XN000022-1996-12-18 — Page 22

Bankruptcy (Amendment) Bill 1996 (second reading)

Following is the speech by the Secretary for Financial Services, Mr Rafael Hui, at resumption of second reading debate of Bankruptcy (Amendment) Bill 1996, in the Legislative Council today (Wednesday):

Mr President,

I am grateful to the Members of the Bills Committee, and in particular its Chairman, the Honourable Ronald Arculli, for the detailed scrutiny that they have given to the Bankruptcy (Amendment) Bill 1996 which is a long and technical bill. We are grateful for their support of the Bill and also for the constructive suggestions that they have made in relation to it.

I outlined the main elements of this Bill when it was introduced into the Council earlier this year and I do not propose to repeat them again now. Suffice to say the Bill will modernise and streamline the legislative framework and procedures for the administration of personal insolvencies and also represents the first phase in a comprehensive overhaul of our insolvency system.

Mr President, I shall be proposing a limited number of amendments to the Bill at the Committee Stage, all of which have been agreed with the Bills Committee. These amendments, which are mainly technical, are being proposed primarily in response to specific concerns raised in submissions made to the Bills Committee, notably by the Hong Kong Association of Banks and the Hong Kong Society of Accountants, and well as issues raised by the Bills Committee itself.

Of particular concern to the accountancy sector was the possibility that tax information relating to a bankrupt that was obtained by the trustee in bankruptcy might also become available to creditors or other unrelated parties. To allay this concern 1 shall move an amendment to provide suitable safeguards in relation to maintenance of

tax secrecy.

One aspect which received close attention from the Bills Committee was the proposed time period leading up to the automatic discharge from bankruptcy for a first-time bankrupt. The Bill proposes that this should be 3 years based on the precedents set under the UK Insolvency Act 1986 and the Australian Bankruptcy Amendment Act 1981. However, the Bills Committee felt that this may not be sufficiently long, noting also that under bankruptcy legislation in Singapore the corresponding period is 5 years. Members of the Committee considered that 4 years rather than 3 would be more appropriate for Hong Kong's situation. I am prepared to defer to their judgement particularly in view of the fact that it is open to a bankrupt to apply for early discharge. I will be moving an amendment to reflect this change.