must give written notice of the suspension to the trustee and must include in the notice a statement setting out the reasons for the suspension.

(4)A suspension of the approval of an approved trustee takes effect from the date specified in the notice given under subsection (3) or, if a later date is specified, from that date, irrespective of whether or not the trustee appeals against the suspension under Part V.  

20B.Revocation of approval of approved trustee

(1)The Authority may revoke the approval of an approved trustee on being satisfied on reasonable grounds that--

  1. the trustee has failed to comply with a condition to which the approval is subject; or

  2. the trustee is for any reason unable to carry out any of the duties of an approved trustee in relation to a registered scheme; or

  3. if the regulations specify requirements that are to be complied with as to the financial resources (including capital adequacy) or the qualifications of approved trustees, the trustee is not, or is no longer, able to satisfy those requirements; or

  4. the trustee has failed to comply with section 22.

(2)The Authority must not revoke the approval of an approved trustee without giving the trustee an opportunity to make representations (either orally or in writing or both) as to why the approval should not be revoked.

(3)If the Authority revokes the approval of an approved trustee, it must give written notice of the revocation to the trustee and must include in the notice a statement setting out the reasons for the revocation.

(4)An approved trustee's approval is, by operation of this subsection, revoked--

  1. if the trustee is a company and--
    1. the Court makes an order for the winding up of the company; or

    2. the company is dissolved otherwise than in consequence of such an order; or

  2. if the trustee is a natural person, the person--
    1. dies; or

    2. is, in accordance with the Mental Health Ordinance (Cap. 136), found by the High Court to be of unsound mind and incapable of managing himself or herself and his or her affairs; or

    3. is adjudicated bankrupt or has entered into a composition with the person's creditors without paying the creditors in full.

20C.Register of approved trustees to be kept

(1)The Authority must establish and maintain a register of trustees approved under section 20. The register may be in such form, and contain such information, as the Authority may determine.

(2)The register is to be kept at the head office of the Authority in Hong Kong.

(3)Members of the public are entitled, without charge, to inspect the register during the ordinary business hours of the Authority.

21. Application for registration as employer sponsored scheme or master trust scheme

(1)An application for the registration of a provident fund scheme as an employer sponsored scheme may be made to the Authority only--

  1. by a company that is an approved trustee or has applied for approval as such under section 20; or

  2. by 2 or more natural persons who are approved trustees, or have applied for approval under that section, and at least 1 of whom must be an independent trustee; or

  3. by such a company and 1 or more such natural persons.

(2)An application for the registration of a provident fund scheme as a master trust scheme may be made to the Authority only by an approved trustee that is a company or by a company that has applied for approval under section 20.

(3)If an application under this section is made by 2 or more approved trustees who are natural persons, at least 1 of those persons must be an independent trustee. The regulations may prescribe the qualifications of independent trustees for the purposes of this subsection.

(4)An application must--

  1. specify particulars of the scheme sought to be registered and contain such other information (if any) as is prescribed in guidelines issued under section 6D; and

  2. be accompanied--
    1. by a copy of the proposed rules that are to govern the scheme and by such other documents (if any) as are prescribed in guidelines issued under section 6D; and

    2. by an application fee of such amount as is prescribed by the regulations.

(5)The Authority may, by written notice, require an applicant to provide such additional information and documents as are reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a reasonable time specified in the notice, the Authority may reject the application.

(6)As soon as practicable after receiving an application for the registration of a provident fund scheme, the Authority must consider the application.

(7)The Authority may register a scheme only if satisfied that the scheme--

  1. complies with, or will if registered comply with, such requirements and standards as are prescribed by the regulations referred to in section 21C; and

  2. will be governed by the law of Hong Kong.

(8)The Authority may, as a condition of registering a provident fund scheme under this section, require the applicant to enter into an undertaking with respect to the administration of the scheme, including--

  1. in the case of an application to register a scheme as an employer sponsored scheme, an undertaking not to refuse an application for membership of the scheme made by or on behalf of a relevant employee of the participating employer; and

  2. in the case of an application to register a scheme as a master trust scheme, an undertaking not to refuse an application for membership of the scheme made by or on behalf of any relevant employee or self-employed person.

(9)The Authority must not reject an application under this section without giving the applicant an opportunity to make representations (either orally or in writing or both) as to why the application should not be rejected.

(10)If the Authority rejects an application made under this section, it must give written notice of the rejection to the applicant and must include in the notice a statement setting out the reasons for the rejection.

(11)On registering a provident fund scheme, the Authority must issue to the approved trustee of the scheme a certificate of registration. The certificate must specify whether the scheme is an employer sponsored scheme or a master trust scheme.

21A.Applications for registration of schemes as industry schemes

(1)The Authority may invite approved trustees that are companies to lodge with it applications to register a provident fund scheme as an industry scheme.

(2)Such a scheme may be for the persons engaged (whether as employees or as self-employed persons) in a particular industry or a particular class of industries or in 2 or more industries or classes of industries.

(3)The invitations sent or given to the approved trustees must be in writing and be identical in all material respects and must specify--

  1. the criteria on which the consideration of applications will be based; and

  2. the date by which applications must be lodged with the Authority.

(4)An application by an approved trustee in response to an invitation sent or delivered under subsection (1) must--

  1. specify particulars of the scheme sought to be registered and contain such other information as is specified in the invitation; and

  2. be accompanied--
    1. by a copy of the proposed rules that are to govern the scheme and by such other documents as are specified in the invitation; and

    2. by an application fee of such amount as is prescribed by the regulations; and

  3. be made within the period specified in the invitation.

(5)The Authority may, by written notice, require an applicant to provide such additional information and documents as are reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a reasonable time specified in the notice, the Authority may reject the application.

(6)As soon as practicable after the date specified in the invitations sent or delivered under subsection (1), the Authority must--

  1. consider the applications made in response to the invitation; and

  2. from among the applicants, select the applicant that best satisfies the criteria specified in the invitation; and

  3. register the scheme for the industry concerned and the successful applicant as the approved trustee of the scheme.

(7)The Authority may register a scheme as an industry scheme only if satisfied that the scheme--

  1. will, when registered, comply with such requirements and standards as are prescribed by the regulations referred to in section 21C; and

  2. will be governed by the law of Hong Kong.

(8)The Authority may, as a condition of registering a provident fund scheme as an industry scheme, require the applicant to enter into an undertaking with respect to the administration of the scheme, including an undertaking not to refuse an application for membership of the scheme made by or on behalf of any relevant employee or self-employed person who is employed or engaged in the industry concerned.

(9)An applicant is entitled to make representations (either orally or in writing or both) as to why the Authority should select the scheme specified in the applicant's application from among the applicants.

(10)As soon as practicable after selecting the successful applicant, the Authority must notify that applicant of the selection and give written notices to the other applicants that their applications have been rejected.

(11)On registering a provident fund scheme as an industry scheme, the Authority must--

  1. publish in the Gazette a notice of that registration containing such particulars as are prescribed by the regulations; and

  2. issue to the approved trustee of the scheme a certificate of registration.

The certificate must specify that the scheme is an industry scheme.

21B.Register of schemes to be kept

(1)The Authority must establish and maintain a register of schemes registered under sections 21 and 21A. The register may be in such form, and contain such information, as the Authority may determine.

(2)The register is to be kept at the head office of the Authority in Hong Kong.

(3)Members of the public are entitled, without charge, to inspect the register during the ordinary business hours of the Authority.

21C.Regulations with respect to registered schemes

(1)Regulations may be made under section 46 as to the requirements and standards that must be complied with in relation to--

  1. registered schemes; or

  2. applications for the registration of provident fund schemes.

(2)Those regulations may include requirements or standards as to the following matters--

  1. the vesting in scheme members of accrued benefits;

  2. the acceptance by approved trustees of mandatory contributions and voluntary contributions in respect of scheme members;

  3. the preservation of the accrued benefits of scheme members;

  4. the payment of accrued benefits to or in respect of scheme members;

  5. the transfer of accrued benefits from one scheme to another or from one account in a scheme to another account in the same scheme;

  6. the investment of accrued benefits;

  7. in the case of schemes administered by trustees that are companies, the composition of the board of directors of those companies and the composition of committees of those boards;

  8. the keeping of records (including accounting records) relating to registered schemes;

  9. the provision of information about the relevant scheme to scheme members;

  10. the preparation and publication of financial and other reports relating to schemes;

  11. the provision of information and documents to the Authority relating to schemes;

  12. the provision of information to other persons in relation to schemes;

  13. the financial viability of schemes (including their funding and solvency).

22.Approved trustee to comply with prescribed requirements and standards

The approved trustee of a registered scheme must, as far as reasonably practicable, ensure that the requirements and standards prescribed by the regulations referred to in section 21C are complied with in relation to the scheme.  

22A.Annual statements to be lodged with the Authority

(1)The approved trustee of a registered scheme must lodge with the Authority an annual statement not later than the date prescribed by the regulations for the purposes of this section.

(2)The statement must include or be accompanied by the following--

  1. the name and business address of the approved trustee;

  2. such other information or documents as are prescribed by the regulations for the purposes of this section.

