Hong Kong Regulations

MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 23

Application requirements

(1) An application for registration of a provident fund scheme must be signed-

   (a)  if the applicant is or includes a company, by at least 2 directors of
        the company; and

   (b)  if the applicant consists wholly of natural persons, by at least 2 of
        those persons, including the independent trustee.

(2) If an application is made by persons all of whom are natural persons, each
of those persons (other than an independent trustee) must be a member or
prospective member of the scheme.

(3) If an application is made by persons of whom one or more are companies and
the others are natural persons, each of those natural persons must be a member
or prospective member of the scheme.

(4) An application to register a provident fund scheme as an employer
sponsored scheme must include particulars of the employer sponsoring
the scheme.

(5) A person is an independent trustee for the purposes of section 21(3) of
the Ordinance if the person-

   (a)  is not a controller, close relative, partner or employee of the
        employer sponsoring the scheme or of an associate of that employer;
        and

   (b)  where the employer sponsoring the scheme is a company, does not hold
        any shares of the company or of an associate of the company; and

   (c)  satisfies the Authority that the person has the skill, knowledge,
        experience and qualifications that are, in the opinion of the
        Authority, necessary for a person to administer provident fund
        schemes; and

   (d)  satisfies the Authority that the person has no past or present
        association (financial or otherwise) with-

        (i)    the employer sponsoring the scheme; or

        (ii)   a controller of that employer; or

        (iii)  an associate of that employer or of such a controller, that
               could affect the impartiality of the person's independent
               judgment; and

   (e)  is not an auditor or actuary of the scheme.

(6) If an application is made by persons any of whom are natural persons, each
of those natural persons must produce to the Authority a performance guarantee
or satisfy the Authority that the trustee will have entered into such a
guarantee before the scheme begins to operate.

(7) A performance guarantee relating to a person-

   (a)  must be issued in writing by an authorized financial  institution or
        authorized insurer; and

   (b)  must impose a continuing obligation on the authorized financial 
        institution or authorized insurer to indemnify the scheme against any
        loss sustained by the scheme or the scheme members as a result of-

        (i)    a failure by the person concerned to perform a duty imposed on
               approved trustees by or under the Ordinance; or

        (ii)   a breach of any fiduciary duties on the part of the person
               concerned; and

   (c)  must be governed by the law of Hong Kong; and

   (d)  may allow the guarantor to terminate its obligation under the
        guarantee only by giving not less than 30 days' written notice in
        advance to the Authority and to the person concerned.

(8) The liability of the authorized financial institution or
authorized insurer under the obligation referred to in subsection (7)(b) must
be at least $10000000 or an amount equivalent to 10 per cent of the net asset
value of the scheme, whichever is the less.

(9) The applicant must also ensure there is in force, or arrangements have
been made to enter into, adequate insurance that will indemnify scheme members
against losses that the members could incur as a result of the administration
of the scheme by the applicant or by any service provider appointed or engaged
to provide services for the purposes of the scheme.