Gaps in the regulation of traditional Chinese and modern business trusts in Hong Kong: The need for legislative reforms

Trusts in Hong Kong are primarily regulated under the principles derived from rules of equity supplemented by several pieces of legislation, the most important one being the Trustee Ordinance (Cap. 29) (TO).1The current laws were modelled substantially on the English Trustee Act 1925.However, the intricacies of Chinese customary practices and business innovations in the use of trusts in Hong Kong had been largely neglected by the Government in the recent round of legal reforms. Although the primary goal of the proposals was to attract more settlors to set up trusts in Hong Kong as well as to strengthen the territory’s place in world an international financial centre, 2the lack of legislative governance has meant that traditional Chinese and publicly listed business trusts do not provide adequate safeguards for beneficiaries and unit holders. Therefore the aim of this article is not only to highlight the fact that these two types of trusts were not dealt with the new Trust Ordinance, but also to demonstrate that there is a clear necessity for legislative intervention.