22B.Annual registration fee to be paid to the Authority

(1)The approved trustee of a registered scheme must pay to the Authority an annual registration fee in respect of the scheme not later than the date on which the annual statement relating to the scheme is required to be lodged with the Authority under section 22A.

(2)The annual registration fee is to be an amount prescribed by the regulations and may be determined by reference to the current value of the assets of a registered scheme. However, the amount must not be fixed at a level that exceeds that which will enable the Authority to recover the costs incurred, or likely to be incurred, in exercising and performing its functions with respect to registered schemes.

(3)In fixing the level of the annual registration fee, the amounts likely be received by the Authority from other fees payable to it under this Ordinance are to be taken into account, but any amount appropriated to the Authority by the Legislative Council for the purposes of the Authority out of general revenue is to be disregarded.

(4)The amount at which the annual registration fee may be fixed is not to be affected by the fact that, in exercising or performing a function for or in relation to a particular person, the fee payable to the Authority by the person may exceed the actual cost to the Authority of exercising or performing the function.

(5)The Authority may, by proceedings brought in the District Court, recover from the approved trustee of a registered scheme as a debt an annual registration fee that is not paid on time.".

39.

Section 23

Repeal.

40.

Section 24

  1. Repeal "of their functions and the exercise of their powers" and substitute "or exercise of their functions".

  2. Repeal "shall be void and of no effect" and substitute "is void".


41.

Section 25

Repeal and substitute--

"25.Duties of officers of corporate trustees

If the approved trustee of a registered scheme is a company, each of the officers of the company has a duty to exercise a sufficient degree of care and diligence so as to ensure that, as far as reasonably practicable, the company--

  1. complies with all requirements and standards prescribed by the regulations referred to in section 21C; and

  2. fulfils the trustee's covenants (whether they are contained in the rules governing the scheme expressly or are implied because of section 24); and

  3. performs all duties imposed on the trustee in accordance with section 27.".

42.

Section 26

Repeal and substitute--

"26.Governing rules not to exempt approved trustee from liability for breach of trust etc.

A provision of the governing rules of a registered scheme is void in so far as it purports to exempt the approved trustee of the scheme from, or to indemnify that trustee against--

  1. liability for breach of trust for failure to act honestly as regards a matter concerning the scheme; or

  2. liability for breach of trust for an intentional or reckless failure to exercise, as regards a matter concerning the scheme, the degree of care and diligence that is to be reasonably expected of a trustee who is exercising functions in relation to a trust; or

  3. liability for a fine or penalty imposed by or under the law,

or purports to limit any such liability.".

43.

Section 27(1)

Repeal "in regulations made under section 46 and those regulations may provide for the imposition of financial penalties in the event of non-compliance" and substitute "by the regulations".

44.

Section 27(2)

  1. Repeal "imposed by the regulations referred to in subsection (1) may include the following, namely" and substitute "that may be imposed by the regulations include (but are not limited to) the following".

  2. In paragraph (a), repeal "statutory minimum" and substitute "mandatory".

  3. In paragraph (h), repeal "a balance sheet and statement of account in relation to a registered scheme. " and substitute "financial statements in respect of a registered scheme; ".

  4. Add--

    "(i) in the case of an approved trustee of a registered scheme that is a company, the duty of each officer of the company to make such disclosures affecting the scheme or that could affect the scheme, as are prescribed by those regulations;

    (j) in the case of an approved trustee of a registered scheme who is a natural person, the duty of the person to make such disclosures affecting the scheme, or that could affect the scheme, as are prescribed by those regulations;

    (k) the duty of an approved trustee to keep a register of disclosures referred to in paragraph (i) or (j), as appropriate. ".

45.

Section 27(3)

Repeal and substitute--

"(3)An approved trustee has the same duties as those imposed on trustees by law, except in so far as they are expressly or impliedly modified by, or are inconsistent with, this Ordinance.

(4)Whenever the approved trustee of a registered scheme is required or empowered by or under this Ordinance, or by the governing rules of the scheme, to delegate a duty of the trustee in relation to the scheme to a service provider, the delegation does not absolve the trustee--

  1. from responsibility to ensure that the duty is performed in relation to the scheme; or

  2. from the consequences of any failure by the service provider to perform that duty.".

46.

Section 28(1)

Repeal "shall not be undertaken" and substitute "must not be engaged in".

47.

Section 28

Repeal subsection (3).

48.

Section 29(1)

Repeal and substitute--

"(1)The approved trustee of a registered scheme may invest the accrued benefits of scheme members in restricted investments--

  1. only in so far as approved trustees are not prohibited by the regulations from investing those benefits in those investments; or

  2. if approved trustees are not so prohibited, only in accordance with such limitations and conditions as are prescribed by the regulations.".

49.

Section 30(1)

Repeal and substitute--

"(1)If at any time the Authority reasonably believes that circumstances exist or have existed that may prejudice the accrued benefits of a member of a registered scheme, it may, by written notice served on the approved trustee of the scheme, require that trustee--

  1. to arrange for an auditor (who must be approved by the Authority) to investigate whether or not any such circumstances exist or have existed and to investigate any other matters relating to the trustee or the scheme that may be specified in the notice and to prepare for the trustee a report on the investigation; and

  2. to provide the Authority, within such period as may be specified in the notice, with a copy of the report.".

50.

New

Add--

"30A.General power of inspection

(1)An authorized person may, at any reasonable time during ordinary business hours, enter premises at which the person reasonably believes that--

  1. the affairs of a registered scheme are being conducted; or

  2. any document relating to the scheme is being kept,

for the purpose of ascertaining whether or not the provisions of this Ordinance are being complied with.

(2)Subsection (1) does not authorize an authorized person to enter premises that are being used as a private dwelling.

(3)An authorized person may enter premises under this section without giving notice and without the consent of the occupier--

  1. if entry is required urgently and the Authority has expressly authorized entry; or

  2. if giving notice or obtaining the consent of the occupier would defeat the purpose for which it is intended to exercise the power of entry.

In all other circumstances, an authorized person must give the occupier of the premises reasonable notice of the intention to enter the premises.

(4)An authorized person who enters premises under this section may do any of the following--

  1. inspect the premises and examine any record found on the premises that the person reasonably believes relates to a registered scheme;

  2. take photographs of the premises or of any thing found on the premises that the authorized person reasonably believes relates to the scheme;

  3. require the occupier of the premises or any person who is apparently an employee or agent of that occupier to provide the authorized person with such assistance and facilities as is or are reasonably necessary to enable the authorized person to exercise or perform that person's functions;

  4. require any person on the premises to produce for inspection records under the control of the person relating to the scheme and, if any such records are not legible or are not in the English or Chinese language, to produce a statement in writing in English or Chinese setting out the contents of those records;

  5. make copies of all or any part of any such records or statements.

(5)A person may exercise a power conferred by this section only if the person--

  1. is in possession of a warrant of authority issued by the Authority; and

  2. on being requested to do so, produces that warrant to the occupier of the premises sought to be entered, inspected or examined or to any other person in relation to whom it is sought to exercise that power.".


51.

Section 31(1)

  1. Add "," after " Authority may".

  2. Add "," after "a registered scheme".

  3. Repeal "in the approved trustee's possession or under his control as may be specified in the notice and which relates to the registered scheme" and substitute "relating to the scheme that is specified in the notice, but only if the information or document is in the possession, or under the control, of that trustee".


52.

Section 31(2)

  1. Add "," after "who".

  2. Add "," after "excuse".


53.

Section 32(1)

Repeal and substitute--

"(1)The Authority may, by written notice served on the approved trustee of a registered scheme, notify that trustee that the Authority intends to investigate the matters specified in the notice on the ground that the Authority reasonably believes that--

  1. a person has contravened this Ordinance with respect to the scheme; or

  2. circumstances may exist that could prejudice the interests of scheme members; or

  3. the trustee is failing, or has failed, to fulfil the trustee's duties with respect to the scheme.

(1A)The Authority must, as soon as practicable after serving such a notice, investigate the matters specified in the notice.".

54.

Section 32(2)

Repeal "carry out the investigation referred to in subsection (1) in accordance with rules made by the Authority under section 47" and substitute "conduct an investigation under this section".

55.

Section 32(3)

Repeal and substitute--

"(3)For the purpose of conducting an investigation, an inspector may do any of the following--

  1. enter premises (other than premises referred to in subsection (3A)) if the inspector reasonably believes that it is necessary to enter those premises because they may have some connection with a registered scheme;

  2. inspect those premises and make copies of records found on the premises that the inspector reasonably believes may relate to the financial or other affairs of the scheme;

  3. require the trustee of the scheme or any other person who the inspector reasonably believes has custody of records relating to the affairs of the trustee or the scheme to produce the records to the inspector;

  4. require the trustee or any other person who the inspector reasonably believes has information concerning the affairs of the scheme--
    1. to give all reasonable assistance to the inspector in connection with the investigation; and

    2. to appear before the inspector at a time and place specified by the inspector in writing to be examined with respect to the matters relating to the affairs of the trustee or the scheme and to answer questions that the inspector may put to the trustee or other person.

(3A)If premises are being used as private dwelling, an inspector may enter and search those premises only under the authority of a warrant issued under subsection (3B).

