MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - CHAPTER 485A MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - LONG TITLE Empowering section VerDate: (Cap 485, section 46) [Sections 1 to 8, 13 and 206 } 24 July 1998 L.N. 294 of 1998 Part XIV (except sections 185 to 191) } 12 March 1999 L.N. 69 of 1999 Sections 9 to 12, Parts II and III, Part IV (except sections 32 to 35), Part V (except sections 56, 59 and 66), Part VI (except section 71), Parts VII to X, Sections 204 and 205, and Schedules 1 to 4 } } }} 3 August 1999 L.N. 69 of 1999 Sections 32 to 35, 56, 59, 66, 71, 119 to 175 and 185 to 203 } 1 December 2000 L.N. 121 of 2000] (L.N. 201 of 1998) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 1 (Omitted as spent) VerDate:01/12/2000 PART I PRELIMINARY (Omitted as spent) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION,MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 2 Interpretation VerDate:18/07/2008 In this Regulation, unless the context otherwise requires- "account number" (帳戶號碼) includes a reference to a combination of numbers, letters or other symbols that identifies a member's account with a registered scheme; "accounting practice unit" (會計執業單位) means a practice unit as defined by section 2 of the Professional Accountants Ordinance (Cap 50); "actuary" (精算師) has the same meaning as in section 2 of the Occupational Retirement Schemes Ordinance (Cap 426); "adequate insurance" (足夠保險) has the meaning given by section 8; "applicable accounting guideline" (適用的會計指引) means- (a) the industry accounting guideline, issued by the Hong Kong Institute of Certified Public Accountants, called the "Financial Statements of Retirement Schemes", or that guideline as amended from time to time; or (23 of 2004 s. 56) (b) if the Hong Kong Institute of Certified Public Accountants issues an accounting guideline in respect of registered schemes, that guideline, or that guideline as amended from time to time; (23 of 2004 s. 56) "approved credit rating agency" (核准信貸評級機構) means a credit rating agency approved by the Authority for the purposes of this Regulation; "approved futures exchange" (核准期貨交易所) means- (a) a recognized futures market; or (b) any futures exchange established in a place outside Hong Kong that is declared by the Authority by notice published in the Gazette to be an approved futures exchange for the purposes of this Regulation; (5 of 2002 s. 407) "approved overseas bank" (核准海外銀行) has the meaning given by section 3; "approved overseas insurer" (核准海外保險人) has the meaning given by section 4; "approved overseas trust company" (核准海外信託公司) has the meaning given by section 5; "approved pooled investment fund" (核准匯集投資基金) has the meaning given by section 6; "approved stock exchange" (核准證券交易所) means- (a) a recognized stock market; or (b) any stock exchange established in a place outside Hong Kong that is declared by the Authority by notice published in the Gazette to be an approved stock exchange for the purposes of this Regulation; (5 of 2002 s. 407) "arrears" (欠款) means the mandatory contributions that are not paid by the contribution day; "assets held in Hong Kong" (在香港持有的資產) has the meaning given by section 10; "authorized financial institution" (認可財務機構) means an institution authorized under Part IV of the Banking Ordinance (Cap 155); "authorized insurer" (獲授權保險人) means an insurer authorized under section 8 of the Insurance Companies Ordinance (Cap 41); "authorized mutual fund" (認可互惠基金) means a mutual fund authorized as a collective investment scheme by the Securities and Futures Commission under section 104 of the Securities and Futures Ordinance (Cap 571); (5 of 2002 s. 407) "authorized unit trust" (認可單位信託) means a unit trust authorized as a collective investment scheme by the Securities and Futures Commission under section 104 of the Securities and Futures Ordinance (Cap 571); (5 of 2002 s. 407) "central securities depository" (中央證券寄存處) means a depository in Hong Kong, or a depository or a clearing agency outside Hong Kong that is approved by the Authority for the purposes of this Regulation; "consolidated report" (綜合報告) means a report published in accordance with section 89; "constituent fund" (成分基金), in relation to a registered scheme, means the fund that constitutes a registered scheme, or a fund that forms part of the scheme, and complies with the requirements set out in section 36; "continuous financial support" (持續財政支援), in relation to a company that applies to be or is an approved trustee, has the meaning given by section 12; "contribution account" (供款帳戶), in relation to a member of a registered scheme, means an account with the scheme into which— (a) mandatory contributions and voluntary contributions (if any) are paid in respect of any current employment or current self-employment of the member; and (b) special contributions (if any) are paid in respect of the member; (30 of 2008 s. 7) "contribution day" (供款日)- (a) in relation to a self-employed person, means the last day of the contribution period prescribed by section 131; and (b) in relation to a participating employer, has the meaning given by section 122(1); "control objectives" (控制目標), in relation to a registered scheme, means the control objectives for the time being applicable to the scheme because of section 39; "currency forward contract" (貨幣遠期合約) means a contract for the purchase or sale of a specific quantity of foreign currency, with delivery and settlement at a specified future date; "custodian" (保管人), in relation to the assets of a registered scheme, includes the approved trustee of the scheme if acting as the custodian of those assets in accordance with section 50(2); (L.N. 223 of 2000) "deadline" (最後期限), in relation to the financial period of a registered scheme, means the end of the day that falls 6 months after the end of that period; "debt security" (債務證券) means- (a) any debenture or other document issued by a person as evidence of a debt owed by the person or as security for the repayment of a loan (whether with or without interest); or (b) debenture stock and bonds issued by a company (whether constituting a charge on the assets of the company or not); or (c) convertible loan stock; "delegate" (獲轉授人), in relation to a custodian, means a person to whom the custodian has delegated the custodian's function as a custodian; (L.N. 223 of 2000) "eligible overseas bank" (合資格海外銀行) has the meaning given by section 13; "encumbrance" (產權負擔) includes a charge, pledge, lien and mortgage; "Fees Regulation" (《費用規例》) means the regulation (if any) made under section 46 of the Ordinance prescribing fees for the purposes of this Regulation; "financial futures contract" (財務期貨合約) means a contract under which- (5 of 2002 s. 407; L.N. 145 of 2006) (a) a party to the contract agrees to deliver to the other party to the contract at an agreed future time a specified security, or an agreed quantity of specified securities, at an agreed price; or (b) the parties agree to make an adjustment between themselves at an agreed future time according to whether at that time- (i) a specified security, or an agreed quantity of specified securities, is worth more or less than a value agreed at the time when the contract is entered into; or (ii) a number of an index of securities stands at a higher or lower level than a level agreed at the time when the contract is entered into; (L.N. 145 of 2006) "financial option contract" (財務期權合約) means a contract under which a party to the contract acquires from the other party to the contract an option or right, exercisable at or before a specified time, to be paid by that other party an amount of money to be determined by reference to the amount by which a number specified in the contract is more or less than the number of a specified index of securities as at the time when the option or right is exercised; (5 of 2002 s. 407; L.N. 145 of 2006) "financial period" (財政期), in relation to a registered scheme, has the meaning given by section 79; "financial statements" (財務報表), in relation to a registered scheme, means a balance sheet and statement of account prepared or to be prepared in respect of the scheme; "independent director" (獨立董事) means a director having the qualifications prescribed by section 9; "Insurance Authority" (保險業監督) means the Insurance Authority appointed under section 4 of the Insurance Companies Ordinance (Cap 41); (L.N. 223 of 2000) "insurer" (保險人), when it is not qualified by the word "authorized", means a person who is carrying on insurance business; "market value" (市值), in relation to any property, means the price that can reasonably be expected to be paid for the property if it were sold by a willing seller to a willing buyer on the open market, with both parties acting at arms length; "Monetary Authority" (金融管理專員) means the Monetary Authority appointed under section 5A of the Exchange Fund Ordinance (Cap 66); (L.N. 223 of 2000) "net assets" (淨資產), in relation to a company or corporation, means the amount by which the company's or corporation's, as the case may be, total tangible assets exceed its total liabilities; (L.N. 223 of 2000) "offering document" (要約文件), in relation to a registered scheme, means a document- (a) inviting participation in the scheme by prospective participating employers or prospective members of the scheme; and (b) containing information relating to the establishment or administration of the scheme; (2 of 2002 s. 21) "ORSO exempted scheme" (職業退休豁免計劃) has the same meaning as in section 2(1) of the Mandatory Provident Fund Schemes (Exemption) Regulation (Cap 485 sub. leg. B); (2 of 2002 s. 21) "ORSO registered scheme" (職業退休註冊計劃) has the same meaning as in section 2(1) of the Mandatory Provident Fund Schemes (Exemption) Regulation (Cap 485 sub. leg. B); (2 of 2002 s. 21) "overseas" (海外), in relation to Hong Kong, means outside Hong Kong; "participation agreement" (參與協議), in relation to a registered scheme, means an agreement- (a) between a participating employer and the approved trustee of the scheme for the employer and his employees to participate in the scheme; (b) between a self-employed person and the approved trustee of the scheme for the self-employed person to participate in the scheme; or (c) between a person intending to maintain a preserved account in the scheme and the approved trustee of the scheme; (2 of 2002 s. 21) "prescribed capital adequacy requirements" (訂明資本充裕程度規定), in relation to a company that applies to be or is an approved trustee, has the meaning given by section 11; "preserved account" (保留帳戶), in relation to a member of a master trust scheme or an industry scheme, means an account with the scheme (other than a contribution account)— (a) into which special contributions (if any) are paid in respect of the member; (b) in which the accrued benefits (if any) in respect of any former employment or former self-employment of the member are held; and (c) in which the member’s benefits (if any) transferred to the scheme from an ORSO exempted scheme or an ORSO registered scheme are held, and includes a former contribution account (if any) of the member in which accrued benefits retained under section 147(6) are held; (30 of 2008 s. 7) "recognized futures market" (認可期貨市場) has the same meaning as in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap 571); (5 of 2002 s. 407) "recognized stock market" (認可證券市場) has the same meaning as in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap 571); (5 of 2002 s. 407) "registered trust company" (註冊信託公司) means a trust company registered under Part VIII of the Trustee Ordinance (Cap 29); "scheme assets" (計劃資產) means securities and other assets acquired and held for the purposes of a registered scheme, and includes- (a) income derived from the investment of those securities or other assets; and (b) money payable to the scheme; "securities" (證券) has the same meaning as in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap 571); (5 of 2002 s. 407) "special contribution" (特別供款) means a contribution paid by the Authority under Part IIIA of the Ordinance; (30 of 2008 s. 7) "substantial financial institution" (具規模財務機構) has the meaning given by section 7; (2 of 2002 s. 21; 5 of 2002 s. 407) "account number" (帳戶號碼) "accounting practice unit" (會計執業單位) "actuary" (精算師) "adequate insurance" (足夠保險) "applicable accounting guideline" (適用的會計指引) "approved credit rating agency" (核准信貸評級機構) "approved futures exchange" (核准期貨交易所) "approved overseas bank" (核准海外銀行) "approved overseas insurer" (核准海外保險人) "approved overseas trust company" (核准海外信託公司) "approved pooled investment fund" (核准匯集投資基金) "approved stock exchange" (核准證券交易所) "arrears" (欠款) "assets held in Hong Kong" (在香港持有的資產) "authorized financial institution" (認可財務機構) "authorized insurer" (獲授權保險人) "authorized mutual fund" (認可互惠基金) "authorized unit trust" (認可單位信託) "central securities depository" (中央證券寄存處) "consolidated report" (綜合報告) "constituent fund" (成分基金) "continuous financial support" (持續財政支援) "contribution account" (供款帳戶) "contribution day" (供款日) "control objectives" (控制目標) "currency forward contract" (貨幣遠期合約) "custodian" (保管人) "deadline" (最後期限) "debt security" (債務證券) "delegate" (獲轉授人) "eligible overseas bank" (合資格海外銀行) "encumbrance" (產權負擔) "Fees Regulation" (《費用規例》) "financial futures contract" (財務期貨合約) "financial option contract" (財務期權合約) "financial period" (財政期) "financial statements" (財務報表) "independent director" (獨立董事) "Insurance Authority" (保險業監督) "insurer" (保險人) "market value" (市值) "Monetary Authority" (金融管理專員) "net assets" (淨資產) "offering document" (要約文件) "ORSO exempted scheme" (職業退休豁免計劃) "ORSO registered scheme" (職業退休註冊計劃) "overseas" (海外) "participation agreement" (參與協議) "prescribed capital adequacy requirements" (訂明資本充裕程度規定) "preserved account" (保留帳戶) "recognized futures market" (認可期貨市場) "recognized stock market" (認可證券市場) "registered trust company" (註冊信託公司) "scheme assets" (計劃資產) "securities" (證券) "special contribution" (特別供款) "substantial financial institution" (具規模財務機構) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 3 What is an approved overseas bank for the purposes of this Regulation? VerDate:24/07/1998 A bank incorporated outside Hong Kong is an approved overseas bank for the purposes of this Regulation if the bank has satisfied the Authority that it is authorized by the law of a place outside Hong Kong to carry on the business of a bank and the Authority has notified the bank in writing that it has approved the bank as an overseas bank for those purposes. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 4 What is an approved overseas insurer for the purposes of this Regulation? VerDate:24/07/1998 An insurer incorporated outside Hong Kong is an approved overseas insurer for the purposes of this Regulation if the insurer has satisfied the Authority that it is authorized by the law of a place outside Hong Kong to carry on the business of an insurer and the Authority has notified the insurer in writing that it has approved the insurer as an overseas insurer for those purposes. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 5 What is an approved overseas trust company for the purposes of this Regulation? VerDate:24/07/1998 A trust company incorporated outside Hong Kong is an approved overseas trust company for the purposes of this Regulation if the company has satisfied the Authority that it is authorized by the law of a place outside Hong Kong to carry on the business of a trust company and the Authority has notified the company in writing that it has approved the company as an overseas trust company for those purposes. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 6 What is an approved pooled investment fund for the purposes of this Regulation? VerDate:18/01/2008 (1) An investment fund is an approved pooled investment fund for the purposes of this Regulation if it is an insurance policy, authorized unit trust or authorized mutual fund that- (a) complies with the requirements set out in section 17(2) of Schedule 1; and (b) is approved by the Authority. (2) The granting of an approval in respect of a pooled investment fund is subject to the payment to the Authority of such fee (if any) as may be prescribed in the Fees Regulation and to such conditions (if any) as the Authority considers appropriate. (2 of 2002 s. 21) (3) Where the Authority- (a) has decided that it is appropriate to- (i) amend any conditions imposed under subsection (2) or this subsection on an approved pooled investment fund; or (ii) impose conditions on an approved pooled investment fund; and (b) has given to the investment manager, insurer or trustee concerned- (i) not less than 30 days' advance notice of its decision, specifying its grounds; and (ii) an opportunity to make written representations as to why the conditions should not be amended or imposed, then the Authority may, by written notice served on the investment manager, insurer or trustee- (i) amend any conditions imposed under subsection (2) or this subsection on the investment fund; or (ii) impose conditions on the investment fund. (2 of 2002 s. 21) (4) The Authority may waive a person's compliance with a condition imposed under subsection (2) or (3)- (a) in a particular case; and (b) where the person satisfies the Authority that such compliance is not, or has not been, reasonably practicable in all the circumstances of that case. (2 of 2002 s. 21) (5) The Authority may on application made by a person specified in the guidelines cancel the approval of a pooled investment fund. (1 of 2008 s. 29) (6) An application under subsection (5) must- (a) be in a form approved by the Authority; and (b) contain such information, and be accompanied by such documents, as may be specified for the purposes of this section in the guidelines. (1 of 2008 s. 29) (7) The Authority may, by written notice, require an applicant to provide such additional information and documents as are reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a reasonable time specified in the notice, the Authority may reject the application. (1 of 2008 s. 29) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 7 What is a substantial financial institution for the purposes of this Regulation? VerDate:23/06/2000 (1) An institution is a substantial financial institution for the purposes of this Regulation if- (L.N. 223 of 2000) (a) it is an authorized financial institution, an authorized insurer, a registered trust company, an approved overseas bank, an approved overseas insurer or an approved overseas trust company; and (b) it has- (i) a paid up share capital of at least $150000000 or its equivalent in a foreign currency; and (ii) net assets of at least the same amount. (L.N. 222 of 2000; L.N. 223 of 2000) (2) The reference to "liabilities" in the determination of net assets as referred to in subsection (1)(b)(ii) may exclude in part or in whole a subordinated debt of the institution concerned where, subject to subsection (3), the Authority declares in writing that it is satisfied that under the terms of the debt instrument concerned- (L.N. 222 of 2000) (a) the claims of the lender against the institution are fully subordinated to those of all unsubordinated creditors; (b) the debt is not secured against any assets of the institution; (c) the debt has a minimum initial period to maturity of more than 5 years (and notwithstanding that the period may be reduced with the prior consent of the Authority); and (d) the debt is not repayable prior to maturity without the prior consent of the Authority. (L.N. 223 of 2000) (3) The Authority shall not make a declaration under subsection (2) in relation to an institution except after consultation with- (a) if the institution is an authorized financial institution, the Monetary Authority; (b) if the institution is an authorized insurer, the Insurance Authority. (L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 8 What is adequate insurance for the purposes of registered schemes? VerDate:23/06/2000 (1) For the purposes of the Ordinance, an approved trustee has adequate insurance for the registered schemes administered by the trustee if there are in force 1 or more insurance policies that- (a) are obtained from 1 or more eligible insurers; and (b) cover the total managed assets of the approved trustee and do not deal with any matter other than the assets of the schemes concerned; and (c) provide an insurance cover for not less than the amount specified in subsection (4); and (d) provide for indemnity in respect of the prescribed risks set out in subsection (5) that are attributable to the administration of the schemes by the trustee or by any service provider of the scheme (excluding losses attributable to investing the funds of the scheme in the ordinary course of business); and (e) specify a deductible amount that does not exceed the maximum amount determined under subsection (6); and (f) are governed by the law of Hong Kong. (2) For the purpose of subsection (1)(a), a person is an eligible insurer if the person's business includes that of providing insurance and- (a) the person is specified in section 6(1) of the Insurance Companies Ordinance (Cap 41); or (b) the Authority is satisfied that the person is an insurer that is able to meet its liabilities. (3) Before determining whether an insurer is able to meet its liabilities, the Authority must- (a) take into account the credit rating of the insurer as determined by an approved credit rating agency; and (b) consult the Insurance Authority. (4) For the purpose of subsection (1)(c), the amount of insurance cover is to be obtained in respect of the total managed assets of an approved trustee as follows- (a) if the market value of the total managed assets is not more than $100000000-30 per cent of that value; (b) if the market value of the total managed assets is more than $100000000 but not more than $300000000-$30000000 plus 20 per cent of that value that exceeds $100000000; (c) if the market value of the total managed assets is more than $300000000 but not more than $500000000-$70000000 plus 15 per cent of that value that exceeds $300000000; (d) if the market value of the total managed assets is more than $500000000 but not more than $1000000000-$100000000 plus 10 per cent of that value that exceeds $500000000; (e) if the market value of the total managed assets is more than $1000000000 but not more than $5000000000-$150000000 plus 5 per cent of that value that exceeds $1000000000; (f) if the market value of the total managed assets is more than $5000000000 but not more than $10000000000-$350000000 plus 3 per cent of that value that exceeds $5000000000; (g) if the market value of the total managed assets is more than $10000000000-$500000000. (5) For the purpose of subsection (1)(d), the prescribed risks are as follows- (a) the risk of loss of scheme assets attributable to fraudulent, wrongful or negligent acts done or omitted to be done by- (i) the approved trustee of the scheme; or (ii) a service provider appointed or engaged for the purposes of that scheme; or (iii) an employee or agent of the trustee or of the service provider; (b) the risk of loss of scheme assets kept on the premises of the trustee or service providers or at a central securities depository; (c) the risk of loss of scheme assets while they are being transported in the custody of the trustee or service providers, or of a central securities depository; (d) the risk of loss of scheme assets arising from relying on a cheque or other negotiable instrument that is forged, fraudulently altered, lost or stolen; (e) the risk of loss of scheme assets arising from the fraudulent use of a computer or from fraudulent instructions given for the transfer of those assets; (f) the risk of loss of scheme assets arising from indemnifying the trustee in accordance with the governing rules of the scheme as permitted by law. (6) For the purpose of subsection (1)(e), the maximum amount is to be determined in respect of the total managed assets of an approved trustee as follows- (a) if the market value of the total managed assets is not more than $1000000-$100000; (b) if the market value of the total managed assets is more than $1000000, the smaller of the following amounts- (i) $500000; (ii) an amount equal to 10 per cent of the market value of the scheme assets. (7) For the purpose of this section- (a) a reference to the total managed assets of an approved trustee is a reference to the aggregate of all scheme assets of all registered schemes administered by the trustee; and (b) a reference to a deductible amount, in relation to a policy of insurance under which the insurer is liable for only the part of a claim that exceeds a specified amount, is a reference to that amount. (8) (Repealed L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 9 Qualifications of an independent director VerDate:03/08/1999 A director is qualified as an independent director for the purposes of section 20(2) of the Ordinance and this Regulation only if the director- (a) is not an employee or partner of the applicant, or of an associate of the applicant; and (b) is not a director of an associate of the applicant; and (c) does not hold any shares of the applicant or of any associate of the applicant; and (d) satisfies the Authority that the director has no past or present association (financial or otherwise) with- (i) the applicant (otherwise than as a director or professional adviser); or (ii) any controller of the applicant; or (iii) any associate of the applicant or of any such controller, that could affect the impartiality of the director's independent judgment; and (e) is not a controller (otherwise than by virtue of being a director), close relative, partner or employee of the applicant or of any associate of the applicant; and (f) is not an auditor or actuary of any provident fund scheme administered by the applicant. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION,MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 10 What are assets held in Hong Kong for the purposes of this Regulation? VerDate:14/12/2007 Any of the following are assets held in Hong Kong for the purposes of this Regulation- (a) real property, including a leasehold interest in real property, located in Hong Kong; (b) computer equipment, office machinery, furniture, motor vehicles and other equipment located in Hong Kong; (c) deposits (in any currency or monetary unit) held with a Hong Kong branch of an authorized financial institution; (d) debt securities issued in Hong Kong, but only if they are transferable and registrable in a register in Hong Kong and, in the case of debt securities that are in the form of certificates, the certificates are kept in Hong Kong; (e) debt securities issued outside Hong Kong, but only if their certificates are kept in Hong Kong and are transferable by delivery (with or without endorsement); (f) negotiable instruments (including bills of exchange within the meaning of the Bills of Exchange Ordinance (Cap 19)) that are kept in Hong Kong; (g) shares of a company, wherever incorporated and whether or not a company within the meaning of section 2 of the Companies Ordinance (Cap 32) or a non-Hong Kong company, being shares that- (30 of 2004 s. 3) (i) are transferable and registrable only in a register kept in Hong Kong; or (ii) are, in the ordinary course of business, transferable and registrable in a register kept in Hong Kong and their certificates (if any) are kept in Hong Kong; (h) debts that may be enforced only by legal proceedings brought in a Hong Kong court; (i) an interest in an authorized unit trust that is realizable in Hong Kong, but only if the governing law of the trust is the law of Hong Kong. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 11 Prescribed capital adequacy requirements VerDate:23/06/2000 (1) The requirements set out in this section are the prescribed capital requirements that have to be complied with by a company that applies to be or is an approved trustee of a registered scheme. (2) The prescribed capital adequacy requirements are complied with if the company- (a) has a paid up share capital of at least $150000000; and (b) owns net assets of at least the same amount; and (c) owns assets held in Hong Kong to the value of at least $15000000. (3) The prescribed capital adequacy requirements are also complied with if the company- (a) is an associate of- (i) a company or corporation that is a substantial financial institution and provides continuous financial support to the first-mentioned company; or (ii) a company or corporation having a subsidiary that is a substantial financial institution and provides continuous financial support to the first-mentioned company; and (L.N. 223 of 2000) (b) has a paid up share capital of at least $30000000 and owns net assets of at least the same amount; and (c) owns assets held in Hong Kong to the value of at least $15000000. