Hong Kong Regulations

MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 65

Approved trustee to ensure that scheme assets are not improperly encumbered

Caution: This is a past version. See the current version here.

(1) The approved trustee of a registered scheme must ensure that the scheme
assets are not subject to any encumbrance, other than an encumbrance to which
this subsection does not apply.

(2) Subsection (1) does not apply to an encumbrance that-

   (a)  is created for the purpose of securing an amount borrowed to enable
        accrued benefits to be paid to or in respect of scheme members, and
        then only if-

        (i)    the amount borrowed (together with any other borrowings made
               for the same purpose) does not exceed 10 per cent of the
               market value of the scheme assets at the time of the borrowing;
               and

        (ii)   the borrowing is not part of a series of borrowings; and

        (iii)  the period of the borrowing does not exceed 90 days; or

   (b)  is created for the purpose of securing an amount borrowed to settle a
        transaction relating to the acquisition of scheme assets, and then
        only if-

        (i)    the amount borrowed (together with any other borrowings made
               for the same purpose) does not exceed 10 per cent of the
               market value of the scheme assets at the time of the borrowing;
               and

        (ii)   the borrowing is not part of a series of borrowings; and

        (iii)  the period of the borrowing does not exceed 7 working days; and

        (iv)   at the time the decision to enter into the transaction was
               made, it was unlikely that the borrowing would be necessary.

(3) Any encumbrance created over scheme assets of a registered scheme is void
to the extent that it is inconsistent with subsection (2).