(3B)A magistrate may, on an application made by or on behalf of an inspector, issue a warrant authorizing the inspector to enter and search premises referred to in subsection (3A) if satisfied by information made on oath that there are reasonable grounds for suspecting--

  1. that the premises may have some connection with a particular registered scheme; and

  2. that there may be on the premises records relating to the affairs of the trustee or the scheme.

(3C)An inspector who enters premises under the authority of a warrant issued under this section may take possession of any records that the inspector reasonably believes relate to the affairs of the trustee or the scheme.".

56.

Section 32(4)

Repeal "he may by complaint to the court" and substitute ", the inspector may, by complaint made to the Court, ".

57.

Section 32(5)

  1. Repeal "court" and substitute "Court" where it first appears.

  2. Add "who is" after "the person".

  3. Repeal "in like manner as if he had been" and substitute "in the same way as a person who is".


58.

Section 32(6)

  1. Repeal "where such" and substitute "if the".

  2. Repeal "so".

  3. Repeal "concerned shall be" and substitute "is".

  4. Repeal "that person" and substitute "the person".

  5. Repeal "such proceedings in relation to" and substitute "proceedings relating to".

59.

Section 32(9)

Repeal and substitute--

"(9)On receiving a report of an investigation conducted under this section, the Authority must provide a copy of the report to the approved trustee of the registered scheme concerned. The Authority may also do either or both of the following--

  1. provide a copy of the report to any person who appears to the Authority to have an interest in the scheme;

  2. publish the report or any part of it in such publication as it considers appropriate.".

60.

Section 32(10)

  1. Repeal "shall require" and substitute "requires".

  2. In paragraph (b)(i), repeal "has reason to believe" and substitute "reasonably believes".

61.

Section 33

Repeal and substitute--

"33.Suspension and termination of approved trustee's administration of registered scheme

(1)The Authority may, by written notice served on an approved trustee of a registered scheme, suspend the trustee's administration of the scheme if the Authority reasonably believes--

  1. that the trustee's conduct with respect to the scheme is having, has had or could have an adverse effect on the financial soundness of the scheme or the interests of the scheme members; or

  2. that the trustee is engaging, or has engaged, in a forbidden investment practice specified in guidelines published under section 28.

(2)A notice under subsection (1) must specify--

  1. the period for which the approved trustee's administration of the scheme is to be suspended; and

  2. the grounds for the suspension.

(3)A suspension of an approved trustee's administration of a registered scheme takes effect from the date specified in the notice served under subsection (1) or, if a later date is specified, from that date, irrespective of whether or not the trustee appeals against the suspension under Part V.

(4)The Authority may, if it reasonably believes that it is necessary to do so, extend the period of an approved trustee's suspension by serving a further notice on the approved trustee concerned.

(5)As soon as practicable after suspending an approved trustee's administration of a registered scheme, the Authority must hold an inquiry to determine whether or not the trustee's administration of the scheme should be terminated. The inquiry is to be held in accordance with Schedule 5A.

(6)The Authority must terminate the approved trustee's administration of a registered scheme if, at the conclusion of an inquiry held under this section, the Authority is satisfied--

  1. that the trustee's conduct with respect to the scheme is having, has had or could have an adverse effect on the financial soundness of the scheme or the interests of the scheme members; or

  2. that the trustee is engaging or has engaged in a forbidden investment practice specified in guidelines published under section 28.

(7)An approved trustee's administration of a registered scheme is also terminated if the trustee's approval is revoked under section 20B.

(8)An approved trustee's administration of a registered scheme is also suspended if the trustee's approval is suspended under section 20A.

(9)An approved trustee's administration of a registered scheme may also be terminated by the resignation of the trustee but only with the prior written approval of the Authority. That approval may be given only when the Authority is satisfied that adequate arrangements have been made for another approved trustee to assume responsibility for the administration of the scheme and for the legal interest in the scheme assets to be transferred to that other trustee.

33AAuthority to appoint administrator on suspension or termination of trustee's administration

(1)If--

  1. the administration of an employer sponsored scheme by a trustee is suspended or terminated; and

  2. after the suspension or termination--
    1. there are no other trustees of the scheme; or

    2. there is only one remaining trustee (not being a company); or

    3. if each of the remaining trustees is a natural person, there is no remaining independent trustee,

the Authority must, as soon as practicable after the suspension or termination of administration, appoint an administrator to replace the trustee whose administration of the scheme has been suspended or terminated until the suspension ends or the vacancy resulting from the termination is filled.

(2)A person appointed under subsection (1) must, as far as possible, be an approved trustee.

(3)However, if the Authority is unable to find an approved trustee who is willing to act as an administrator of the registered scheme concerned, it may appoint as administrator a person who is not an approved trustee.

(4)If--

  1. the administration of a master trust scheme or an industry scheme by a trustee is suspended or terminated; and

  2. there are no other trustees of the scheme,

the Authority must, as soon as practicable after the suspension or termination of administration, appoint an administrator to administer the scheme to replace the trustee whose administration of the scheme has been suspended or terminated until the suspension ends or the vacancy resulting from the termination is filled.

(5)A person appointed under subsection (4) must, as far as possible, be an approved trustee that is a company.

(6)However, if the Authority is unable to find an approved trustee that is a company who is willing to act as an administrator of the registered scheme concerned, it may appoint as administrator a person who is not an approved trustee or an approved trustee that is not a company.

(7)An appointment under this section is to be on such terms and conditions as are specified in the appointment, including the fees that are to be payable to the approved trustee. If a person appointed under this section is not an approved trustee, the terms and conditions are, as nearly as practicable, to be those applicable to such a trustee.

(8)The Authority may terminate the appointment of an administrator after giving reasonable notice to the administrator and may--

  1. if the approved trustee's administration of the scheme is suspended and the suspension has not ended; or

  2. if that trustee's dministration of the scheme is terminated,

in accordance with this section appoint another administrator to administer the scheme.

(9)The administrator of a registered scheme may resign by giving to the Authority not less than 30 days' written notice of the resignation.

(10)An administrator of a registered scheme may deal with the scheme assets as if the legal interest in those assets was vested in the administrator or, where the administrator consists of 2 or more persons, was vested in those persons jointly.

33B. Authority to appoint replacement trustee on termination of approved trustee's administration

(1)If--

  1. the administration of an employer sponsored scheme by a trustee has been terminated; and

  2. after the termination--
    1. there are no other trustees of the scheme; or

    2. there is only one remaining trustee (not being a company); or

    3. if each of the remaining trustees is a natural person, there is no remaining independent trustee,

the Authority must, as soon as practicable after the termination, take all reasonable steps to appoint another approved trustee to replace the trustee whose administration of the scheme was terminated.

(2)A person appointed under subsection (1) must be an approved trustee.

(3)If--

  1. the administration of a master trust scheme or an industry scheme by a trustee has been terminated; and

  2. there are no other trustees of the scheme,

the Authority must take all reasonable steps to appoint another approved trustee to replace the trustee whose administration of the scheme was terminated.

(4)A person appointed under subsection (3) must be an approved trustee that is a company.

(5)An appointment under this section is to be on such terms and conditions as are specified in the appointment, including the fees that are to be payable to the approved trustee.

(6)The legal interest in the assets of a registered scheme in respect of which an approved trustee is appointed under this section becomes vested in the trustee on that appointment.".

62.

Section 34

Repeal and substitute--

"34.Voluntary winding up of employer sponsored scheme

(1)An employer sponsored scheme may be wound up voluntarily in such circumstances as are prescribed by the regulations, but only with the written consent of the Authority. That consent may be given only if the Authority is satisfied that--

  1. there are no longer any scheme members or, if there are any such members, the interests of those members are adequately protected and, if those members continue to have accrued benefits in the scheme, satisfactory arrangements have been made for the transfer of those benefits to another registered scheme; and

  2. all existing liabilities relating to the scheme (including obligations to scheme members) can be met from the scheme assets.

(2)The approved trustee of an employer sponsored scheme, or any other person of a class prescribed by the regulations for the purposes of this subsection, may make an application to the Authority to give its consent to the voluntary winding up of the scheme.

(3)An application must--

  1. be in a form approved by the Authority; and

  2. contain such information, and be accompanied by such documents, as are prescribed by the regulations; and

  3. be accompanied by an application fee of such amount (if any) as is so prescribed.

(4)The Authority may, by written notice, require an applicant to provide such additional information and documents as are reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a reasonable time specified in the notice, the Authority may reject the application.

(5)The Authority must not refuse to give its consent to the voluntary winding up of the scheme without giving the applicant an opportunity to make representations (either orally or in writing or both) as to why the Authority should consent to the winding up.

(6)If the Authority refuses to consent to the voluntary winding up of the scheme, it must give written notice of the refusal to the applicants and must include in the notice a statement setting out the reasons for the refusal.

(7)On consenting to the voluntary winding up of an employer sponsored scheme, the Authority must appoint a liquidator to wind up the affairs of the scheme. More than one liquidator may be appointed under this subsection if the Authority thinks it necessary.

(8)A liquidator appointed under subsection (7) must have such qualifications as are specified in the regulations.

(9)The appointment of a liquidator under subsection (7) is to be on such terms and conditions as are specified in the appointment, including the fees that are to be payable to the liquidator.

