XN000022-1995-07-05 — Page 37

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As Members have pointed out, the Bill would no longer permit investments in the share capital of "non-listed" companies made before the commencement of the Ordinance, that is, 15th October 1993. This was not our intention. Committee Stage Amendments will be moved later today to clarify that such investments will be allowed and that the 15 per cent of the assets of the scheme which may be invested in shares of emerging stock markets is not in addition to any such investments made before 15th October 1993. However, the scheme's administrator will need the Registrar's permission before making investments that arise directly from entitlements attached to investments held before 15th October 1993. In granting permission the Registrar will have to be satisfied that the investments derive directly from previous entitlements and have become available in the normal course of business, and that the registered scheme would be disadvantaged if the investments were not made. The Registrar is also empowered to issue guidelines explaining what evidence or documentary material would be required to prove that the investments meet those criteria.

The Bill also proposes to impose a requirement to obtain the approval of the Registrar before making any changes to the particulars of a scheme, for instance, to the scheme's name, to the relevant employer of an exempted scheme or a registered scheme, or to the representative employer of a scheme of a group of companies. Members have questioned the need for such prior approval. Having considered the administrative difficulties which the relevant employer may face in seeking prior approval for such changes, we propose to replace the prior approval requirement with a notification requirement. I shall move Committee Stage amendments later today for this purpose and consequentially to adjust the level of penalties for defaults in complying with amended provisions.

Members have questioned whether section 67 of the Occupational Retirement Schemes Ordinance, which provides for the registration of schemes operated by a group of companies, has met its intended purpose. The original intention of section 67 was to permit a group of companies, each of which has a significant influence over each other, to nominate a representative employer to operate a common scheme. It would be undesirable to allow loosely connected parties to operate such a scheme as there would be no clearly binding influence operating amongst them. However, the Ordinance does not empower the Registrar to refuse an application from a relevant employer who does not fall within the relationship specified in section 67. To address this deficiency, we propose that the Ordinance be amended to reflect the policy intention that an occupational retirement scheme may be operated by two or more employers only if they fall within such a group relationship. Such a group could consist of a holding company, its subsidiaries and associated companies.