Hong Kong Regulations

SOLICITORS (PROFESSIONAL INDEMNITY) RULES - SCHEDULE 1

CONTRIBUTIONS TO FUND

(Past version on 10/01/2001).
(Past version on 06/30/1997).

(1) (a) Save in the cases referred to in subparagraphs (2) (when the amount of contribution shall be assessed by the Company as therein provided), (3) (which provides that the amount of the basic contribution shall be not less than the minimum amount as therein provided) and (4) (when the amount of contribution may be reduced as therein provided), the amount of all contributions for the first indemnity period and for each subsequent indemnity period shall be calculated- (L.N. 363 of 1991)
(i) according to the formula-

Where-
* =multiplied by;
C =the amount (subject to any appropriate adjustment made under subparagraph (3)) of the basic contribution which may also be the contribution;
N =number of principals (as at 31 July immediately preceding such indemnity period);
M =number of assistant solicitors and consultants (as at 31 July immediately preceding such indemnity period); and
S =the amount established from the following table-

	Gross fee income of the firm $ Million	Amount $
	over 0 but not exceeding 5	2.64% x gross fee income
	over 5 but not exceeding 6	142000
	over 6 but not exceeding 7	161000
	over 7 but not exceeding 8	181000
	over 8 but not exceeding 9	197000
	over 9 but not exceeding 10	212000
	over 10 but not exceeding 11	228000
	over 11 but not exceeding 12	241000
	over 12 but not exceeding 13	253000
	over 13 but not exceeding 14	265000
	over 14 but not exceeding 15	274000
	over 15 but not exceeding 16	281000
	over 16 but not exceeding 17	286000
	over 17 but not exceeding 18	290000
	over 18 but not exceeding 19	295000
	over 19 but not exceeding 20	299000
	over 20 but not exceeding 21	302000
	over 21 but not exceeding 22	306000
	over 22 but not exceeding 23	309000
	over 23 but not exceeding 24	313000
	over 24 but not exceeding 25	316000
	over 25 but not exceeding 50	1.27% x gross fee income (subject to a maximum amount of $543000)
	over 50 but not exceeding 75	1.09% x gross fee income (subject to a maximum amount of $673000)
	over 75 but not exceeding 100	0.90% x gross fee income (subject to a maximum amount of $732000)
	over 100	0.73% x gross fee income

and the gross fee income of the firm shall be determined by the particulars contained in the gross fee income certificate produced under rule 8(1)(a) plus a factor to be applied by the Company to this figure to compensate for the historical basis of the gross fee income calculation (such factor not to exceed 10%) and shall be subject to adjustment as provided in sub-subparagraph (b)(iv); or (L.N. 162 of 2001)
(ii) in the circumstances set out in subparagraph (6), according to the formula-

Where-
C = the amount (subject to any appropriate adjustment made under subparagraph (3)) of the basic contribution which may also be the contribution; and
F = the appropriate factor referred to in subparagraph (6)(d).
(b) (i) The contribution for the first indemnity period and for all subsequent indemnity periods shall be regulated by the number of principals, assistant solicitors and consultants engaged or employed in the Practice from time to time and the gross fee income of the firm.
(ii) Information regarding gross fee income of the firm and unqualified staff and the information described as N and M in sub-subparagraph (a) shall be properly recorded and the indemnified shall at all times allow the Company to inspect such records.
(iii) Particulars of the names and the position held in the Practice of every principal, assistant solicitor and consultant and the numbers of and positions held by unqualified staff at 1 October 1989 shall be submitted by the firm to the Company on or before 8 October 1989. Thereafter a return shall be sent to the Company on or before the last day of December, March, June and September in each year commencing on 31 December 1989 showing every subsequent change in such particulars (and the date of such change) occurring since the date of the previous return.
(iv) Upon receipt by the Company of the certificate of gross fee income and information pursuant to rule 8(1) to enable the Company to assess the contribution for the next period of indemnity, the Company will also, based on such information and the other information referred to in sub-subparagraph (b)(iii), calculate and adjust the contribution for the preceding indemnity period in accordance with the formula for calculating the contribution for such preceding indemnity period. Any difference in the amount of the assessed contribution paid for the preceding indemnity period and the contribution established by such calculation shall be met by a further payment by the firm, or in the event of the firm being dissolved prior to payment, by the principals of the firm immediately prior to such dissolution to the Company, or, notwithstanding paragraph 4, by a refund to the firm or such principals by the Company, as the case may be. (L.N. 162 of 1993)
(c) If any principal who is required to make contributions in accordance with paragraph 1 fails to provide the Company with a certified public accountant (practising)'s certificate of the gross fee income or other information referred to in sub-subparagraph (b)(iii) pursuant to rule 8(1), then such principal and the other principal or principals, if any, in the Practice shall be jointly and severally liable to pay- (23 of 2004 s. 56)
(i) for the first indemnity period, an amount equal to 400% of the total amount payable by the firm as premium under and in respect of the second Master Policies for the period from 1 October 1987 to 30 September 1988; and
(ii) thereafter, for each subsequent indemnity period an amount equal to 200% of the rate of contribution for the preceding indemnity period until such principal or principals have made disclosure of such particulars of the gross fee income or other information as was required.
(d) Upon a principal making good all failures under sub-subparagraph (c), the Company shall assess the contribution payable in respect of the Practice. If the amount of the contribution as assessed-
(i) is less than the amount of the contribution paid, the difference shall be repaid to his firm without interest; or
(ii) exceeds the amount of the contribution paid, his firm shall upon demand pay to the Company the balance of the amount of the contribution together with interest on the amount of such balance at the rate of 4% per annum above the best lending rate from time to time of The Hongkong and Shanghai Banking Corporation Limited calculated from the date stipulated in or prescribed by the Society under rule 8(1)(c) until receipt of payment by the Company.