(10)The voluntary winding up of an employer sponsored scheme is to be conducted in accordance with regulations made under section 46 for the purposes of this section.

(11)On being satisfied that the winding up of a registered scheme has been completed in accordance with this section, the Authority must cancel the registration of the scheme.

34A.Winding up of registered schemes otherwise than in accordance with section 34

(1)Except as provided by section 34, a registered scheme may be wound up only by the Court on application made by the Authority.

(2)In winding up a registered scheme, the Court must satisfy itself--

  1. that the interests of scheme members are adequately protected; and

  2. if those members continue to have accrued benefits in the scheme, that satisfactory arrangements are made for the transfer of those benefits to another registered scheme.

(3)The Court may appoint a liquidator to conduct the winding up of a registered scheme and, subject to the regulations, may specify the duties to be performed by the liquidator in relation to the conduct of the winding up. More than one liquidator may be appointed under this subsection if the Court thinks it necessary.

(4)A liquidator appointed under subsection (3) must have such qualifications as are specified in the regulations.

(5)The appointment of a liquidator under subsection (3) is to be on such terms and conditions as are specified in the appointment, including the fees that are to be payable to the liquidator.

(6)The winding up of a registered scheme under this section is to be conducted in accordance with winding up rules made in accordance with subsection (7). Those rules may include provision for the payment of fees with respect to the proceedings relating the winding up of such a scheme and may specify by whom and to whom those fees are to be paid and the manner in which they are to be paid.

(7)The winding up rules referred to in subsection (6) are to be made by the Rules Committee constituted under section 55 of the Supreme Court Ordinance (Cap. 4) and may be amended by that Committee as and when necessary.

(8)Winding up rules made for the purposes of this section are to be judicially noticed.

(9)On being satisfied that the winding up of a registered scheme has been completed in accordance with this section, the Authority must cancel the registration of the scheme.

(10)In this section, "liquidator" (清盤人) includes a provisional liquidator.

34B.Power to merge registered schemes

(1)The approved trustees of 2 or more registered schemes that are employer sponsored schemes or master trust schemes may apply to the Authority to consent to the merger of those schemes into a single new scheme of the same kind.

(2)The approved trustees of

a number of registered schemes exceeding 2 (being employer sponsored schemes or master trust schemes) may apply to the Authority to consent to the merger of those schemes into a smaller number of new schemes of the same kind.

(3)An application must--

  1. be in a form approved by the Authority; and

  2. contain such information, and be accompanied by such documents, as are prescribed by the rules; and

  3. be accompanied by an application fee of such amount as is so prescribed.

(4)The Authority may, by written notice, require an applicant to provide such additional information and documents as are reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a reasonable time specified in the notice, the Authority may reject the application.

(5)As soon as practicable after receiving an application to consent to the merger of registered schemes, the Authority must consider the application. The Authority may consent to the merger only if satisfied--

  1. that the interests of the members of those schemes will be adequately protected and that, if the merger is approved, their accrued benefits will be transferred to the new scheme; and

  2. that the new scheme will be governed by the law of Hong Kong; and

  3. that the new scheme complies with, or will if the merger is consented to, comply with, such requirements and standards as are prescribed by the regulations referred to in section 21C.

(6)The Authority must not reject an application under this section without giving the applicants an opportunity to make representations (either orally or in writing or both) as to why the Authority should consent to the merger of the schemes.

(7)If the Authority rejects an application made under this section, it must give written notice of the rejection to the applicants and must include in the notice a statement setting out the reasons for the rejection.

(8)On registering a scheme derived from the merger of existing schemes, the Authority must issue to the approved trustee of the new scheme a certificate of registration and cancel the registration of the merged schemes. The certificate must specify that the scheme is an employer sponsored scheme or a master trust scheme, as the case requires.

34C.Power to divide registered scheme

(1)The approved trustee of a registered scheme that is an employer sponsored scheme or a master trust scheme may apply to the Authority to consent to the division of the scheme into 2 or more new schemes of the same kind.

(2)An application must--

  1. be in a form approved by the Authority; and

  2. contain such information, and be accompanied by such documents, as are prescribed by the rules; and

  3. be accompanied by an application fee of such amount as is so prescribed.

(3)The Authority may, by written notice, require an applicant to provide such additional information and documents as are reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a reasonable time specified in the notice, the Authority may reject the application.

(4)As soon as practicable after receiving an application to consent to the division of a registered scheme, the Authority must consider the application. The Authority may consent to the division of the scheme only if satisfied--

  1. that the interests of the members of the scheme will be adequately protected and that, if the division is approved, their accrued benefits will be transferred to one of the new schemes; and

  2. that the new schemes will be governed by the law of Hong Kong; and

  3. that the new schemes comply with, or will if the division is approved, comply with, such requirements and standards as are prescribed by the regulations referred to in section 21C.

(5)The Authority must not reject an application under this section without giving the applicant an opportunity to make representations (either orally or in writing or both) as to why the application should not be rejected.

(6)If the Authority rejects an application made under this section, it must give written notice of the rejection to the applicant and must include in the notice a statement setting out the reasons for the rejection.

(7)On registering the new schemes, the Authority must issue to the approved trustee of those schemes certificates of registration and cancel the registration of the divided scheme. The certificates of registration must specify whether the new schemes are employer sponsored schemes or master trust schemes.".

63.

Section 38(4)

Repeal and substitute--

"(4)At the hearing of an appeal, the appellant is entitled to appear in person or to be represented by any of the following persons--

  1. a legal practitioner;

  2. if the appellant is a company, any of its officers or employees;

  3. if the appellant is a partnership, any of its partners or employees;

  4. with the leave of the Appeal Board, any other person.

(4A)At the hearing of an appeal, the Authority is entitled to be represented by any of the following persons--

  1. the Executive Director;

  2. any of the Authority's employees;

  3. a legal practitioner;

  4. with the leave of the Appeal Board, any other person.".

64.

Section 38(6)

Repeal and substitute--

"(6)A sum awarded to the Authority under section 36(3) as costs is recoverable by the Authority in the District Court as a debt due to the Authority.

(7)A sum awarded against the Authority under section 36(3) as costs is recoverable from the Authority in the District Court as a debt.".

65.

Section 39(2)

Repeal and substitute--

"(2)On the hearing of the case, the Court of Appeal may either--

  1. determine the question stated; or

  2. remit the case to the Appeal Board, in whole or in part, for reconsideration in the light of the Court's determination.".


66.

Section 40

  1. Add "," after "who" and after "excuse".

  2. Add "or" at the end of paragraphs (a) and (b).

67.

Sections 41 and 42

Repeal and substitute--

"41.Persons not to disclose certain information

(1)A person who obtains information in the exercise or performance of functions conferred or imposed by or under this Ordinance--

  1. must not disclose the information to any other person, unless the disclosure is necessary in order to exercise or perform those functions; and

  2. must not enable another person to have access to the information, except in so far as that access is necessary to allow that other person to exercise or perform functions under or for the purposes of this Ordinance.

(2)Subsection (1) does not prevent the disclosure of, or the provision of access to, information (not being information contained in a report referred to in section 7C(4)) in accordance with an order of a court or in accordance with a law or a requirement made under a law.

(3)A person who, without lawful authority, contravenes subsection (1) commits an offence and is liable on conviction to a fine at level 4.

42.Authority may disclose certain information despite section 41

(1)The Authority may do any of the following with respect to information obtained by it under this Ordinance--

  1. disclose the information as a summary compiled from information provided by persons in accordance with this Ordinance but only if the summary is compiled so as to prevent the identities and businesses of those persons from being ascertained from the summary;

  2. disclose the information for the purposes of any criminal proceedings in Hong Kong or an investigation conducted with a view to bringing any such proceedings;

  3. disclose the information in connection with any civil proceedings to which the Authority is a party or with a view to bringing any such proceedings;

  4. subject to subsection (2), disclose the information to the Chief Executive, the Financial Secretary, the Secretary for Financial Services, the Commissioner of Inland Revenue, the Registrar of Occupational Retirement Schemes, the Insurance Authority, the Monetary Authority or the Securities and Futures Commission, but only if the Authority reasonably believes that the disclosure--
    1. is in the interests of the scheme members concerned; or

    2. is in the public interest; or

    3. is necessary to enable the exercise or performance of a function imposed or conferred by law;

  5. disclose the information to a body specified in accordance with subsection (4), but only if the Authority--
    1. is satisfied that the information will be used only in disciplinary proceedings brought or pro-posed to be brought against a member of the body; and

    2. considers that the disclosure is appropriate.

(2)The Authority may disclose information under subsection (1) to the Commissioner of Inland Revenue only if it is satisfied that the information is required in order to assist the Commissioner in determining a matter that the Commissioner is required or empowered to determine under the Inland Revenue Ordinance (Cap. 112).

(3)Subsection (1) does not authorize the disclosure of information contained in a report referred to in section 7C(4) to a person or body specified in subsection (1)(d) or (e).

(4)The Authority may, by notice published in the Gazette, specify a body for the purposes of subsection (1)(e).

