CONFIDENTIAL

10. In all cases there will be a requirement that the applicant should be ordinarily resident in Hong Kong. The conditions as

to nationality and residence would not, however, apply to the

spouses and children of successful applicants; the exclusion from

registration as citizens of those dependents who were not British nationals resident in Hong Kong would hinder the purposes of the

scheme by encouraging the whole family to come to the UK to

establish a common right of abode. In cases where a successful

applicant ceased to be ordinarily resident in Hong Kong after

gaining citizenship, he or she would lose the ability under the

Bill (which is not available under existing nationality law) to

transmit citizenship to a spouse in any marriage contracted after

ceasing to be ordinarily resident in Hong Kong (although children

of the marriage would receive it in the normal way).

Distribution of Places

11.

Annex B shows how the 50,000 assurances would be allocated

between the four component schemes. 36,200 places will go to

the GAS, 500 to the KES, 7,000 to the DSS and 6,300 to the SSS.

Some 14% of places will be held back for a second tranche of

allocations nearer to 1997 to cater for those who will by then have moved into key positions. About 65% of all places are expected to go to the private sector.

Selection Methods

12. The exact systems will need to be finalised in the light of

our revisions. Meanwhile, for illustrative purposes details of the proposed methods of selection for each of the component schemes are set out in Annex A. The effect is that I will grant citizenship on the basis of recommendations from the Governor,

and I will be able to reject such recommendations only in limited

circumstances which will be defined in the Bill, ie where an

individual fails to satisfy the good character requirements.

CONFIDENTIAL

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