(5) (a) Notwithstanding anything to the contrary in this paragraph, the Company may, with the authority of a resolution of the Council, at any time during an indemnity period demand in writing from every principal who is required to make contributions in accordance with paragraph 1 at any time during the indemnity period when the demand is made such further sum as may be authorized by the Council to make up a deficit or anticipated deficit in the fund, and such principal shall be bound to pay such further sum to the Company within 30 days after the date of issue of such written demand.
(b) Subject to the amount of payments received from such principal being sufficient to cover the amount of the deficit or anticipated deficit, the sum which such principal shall be required to pay shall be that proportion of the deficit or anticipated deficit as the total amount of the contributions payable after appropriate adjustment as provided in subparagraph (1)(b)(iv) by such principal for the indemnity period when the demand is made bears to the total amount of the contributions payable after adjustment by all principals under the Professional Indemnity Scheme for such indemnity period, provided that such principal may be required to make an interim payment on account of the sum which such principal is to pay hereunder. Such interim payment (which shall be subject to subsequent adjustment) shall be that proportion of the deficit or anticipated deficit as the contribution paid by such principal for the indemnity period when the demand is made bears to the total amount of the contributions then paid for such indemnity period.
(6) (a) If during any period of 4 indemnity periods immediately prior to any indemnity period, an insurer or the Company on behalf of the indemnified has paid, or is deemed, pursuant to sub-subparagraph (b), to have paid, any claim, then the contribution payable for such indemnity period shall not be the basic contribution but shall be calculated in accordance with the formula set out in paragraph 2(1)(a)(ii) by multiplying the basic contribution by the appropriate factor established pursuant to sub-subparagraph (d).
(b) (i) For the purposes of sub-subparagraph (a), if during any period of 4 indemnity periods immediately prior to any indemnity period, an insurer or the Company on behalf of a former Practice has paid any claim and a former principal of such former Practice is a principal at the relevant date, then the claim so paid shall be deemed to have been paid on behalf of the firm of which such former principal is a principal at the relevant date, except that where there is more than one former principal of such former Practice who is a principal at the relevant date the claim so paid shall be divided equally among each such former principal whose share of such claim shall be deemed to have been paid on behalf of the firm of which such former principal is a principal at the relevant date.
(ii) For the purposes of this sub-subparagraph, "the relevant date" (有關日期) means 31 July immediately prior to any indemnity period.
(c) For the purposes of sub-subparagraph (d), claims paid during such period-
(i) shall not include-
(A) any amount in excess of $10000000 in respect of any one claim; (L.N. 528 of 1994)
(B) the amount of any claim paid by insurers under the former Master Policy on behalf of the indemnified prior to 1 October 1986 the full amount of which is paid by the indemnified to authorized insurers under the first Master Policies prior to 1 October 1986 provided that this exclusion shall only apply in respect of claims paid by insurers under the former Master Policy (and repaid by the indemnified) which do not exceed the aggregate of 50% of the premiums paid by the indemnified in respect of compulsory professional indemnity insurance in respect of the 4 indemnity periods prior to 1 October 1986;
(C) the amount of any deductible paid by the indemnified;
(D) the legal costs and disbursements incurred in successfully defending a claim made against the indemnified;
(E) the legal costs and disbursements (including defence and claimants' costs) paid in respect of a successful claim made against the indemnified under the former Master Policy; and
(F) the amount of any claim paid under or in respect of a policy of insurance other than the former Master Policy or the Master Policies or Master Policy;
(ii) shall include all legal costs and disbursements (including defence and claimants' costs) which are paid in respect of a successful claim made against the indemnified under the Master Policies or a Master Policy.