(5)If--

  1. the Authority discloses information to a body specified in subsection (1)(e); and

  2. the body or a member of the body, or a person who obtains or receives the information (directly or indirectly) from the body or such a member, discloses the information to another person,

the body, member or person commits an offence and is liable on conviction to a fine at level 4.

(6)Despite section 41, the Authority may also disclose to a person located in a place outside Hong Kong information obtained by it under this Ordinance if--

  1. the person exercises or performs in that place functions that correspond to those of the Authority or a person or body specified in subsection (1)(d); and

  2. the Authority is satisfied that--
    1. the person is subject to adequate secrecy provisions imposed by the law of that place; or

    2. the disclosure will enable or assist the person to exercise or perform the person's official functions,

and that it is not contrary to the interests of any scheme members or the public interest that the information should be disclosed to the person.

(7)The information that may be disclosed under subsection (6) includes (but is not limited to) information on matters relating to the affairs of an approved trustee or a service provider--

  1. that is incorporated, or that has its principal place of business, in a place outside Hong Kong; or

  2. that is incorporated in or outside Hong Kong and that is an associate of an approved trustee that is incorporated, or has its principal place of business, in that place; or

  3. that is incorporated in Hong Kong and that has, or is proposing to establish, in that place an associate that is or would be subject to supervision by that person.".

68.

New

Add--

"42A.Protection for auditors and service providers

(1)An auditor or service provider appointed by an approved trustee under this Ordinance does not contravene any duty of confidentiality owed by the auditor or service provider to the trustee only because the auditor or service provider gives to the Authority information or an opinion on a matter affecting--

  1. the trustee; or

  2. any of the trustee's employees or agents; or

  3. a registered scheme administered by the trustee,

if the information or opinion is given in good faith and is relevant to the exercise or performance of a function of the Authority under this Ordinance.

(2)Subsection (1) applies--

  1. to a person whose appointment as an auditor or service provider has ceased; and

  2. to an auditor or service provider or former auditor or service provider who was appointed by a trustee whose approval is revoked,

in the same way as it applies to an auditor or service provider appointed by an approved trustee.".

69.

Section 43

Repeal and substitute--

"43.Offence for unapproved person to carry on business as approved trustee, etc.

(1)A person must not act as, or purport to carry on business as, an approved trustee unless the person is approved as a trustee under section 20.

(2)A person must not administer, or purport to administer, a provident fund scheme unless--

  1. the person is an approved trustee; and

  2. the scheme is registered under section 21 or 21A.

(3)A person who contravenes subsection (1) or (2) commits an offence and is liable on conviction to a fine at level 6.

43A.Offences by approved trustees

(1)An approved trustee of a registered scheme commits an offence if the trustee, without reasonable excuse--

  1. pays the accrued benefits of a scheme member otherwise than in the circumstances permitted by or under this Ordinance; or

  2. fails to pay accrued benefits of a scheme member in accordance with an entitlement conferred by or under this Ordinance.

(2)An approved trustee of a registered scheme who invests the accrued benefits of scheme members in restricted investments in contravention of section 29 commits an offence.

(3)An approved trustee who, without reasonable excuse, fails to comply with a requirement of section 14(3) commits an offence.

(4)An approved trustee who is convicted of an offence under this section is liable to a fine at level 6 and to imprisonment for 12 months.

43B.Offences by employers

(1)An employer who, without reasonable excuse, fails to comply with a requirement imposed on employers by section 7 or section 7A (subsection (8) excepted) commits an offence.

(2)An employer who--

  1. imposes, or attempts to impose, on a relevant employee who is required to be a member of a registered scheme a condition of employment that the person should not become such a member; or

  2. discourages, or attempts to discourage, such an employee from becoming or continuing to be a member of a registered scheme,

commits an offence.

(3)An employer who, without reasonable excuse, fails to comply with a requirement of section 14(4) commits an offence.

(4)An employer who is convicted of an offence under this section is liable to a fine at level 6 and to imprisonment for 12 months.

43C.Offences by self-employed persons

(1)A self-employed person commits an offence if, without reasonable excuse, the person--

  1. fails to become a member of a registered scheme; or

  2. fails to continue to be a member of a registered scheme.

(2)A self-employed person who is convicted of an offence under this section is liable to a fine at level 6 and to imprisonment for 12 months.

43D.Offence to obstruct Authority etc. in the exercise or

performance of functions

(1)Any person who--

  1. without lawful authority, obstructs or hinders, or interferes with, a person to whom this section applies in the exercise or performance of a function conferred or imposed on that person by or under this Ordinance; or

  2. without reasonable excuse, fails to comply with a lawful requirement made by such a person in the course of exercising or performing such a function,

commits an offence and is liable on conviction to a fine at level 5.

(2)This section applies to the following persons--

  1. the Authority;

  2. an authorized person;

  3. an auditor who is appointed by an approved trustee for he purposes of section 30;

  4. an inspector appointed for the purposes of section 32.

43E.Offence to make false or misleading statement

A person who, in any document given to the Authority, an approved trustee or an auditor of an approved trustee or a registered scheme in connection with this Ordinance, makes a statement that the person knows to be false or misleading in a material respect commits an offence and is liable on conviction to a fine at level 6 and to imprisonment for 12 months.".

70.

Section 44(1)

  1. Repeal "director, manager, secretary, or other similar officer" and substitute "officer, or other person concerned in the management".

  2. Repeal "in any such capacity, he as well as the company, shall be guilty of the offence and shall be" and substitute "in that capacity, the officer or person as well as the company commits the offence and is".


71.

Section 44(2)

Repeal "shall be guilty of the offence and shall be" and substitute "also commits the offence and is".

72.

Section 45

Repeal and substitute--

"45.Application and interpretation of sections 45B and 45C

(1)Sections 45B and 45C apply to approved trustees, participating employers and self-employed persons.

(2)In sections 45B and 45C--

"prescribed financial penalty" (訂明罰款) means the amount of financial penalty prescribed by the regulations in relation to a provision referred to in subsection (3)(a);

"prescribed provision" (訂明條文) means a provision of this Ordinance or of the regulations prescribed by the regulations for the purposes of those sections.

"45A. "Power to make regulations for purposes of sections 45B and 45C

(1)For the purposes of sections 45, 45B and 45C, the regulations may--

  1. prescribe a provision of this Ordinance or of the regulations that--
    1. specifies a duty that is required to be performed, or a requirement or standard that is required to be complied with; or

    2. contribution or other amount of money to be paid; and

  2. prescribe the amount of financial penalty payable for a failure to perform the duty, or to comply with the requirement or standard, or to pay the amount of money on time; and

  3. subject to subsection (2), prescribe different amounts of financial penalties in respect of different provisions of this Ordinance and of the regulations and prescribe different amounts of financial penalties according to whether it is the first or second or a subsequent occasion on which the person concerned has failed--
  1. to perform a duty, or comply with a requirement or standard, specified in a prescribed provision; or

  2. to pay on time a fee, contribution or other amount under such a provision.

(2)The maximum amount that the regulations may prescribe as a financial penalty--

  1. for failing to perform a duty, or to comply with a requirement or standard, specified in a prescribed provision, is $50,000; and

  2. for failing to pay on time a fee, contribution or other amount of money payable under a prescribed provision, is $5,000 or 10 per cent of the amount, whichever is the greater.

(3)The regulations referred to in subsection (1) may not prescribe a provision the failure to comply with which is punishable as an offence under this Ordinance.

45B.Authority may serve notice requiring payment of financial penalty in certain cases

(1)The Authority may serve on a person to whom this section applies a notice in the required form if it reasonably believes that the person has failed--

  1. to perform a duty or to comply with a requirement or standard specified in a prescribed provision; or

  2. to pay on time a fee, contribution or other amount of money payable under such a provision.

(2)For the purposes of subsection (1), a notice is in the required form if it--

  1. alleges that the person concerned has failed to perform a duty or to comply with a requirement or standard, or to pay on time a fee, contribution or other amount of money, referred to in that subsection; and

  2. specifies the prescribed financial penalty that is applicable to the alleged failure; and

  3. states that, if within the period specified in the notice (being a period of not less than 14 days), the person--
    1. pays to the Authority the prescribed financial penalty specified in the notice; and

    2. performs the duty, or complies with the requirement or standard, or pays the fee, contribution or other amount of money,

no further action will be taken against the person in relation to the matter; and

    1. further states that, if at the end of that period, the person has not paid the prescribed financial penalty to the Authority or has not performed the duty, or complied with the requirement or standard, or paid that fee, contribution or amount of money, civil proceedings may be brought against the person to recover the amount of the penalty.

(3)If a person on whom a notice is served under this section, within the specified period--

  1. pays the prescribed financial penalty to the Authority; and

  2. performs the duty or complies with the requirement or standard, or pays the fee, contribution or amount of money, specified in the notice,

no proceedings are to be brought against the person for the recovery of that penalty.

(4)The fact that a person pays a financial penalty to the Authority does not absolve the person from having to perform the duty or to comply with the relevant requirement or standard specified in, or to pay the fee, contribution or amount of money payable under, the relevant prescribed provision.

45C.Proceedings for recovery of financial penalty

(1)If a person on whom a notice is served under section 45B does not, within the period specified in the notice--

    1. pay the prescribed financial penalty to the Authority; or

    2. perform the duty or comply with the relevant requirement or standard specified, or pay the fee, contribution or amount of money payable under, the relevant prescribed provision,

the Authority may bring proceedings in the District Court for the recovery of that penalty.

