Provisional Legislative Council

PLC Paper No. CB(1)682
(These minutes have been
seen by the Administration)

Ref : CB1/BC/3/97

Bills Committee on
Provident Fund Schemes
Legislation (Amendment) Bill 1997

Minutes of the meeting held on Monday, 1 December 1997, at 2:30 pm in Conference Room A of the Legislative Council Building

Members present :

Hon Ronald ARCULLI, JP (Chairman)
Hon LEE Kai-ming
Hon MA Fung-kwok
Hon CHAN Yuen-han
Hon YEUNG Yiu-chung
Hon Paul CHENG Ming-fun, JP
Hon NGAN Kam-chuen

Members absent :

Dr Hon LAW Cheung-kwok (Deputy Chairman)
Hon James TIEN Pei-chun, JP
Hon HO Sai-chu, JP
Hon Mrs Peggy LAM, JP
Hon Henry WU
Dr Hon Mrs TSO WONG Man-yin
Hon CHAN Kam-lam
Hon Ambrose LAU Hon-chuen, JP
Dr Hon TANG Siu-tong, JP
Hon CHOY So-yuk

Public officers attending :

Mrs Pamela TAN
Mandatory Provident Fund Office

Ms Maisie CHENG
Assistant Director
Scheme Operations

Mr Raymond TAM
Assistant Director
Regulatory Standards

Mr Geoffrey FOX
Senior Assistant Law Draftsman
Department of Justice

Clerk in attendance:

Miss Polly YEUNG
Chief Assistant Secretary (1)3

Staff in attendance :

Mr LEE Yu-sung
Senior Assistant Legal Adviser

Miss Anita HO
Assistant Legal Adviser 2

Mr Daniel HUI
Senior Assistant Secretary (1)5

I Election of Chairman and Deputy Chairman

Members agreed that Mr LEE Kai-ming should preside over the election of Chairman and Deputy Chairman. Mr LEE Kai-ming invited nominations for the Chairman. Mr Ronald ARCULLI was nominated by Mr YEUNG Yiu-chung and seconded by Mr Paul CHENG. Mr ARCULLI accepted the nomination.

2.There being no other nomination, Mr Ronald ARCULLI was declared Chairman of the Bills Committee.

3. Mr LEE Kai-ming invited nominations for the Deputy Chairman. Dr LAW Cheung-kwok, who was absent from the meeting, was nominated by Mr Ronald ARCULLI and seconded by Mr LEE Kai-ming. Mr ARCULLI confirmed that Dr LAW would accept the nomination.

4. There being no other nomination, Dr LAW Cheung-kwok was declared Deputy Chairman of the Bills Committee.

II Meeting with the Administration
(PLC Paper No. CB(1)536)

5. On scrutiny of the omnibus Bill seeking to amend 12 ordinances, members agreed that they would first refer to the marked-up copy of the Bill and review key differences between existing provisions of the Mandatory Provident Fund Schemes Ordinance (MPFSO) and the proposed amendments. Major policy and legal issues identified in the course of deliberation would be recorded for follow-up action in due course.CAS(1)3

Proposed amendments to the MPFSO

Section 2

6. Members noted the Administration’s clarification on the following proposed amendments : -

  1. the definition of "corporate trustee" was deleted since the revised definition of "approved trustee" had already specified that an approved trustee must be a natural person or a company, the latter being the same as a corporate trustee;

  2. the definition of "auditor" was deleted because part VII of the proposed MPF Schemes (General) Regulation would set out the definition and qualification requirements on auditors in greater details;

  3. the definitions of "registered scheme" and "master trust scheme" had been suitably amended to cater for the setting up of industry schemes;

  4. to avoid repeating the definitions of "guidelines", "regulations" and "rules" each time they appeared in various sections of the Ordinance, definitions on these expressions were included under section 2; and

  5. the revised definition of "total incapacity" was modelled on that of the Employment Ordinance.

7. In response to the Chairman, the Assistant Director/Scheme Operations (AD/SO) confirmed that a scheme member who was totally incapacitated from his present employment would be eligible to withdraw his accrued MPF benefits but he could also opt to leave the accrued benefits in his MPF account. Members noted that accrued benefits not yet withdrawn would not affect a person’s eligibility for Comprehensive Social Security Assistance.