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 12 What is continuous financial support for the purposes of this Regulation? VerDate:18/01/2008 For the purposes of this Regulation, a substantial financial institution provides continuous financial support to a company that applies to be or is an approved trustee if the institution gives an undertaking to the Authority by deed, or by a document of like effect acceptable to the Authority, that the institution- (L.N. 223 of 2000; 1 of 2008 s. 3) (a) will, if so required by the Authority, subscribe sufficient additional capital of not more than $30000000 when the paid up share capital or net assets of the trustee or the applicant becomes less than that amount; and (b) will not, without the approval of the Authority, do any act to dispose of, or authorize the disposal or issue of, any part of the share capital or assets of the trustee or the applicant as a result of which the trustee or the applicant ceases to be an associate of the institution. (L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 13 What is an eligible overseas bank for the purposes of this Regulation? VerDate:01/04/2003 A bank is an eligible overseas bank for the purposes of this Regulation if- (a) it is a bank incorporated outside Hong Kong and not holding a valid banking licence under the Banking Ordinance (Cap 155); and (5 of 2002 s. 407) (b) it satisfies a minimum credit rating set by the Authority, based on the credit rating of the bank as determined by an approved credit rating agency. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 14 Definition VerDate:03/08/1999 PART II APPLICATION FOR APPROVAL AS TRUSTEE In this Part, "applicant" (申請人) means an applicant for approval under section 20 of the Ordinance. "applicant" (申請人) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 15 Eligibility for approval as trustee VerDate:03/08/1999 The Authority may approve an applicant under section 20 of the Ordinance only if the applicant satisfies the requirements of section 16, 17 or 19, as the case requires. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 16 Eligibility requirements for company incorporated in Hong Kong VerDate:03/08/1999 (1) If an applicant is a company incorporated in Hong Kong- (a) the applicant must be a registered trust company whose name includes the word "trust" or "trustee" if the name is in English, or the words "信託" or "受託人" if the name is in Chinese; and (b) the company must have at least 5 directors; and (c) all of the directors of the company must be natural persons; and (d) the business of the applicant must be limited to trust business. (2) The applicant must satisfy the Authority- (a) that all of the controllers of the applicant are persons of good reputation and character and, in particular, have not been found guilty, whether in Hong Kong or elsewhere, of an offence involving fraud or dishonesty; and (b) that the chief executive officer and a majority of the directors (which must include an independent director) of the applicant have the skill, knowledge, experience and qualifications that are, in the opinion of the Authority, necessary for the successful administration of provident fund schemes. (3) The applicant must comply with the prescribed capital adequacy requirements. (4) The applicant must have sufficient presence and control in Hong Kong. (5) An applicant has sufficient presence and control in Hong Kong if- (a) the applicant complies with subsection (6); and (b) it has sufficient expertise and management resources in Hong Kong to conduct its business operations effectively; and (c) the chief executive officer of the applicant ordinarily resides in Hong Kong. (6) An applicant complies with this subsection if- (a) the applicant's day to day business activities relating to the applicant's business in Hong Kong (including the keeping of its records relating to those activities) are conducted wholly in Hong Kong; or (b) where those activities are not conducted wholly in Hong Kong- (i) those activities are adequately supervised by the applicant from within Hong Kong; and (ii) sufficient records of those activities are kept at a place or places so that those records can be readily accessible in Hong Kong to enable an audit of them to be carried out. (7) The applicant must satisfy the Authority that it is capable of carrying on a business of administering registered schemes. (8) For the purpose of subsection (7), the Authority may enter and inspect the premises intended to be used by the applicant for carrying on the business of administering registered schemes. (9) The Authority may refuse the application of an applicant who fails to allow the Authority to enter and inspect the premises referred to in subsection (8). MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 17 Eligibility requirements for company incorporated outside Hong Kong VerDate:18/01/2008 (1) If an applicant is a company incorporated outside Hong Kong- (a) the applicant must be a company to which Part XI of the Companies Ordinance (Cap 32) applies, and whose name includes the word "trust" or "trustee" if the name is in English, or the words "信託" or "受託人" if the name is in Chinese; and (b) the objects of the company must contain some of, but not more than, those specified in section 81 of the Trustee Ordinance (Cap 29); and (c) the company must have at least 5 directors and all of the directors of the company must be natural persons; and (d) the applicant must satisfy the Authority as to the matters specified in subsection (2). (2) The following matters are specified for the purposes of subsection (1)(d)- (a) the applicant is incorporated or registered in a jurisdiction where there are in force laws relating to corporations and trusts and that those laws are comparable to those of Hong Kong; (b) the applicant is adequately regulated under those laws and is adequately supervised by an authority established in that jurisdiction that is acceptable to the Authority; (c) that authority certifies to the Authority that the applicant is in good standing and has not contravened any requirement under the laws relating to corporations or trusts in force in that jurisdiction; (d) the business of the applicant is limited to trust business; (e) the applicant has experience in conducting business internationally, and standing as an international financial institution, that are acceptable to the Authority. (3) The applicant must designate one of its controllers to be its Hong Kong chief executive officer. The Hong Kong chief executive officer- (a) must be a natural person; and (b) must, either alone or with others, be immediately responsible to the directors of the company for the conduct of the whole of the applicant's business in Hong Kong. (4) The applicant must satisfy the Authority- (a) that all of the controllers of the applicant are persons of good reputation and character and, in particular, have not been found guilty, whether in Hong Kong or elsewhere, of an offence involving fraud or dishonesty; and (b) that the chief executive officer, the Hong Kong chief executive officer and a majority of the directors (which must include an independent director) of the applicant have the skill, knowledge, experience and qualifications that are, in the opinion of the Authority, necessary for the successful administration of provident fund schemes. (5) The applicant must comply with the prescribed capital adequacy requirements. (6) The applicant must have sufficient presence and control in Hong Kong. (7) An applicant has sufficient presence and control in Hong Kong if- (a) the applicant complies with subsection (8); and (b) it has sufficient expertise and management resources in Hong Kong to conduct its business operations effectively; and (c) the Hong Kong chief executive officer of the applicant ordinarily resides in Hong Kong. (8) An applicant complies with this subsection if- (a) the applicant's day to day business activities relating to the applicant's business in Hong Kong (including the keeping of its records relating to those activities) are conducted wholly in Hong Kong; or (b) where those activities are not conducted wholly in Hong Kong- (i) those activities are adequately supervised by the applicant from within Hong Kong; and (ii) sufficient records of those activities are kept at a place or places so that those records can be readily accessible in Hong Kong to enable an audit of them to be carried out. (9) The applicant must satisfy the Authority that it is capable of carrying on a business of administering registered schemes. (10) For the purpose of subsection (9), the Authority may enter and inspect the premises intended to be used by the applicant for carrying on the business of administering registered schemes. (11) The Authority may refuse the application of an applicant who fails to allow the Authority to enter and inspect the premises referred to in subsection (10). (12) The applicant must give an undertaking to the Authority by deed, or by a document of like effect acceptable to the Authority, that the applicant, and all transactions relating to the administration by the applicant in Hong Kong of provident fund schemes and all disputes arising out of those transactions, will be governed by the law of Hong Kong. (1 of 2008 s. 4) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 18 Auditor's report on prescribed capital adequacy requirements VerDate:03/08/1999 (1) An applicant under section 16 or 17 must submit to the Authority, on or before such date as the Authority may specify, a written report prepared by an auditor appointed by the applicant and addressed to the applicant. (2) The report must state, in the opinion of the auditor, whether or not the applicant, as at a date agreed between the applicant and the Authority subject to subsection (3), complies with the prescribed capital adequacy requirements. (3) The date referred to in subsection (2) must be on or before the date on which the Authority approves the applicant's application. (4) The report may include such observations, elaborations, qualifications or explanations as the auditor considers necessary. (5) If the Authority requires an applicant to rectify a matter relating to any of those observations, elaborations, qualifications or explanations, the applicant must submit to the Authority, before the end of the period within which the Authority has allowed for the matter to be rectified, a second report prepared by the same auditor who prepared the report referred to in subsection (1). (6) The second report must state whether or not, in the opinion of the auditor, the matter relating to the observations, elaborations, qualifications or explanations included by the auditor in the written report has been rectified. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 19 Eligibility requirements for natural persons VerDate:03/08/1999 An applicant who is a natural person must- (a) ordinarily reside in Hong Kong; and (b) satisfy the Authority that the applicant is a person of good reputation and character and, in particular, has not been found guilty, whether in Hong Kong or elsewhere, of an offence involving fraud or dishonesty. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 20 Applicant's other business compatible with interests of scheme members VerDate:03/08/1999 (1) The Authority may approve the application of an applicant only if it is of the opinion that all businesses carried on by the applicant (other than the business of administering provident fund schemes) are compatible with the interests of members of provident fund schemes administered by the applicant. (2) Subsection (1) applies even though the applicant is able to comply with the other provisions of this Part and with the requirements of the Authority made under this Part. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 21 Definitions VerDate:03/08/1999 PART III REGISTRATION OF SCHEMES (1) In this Part- "applicant" (申請人), in relation to a provident fund scheme, means the applicant for the scheme to be registered in accordance with section 21 or 21A of the Ordinance and, if an application is made by 2 or more trustees, means those trustees jointly; "the scheme" (計劃), in relation to the application made by an applicant, means the provident fund scheme to which the application relates. (2) A reference to an approved trustee, in relation to an application to register a provident fund scheme other than as an industry scheme, includes a reference to a natural person or company that has applied for approval as an approved trustee under section 20 of the Ordinance. "applicant" (申請人) "the scheme" (計劃) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 22 Undertaking to comply with requirements and standards VerDate:18/01/2008 An applicant must give an undertaking to the Authority by deed, or by a document of like effect acceptable to the Authority, that the applicant will ensure that, as far as reasonably practicable, the requirements and standards prescribed in Part IV will be complied with in relation to the provident fund scheme concerned if it is registered. (1 of 2008 s. 5) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 23 Application requirements VerDate:03/08/1999 (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. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 24 Application to include statement of investment policy VerDate:03/08/1999 (1) An application must include a statement setting out the investment policy (including the investment objectives) of the scheme. (2) The statement of investment policy must include sufficient information to enable scheme members to ascertain in relation to each constituent fund of the scheme- (a) the investment objectives of the fund; and (b) the policy as to the kinds of securities and other assets in which the fund may be invested; and (c) the policy as to the balance between different kinds of securities and other assets of the fund; and (d) the policy regarding the acquisition, holding and disposal of financial futures contracts and financial option contracts for the purposes of the fund; and (e) the risks inherent in implementing the policies referred to in paragraphs (b), (c) and (d) and the return expected to result from giving effect to those policies. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 25 Notice of registration of industry scheme VerDate:03/08/1999 (1) The Authority must publish in the Gazette, within 7 days after an industry scheme is registered under section 21A of the Ordinance, a notice of that registration. (2) For the purposes of section 21A(11) of the Ordinance, the notice referred to in subsection (1) must contain the following particulars- (a) the name of the scheme; (b) the name and address of the approved trustee of the scheme; (c) the type of industry to which the scheme relates; (d) the documents to be provided by an employer who applies to participate in the scheme; (e) the documents to be provided by a self-employed person who applies to become a member of the scheme. