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

Information Note

Committee Stage Amendments - Part I

Purpose

This paper presents the proposed Committee Stage Amendments (CSAs) to the Provident Fund Schemes Legislation (Amendment) Bill 1997.

2.The proposed CSAs will be presented to Members in two parts :

  1. The first part covers the CSAs to the main body of the Mandatory Provident Fund Schemes Ordinance (MPFSO) (i.e. items 1 - 77 of Schedule 1 of the Bill). The draft CSAs are at Annex.

  2. The second part covers the CSAs to the remainder of the Bill (i.e. schedules of the MPFSO and consequential amendments to other Ordinances). These CSAs will be submitted to Members for consideration at a later meeting.

CSAs to Schedule 1 - Amendments to MPFSO

Proposed Section 2 - New Definition of " chief executive "

3.Upon Members' request, the expression " chief executive " has been changed to " chief executive officer " under the definitions of " chief executive " , " controller " and " officer " to avoid confusion with the " Chief Executive " of the HKSAR.

Proposed Section 6 - Mandatory Provident Fund Schemes Authority

4.MPFA to regulate ORSO schemes - In the light of the Bills Committee's views, amendments are made to the proposed sections 6(2)(c) and 6A(1)(f) to enable the MPFA to exercise such other functions conferred under any other Ordinance, including the Occupational Retirement Schemes Ordinance, and to enter into agreement with the Government for the management and control of property or employees of the Government.

5.MPFA to issue guidelines regarding returns - The proposed section 6D(2A) is amended to enable the MPFA to issue guidelines requiring trustees to submit returns e.g. regular statistical returns on MPF schemes. A consequential amendment to the proposed section 46(1A)(s) is also made to achieve consistency in wording.

6.Preparation of corporate plan by the MPFA - Upon Members' request, an amendment is made to the proposed section 6F to allow flexibility for the MPFA to prepare a corporate plan for more than one financial year.

7.MPFA's audited financial statements - As suggested by Members, an amendment is made to the proposed section 6L(1) to specify the time frame for the Authority to submit its financial statement for annual audit.

8.Quorum of Meeting - In the light of Members' suggestion, the proposed section 6O is amended to the effect that the quorum for the meetings of the MPFS Advisory Board is not less than half its membership.

Proposed Section 12A - Vesting

9.The Administration proposes to make a grammatical amendment to the proposed section 12A(3)(c) by replacing the word " are " with " is".

Proposed Section 14 - Portability of accrued benefits

10.It is necessary to amend the proposed section 14(2) to enable regulations to be made prescribing the options of scheme members in transferring their accrued benefits under different circumstances. Consequential amendments to the proposed sections 14(3) and (4) are made so as to tally with the wording used in the proposed section 14(2). Members noted the proposed amendments during the Bills Committee meetings.

Proposed Section 18 - Mandatory contributions in arrears

11.To remove doubts, it is necessary to amend the proposed section 18(3) to clarify that the penalty interest is calculated on a " per annum " basis.

Proposed Section 22B(3) - Annual registration fee

12.To clarify the policy intention, the proposed section 22B is amended to reflect that all the fees to be received by the MPFA are to be taken into account in fixing the level of the annual registration fee. Members noted the proposed amendment at the Bills Committee meetings.

Proposed Section 25 - Duties of officers of a company which is a trustee

13.To avoid ambiguity, the word 'sufficient " is substituted by " reasonable " to be in line with similar legislation on the duties of trustees in the administration of provident fund schemes.

Proposed Sections 43, 43A-43E - Offences

14.Offences by unapproved person - Two amendments are made to the proposed section 43(2)(a) :

  1. As pointed out by Members, the proposed section 43(2)(a) is amended to allow a scheme to be administered by an administrator who is not an approved trustee but appointed by the MPFA under the proposed section 33A(3) to replace temporarily a trustee who has been suspended or terminated.

  2. As suggested by Members, given the seriousness of the offence, the penalty under the proposed section 43(3) for an unapproved person to carry on business as approved trustee is increased to -

    1. a fine at level 6 and imprisonment for 12 months on conviction for a first offence; and

    2. a fine of $200,000 and imprisonment for 2 years for a second or subsequent offence.

15.Offences by trustee - To be consistent with the proposed section 43(3) described in paragraph 14 (b) above, the proposed section 43A(4) is amended so that an approved trustee who is convicted of an offence under the proposed section 43A is subject to the same level of penalties, i.e. a fine at level 6 and imprisonment for 12 months for a first offence and a fine of $200,000 and imprisonment for 2 years for a second or subsequent offence.

16.Offences by employers - Three amendments are made to the proposed section 43B :

  1. The proposed section 43B(1) is amended to make it an offence for an employer to fail to pay mandatory contributions. Members noted the proposed amendment during the Bills Committee meetings.

  2. Upon Members' request, the proposed section 43B(2), which makes it an offence for an employer to prevent or discourage employees from becoming MPF scheme members, is deleted. The deletion is made because the circumstances are already covered by the proposed section 43B(1) which provides that an employer who fails to comply with the requirement regarding MPF membership commits an offence on conviction.

  3. In the light of Members' views, the proposed section 43B(4) is amended to provide for two tiers of penalties for an employer convicted of an offence :

    1. a fine at level 6 and imprisonment for 6 months for a first offence; and

    2. a fine of $200,000 and imprisonment for 1 year for a second or subsequent offence.

17.Offences by self-employed persons - Two amendments are made to the proposed section 43C :

  1. The proposed section 43C(1) is amended to the effect that a self-employed person who fails to pay the mandatory contributions commits an offence. Members noted the proposed amendment during the Bills Committee meeting.

  2. Upon Members' request, the proposed section 43C(2) is amended to provide for two tiers of penalties for a self-employed person convicted of an offence. The penalties are the same as those for employers.

18.Offences to obstruct the Authority - Consequent to the amendments made to the proposed sections 43(3) and 43A(4) regarding offences committed by unapproved person and trustee, the proposed section 43D(1) is amended so that a person commits an offence under this section is subject to the same level of penalties, i.e. a fine at level 6 and imprisonment for 12 months for a first offence, and a fine of $200,000 and imprisonment for 2 years for a second or subsequent offence.

19.Offences to make false statement - Two amendments are made to the proposed section 43E :

  1. Upon Members' request, the proposed section 43E is amended so that a person who recklessly makes a statement which is false or misleading in a material respect commits an offence.

  2. The level of penalties is increased to the same level for obstructing the Authority, i.e. a fine at level 6 and imprisonment for 12 months for a first offence, and a fine of $200,000 and imprisonment for 2 years for a second or subsequent offence.

Proposed Section 45(2) - Interpretation of " prescribed financial penalty "

20.Members noted that the proposed section 45(2) should be amended by deleting 'subsection (3)(a) " and substituting 'section 45A(1)(a) " in the definition of " prescribed financial penalty " to reflect the correct reference.

Proposed Section 45A(3) - Power to make regulations for purposes of sections 45B and 45C

21.To empower the MPFA to instigate prosecutions other than imposing financial penalties for a more serious contravention of the Ordinance, the proposed section 45A(3) is deleted. Members noted the proposed amendment during the Bills Committee meetings.

Proposed Section 46(3) and 47(4) - Regulations and Rules

22.Upon Members' request, the existing wording for section 46(3) and 47(4) are retained so as to be consistent with section 35 of Cap 1 regarding the legislature's vetting of subsidiary legislation.


Mandatory Provident Fund Office
Financial Services Bureau
30 December 1997