XN000022-1995-01-18 — Page 27

11.

The Bill's second purpose is to seek to relax statutory investment restrictions upon scheme assets but without compromising safeguards against fraud or mismanagement. The statutory investment restrictions have been criticised by scheme administrators as being too severe. They have a point. Investment in mutual funds is prohibited, as is investment in shares not listed on the Unified Exchange or any stock market not recognised by the SFC, for instance in shares on emerging stock markets such as Taiwan, Indonesia and Spain. We consider these criticisms and concerns justified and propose to relax the restriction by allowing scheme administrators to invest up to 100 per cent of a scheme's assets in mutual funds, and up to 15 per cent of the assets in the listed shares of companies on stock exchanges not recognised by the SFC but legally established and regulated as stock exchanges in accordance with the laws of the jurisdictions in which they are established. Investment in private companies will, however, continue to be prohibited.

The Bill also proposes to make a number of miscellaneous amendments to the Ordinance to facilitate administration of schemes by the Registrar. These amendments briefly include -

the imposing of a requirement to obtain the approval of the Registrar before any changes are made to the registered particulars of a scheme which may materially alter the grounds upon which the scheme has been registered;

the imposing of penalties for breaches of such requirements;

the empowering of the Registrar to amend the Occupational Retirement Schemes Register, and to prescribe the payment of fees for changes in scheme particulars; to cancel registration of a scheme upon its termination or winding up; and to make rules relating to approval and notification procedures for changes.

Mr President, with these remarks, I commend the Occupational Retirement Schemes (Amendment) Bill to this Council.

End/Wednesday, January 18, 1995