(d) (i) If claims so paid exceed 0% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 50% of premiums or contributions so paid, a factor of 1.06 shall be applied to the contribution.
(ii) If claims so paid exceed 50% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 100% of premiums or contribution so paid, a factor of 1.13 shall be applied to the contribution.
(iii) If claims so paid exceed 100% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 200% of premiums or contributions so paid, a factor of 1.33 shall be applied to the contribution.
(iv) If claims so paid exceed 200% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 300% of premiums or contributions so paid, a factor of 1.53 shall be applied to the contribution.
(v) If claims so paid exceed 300% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 400% of premiums or contributions so paid, a factor of 1.78 shall be applied to the contribution.
(vi) If claims so paid exceed 400% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 500% of premiums or contributions so paid, a factor of 1.98 shall be applied to the contribution.
(vii) If claims so paid exceed 500% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 600% of premiums or contributions so paid, a factor of 2.18 shall be applied to the contribution.
(viii) If claims so paid exceed 600% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 700% of premiums or contributions so paid, a factor of 2.43 shall be applied to the contribution.
(ix) If claims so paid exceed 700% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 800% of premiums or contributions so paid, a factor of 2.63 shall be applied to the contribution.
(x) If claims so paid exceed 800% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 900% of premiums or contributions so paid, a factor of 2.88 shall be applied to the contribution.
(xi) If claims so paid exceed 900% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period but do not exceed 1000% of premiums or contributions so paid, a factor of 3.00 shall be applied to the contribution.
(xii) If claims so paid exceed 1000% of the total amount of premiums or contributions paid in respect of the Practice in the 4 indemnity periods preceding the indemnity period, a factor of 3.50 shall be applied to the contribution.
(7) (a) Notwithstanding anything to the contrary in subparagraph (2), the Company may, with the authority of a resolution of the Council at any time during an indemnity period, reduce the total amount of the contributions established in accordance with subparagraph (2) which are payable by firms, during the next indemnity period by such amount as is authorized by the Council.
(b) The benefit of such reduction shall be available only to those firms which are entitled to indemnity during both the indemnity period when the resolution of the Council referred to in sub-subparagraph (a) is passed and during the next indemnity period and shall be obtained by reducing the amount of the contribution payable by any such firm for such next indemnity period by the amount established in accordance with sub-subparagraph (c).
(c) The amount by which the contribution of any such firm referred to in sub-subparagraph (b) shall be reduced shall be that proportion of the authorized reduction amount as the total amount of the contributions payable after appropriate adjustment as provided in subparagraph (1)(b)(iv) by that firm for the indemnity period when the resolution of the Council is passed bears to the total amount of contributions payable after adjustment by all firms under the Professional Indemnity Scheme for such indemnity period. (L.N. 363 of 1991)

(a) the maximum amount of contribution or basic contribution payable for any indemnity period;
(b) the number of principals in a firm at any date;
(c) the number of unqualified staff employed for the purpose of the Practice at any date;
(d) the number of assistant solicitors and consultants in a firm at any date;
(e) any information or other matter on the basis of which any adjustment in contribution is assessed in accordance with paragraph 2(1)(b)(iv);
(f) the amount of any additional contribution to meet the amount of any deficit or anticipated deficit under paragraph 2(5);
(g) the calculation of the amount of any claim paid and claims loading under paragraph 2(6) and all matters which are to be included or excluded when establishing the amount of claims paid;
(h) the date on which a Practice becomes a former Practice;
(i) whether a firm is eligible to receive any benefit under paragraph 2(7)(b);
(j) the amount of the reduction in the contribution payable by a firm under paragraph 2(7)(c). (L.N. 363 of 1991)

"the relevant date"
(有關日期)