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 26 Operation of this Part VerDate:03/08/1999 PART IV REQUIREMENTS AND STANDARDS FOR REGISTERED SCHEMES The requirements and standards set out in sections 27 to 41 are the requirements and standards prescribed for the purposes of section 21C of the Ordinance. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 27 Eligibility of approved trustees of employer sponsored scheme VerDate:03/08/1999 (1) If all the approved trustees of an employer sponsored scheme are natural persons, at least one of those trustees must be an independent trustee and the others must be members of the scheme. (2) If one or more of the approved trustees of an employer sponsored scheme are companies and the others are natural persons, each of the natural persons must either be an independent trustee or a member of the scheme. (3) A person is an independent trustee for the purposes of this Part only if the person continues to satisfy the requirements set out in section 23(5). MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 28 Appointment of officer of approved trustee that is a company VerDate:03/08/1999 (1) If an approved trustee of a registered scheme is a company and the office of an officer of the company becomes vacant, an application must be made to the Authority for its consent to the appointment of a replacement officer within 30 days after the vacancy arises. (2) An officer may be appointed in respect of an approved trustee of a registered scheme that is a company only if the Authority has given its prior written consent to the appointment. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 29 Maintenance of adequate insurance VerDate:03/08/1999 (1) There must be in force in respect of a registered scheme 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 trustee or by any service provider appointed or engaged to provide services for the purposes of the scheme. (2) The insurance relating to the scheme must provide that it may be terminated by the insurer only if the insurer gives not less than 30 days' written notice in advance to the trustee or the service provider by whom the insurance was entered into. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 30 Maintenance of valid performance guarantee VerDate:03/08/1999 (1) A valid performance guarantee of a kind referred to in section 23(6) must be maintained in respect of an approved trustee of a registered scheme who is a natural person. (2) On receipt of a notice referred to in section 23(7)(d), another performance guarantee that complies with section 23(7) and (8) must be obtained before the current guarantee terminates. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 31 Non-refusal of scheme applicants VerDate:15/02/2002 (1) An application for membership of a registered scheme that is made by or on behalf of a relevant employee of a participating employer, or by a self-employed person who is 18 years of age or over and below retirement age, must not be refused if that employee or person- (2 of 2002 s. 21) (a) provides or is willing to provide the information required by the approved trustee with respect to such applications for membership of the scheme; and (L.N. 223 of 2000) (b) agrees in writing to comply with the governing rules of the scheme. (1A) An application for participation in a registered scheme that is made by or on behalf of an employer must not be refused if that employer- (a) provides or is willing to provide the information required by the approved trustee with respect to applications for participation; and (b) agrees in writing to comply with the governing rules of the scheme. (L.N. 223 of 2000) (1B) An application for membership of a registered scheme that is made by a person only for the purpose of maintaining a preserved account within the scheme must not be refused if that person- (a) provides or is willing to provide the information required by the approved trustee with respect to such applications for membership of the scheme; and (b) agrees in writing to comply with the governing rules of the scheme. (L.N. 223 of 2000) (2) The following information must be disclosed to a person who is considering making an application to become a scheme member or participating employer- (L.N. 223 of 2000) (a) the requirements and information required for application for membership of or participation in the scheme; (L.N. 223 of 2000) (b) the governing rules of the scheme; (c) scheme information, including all of the fees and charges payable under the scheme. (3) The information referred to in subsection (2)(c) must include (but is not limited to) the actual amounts of the annual fees payable in respect of- (a) scheme members of the different income levels prescribed by the guidelines; and (b) participating employers of the different scales of operation prescribed by the guidelines. (4) A scheme applicant must be given a notice of acceptance within 30 days from the date on which the applicant submits all the information required for the application for membership of or participation in the scheme, or from the date on which the applicant agrees to observe and accept the governing rules of the scheme, whichever is the later. (L.N. 223 of 2000) (5) The membership of a scheme member may be terminated by the approved trustee only in accordance with the governing rules of the scheme and- (a) in the case of a scheme member who is a relevant employee, with the written agreement of that member or the participating employer of that member given not earlier than 60 days before the termination; or (b) in the case of a scheme member who is a self-employed person or former self-employed person, and who is 18 years of age or over and below retirement age, with the written agreement of that member given not earlier than 60 days before the termination. (L.N. 223 of 2000; 2 of 2002 s. 21) (6) The participation of an employer may be terminated by the approved trustee only in accordance with the governing rules of the scheme and with the written agreement of the participating employer given not earlier than 60 days before the termination. (L.N. 223 of 2000) (7) In respect of a scheme member whose accrued benefits are being or have been transferred pursuant to Part XII, no fees may be charged, no financial penalties may be imposed and no other restrictions or requirements shall be applied to prevent or to hinder the relevant participating employer or the scheme member from terminating his participation in the registered scheme of the transferor trustee or the liability to contribute to that registered scheme. (L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 32 Acceptance of contributions and accrued benefits being transferred VerDate:01/12/2000 (1) All contributions paid to the approved trustee of a registered scheme in accordance with section 7A, 7C or 11 of the Ordinance by participating employers and by self-employed persons who are scheme members must be accepted. (2) Accrued benefits transferred to the scheme from another registered scheme in accordance with this Regulation, or from an occupational retirement scheme exempted under section 5 of the Ordinance, must also be accepted. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 33 Requirements with respect to voluntary contributions VerDate:15/02/2002 (1) Accrued benefits derived from the voluntary contributions must not be paid by the approved trustee of a registered scheme otherwise than by reference to those contributions and the income or profits derived from their investment. (2) The governing rules of the scheme must provide- (a) that participating employers are obliged, on request by any of their employees who are members of the scheme, to pay to the trustee of the scheme any voluntary contribution made by those employees; and (b) if a participating employer elects to make voluntary contributions in respect of any employees who are members of the scheme, that those contributions will become vested in those employees as accrued benefits in accordance with the governing rules of the scheme; and (c) if an employee or a self-employed person who is a member of a registered scheme elects to make voluntary contributions, that those contributions will become vested in full as accrued benefits in that employee or self-employed person when the contributions are received by the approved trustee of the scheme. (3) If a member of the scheme so requests, accrued benefits derived from voluntary contributions made by or in respect of the member must be paid to the member as provided by the governing rules of the scheme. Where any of those voluntary contributions are required to be made by the scheme member's employer, then the governing rules of the scheme must, not later than 6 months after the commencement of this subsection, provide for the payment of any accrued benefits derived from voluntary contributions if the employer has failed to make such a required voluntary contribution to the scheme within 6 months after- (a) if the amount of the voluntary contributions required to be made by the employer is determined by reference to the income derived from the employee's employment with the employer, the end of the period covered by the payment of such income; (b) if the amount of the relevant contributions required to be made by the employer is determined by reference to a period of employment of the employee with the employer, the end of such period. (2 of 2002 s. 21) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 34 No fees etc. for transfer of accrued benefits other than actual expenses VerDate:01/12/2000 No fees may be charged, and no financial penalties may be imposed, for transferring accrued benefits from a registered scheme to another scheme or from one account to another account within the scheme, other than actual and reasonable expenses incurred by the trustee as a result of redeeming funds in connection with the transfer from a unit trust or similar type of investment and of purchasing units in another such investment, where a difference in price of the units is normally associated with the redemption of those funds and the purchase of those units. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 35 No fees etc. for transfer of accrued benefits in certain circumstances VerDate:01/12/2000 (1) If, after contributions have ceased to be paid to a registered scheme by or on behalf of a scheme member, no fees may be charged, and no financial penalties may be imposed, for the transfer of the member's accrued benefits to another scheme or from one account to another account within the scheme. (2) Subsection (1) applies only to the first transfer of those benefits made in respect of the member and only if- (a) that transfer is made within not more than 12 months after the date on which the contributions ceased to be paid; and (b) the amount of those benefits, at the time of the transfer, does not exceed $5000. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 36 Scheme may consist of a single constituent fund or of separate constituent funds VerDate:18/01/2008 (1) A registered scheme may consist of a single constituent fund, or of 2 or more constituent funds. (2) A constituent fund must be approved by the Authority. (3) If the scheme comprises 2 or more constituent funds, each of the funds must have different investment policies so as to provide scheme members with a choice as to the investment of their accrued benefits. (4) The Authority may on application made by an approved trustee of a registered scheme cancel the approval of a constituent fund of the scheme. (1 of 2008 s. 30) (5) An application under subsection (4) must- (a) be in a form approved by the Authority; and (b) contain such information, and be accompanied by such documents, as may be specified for the purposes of this section in the guidelines. (1 of 2008 s. 30) (6) The Authority may, by written notice, require an applicant to provide such additional information and documents as are reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a reasonable time specified in the notice, the Authority may reject the application. (1 of 2008 s. 30) (7) The approval granted in respect of each constituent fund of a registered scheme is taken to be cancelled upon the cancellation of the registration of the scheme. (1 of 2008 s. 30) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 37 Provisions relating to capital preservation fund VerDate:18/01/2008 (1) At least one of the constituent funds of a registered scheme must be a capital preservation fund. (2) A capital preservation fund- (a) may be invested only- (i) by placing it on deposit in accordance with section 11 of Schedule 1, but only for a term not exceeding 12 months; or (ii) in debt securities with a remaining maturity period of 2 years or less and of a kind referred to in section 7(2)(a) or (b) of Schedule 1; or (iii) in debt securities with a remaining maturity period of 1 year or less and that satisfy the minimum credit rating set by the Authority, based on the credit rating of the securities as determined by an approved credit rating agency; and (1 of 2008 s. 49) (b) must have an average portfolio remaining maturity period of not more than 90 days; and (c) must have a total value of Hong Kong dollar currency investments equal to the total market value of the fund, as measured by the effective currency exposure, in accordance with section 16 of Schedule 1; and (d) must operate as a unit trust, or as a unitized insurance policy issued by an authorized insurer. (3) After taking into account any losses arising from the investment of the funds comprising a capital preservation fund, all income and profits derived from the investment of those funds must be credited to the scheme members concerned at least once each month. (4) Amounts may be deducted from the account of a scheme member whose accrued benefits form part of a capital preservation fund only as provided by subsections (5) to (7). (5) If the approved trustee of a registered scheme some or all of the funds of which comprise a capital preservation fund is required to pay a levy under section 17(3) of the Ordinance, such amount as may be necessary to enable the trustee to pay the levy may be deducted from the account of each scheme member whose accrued benefits form part of that fund. The amount is to be calculated as follows- MAB A＝L× CPA where- A represents the amount to be calculated; L represents the amount of the levy; MAB represents the member's accrued benefits that form part of the capital preservation fund; CPA represents the total funds comprising the capital preservation fund. (6) If- (a) funds attributable to a scheme member form part of