(2)On the hearing of proceedings brought under this section, the District Court may, if satisfied that the defendant has failed to perform the duty or to comply with the requirement or standard, or to pay the fee, contribution or other amount of money, that gave rise to the proceedings, order the defendant to pay--

    1. the amount of the prescribed financial penalty; or

    2. such smaller amount as it considers appropriate, having regard to the nature and extent of the failure.

(3)It is a defence to proceedings brought under this section (other than proceedings relating to the payment of an amount of money) that it was not reasonably practicable to perform the duty, or to comply with the requirement or standard, to which the proceedings relate.

(4)Proceedings under this section may be brought at any time--

    1. within 6 years after the date on which it is alleged that the relevant duty was not performed, the relevant require-ment or standard was not complied with or the relevant fee, contribution or amount of money was not paid; or

    2. if the failure to perform that duty, or to comply with that requirement or standard, or to pay that fee, con-tribution or amount has continued, within 6 years after the date on which the failure ceased.

(5)The procedure and rules of evidence, and the burden of proof, applicable to civil proceedings apply to proceedings brought under this section.

(6)In proceedings brought under this section, the District Court may make an order awarding costs to either party and assess the amount of those costs. An award of costs can be made against the Authority only in the circumstances in which an award of costs could be made against a prosecutor in criminal proceedings.

(7)Failure to comply with an order made under this section is a contempt of the District Court.

45D.How financial penalty is to be dealt with when paid or recovered

A financial penalty paid under section 45B or recovered under section 45C is to be paid into the MPFA Administration Account maintained under section 6I.

45E.How undertakings may be enforced

(1)The Authority may apply to the Court for an order under this section if it considers that an approved trustee has contravened a term of an undertaking given to the Authority under this Ordinance.

(2)If, on the hearing of an application under this section, the Court is satisfied that the approved trustee has contravened a term of the undertaking, it may make any of the following orders--

  1. an order directing the trustee to comply with the term;

  2. if the trustee has obtained a financial benefit that is attributable to a contravention of the undertaking, an order directing the trustee to pay to the Authority an amount not exceeding the amount of that benefit;

  3. any order that the Court considers appropriate directing the trustee to compensate any other person who has sustained financial loss in consequence of the contravention.

45F.Power of Court to make certain orders

(1)Whenever a person has done, is doing or is proposing to do any act or thing that constituted, constitutes or would constitute a contravention of this Ordinance, the Court may, on the application of the Authority or of any person whose interests have been, are being or would be affected by the doing of the act or thing--

  1. make an order restraining the person from again doing, continuing to do or doing that act or thing; and

  2. if in the opinion of the Court it is desirable to do so, make a further order requiring the person to do any act or thing.

(2)Whenever a person has refused or failed, is refusing or failing, or is proposing to refuse or fail, to do any act or thing that the person is required to do by or under this Ordinance, the Court may, on the application of the Authority or of any person whose interests have been, are being or would be affected by the refusal or failure to do the act or thing, make an order requiring the person to do the act or thing.

(3)An order under subsection (1) or (2) may be made on such terms as the Court considers appropriate.

(4)The Court may grant an interim order pending determination of an application referred to in subsection (1) if in its opinion it is desirable to do so.

(5)The Court may from time to time rescind or vary an order made under this section.

(6)The power of the Court to make an order restraining a person from again doing, continuing to do or doing an act or thing may be exercised--

  1. whether or not it appears to the Court that the person intends to do the act or thing again or to continue to do the act or thing; and

  2. whether or not the person has previously done the act or thing; and

  3. whether or not there is imminent danger of substantial damage to any other person if the person does the act or thing.

(7)The power of the Court to make an order requiring a person to do an act or thing may be exercised--

  1. whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do the act or thing; and

  2. whether or not the person has previously refused or failed to do the act or thing; and

  3. whether or not there is an imminent danger of substantial damage to any other person if the person refuses or fails to do the act or thing.

(8)If an application for an order under this section is made by the Authority, the Court may not require the Authority or any other person, as a condition of making an interim order, to give any undertaking as to damages.

(9)The Court may, in addition to or instead of making an order under this section in respect of a person, order the person to pay damages to another person.

45G.Right to bring civil proceedings to recover financial loss

(1)A person who has sustained financial loss that is attributable--

  1. to a contravention of the governing rules of a registered scheme by another person; or

  2. to the failure of another person to perform a duty, or to comply with a requirement or standard, imposed on that other person by or under this Ordinance,

is entitled, by proceedings brought in a court of competent jurisdiction, to recover from that other person the amount of that loss as damages.

(2)The right conferred by this section is in addition to any other right conferred by law to recover the loss or damages in respect of the loss.".

73.

Section 46(1)

Repeal and substitute--

"(1)The Chief Executive in Council may make regulations, not inconsistent with this Ordinance, for or with respect to any matter--

  1. that by this Ordinance is required or permitted to be prescribed by regulations; or

  2. that is necessary or convenient to be prescribed for achieving the objects of this Ordinance.

(1A)Regulations may also be made under subsection (1) for all or any of the following purposes--

  1. providing for the giving of undertakings to the Authority by approved trustees and applicants for approval as trustees;

  2. requiring approved trustees and persons applying for approval as such to enter into arrangements for the provision of adequate insurance against the risk of losses that are attributable to misfeasance or other illegal conduct by them or by others with respect to registered schemes;

  3. prescribing the retirement age for the purposes of this Ordinance;

  4. requiring approved trustees of registered schemes to provide information to scheme members and prescribing the kind of information that is to be provided to them;

  5. providing for the payment of accrued benefits to or in respect of scheme members and providing for the transfer of accrued benefits from one registered scheme to another or from one account in a registered scheme to another;

  6. providing for the preservation of the accrued benefits of scheme members until the occurrence of a specified event (including, but not limited to, the retirement, death, total incapacity or permanent departure from Hong Kong of scheme members);

  7. providing for the disposal of unclaimed accrued benefits;

  8. providing for the operation of the compensation fund referred to in section 17;

  9. providing for the formulation of proper accounting systems (including the keeping of proper accounting records) with respect to registered schemes;

  10. prescribing requirements with which approved trustees must comply with with respect to keeping scheme members' accounts;

  11. providing for the auditing of the accounting records and financial statements of approved trustees and of registered schemes;

  12. prescribing the duties of auditors so appointed (including the duty of an auditor to report specified matters to the Authority in specified circumstances);

  13. providing for the engagement or appointment by the approved trustee of a registered scheme of service providers to provide services for the purposes of the scheme and for the delegation of the trustee's functions in relation to the scheme to such a service provider;

  14. prescribing the duties of service providers and other persons engaged or appointed by the approved trustee of a registered scheme to provide services for the purposes of the scheme (including the duty of such a service provider or other person to report specified matters to the Authority in specified circumstances);

  15. prescribing requirements that are to be complied with with respect to the funds of registered schemes, including--
    1. requirements relating to the separation of the funds and other assets of a registered scheme from other funds and assets that are beneficially owned by participating employers who are participating in the scheme; and

    2. requirements that the funds and other assets of a registered scheme are to be applied only for the purposes of the scheme; and

    3. requirements that the funds and other assets of a registered scheme are not to be subject to any charge, pledge, lien, mortgage or other encumbrance, except in circumstances specified in the rules or by the Authority;

  16. requiring approved trustees of registered schemes to enter into arrangements for the scheme assets to be held by custodians and prescribing requirements to be complied with with respect to those arrangements and the qualifications of custodians;

  17. requiring the approved trustees of registered schemes to maintain adequate reserves so as to provide investment guarantees;

  18. requiring approved trustees of registered schemes to maintain specified internal control procedures with respect to those schemes;

  19. requiring persons to lodge with the Authority returns containing specified kinds of information, or to provide the Authority with specified kinds of information, with respect to registered schemes;

  20. providing for the service or notification of documents for the purposes of this Ordinance;

  21. providing for the voluntary winding up of employer sponsored schemes;

  22. providing for the merger of existing registered schemes and for the division of an existing registered scheme into one or more other schemes.

(1B)A regulation under this section may do all or any of the following--

  1. apply generally or be limited in its application by reference to specified exceptions or factors;

  2. apply differently according to different factors of a specified kind;

  3. authorize any matter or thing to be determined, applied or regulated by any specified person;

  4. prescribe fees for the purposes of those regulations;

  5. authorize the Authority to charge (on a cost recovery basis) for any service provided by the Authority.

(1C)A regulation under this section may apply, adopt or incorporate by reference, with or without modifications, any publication (including an Ordinance or subsidiary legislation), either in force at the time of publication or as in force from time to time.".

74.

Section 46(3)

Repeal "shall be subject to the approval of" and substitute "do not take effect until they have been approved by".

75.

Section 47(1)and (2)

Repeal and substitute--

"(1)The Authority may make rules, not inconsistent with this Ordinance or the regulations, for or with respect to any matter that by this Ordinance is required or permitted to be prescribed by the rules.