8.In response to members’ concern over the proposed deletion of the definition of "statutory corporation", the Assistant Director/Regulatory Standards (AD/RS) explained that as statutory corporations would not be eligible to become an approved trustee, there was no need to provide a definition for it. At members’ request, the Administration agreed to provide a marked-up copy highlighting the expression "statutory corporation" where it appeared in the MPFSO and how it was being substituted.MPFO/DJ

9. To avoid confusion between the newly added definition of "chief executive" of a company and the expression "Chief Executive" of the Hong Kong Special Administrative Region, the Administration would consider the Chairman’s suggestion of using alternative expressions such as "chief executive officer" when referring to the senior management of a company.MPFO/DJ

10. Regarding the statutory effect of the "guidelines" issued by the MPF Schemes Authority (MPFA) under proposed section 6D, AD/SO and the Senior Assistant Law Draftsman (SALD) clarified that in accordance with the proposed section 6D(5), the relevant guidelines would not be legally binding but would be admissible as evidence in court proceedings in determining whether there had been breaches of relevant provisions of the MPFSO. At members’ request, the Administration would provide further information on similar provisions contained in other pieces of legislation for reference.MPFO/DJ

11. At a member’s request, the Senior Assistant Legal Adviser (SALA) would further advise on the major difference between the current and proposed definitions of "master trust scheme".SALA

Section 4

12. Members noted that the proposed amendments to section 4 were mainly technical to reflect changes in the titles of public officers, notably the expression "Governor" being replaced by "Chief Executive".

Section 5

13. Members noted that the proposed amendments to section 5 and the newly added section 5A sought to provide in greater detail the mechanism for granting exemptions to employees and employers of schemes registered under the Occupational Retirement Schemes Ordinance (ORSO).

Proposed section 6

14. Members were briefed on major amendments proposed to section 6 seeking to re-constitute the MPFA, currently a public officer to be appointed by the Chief Executive, as a corporation independent of the Government and to impose requirements for accountability.

Proposed section 6(1)

15. On the proposed reconstitution of the MPFA, members were concerned about the wide powers vested with the Executive Director of the MPFA and the lack of a management board to provide checks and balances and to enhance transparency. In this connection, the Chairman cited the example of the Securities and Futures Commission which had a board of directors with executive functions and an advisory committee providing advice on policy matters. He urged the Administration to re-consider the proposed constitution of the MPFA having regard to the constitution of other statutory corporations. In response to the Chairman, SALD advised that how the MPFA should be re-constituted was primarily a policy decision and there should not be any problem from the law drafting point of view to give effect to the policy intent.

16. At members’ request, the Administration and SALA would seek further information on the constitution of statutory corporations under other pieces of legislation, and whether it was the prevalent practice to provide for a management board comprising members representing the relevant sectors and with its own rules of procedures. Admin/

Proposed section 6A

17. In reply to members, Director of the MPF Office (D/MPFO) confirmed that it was the Administration’s intention that the future MPFA would also oversee ORSO schemes. On whether this function should also be added to the proposed section 6A, D/MPFO expressed difficulties at this stage since parallel amendments to ORSO would be required and she considered it more appropriate to introduce the necessary amendments after the MPFA had been set up.

Proposed section 6F

18. The Chairman enquired about the proposed requirement whereby the MPFA had to prepare a corporate plan "for its next financial year", but not for a longer period ahead. In response, the Administration advised that this was only the minimum statutory requirement which was in line with overseas practice. SALD added that the MPFA was at liberty to prepare plans covering more than one financial year.

Proposed section 6L

19. On the timing of submitting financial statements, the Administration agreed to consider members’ suggestion of prescribing a period within which the MPFA had to submit financial statements to its auditor after the expiry of its financial year. MPFO/DJ

Proposed section 6P

20. Members requested the Administration to consider stipulating the quorum for meetings of the proposed MPF Schemes Advisory Board. If a management board was to be provided for the MPFA, a quorum should also be prescribed. MPFO/DJ

III Any other business

21. The Chairman suggested that the Committee should aim at completing scrutiny of the Bill and related subsidiary legislation by mid February 1998 before the Provisional Legislative Council proceeded to examine the 1998-99 Budget. In reply to the Chairman, D/MPFO advised that the Committee could examine the draft subsidiary legislation immediately after the scrutiny of the Bill.

22. Members agreed that the Bills Committee would meet on the following dates: -

    3 December 1997, 10:45 am - 12:45 pm
    4 December 1997, 2:30 pm - 4:30 pm
    8 December 1997, 2:30 pm - 4:30 pm
    11 December 1997, 2:30 pm - 4:30 pm
    15 December 1997, 10:45 am - 12:45 pm
    16 December 1997, 8:30 am - 10:30 am
    16 December 1997, 10:45 am - 12:45 pm
    16 December 1997, 2:30 pm - 4:30 pm
    16 December 1997, 4:30 pm - 6:30 pm

23. The meeting ended at 4:30 pm.

Provisional Legislative Council Secretariat
17 December 1997