a capital preservation fund; and (b) the amount of the income and profits derived from the investment of those funds for a particular month exceeds the amount of interest that would be earned if those funds had been placed on deposit in a Hong Kong dollar savings account at the prescribed savings rate, an amount not exceeding the excess may be deducted from the member's accrued benefits as scheme administrative expenses for that month. (7) However, if for a particular month no amount is deducted as administrative expenses under subsection (6), or the amount of administrative expenses that is deducted under that subsection is less than the amount of administrative expenses for the month, the deficiency may be deducted from the amount of any excess that may remain in respect of any of the following 12 months after deducting the administrative expenses applicable to that following month. (8) In this section- "authorized financial institution" (認可財務機構) means an authorized financial institution belonging to a class specified by the Authority from time to time for the purposes of this subsection by notice published in the Gazette; (L.N. 223 of 2000) "Hong Kong dollar savings account" (港元儲蓄帳戶) means a Hong Kong dollar savings account established by an authorized financial institution; "prescribed savings rate" (訂明儲蓄利率) means the rate prescribed by the Authority for the purposes of this subsection by notice published in a Chinese language newspaper and an English language newspaper circulating in Hong Kong as- (a) the rate at which interest is for the time being payable in respect of a Hong Kong dollar savings account; or (b) if different authorized financial institutions pay interest on Hong Kong dollar savings accounts at different rates, the rate determined by the Authority as the average of those rates. "authorized financial institution" (認可財務機構) "Hong Kong dollar savings account" (港元儲蓄帳戶) "prescribed savings rate" (訂明儲蓄利率) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 38 Statement of investment policy to be maintained in respect of each registered scheme VerDate:03/08/1999 (1) A statement of investment policy must be prepared and maintained in respect of each registered scheme. (2) The statement of investment policy must include sufficient information to enable scheme members to ascertain in relation to each constituent fund of the scheme- (a) the investment objectives of the fund; and (b) the policy as to the kinds of securities and other assets in which the fund may be invested; and (c) the policy as to the balance between different kinds of securities and other assets of the fund; and (d) the policy regarding the acquisition, holding and disposal of financial futures contracts and financial option contracts for the purposes of the fund; and (e) the risks inherent in implementing the policies referred to in paragraphs (b), (c) and (d) and the return expected to result from giving effect to those policies. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 39 Control objectives and internal control procedures to be maintained for each registered scheme VerDate:03/08/1999 (1) Control objectives that comply with subsection (2) must be established for each registered scheme and be maintained at all times while the scheme is registered. (2) For the purposes of subsection (1), the control objectives of a registered scheme must include (but are not limited to) the following- (a) ensuring that the scheme assets are safeguarded in the interests of scheme members; (b) ensuring that the guidelines made by the Authority under section 28 of the Ordinance with respect to forbidden investment practices are not contravened; (c) ensuring that the limitations and prohibitions imposed under this Regulation with respect to the investment of the funds of the scheme in restricted investments are complied with; (d) ensuring that the requirements of sections 37(2), 51 and 52 and Schedule 1 with respect to permissible investments are complied with in relation to the scheme; (e) ensuring that the funds of the scheme and the scheme assets are, except as permitted by this Regulation, kept separate from those of the participating employers and of the approved trustee of the scheme and of the service providers and other persons appointed or engaged for the purposes of the scheme. (3) Internal control measures for achieving the control objectives of each registered scheme must be established for the scheme and must be maintained and complied with at all times while the scheme is registered. (4) Those internal control measures must include procedures for- (a) monitoring investments to ensure that the control objectives referred to in subsection (2)(b), (c) and (d) are achieved; and (b) monitoring the assets and liabilities of the scheme to ensure the objective referred to in subsection (2)(e) is achieved, so that the funds of the scheme and the scheme assets are kept separate from those of the participating employers, the trustee and any other persons (such as service providers); and (c) ensuring the accuracy of statements, returns and reports required to be lodged with the Authority. (5) The control objectives and internal control measures established and maintained for the scheme may be amended, and fresh control objectives or internal control measures may be substituted, as and when necessary. (6) This section is not required to be complied with during a financial period of an employer sponsored scheme if- (a) it has no more than 1000 members throughout the immediately preceding financial period of the scheme; or (b) is exempted by the Authority under subsection (7). (7) The Authority may grant an exemption for the purposes of subsection (6) if satisfied that- (a) for a substantial portion of the immediately preceding financial period of the scheme, the scheme had no more than 1000 members; or (b) the scheme will not have, or is unlikely to have, more than 1000 members during the current financial period of the scheme. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 40 Investment standards to be complied with VerDate:03/08/1999 (1) The funds of a registered scheme may be invested only- (a) in the investments permitted under Part V and Schedule 1; and (b) in accordance with that Part and that Schedule. (2) An investment manager appointed in relation to the scheme by the approved trustee of the scheme is required to comply with Part V and Schedule 1. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 41 Requirements with respect to particulars specified in application for registering industry scheme VerDate:03/08/1999 In the case of an industry scheme, the particulars of the scheme that were specified in the application under section 21A of the Ordinance and approved or modified by the Authority must be complied with after the scheme has been registered. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 42 Offence for approved trustee who fails to ensure compliance with certain requirements and standards VerDate:03/08/1999 An approved trustee of a registered scheme who fails to comply with section 38, 39 or 40 commits an offence and is liable on conviction to a fine at level 5. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 43 Approved trustee's general duties with respect to administration of scheme VerDate:03/08/1999 PART V FUNCTIONS OF APPROVED TRUSTEES The approved trustee of a registered scheme must perform the following duties with respect to the administration of the scheme- (a) the duty to exercise a level of care, skill, diligence and prudence that may reasonably be expected of a prudent person who is acting in a similar capacity and who is familiar with the operation of registered schemes; (b) the duty to make use of all relevant knowledge and skill that the trustee may be reasonably expected to have because of the trustee's business or occupation; (c) the duty to ensure that the funds of the scheme are invested in different investments so as to minimize the risk of losses of those funds, unless in particular circumstances it is prudent not to do so; (d) the duty to act in the interest of the scheme members and not in the trustee's own interest; (e) the duty to act in accordance with the governing rules of the scheme; (f) the duty to supervise and exercise proper control over all service providers appointed or engaged for the purposes of the scheme. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 44 Approved trustee to appoint investment manager VerDate:18/01/2008 (1) The approved trustee of a registered scheme must ensure that- (a) an investment manager is appointed to manage the investment of the funds of the scheme; and (b) the contract for the appointment of the investment manager complies with Schedule 2. (2) The trustee does not have to comply with subsection (1) in relation to a constituent fund of the scheme if- (a) the accrued benefits of the constituent fund are invested only in a single approved pooled investment fund, or in a single approved index-tracking collective investment scheme, that is specified in the offering document; or (b) the trustee has obtained the prior approval of the Authority that compliance with subsection (1) is not required in relation to the fund. (1 of 2008 s. 35) (3) A person is eligible to be appointed as an investment manager only if the person- (a) is a company incorporated in Hong Kong; and (b) has a paid up share capital of not less than $10000000 and net assets of at least the same amount; and (c) is a corporation licensed to carry on, or an authorized financial institution registered for carrying on, a business in asset management under Part V of the Securities and Futures Ordinance (Cap 571). (5 of 2002 s. 407) (4) In appointing an investment manager, the trustee must ensure that- (a) the selection and appointment of the investment manager is recorded in writing; and (b) there is no conflict of interest between the investment manager and other persons who have a contractual relationship with the trustee, or any other trustee, that could prejudice the interests of scheme members; and (c) the investment manager has the resources (including human resources) necessary to carry on business as an investment manager; and (d) the investment manager has in place adequate controls and safeguards with respect to the investment of funds of the scheme so as to ensure that the interests of scheme members will be properly protected. (5) The trustee may appoint a person as an investment manager in respect of the scheme only if the person is independent of the trustee and of the custodian of the scheme assets and of any delegate of the custodian. (L.N. 223 of 2000) (6) In subsection (2), "approved index-tracking collective investment scheme" (核准緊貼指數集體投資計劃) means an index-tracking collective investment scheme within the meaning of section 1 of Schedule 1 that is approved by the Authority for the purposes of section 6A of that Schedule. (1 of 2008 s. 35) "approved index-tracking collective investment scheme" (核准緊貼指數集體投資計劃) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 45 Delegation of investment management functions VerDate:01/04/2003 (1) The approved trustee of a registered scheme must ensure that the contract for the appointment of an investment manager prohibits the manager from delegating the management of the investment of the funds of the scheme to a person other than to a company or corporation or partnership of companies or corporations that is solvent and complies with subsection (3) or (4). (2) If the contract allows the investment manager to delegate its functions with respect to managing the investment of the funds of the scheme, the trustee must ensure that- (a) a delegation of any of those functions can be made only with the approval of the trustee; and (b) the delegation is in writing; and (c) the delegate is a company or corporation or partnership of companies or corporations that is solvent and complies with subsection (3) or (4); and (d) the manager will continue to be bound by the contract between the trustee and the manager and to be responsible for the proper supervision and control of the delegate and the management of the investment of the funds of the scheme. (3) A company or corporation or partnership of companies or corporations complies with this subsection if it is- (a) an associate of the investment manager of the scheme; and (b) a corporation licensed to carry on, or an authorized financial institution registered for carrying on, a business in asset management under Part V of the Securities and Futures Ordinance (Cap 571). (5 of 2002 s. 407) (4) A company or corporation or partnership of companies or corporations complies with this subsection if it is authorized, by a regulatory authority recognized by the Authority, to carry on business as an investment adviser under the law of a place other than Hong Kong and- (a) is an associate of the investment manager of the scheme; or (b) is an associate of a corporation licensed to carry on, or an authorized financial institution registered for carrying on, a business in asset management under Part V of the Securities and Futures Ordinance (Cap 571); or (5 of 2002 s. 407) (c) is a corporation licensed to carry on, or an authorized financial institution registered for carrying on, a business in asset management under Part V of the Securities and Futures Ordinance (Cap 571) and maintains an office in Hong Kong. (5 of 2002 s. 407) (5) If an investment manager appointed in respect of a registered scheme is allowed to delegate the manager's functions in relation to the scheme, the approved trustee of the scheme must ensure that the functions are delegated only to a person who is independent of the trustee and of the custodian of the scheme assets and of any delegate of the custodian. (L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 46 Independence of investment manager VerDate:18/01/2008 (1) For the purposes of sections 44 and 45, an investment manager, or the delegate of an investment manager, is independent of the approved trustee of the relevant scheme and of the custodian of the scheme assets and a delegate of the custodian of the scheme assets only if- (a) the manager or delegate is not an associate of the trustee or custodian or the delegate of the custodian; and (b) no person is a controller of both the manager or delegate and the trustee or custodian or the delegate of the custodian or any associate of the trustee or custodian or the delegate of the custodian; and (c) the manager or delegate acts independently of the trustee and custodian and the delegate of the custodian in their dealings with the