(1A)Rules may also be made under subsection (1) for all or any of the following purposes--

  1. providing for matters relating to the administration of registered schemes;

  2. prescribing methods by which mandatory contributions must or may be paid to approved trustees of registered schemes;

  3. prescribing the measures to be taken by participating employers, relevant employees and self-employed persons in order to ensure that sections 7, 7A and 7C are complied with.

(2)Rules under this section may do all or any of the following--

  1. apply generally or be limited in their application by reference to specified exceptions or factors;

  2. apply differently according to different factors of a specified kind;

  3. authorize any matter or thing to be determined, applied or regulated by any specified person;

  4. prescribe fees for the purposes of those rules.".


76.

Section 47(4)

Repeal "shall be subject to the approval of" and substitute "do not take effect until they have been approved by".

77.

New

Add--

"47A.Authority may specify or approve forms

(1)The Authority may specify or approve the form and contents of documents required for the purposes of this Ordinance.

(2)If the Authority has specified or approved a form for the purposes of this Ordinance, strict compliance with the form is not necessary and substantial compliance is sufficient.

(3)If a form specified or approved by the Authority for the purposes of this Ordinance requires the form to be completed in a specified way, or requires specified information to be included in or be attached to, or to accompany, the form, the form is not properly completed unless it is completed in that way, or includes or has attached to it, or is accompanied by, that information.".

78.

Schedule 1, Part I

  1. In item 7, add "(other than a casual employee)" after "relevant employee".

  2. Repeal item 8 and substitute--

    "8.Any employer of a person (other than a self-employed person) specified in items 1 to 7 and 9.".

  1. Repeal "Notes:".

  2. In paragraph (3), add "and 9" after "1 to 7".

79.

Schedule 1, Part II

  1. Add after item 3--

    "4.The employer of an employee who is, because of the operation of section 4(3) of this Ordinance, exempt from the operation of this Ordinance.".

  2. Repeal "Notes:".

  3. Add "(1)" before "In this Part".

  4. Add--

    "(2)The persons referred to in items 1 and 2 are exempt from the operation of this Ordinance only in so far as their relevant income is derived from employment of the kind referred to in those items.

    (3)An employer referred to in item 3 is exempt from the operation of this Ordinance only in respect of the relevant income of a domestic employee employed by the employer.

    (4)An employer referred to in item 4 is exempt from the operation of this Ordinance only in respect of the relevant income of the exempted employee of the employer.".


80.

New

Add--

"SCHEDULE 1A [ss. 6B & 48]

Delegation of Functions of Authority

  1. A delegation under section 6B--
    1. may be general or limited; and

    2. must be in, or be evidenced by, writing signed by the Executive Director or by a person authorized by the Executive Director for that purpose; and

    3. may be revoked, wholly or partly, by the delegator.

  2. A delegated function may be exercised only in accordance with any conditions to which the delegation is subject.

  3. A delegate may, in the exercise of a function delegated under this section, exercise any other function that is incidental to the delegated function.

  4. A delegated function that purports to have been exercised by a delegate is, until the contrary is proved, taken to have been duly exercised by the delegate.

  5. A delegated function that is duly exercised by a delegate is taken to have been exercised by the delegator.

  6. If--
    1. the exercise of a function by a person or body is, by virtue of a document (including an Ordinance), dependent on the opinion, belief or state of mind of the person or body in relation to any matter; and

    2. the person or body has delegated the function to some other person or body,

    the function may be exercised by the delegate on the opinion, belief or state of mind of the delegate in relation to any such matter.

  7. If a function is delegated to a particular officer or the holder of a particular office--
    1. the delegation does not cease to have effect merely because the person who was the particular officer or the holder of the particular office when the function was delegated ceases to be that officer or the holder of that office; and

    2. the function may be exercised (or, in the case of a duty, must be performed) by the person for the time being occupying or acting in the office concerned.

  8. A function that has been delegated may, despite the delegation, be exercised by the delegator.

  9. Section 6B and this Schedule applies to a sub-delegation of a function in the same way as it applies to a delegation of a function, but only in so far as this Ordinance or the document that authorizes the delegation of the function also authorizes the sub-delegation of the function.".


81.

Schedule 2

Repeal and substitute--

"SCHEDULE 2 [ss. 2, 9, 11 & 48]
Minimum Level of Relevant Income per Contribution Period

  1. The minimum level of relevant income for the purposes of section 9 of this Ordinance is, in the case of a relevant employee (not being a casual employee who is a member of an industry scheme), $4,000 per month or, if the employee is not remunerated on a monthly basis, that amount as prorated.

  2. The minimum level of relevant income for the purposes of section 9 of this Ordinance is, in the case of a casual employee who is a member of an industry scheme, $130 per day.

  3. The minimum level of relevant income for the purposes of section 9 of this Ordinance is, in the case of a self-employed person, $4,000 per month or $48,000 per year.".

82.

Schedule 3

Repeal and substitute--

"SCHEDULE 3 [ss. 2, 10, 11 & 48]
Maximum Level of Relevant Income per Contribution Period

  1. The maximum level of relevant income for the purposes of section 10 of this Ordinance is, in the case of a relevant employee (not being a casual employee who is a member of an industry scheme), $20,000 per month or, if the employee is not remunerated on a monthly basis, that amount as prorated.

  2. The maximum level of relevant income for the purposes of section 10 of this Ordinance is, in the case of a casual employee who is a member of an industry scheme, $650 per day.

  3. The maximum level of relevant income for the purposes of section 10 of this Ordinance is, in the case of a self-employed person, $20,000 per month or $240,000 per year.".

83.

Schedule 4

Repeal.

84.

Schedule 5

Add--

"For the purposes of section 24 of the Ordinance, the following covenants are implied in the governing rules of a registered scheme--

  1. that the approved trustee will comply with those governing rules;

  2. that, in administering the scheme, the approved trustee will exercise the care, skill, diligence and prudence to be reasonably expected of a person who is administering a provident fund scheme and is familiar with the operation of provident fund schemes;

  3. that the approved trustee will use in the administration of the scheme all knowledge and skill that the trustee has, or ought reasonably to be expected to have, because of the trustee's profession or business, in so far as that knowledge and skill is relevant to the operation of the scheme;

  4. that the approved trustee will act in the interests of scheme members and not in the trustee's own interests;

  5. that the approved trustee will ensure that the funds of the scheme are invested in different investments so as to minimize the risk of losses of those funds, unless in particular circumstances it is prudent not to do so.".
85.

New

Add--

"SCHEDULE 5A [ss. 33 & 48] Procedure at Inquiries
  1. Approved trustee to be given notice of inquiry

    Not later than 7 days before holding an inquiry under section 33, the Authority must give the approved trustee concerned 7 days' notice of the date on which, and the time and place at which, the inquiry is to begin.

  2. Authority not bound by rules of evidence

    At the inquiry, the Authority must comply with the rules of natural justice, but is not bound by the rules of, or the practice relating to, evidence and may inform itself on any matter as it thinks appropriate.

  3. Proceedings to be inquisitorial

    Proceedings at the inquiry are to be inquisitorial and are not to be conducted in an adversarial manner.

  4. Representation at inquiry

(1)At the inquiry, the approved trustee concerned is entitled--

  1. to be represented by a person of the trustee's choice; and

  2. to adduce to the Authority evidence (either orally or in writing), and to address the Authority on matters, relevant to the determination of the inquiry.

(2)The approved trustee's representative is entitled--

  1. to be present, and to advise that trustee, throughout the inquiry; and

  2. to address the Authority on that trustee's behalf.

5. Authority to give decision in writing

At the conclusion of the inquiry, the Authority must give its decision in writing and must specify in the decision the grounds on which it is based. The Authority must ensure that a copy of the decision is given to the approved trustee concerned.".

86.

Schedule 6

Add--

  1. A decision of the Authority to reject an application for approval as an approved trustee.

  2. A decision of the Authority imposing conditions on an applicant for approval as an approved trustee.

  3. A decision of the Authority to suspend the approval of an approved trustee.

  4. A decision of the Authority to revoke the approval of an approved trustee.

  5. A decision of the Authority to refuse to register a provident fund scheme as an employer sponsored scheme or a master trust scheme.

  6. A decision of the Authority imposing conditions on an applicant for the registration of a provident fund scheme.

  7. A decision of the Authority to suspend an approved trustee's administration of a registered scheme.

  8. A decision of the Authority to terminate an approved trustee's administration of a registered scheme.

  9. A decision of the Authority to refuse to consent to the voluntary winding up of an employer sponsored scheme.

  10. A decision of the Authority to reject an application to the Authority for its consent to the merger of 2 or more registered schemes.

  11. A decision of the Authority to reject an application to the Authority for its consent to the division of a registered scheme into 2 or more registered schemes.

  12. A decision of the Authority to reject an application for the granting of an exemption under section 5 of the Ordinance.

  13. A decision of the Authority to revoke an exemption granted under section 5 of the Ordinance.".
87.

Schedule 8

Repeal and substitute--

"SCHEDULE 8 [ss. 2 & 48] Associates and Related Companies PART 1 Associates

1.Effect of this Schedule

(1)This Schedule has effect for the purpose of determining whether a person is the associate of another for the purposes of this Ordinance.

(2)A person is an associate of another person for the purposes of this Ordinance only as provided by this Schedule.

2.Associates of companies

For the purposes of this Ordinance, an associate of a company includes each of the following--

  1. an officer of the company;

  2. a close relative, partner or employee of an officer of the company;

  3. an associated company;

  4. an officer of an associated company;

  5. a close relative, partner or employee of an officer of an associated company.

3.Matters relating to voting shares

(1)If a reference in a provision of this Ordinance to an associate of another person relates to the extent of a power to exercise, or to control the exercise of, the voting power attached to voting shares of a company, the reference includes a person with whom the other person has, or proposes to enter into--

(a)an agreement as a result of which one of those persons has or will have power (even if it is in any way qualified)--

  1. to exercise voting power attached to shares in the company; or

  2. to control, directly or indirectly, the exercise of that voting power; or

  3. to influence substantially the exercise of that voting power; or
  1. an agreement for the purpose of controlling or influencing--
  1. the composition of the company's board; or

  2. the conduct of affairs of the company; or
  1. an agreement under which one of those persons--
  1. will or may acquire; or

  2. may be required by the other of those persons to acquire,

shares in the company in which the other has a relevant interest; or

  1. an agreement under which one of those persons may be required to dispose of shares in the company in accordance with the other's directions,

whatever other effect the agreement may have.

(2)In relation to a matter concerning shares of a company, a person may be an associate of the company and the company may be an associate of a person.

4.References to associates

(1)A reference in this Ordinance to an associate of another person includes a reference to--

  1. a person in partnership with whom the other person carries on a business; and

  2. subject to section 5(2) of this Schedule, a person who is a partner of the other person otherwise than by virtue of carrying on a business in partnership with the other person; and

  3. a trustee of a trust in relation to which the other person benefits, or is capable of benefiting, otherwise than as a result of transactions entered into in the ordinary course of business in connection with the lending of money; and

  4. an officer of a company that carries on a business and of which the other person is also an officer; and

  5. subject to section 5(2) of this Schedule, an officer of a company that does not carry on a business and of which the other person is also an officer.

(2)A reference in this Ordinance to an associate of another person also includes a reference to--

  1. a person in concert with whom the other person is acting, or proposes to act; and

  2. a person with whom the other person is, or proposes to become, an associate, whether formally or informally, in any other way,

in respect of the matter to which the reference relates.

(3)If a person--

  1. has entered, or proposes to enter, into a transaction; or

  2. has done, or proposes to do, any act,

in order to become associated with another person as mentioned in an applicable provision of this Schedule, the persons are taken to be associates of each other for the purposes of that provision.

5.Exclusions

(1)A person is not an associate of another person by virtue of section 3(1) or 4(2) or (3) of this Schedule only because of any of the following--

  1. one of the persons gives advice to the other, or acts on the other's behalf, in the proper performance of the functions attaching to a professional capacity or a business relationship;

  2. one of the persons (a client) gives specific instructions to the other, whose ordinary business includes dealing in securities, to acquire shares on the client's behalf in the ordinary course of that business;

  3. one of the persons has appointed the other (otherwise than for valuable consideration given by the other or by an associate of the other) to vote as a proxy or representative at a meeting of members, or of a class of members, of a company.

(2)For the purposes of proceedings under this Ordinance in which it is alleged that a person was an associate of another because of paragraph (b) or (e) of section 4(1) of this Schedule, the person is taken to have been an associate of the other in relation to a matter by virtue of that paragraph only if it is proved that the person knew, or ought to have known, at that time the material particulars of that matter.

6.Associates of composite persons

For the purposes of this Ordinance, a reference to an associate includes, in a case where 2 or more persons constitute the approved trustee of a registered scheme, a reference to an associate of any of those persons.

PART 2 Relevant Interests in Shares

7.Terminology used in this Part

(1)For the purposes of this Schedule, a reference to a power to vote in respect of a share is a reference to a power to exercise, or to control the exercise of, the right to vote attached to the share.

(2)A reference in this Schedule to power to dispose of a share includes a reference to power to exercise control over the disposal of the share.

(3)A reference in this Schedule to power or control includes a reference to power or control that--

  1. is direct or indirect or

  2. is, or can be, exercised as a result of, by means of, in breach of, or by revocation of, a trust, agreement or practice, whether the trust, agreement or practice is enforceable or not.

(4)For the purposes of this Schedule--

  1. a power to vote in respect of a share; or

  2. a power to dispose of a share,

that is exercisable by 2 or more persons jointly is taken to be exercisable by any of those persons.

(5)A reference in this Schedule to a controlling interest includes a reference to an interest that gives control.

8.When person has relevant interest in a share

A person has a relevant interest in a share for the purposes of this Schedule if the person has--

  1. power to vote in respect of a voting share in a company; or

  2. power to dispose of the share.

9.Control of company having power in relation to a share

If a company has, or is by this Part taken to have, power to vote in respect of a share or power to dispose of a share, a person is to be regarded, for the purposes of this Schedule, as having in relation to the share the same power as the company has, or is taken to have--

  1. if the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person in relation to the exercise of the power to vote in respect of the share; or

  2. if the person has a controlling interest in the company.

10.Control of relevant percentage of voting power in company having power in relation to a share

If a company or an associate of a company has, or is by this Part (other than this section) taken to have, power to vote in respect of a share, or power to dispose of a share, a person is to be regarded, for the purposes of this Schedule, as having in relation to the share the same power as the company or associate has, or is taken to have, if--

    1. the person has; or

    2. an associate of the person has; or

    3. associates of the person together have; or

    4. the person and an associate or associates of the person together have,

power to vote in respect of no less than 20 per cent of the voting shares in the company.

11.When person is taken to have relevant interest in shares

If--

(a) a person--

  1. has entered into an agreement with another person with respect of an issued share in which the other person has a relevant interest; or

  2. has a right enforceable against another person in relation to an issued share in which the other person has a relevant interest (whether the right is enforceable presently or in the future and whether or not on the fulfilment of a condition); or

  3. has an option granted by another person, or has granted to another person an option, with respect to an issued share in which the other person has a relevant interest; and
  1. on performance of the relevant agreement, enforcement of the right, or exercise of the option, the first-mentioned person would have a relevant interest in the share,

the first-mentioned person is to be regarded, for the purposes of this Part, as having that relevant interest in the share.

12.Control of company having a relevant interest by virtue of section 11

If a company is, because of section 11 of this Schedule, to be regarded as having a relevant interest in a share in another company, a person is taken, for the purposes of this Part, to have a relevant interest in the share if--

  1. the first-mentioned company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person in relation to the exercise of--
  1. a power to vote in respect of shares in the other company; or

  2. a power to dispose of shares in the other company; or
  1. the person has a controlling interest in the first-mentioned company; or

  2. the person has power to vote in respect of no less than 20 per cent of the voting shares in the first-mentioned company.

13.Matters not affecting application of this Part

(1)It is immaterial for the purposes of this Part whether or not power to vote in respect of a share, or power to dispose of a share--

  1. is express or implied or formal or informal; or

  2. is exercisable by a person alone or jointly with any other person or persons; or

  3. cannot be related to a particular share; or

  4. is, or can be made, subject to restraint or restriction.

(2)A relevant interest in a share is not to be disregarded only because of its remoteness or how it arose.

14.Exclusions: money lenders

A relevant interest of a person in a share is to be disregarded for the purposes of this Schedule if--

  1. the person's ordinary business includes lending money; and

  2. the person has authority to exercise powers as the holder of the relevant interest only because of a security given for the purposes of a transaction entered into in the ordinary course of business in connection with lending money, other than a transaction entered into with an associate of the person.

15.Exclusions: certain trustees

A relevant interest of a person in a share is to be disregarded for the purposes of this Schedule if the share is subject to a trust, the person has the relevant interest as a trustee of the trust and--

  1. a beneficiary under the trust is, by virtue of section 11 of this Schedule, regarded as having a relevant interest in the share because the beneficiary has a presently enforceable and unconditional right referred to in paragraph (b) of that section; or

  2. the person is a bare trustee.

16.Exclusions: instructions to securities dealer to dispose of share

A relevant interest of a person in a share is to be disregarded for the purposes of this Schedule if the person's ordinary business includes dealing in securities and the person has authority to exercise powers as the holder of the relevant interest only because of instructions given to the person, by or on behalf of another person, to dispose of the share on the other person's behalf in the ordinary course of that business.

17.Exclusions: honorary proxies

A relevant interest of a person in a share is to be disregarded for the purposes of this Schedule if the person has it only because of having been appointed, otherwise than for valuable consideration given by the person or an associate of the person, to vote as a proxy or representative at a meeting of members, or of a class of members, of a company.

18.Effect of this Part

A person has a relevant interest in a share for the purposes of this Schedule only as provided by this Part.

PART 3 Related Companies

19.When is a company a subsidiary of another company

A company is a subsidiary of another company only if--

(a)the other company--

  1. controls the composition of the board of directors of the first-mentioned company; or

  2. is in a position to cast, or control the casting of, more than 50 per cent of the maximum number of votes that might be cast at a general meeting of the first-mentioned company; or

  3. holds more than 50 per cent of the issued share capital of the first-mentioned company (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); or
  • 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.