scheme. (2) If an investment manager, or a delegate of an investment manager, and the approved trustee, or the custodian of the scheme assets or the delegate of the custodian of the scheme assets, are subsidiaries of- (a) a substantial financial institution; or (b) a holding company of a substantial financial institution, they may nevertheless be regarded as being independent of each other if they comply with subsection (3). (3) An investment manager, or a delegate of an investment manager, and the approved trustee, or the custodian of the scheme assets or the delegate of the custodian of the scheme assets, comply with this subsection if- (a) neither of them is a subsidiary of the other; and (b) no person is a director of both of them; and (c) both of them give an undertaking to the Authority by deed, or by a document of like effect acceptable to the Authority, to act independently of each other in their dealings with the scheme. (1 of 2008 s. 6) (L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 47 Investment management contract VerDate:18/01/2008 (1) The approved trustee of a registered scheme must ensure that there is in force between the trustee and the investment manager appointed in respect of the scheme an investment management contract that specifies the obligations of that manager with respect to the investment of funds of the scheme. (2) The contract must comply with Schedule 2. (3) The approved trustee of a registered scheme must not appoint an investment manager in respect of the scheme unless- (a) the trustee has given an undertaking by deed, or by a document of like effect, to notify in writing the manager of any matters that the trustee regards as pertinent to the manager's appointment; and (b) the manager has given an undertaking by deed, or by a document of like effect, to notify in writing the trustee of any changes to matters referred to in paragraph (a) within 30 days after those changes have occurred. (1 of 2008 s. 7) (4) Despite anything in the governing rules of the scheme, any provision of an investment management contract relating to the scheme that purports to exempt the investment manager from liability for negligence or fraud, or to limit that liability, is void. (5) An investment management contract may permit the investment manager to engage an associate of that manager or an associate of the approved trustee as an agent for the purpose of acquiring or disposing of securities for or in relation to the scheme, but, if it does so, the contract must provide that no more than half of the total value of the commissions or other agency rewards paid for those transactions is to be paid to the associate, or the associate together with other associates of that manager or associate of the approved trustee, during a financial period of the scheme. (L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 48 Approved trustee to ensure compliance with prescribed capital adequacy requirements VerDate:03/08/1999 A company must ensure that the prescribed capital adequacy requirements are complied with at all times while it is an approved trustee. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 49 Duties of approved trustee with respect to investment of scheme funds VerDate:03/08/1999 (1) The approved trustee of a registered scheme must ensure that any investment manager appointed in respect of the scheme, and any delegate of that manager, act in the interests of the scheme members and do not collude with other persons as regards any transaction relating to the investment of the funds for the scheme. (2) The trustee must ensure that, if a transaction involving the acquisition of an asset for or in relation to the scheme is entered into between relevant persons, the consideration to be paid for the asset is not greater than the prevailing market price. (3) The trustee must ensure that, if a transaction involving the disposal or lending of an asset for or in relation to the scheme is entered into between relevant persons, the consideration to be paid for the asset is not less than the prevailing market price. (4) For the purposes of subsections (2) and (3), the following persons are relevant persons- (a) the approved trustee and any service provider appointed or engaged for the purposes of the scheme; (b) the participating employers of scheme members; (c) all associates of any of those participating employers, of any scheme member, or of any service provider appointed or engaged for the purposes of the scheme. (5) The trustee must also ensure that service providers appointed or engaged for the purposes of the scheme and their associates do not retain any payment or benefit from a third party, either directly or indirectly, derived from the acquisition or disposal or lending of scheme assets. (6) Subsection (5) does not prevent the third party from providing the service providers and their associates with goods or services that are of demonstrable benefit to the scheme or scheme members. (7) The trustee must also ensure that- (a) any investment manager appointed for the purposes of the scheme, and any delegate of that manager, do not acquire or dispose of securities for those purposes at brokerage rates that exceed the customary institutional full-service brokerage rates generally applicable to the acquisition and disposal of securities; and (b) the acquisition or disposal of securities for those purposes is effected in accordance with the best commercial practice applicable to the preparation and execution of financial transactions. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 50 Approved trustee to appoint custodian of scheme assets VerDate:03/08/1999 (1) Subject to subsection (2), the approved trustee of a registered scheme must- (a) appoint an eligible person to be the custodian of the scheme assets; and (b) ensure that the scheme assets are kept by, or are under the control of, such a person. (2) The trustee is not required to comply with subsection (1) if the trustee is an eligible person. In that case, the trustee may undertake the functions of custodian of the scheme assets itself. (3) If the trustee appoints a custodian in respect of the scheme, it must enter into a custodial agreement with the custodian setting out the functions of the custodian with respect to the scheme's assets. The agreement must comply with the requirements with respect to custodial agreements in Part VI. (4) For the purposes of this section, a person is an eligible person if the person satisfies the eligibility requirements for a custodian of scheme assets specified in Part VI. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 51 Restrictions on entering into repurchase agreements VerDate:03/08/1999 (1) The approved trustee of a registered scheme must ensure that the funds of the scheme are not applied for the purpose of entering into a repurchase agreement unless the agreement is entered into by the custodian of the scheme assets. (2) If the authority to enter into repurchase agreements in respect of a registered scheme is to be delegated to a custodian appointed in respect of the scheme, that authority must be included in the custodial agreement entered into with the custodian in accordance with section 50. (3) The trustee must ensure that, in relation to each constituent fund of the scheme- (a) a repurchase agreement relating to assets of the fund is entered into only if the amount of the consideration (including the value of any collateral security) given for the relevant security exceeds the value of the security; and (b) no more than 10 per cent of the assets of the fund are the subject of repurchase agreements at any one time; and (c) no more than 50 per cent of the securities of the same issue held among the assets of the fund are the subject of repurchase agreements at any one time. (4) The trustee must ensure that the scheme assets are not the subject of a reverse repurchase agreement. (5) For the purposes of this section- (a) a repurchase agreement, in relation to the approved trustee of a registered scheme, is an agreement under which the trustee agrees to sell a debt security to a person and to repurchase it from that person at a specified date in the future for an agreed price, subject to the amount of consideration (including the value of any collateral security) provided by that person during the period of the agreement; and (b) a reverse repurchase agreement, in relation to the approved trustee of a registered scheme, is an agreement under which the trustee agrees to buy a debt security from a person and to resell it to that person at a specified date in the future for an agreed price. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 52 Restrictions on lending of scheme securities VerDate:03/08/1999 (1) The approved trustee of a registered scheme must ensure that no securities held in respect of the scheme are lent (whether with or without consideration) except in accordance with an agreement entered into by the custodian of the scheme assets and the borrower of the securities. (2) If the authority to enter into security lending agreements in respect of a registered scheme is to be delegated to a custodian appointed in respect of the scheme, that authority must be included in the custodial agreement entered into with the custodian in accordance with section 50. (3) The trustee must ensure that, in relation to each constituent fund of the scheme- (a) a security lending agreement relating to securities held in respect of the fund is entered into only if the amount of the consideration (including the value of any collateral security) given for the securities exceeds the value of those securities; and (b) no more than 10 per cent of the assets of the fund are the subject of security lending agreements at any one time; and (c) no more than 50 per cent of securities of the same issue, or of the same kind, held in respect of the fund are the subject of security lending agreements at any one time. (4) For the purposes of this section, a security lending agreement is an agreement under which one party to the agreement agrees to lend a security to another party to the agreement in consideration for the payment of a fee and a collateral security. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 53 Duty of approved trustee with respect to investing in financial futures contracts and financial option contracts VerDate:03/08/1999 (1) The approved trustee of a registered scheme must ensure that the funds of the scheme are not applied for the acquisition of financial futures contracts or financial option contracts, unless there is established and maintained in respect of the scheme an effective system for monitoring the risks inherent in dealing in contracts of those kinds. (2) If financial futures contracts or financial option contracts are acquired for the purposes of the scheme and an investment manager has been appointed in respect of the scheme, the trustee must ensure that the investment manager, and, where the investment manager has delegated any of that manager's functions, the delegate, provide written reports to the trustee at regular intervals with respect to the performance of those contracts. Those reports must include particulars as to the extent to which the funds of the scheme are exposed to the risk of incurring losses because of the holding of those contracts. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 54 Approved trustee to provide information to scheme members VerDate:03/08/1999 (1) The approved trustee of a registered scheme must ensure that, within 60 days after a person becomes a scheme member, the person is provided with a document containing information relating to the scheme. (2) The document must- (a) include a general description of the scheme, including its terms and the fees and charges payable under the scheme; and (b) if the scheme comprises 2 or more constituent funds, specify particulars of those funds; and (c) specify the person (if any) designated by the trustee as the scheme contact person, either by name or by reference to the person's position or job description, and the means by which the person can be contacted. (3) If a member of an employer sponsored scheme or a master trust scheme is an employee of a participating employer, the trustee may arrange to give to the member's employer the document referred to in subsection (1). In that case, that employer must ensure that the document is given to the member within 7 working days after the employer receives it. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 55 Approved trustee to give membership certificates to relevant employees VerDate:03/08/1999 (1) Within 60 days after a relevant employee of a participating employer becomes a member of a registered scheme, the approved trustee of the scheme must give a membership certificate to the employee. (2) A membership certificate must specify- (a) the name of the scheme; and (b) the name of the approved trustee of the scheme; and (c) the address of the trustee's principal place of business in Hong Kong, unless paragraph (d) applies; and (d) the trustee's residential address if the trustee is a natural person and does not have a place of business in Hong Kong; and (e) the name of the scheme member; and (f) the date of issue of the certificate. (3) The approved trustee of a registered scheme may arrange to give to the member's employer the membership certificate. In that case, that employer must ensure that the certificate is given to the member within 7 working days after the employer receives it. (4) An approved trustee is not required to comply with this section in relation to a casual employee who is a member of an industry scheme. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 56 Approved trustee to provide scheme members with annual benefit statements VerDate:18/01/2008 (1) The approved trustee of the scheme must ensure that- (a) within 3 months after each financial period of a registered scheme, each of the scheme members is provided with a benefit statement setting out the member's position with respect to the scheme as at the end of that period, whether or not the auditing of the financial statements of the scheme for that period has been completed then; and (b) if there are subsequent audit adjustments made to the benefit statements affecting the members' balances, members are notified in writing within 30 days after the trustee becomes aware of those audit adjustments. (2) If a financial period of a registered scheme is extended to more than 12 months, the approved trustee of the scheme must ensure that each member of that scheme is provided with- (a) a benefit statement for the first 12 months of the financial period; and (b) a further benefit statement prepared and issued as at the end of the extended period. (3) A scheme member's benefit statement must- (a) specify the name of the member, the name of the scheme and the name of the approved trustee of the scheme; and (b) specify the total contributions that have been paid to the scheme in respect of the member during the financial period and specify, in so far as it is within the knowledge of the trustee, any contribution periods for which contributions that were required to be paid in respect of the member have not been paid; and (c) specify the value of accrued benefits of the member as at the beginning of the financial period and also the value of accrued benefits of the member as at the end of that period; and (d) if the member is a self-employed person, specify the total contributions paid to the trustee by the scheme member during the financial period; and (e) if the member is not a self-employed person, specify the total contributions paid to the trustee by the member's employer during the financial period; and (f) give particulars of amounts transferred to or from the scheme during the financial period; and (fa) contain such information as may be specified by the Authority; and (1 of 2008 s. 50) (g) subject to subsection (4), be printed in both the Chinese language and the English language; and (h) be prepared on an accrual basis, except that contributions and items relating to contributions not yet received by the approved trustee of the scheme may be included on a cash basis. (4) The name of the member may be printed on the benefit statement in either the Chinese language or the English language, unless the member, by written notice, requires the trustee to print that name in both of those languages. (5) If voluntary contributions to a registered scheme are paid by or in respect of a scheme member, subsection (3) is not complied with unless, in relation to the matters referred to in paragraphs (b) to (fa) of that subsection, the statement provides separate information with respect to- (1 of 2008 s. 50) (a) the mandatory contributions paid by or in respect of the member, and the accrued benefits derived from those mandatory contributions; and (b) the voluntary contributions paid by or in respect of the member, and the accrued benefits derived from those voluntary contributions. (6) If a member of an employer sponsored scheme or a master trust scheme is an employee of a participating employer, the trustee may arrange to give to the member's employer the member's benefit statement. In that case, that employer must ensure that the member's benefit statement is given to the member within 7 working days after the employer receives it. (7) The approved trustee of a registered scheme is not required to comply with this section in relation to a person who has ceased to be a scheme member during the period of 3 months after the end of a financial period of the scheme and whose accrued benefits have been transferred to another registered scheme in accordance with Part XII of this Regulation or have been paid in accordance with section 15 of the Ordinance. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 57 Approved trustee to assist participating employers and scheme members VerDate:03/08/1999 (1) The approved trustee of a registered scheme must, as far as reasonably practicable, provide all assistance necessary to ensure that scheme members and participating employers are able to participate effectively in the operation of the scheme. (2) For the purposes of subsection (1), the trustee may designate a person as a scheme contact person, either by name or by reference to the person's position or job description, and specify the means by which the person can be contacted. (3) The assistance referred to in subsection (1) means assistance- (a) in answering inquires in respect of the scheme, including those relating to- (i) the total amount of the contributions received by the trustee in respect of a scheme member and the dates on which those contributions were received or the date on which a contribution was last received; and (ii) any information contained in any document that the trustee has given to scheme members or participating employers; and (b) in dealing with complaints from scheme members or participating employers. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 58 Approved trustee to inform scheme members etc. of changes of business particulars VerDate:03/08/1999 (1) As soon as practicable and in any case not later than 7 days after a change occurs to the business name, address, telephone number or facsimile number of the approved trustee of a registered scheme, the trustee must, by written notice, inform the scheme members and participating employers of the change. (2) If a member of an employer sponsored scheme or a master trust scheme is an employee of a participating employer, the trustee may arrange to give to the member's employer the written notice required to be given to the member in subsection (1). In that case, that employer must ensure that the notice is given to the member within 7 working days after the employer receives it. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 59 Approved trustee to inform scheme members etc. of requirements relating to voluntary contributions VerDate:01/12/2000 (1) The approved trustee of a registered scheme must, by written notice, inform the scheme members and participating employers of the procedure, and requirements under the scheme, for making changes to the payment of voluntary contributions. The notice must be given not later than 7 days after the receipt of inquiry on or request for changing the payment of voluntary contributions. (2) If a member of an employer sponsored scheme or a master trust scheme is an employee of a participating employer, the trustee may arrange to deliver to the member's employer the written notice required to be given to the member in subsection (1). In that case, that employer must ensure that the notice is given to the member within 7 working days after the employer receives it. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 60 Approved trustee to ensure presence of independent trustee at meetings VerDate:03/08/1999 The approved trustee of an employer sponsored scheme must ensure- (a) that the independent trustee of the scheme is, as far as reasonably practicable, present at all meetings of the trustees; and (b) that any decision taken at a meeting of the trustees at which the independent trustee is absent does not have effect until it is acknowledged in writing by that trustee. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 61 Disclosure of conflicts of interests VerDate:03/08/1999 (1) As soon as practicable after a natural person who is an approved trustee of a registered scheme becomes aware of any matter that gives rise or is likely to give rise- (a) to a conflict of interest between the person's duties as a trustee of the scheme and either the person's other duties as a trustee or the person's personal interests; or (b) if the person is an independent trustee, to the suspension or revocation by the Authority of the person's approval as a trustee, the person must disclose the matter by giving written notice of the matter to each of the other persons who are approved trustees of the scheme. (2) As soon as practicable after a person who is an officer of a company that is an approved trustee of a registered scheme becomes aware of any matter that gives rise or is likely to give rise- (a) to a conflict of interest between the person's duties in relation to the scheme as an officer of the company and either the person's other duties as an officer of the company or the person's personal interests; or (b) if the officer is an independent director, to the suspension or revocation by the Authority of the company's approval as a trustee, the person must disclose the matter by giving written notice of the matter to the company and to each of the other officers of the company and, if the trustee includes natural person, to each of those persons. (3) An approved trustee to or in relation to which a disclosure is made under this section must- (a) record the disclosure in a record kept for the purpose; and (b) ensure that the record is kept available at all reasonable hours for inspection by the Authority or any scheme member on request. (4) A failure to comply with this section does not invalidate any decision of the approved trustee concerned. (5) This section does not apply to or in respect of an interest of a person in a matter or thing which arises merely because the person is a contributor to a provident fund scheme. (6) If a person has disclosed the nature of a conflict of interest concerning a matter in accordance with subsection (1), the person must not, unless the other trustees agree- (a) be present during any deliberation of those persons or the company with respect to the matter; or (b) take part in any decision of the approved trustee with respect to the matter. (7) If an officer of a company has disclosed the nature of a conflict of interest concerning a matter in accordance with subsection (2), the officer must not, unless the directors of the company agree- (a) be present during any deliberation of the company with respect to the matter; or (b) take part in any decision of the company with respect to the matter. (8) For the purposes of this section, a person has a personal interest in a matter if, because of the matter or circumstances relating to the matter- (a) the person has obtained or is able to obtain, whether directly or indirectly, a pecuniary or other advantage; or (b) the person has conferred or is able to confer a benefit on- (i) a relative or friend; or (ii) a body of which the person is a member or with which the person has a close connection; or (iii) any other person to whom the person is under an obligation, whether legal or moral. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 62 Approved trustee to notify Authority of events of significant nature VerDate:01/02/2003 (1) If the approved trustee of a registered scheme becomes aware of the occurrence of an event of significant nature, the trustee must- (a) not later than the third working day after becoming aware of the event, give written notice to the Authority setting out particulars of the event (except an event specified in the guidelines as an event to which this paragraph shall not apply); (b) keep a record of particulars of the event; (c) permit the Authority to inspect the record at any reasonable time during ordinary business hours; and (d) give written notice to the Authority- (i) setting out such further or better particulars of the event as the Authority requires; and (ii) as soon as is practicable after the Authority makes that requirement. (29 of 2002 s. 14) (2) The reference in subsection (1) to an event of significant nature includes (but is not limited to) the following- (a) any event that causes the approved trustee to contravene the Ordinance, the governing rules of the scheme or a condition to which the approval of the approved trustee as such is subject; and (b) any material change to the approved trustee's capacity or ability to act as an approved trustee, including- (i) a systems failure which may affect the approved trustee's ability to perform its duties; and (ii) if the approved trustee is or includes a company, any of the matters specified in subsection (3); and (iii) if the approved trustee is or includes a natural person, any of the matters specified in subsection (4); and (iv) the cancellation, expiry or other termination of the insurance in respect of the scheme. (3) For the purposes of subsection (2)(b)(ii), the matters to be specified are- (a) the winding-up of the approved trustee, or the appointment of a receiver or manager of the assets of the approved trustee; (b) the discontinuation of continuous financial support provided to the approved trustee; (c) any change or proposed change of any controller of the approved trustee. (4) For the purposes of subsection (2)(b)(iii), the matters to be specified are- (a) the death or incapacity of the person or circumstances affecting the ability to carry out the person's duties; (b) the cancellation, expiry or other termination of the performance guarantee in respect of the person. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 63 Amendments to governing rules of registered scheme not to take effect without Authority's approval VerDate:15/02/2002 (1) Subject to subsection (2A), an approved trustee of a registered scheme must notify the Authority in writing of any amendment proposed to be made to the governing rules of the scheme and lodge with the Authority a copy of the proposed amendment. (2) Subject to subsection (2A), an amendment to the governing rules of the scheme does not take effect until the Authority has given written notice to the trustee that the Authority has approved it. (2A) In respect of an amendment proposed to be made or made to the governing rules in respect of or by a participation agreement of a registered scheme- (a) subject to paragraph (b), subsections (1) and (2) shall not apply unless the amendment relates to mandatory contributions or voluntary contributions; (b) subsections (1) and (2) shall not apply if the amendment is in a form approved by the Authority for the purposes of this section. (3) In this section, a reference to an amendment to the governing rules of a registered scheme includes a reference to addition of new provisions, or substitution or omission of existing provisions, of those rules. (2 of 2002 s. 21) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 63A Amendments to offering documents require Authority's approval VerDate:15/02/2002 (1) An approved trustee of a registered scheme must notify the Authority in writing of any amendment proposed to be made to the offering document of the scheme and lodge with the Authority a copy of the proposed amendment. (2) Any amendment to the offering document of the scheme shall not be made available to scheme members, prospective scheme members, participating employers or prospective participating employers until the Authority has given written notice to the trustee that the Authority has approved it. (3) In this section, a reference to an amendment to the offering document of a registered scheme includes a reference to addition of new provisions, or substitution or omission of existing provisions, of the document. (2 of 2002 s. 21) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 64 Approved trustee to ensure separation of scheme assets VerDate:03/08/1999 (1) The approved trustee of a registered scheme must ensure that the scheme assets- (a) are administered and dealt with as trust property by service providers appointed or engaged by the trustee for the purposes of the scheme; and (b) are held, recorded or otherwise controlled in accordance with the market practices that are currently prevailing in the place where the scheme assets are held, recorded or otherwise controlled, and in such manner as is prudent in the circumstances; and (c) are applied only for the purposes of the scheme. (2) Subsection (1) has effect irrespective of whether or not the trustee has appointed a custodian or other service provider to perform functions with respect to the scheme assets. (3) The trustee must also ensure that the scheme assets are separately recorded in the records required to be kept in respect of the scheme and, in particular, are distinguished- (a) from the trustee's personal assets; and (b) from any assets held by the trustee for the benefit of a participating employer or any other person. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 65 Approved trustee to ensure that scheme assets are not improperly encumbered VerDate:18/01/2008 (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) at the time the borrowing was made, it was unlikely that the period of the borrowing would exceed 90 days; or (L.N. 222 of 2000; L.N. 223 of 2000) (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) at the time the borrowing was made, it was unlikely that the period of the borrowing would exceed 7 working days; and (L.N. 222 of 2000; L.N. 223 of 2000) (iv) at the time the decision to enter into the transaction was made, it was unlikely that the borrowing would be necessary; or (L.N. 222 of 2000; L.N. 223 of 2000) (c) is created for the purpose of securing a claim for payment of fees for the safe custody or administration of the scheme assets by a central securities depository or a delegate of a custodian; or (L.N. 222 of 2000; L.N. 223 of 2000; 1 of 2008 s. 11) (d) is created for the purpose of acquiring a financial futures contract pursuant to section 14 of Schedule 1 or a currency forward contract pursuant to section 15 of Schedule 1; or (L.N. 222 of 2000; L.N. 223 of 2000) (e) is created by the operation of law in Hong Kong or in a place outside Hong Kong. (L.N. 222 of 2000; L.N. 223 of 2000) (3) Any encumbrance created over scheme assets of a registered scheme is void to the extent that it is inconsistent with subsection (2). (4) For the avoidance of doubt, it is hereby declared that any encumbrance created over the scheme assets of a registered scheme that is, at the time of creation, consistent with the exception under subsection (2) shall remain valid throughout the period for which the borrowing concerned remains outstanding. (L.N. 222 of 2000; L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 66 Approved trustee permitted to deduct from scheme members' accounts amount in respect of administrative expenses VerDate:01/12/2000 Subject to this Regulation, the approved trustee of a registered scheme may periodically deduct from each scheme member's account with the scheme fees for administrative expenses. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 66A Interest to be received where a scheme's assets are placed on deposit VerDate:23/06/2000 Where a scheme's assets are placed on deposit, then the approved trustee must ensure that the rate of interest received for the deposit is reasonable in all the circumstances of the case taking into account the rate of interest available in the relevant market- (a) at the time of the deposit; and (b) for deposits of like amount and nature. (L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 67 Offences VerDate:23/06/2000 A person who, without reasonable excuse, fails to comply with a requirement or duty imposed on that person by section 43, 44, 45, 46, 47, 49, 50, 51, 52, 53(1), 64 or 65 commits an offence and is liable on conviction to a fine at level 5. (L.N. 222 of 2000; L.N. 223 of 2000) MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 68 Eligibility for appointment as custodian VerDate:18/01/2008 PART VI FUNCTIONS OF SERVICE PROVIDERS Division 1- Custodians of scheme assets (1) A person is eligible to be a custodian of scheme assets only if the person is one of the following- (a) an authorized financial institution; (b) a registered trust company incorporated in Hong Kong that has a paid up share capital of not less than $150000000 and net assets of not less than the same amount; (c) a registered trust company incorporated in Hong Kong that complies with subsection (2). (2) A registered trust company complies with this subsection if it- (a) has a paid up share capital of not less than $50000000 and net assets of not less than the same amount; and (b) is an associate of either- (i) a company or corporation that complies with subsection (3) and provides continuous financial support to the registered trust company; or (ii) a company or corporation having a subsidiary that complies with subsection (3) and provides continuous financial support to the registered trust company. (L.N. 223 of 2000) (3) A company or corporation complies with this subsection if it is- (L.N. 223 of 2000) (a) an authorized financial institution; or (b) a registered trust company incorporated in Hong Kong that has a paid up share capital of not less than $150000000 and net assets of not less than the same amount; or (c) an authorized insurer that has a paid up share capital of not less than $150000000 and net assets of not less than the same amount; or (d) an approved overseas bank, an approved overseas insurer or an approved overseas trust company that complies with subsection (4). (4) An approved overseas bank, an approved overseas insurer or an approved overseas trust company complies with this subsection if- (a) it has a paid up capital of at least US$200000000 or an amount in another foreign currency equivalent to that amount; and (b) it satisfies a minimum credit rating set by the Authority, based on the credit rating as determined by an approved credit rating agency. (5) A company or corporation or a subsidiary of a company or corporation provides continuous financial support to a registered trust company for the purposes of subsection (2)(b)(i) and (ii) if it gives an undertaking to the Authority by deed, or by a document of like effect acceptable to the Authority, that it- (L.N. 223 of 2000; 1 of 2008 s. 8) (a) will, if so required by the Authority, subscribe sufficient additional capital of not more than $50000000 when the paid up share capital or net assets of the trust company become less than that amount; and (b) will not, without the approval of the Authority, do any act to dispose of, or authorize the disposal or issue of, any part of the share capital or assets of the trust company as a result of which the trust company ceases to be its associate. (L.N. 223 of 2000) (6) A person is not eligible to be a custodian of scheme assets unless the person has a sufficient presence and control in Hong Kong. (7) (Repealed L.N. 223 of 2000) (8) A person has a sufficient presence and control in Hong Kong if- (a) the person complies with subsection (9); and (b) the person has sufficient expertise and management resources in Hong Kong to conduct its business operations effectively; and (c) the Hong Kong chief executive officer of the person ordinarily resides in Hong Kong. (32 of 2000 s. 48) (9) A person complies with this subsection if- (a) the person's day-to-day business activities relating to the person's business in Hong Kong (including the keeping of its records relating to those activities) are conducted wholly in Hong Kong; or (b) in the case where those activities are not conducted wholly in Hong Kong- (i) they are conducted under the person's supervision and control in Hong Kong; and (ii) sufficient records of those activities are kept at a place or places so that those records can be readily accessible in Hong Kong to enable an audit of them to be carried out. (10) A person is not eligible to be a custodian of scheme assets unless the person and all delegates of the person are independent of each investment manager appointed in respect of the scheme and of all delegates of the investment manager. (11) Nothing in this section requires the approved trustee of a registered scheme to appoint a person to be a custodian of the scheme assets if the trustee satisfies the eligibility requirements of this section. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 69 Custodial agreement VerDate:18/01/2008 (1) If the approved trustee of a registered scheme appoints a custodian to administer the scheme assets, the trustee must ensure that the contract for the appointment of the custodian incorporates a custodial agreement that complies with Schedule 3. (2) If the approved trustee of a registered scheme does not appoint a custodian to administer the scheme assets, the trustee must give an undertaking to the Authority by deed, or by a document of like effect acceptable to the Authority. The undertaking must incorporate the terms of a custodial agreement that complies with Schedule 3. (1 of 2008 s. 9) (3) If the approved trustee of a registered scheme has appointed a custodian of the scheme assets, that trustee must take all reasonable steps to ensure that the custodian complies with the terms of the relevant custodial agreement. (4) An approved trustee who, without reasonable excuse, fails to comply with this section commits an offence and is liable on conviction to a fine at level 5. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 70 Temporary custodian VerDate:18/01/2008 (1) The approved trustee of a registered scheme may act as a temporary custodian of scheme assets even though the trustee would not, apart from this section, be eligible to be a custodian of scheme assets, or has appointed an eligible person to be a custodian of the scheme assets, but only for the sole purpose of temporarily keeping- (a) contributions and other payments received for the purposes of the scheme; or (b) payments required or permitted to be made from the funds of the scheme. (2) When acting as a temporary custodian of scheme assets, an approved trustee must- (a) comply with the requirements set out in subsection (4); (b) as soon as practicable after receiving contributions and other amounts from an employer or any other person for the purposes of the scheme, pay them to the custodian; and (c) as soon as practicable after receiving the payments from a custodian of the scheme assets for the purpose of paying accrued benefits or other amounts of money, pay them to the persons entitled to receive them. (3) In so acting, the trustee must apply the same care, skill, diligence and prudence as may be reasonably expected of a prudent person who has custody of scheme assets. (4) The requirements referred to in subsection (2)(a) are as follows- (a) the scheme assets must be- (i) administered and dealt with as trust property; and (ii) recorded and controlled in such manner as may be customary and prudent in the circumstances; (b) records of the scheme assets must be kept separate from all other assets of the trustee, including any assets held by the trustee for the benefit of a participating employer or any other person; (c) the scheme assets must not be subject to an encumbrance, except in any of the circumstances set out in subsection (5); (1 of 2008 s. 12) (d) the scheme assets must be applied only for the purpose of the registered scheme. (5) The circumstances referred to in subsection (4)(c) are as follows- (a) where the encumbrance is created for the purpose of securing an amount borrowed to enable accrued benefits to be paid to or in respect of scheme members, but 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) at the time the borrowing was made, it was unlikely that the period of borrowing would exceed 90 days; (b) where the encumbrance is created for the purpose of securing an amount borrowed to settle a transaction relating to the acquisition of scheme assets, but 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) at the time the borrowing was made, it was unlikely that the period of borrowing would 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; (c) where the encumbrance is created for the purpose of securing a claim for payment of fees for the safe custody or administration of the scheme assets by a central securities depository or a delegate of a custodian; (d) where the encumbrance is created for the purpose of acquiring a financial futures contract pursuant to section 14 of Schedule 1 or a currency forward contract pursuant to section 15 of Schedule 1; (e) where the encumbrance is created by operation of law (whether the law of Hong Kong or of a place outside Hong Kong). (1 of 2008 s. 12) (6) (Repealed 1 of 2008 s. 12) (7) An encumbrance created over scheme assets is void to the extent to which it is inconsistent with this section. (8) An approved trustee who, without reasonable excuse, fails to comply with subsection (2) or (3) commits an offence and is liable on conviction to a fine at level 5. MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 71 Eligibility of delegate of custodian VerDate:18/01/2008 (1) A person is not eligible to be a delegate of a custodian of scheme assets unless the person- (2 of 2002 s. 21) (a) would be eligible to be a custodian of scheme assets; (b) is an approved overseas bank or approved overseas trust company which complies with section 68(4); or (c) is an overseas bank or overseas trust company that is a subsidiary or related company of an entity described in subsection (1A). (1 of 2008 s. 53) (L.N. 223 of 2000) (1A) The entity referred to in subsection (1)(c) is an approved overseas bank, an approved overseas trust company, an authorized financial institution or a registered trust company incorporated in Hong Kong, that- (a) has a paid up capital of not less than US$200000000 or an equivalent amount in another currency; and (b) satisfies a minimum credit rating set by the Authority based on a credit rating determined by an approved credit rating agency. (1 of 2008 s. 53) (2) The approved trustee of a registered scheme must ensure that- (a) if the custodian of scheme assets is appointed under section 50(1), the contract for the appointment prohibits the custodian from delegating the custodian's function as a custodian to a person who is not eligible under subsection (1) to be a delegate of the custodian; (b) if t