XN000022-1996-12-18 — Page 24

10 -

The Hong Kong Society of Accountants and Members of the Bills Committee expressed concern over the extent of section 30D of the Bill which deals with the ability of the court to order the Commissioner of Inland Revenue to produce certain documents relating to a bankrupt before the court. The proposed amendment to clause 21, new section 30D of the Bill, limits the production of such documents to private examinations held in Chambers, restricts access to this information to suitably qualified trustees and also imposes a duty of confidentiality on the trustee. The Commissioner of Inland Revenue is also empowered to apply to the court for the discharge or variation of the order.

Clause 25 of the Bill adds claims in tort to the types of unliquidated damages that are provable in bankruptcy. Amendments are made to clause 25 to clarify that a trustee may refer debts or liabilities relating to such unliquidated damages to the court for valuation. At the request of the Hong Kong Association of Banks a further clarification is made in respect of the conversion method used when dividends are paid in foreign currency.

The new section 34(7A) provides that the trustee shall be obliged to make a decision on a proof of debt within a period to be prescribed in the rules.

Under new section 51A of the Bill, where a person has benefited indirectly from a "transaction at an undervalue" or an "unfair preference" undertaken by a debtor and that person "was an associate of, or was connected with" the debtor or the person with whom the debtor dealt in the first instance, then the interest or benefit received is presumed to have been received other than in good faith and suitable redress may be sought by the debtor's estate. The Hong Kong Association of Banks queried the extension of the provision to "connected" persons which is not defined and could inadvertently catch an innocent bank dealing with a debtor in the normal course of business. We accept that these words can be deleted without materially altering the objective of the sub-section and I, therefore, propose that clause 36 be amended accordingly.

The proposed amendment to clause 47 of the Bill takes on board a concern raised by the Bills Committee in relation, particularly, to the issue of tax secrecy. It widens the classes of persons who may make a complaint to the court about the conduct of a trustee so as to include the Official Receiver, the bankrupt or any other

person.

The other amendments proposed are either technical or textual in nature or to amend the Chinese text of the Bill to reflect drafting improvements. All the amendments have been agreed by the Bills Committee.

Mr Chairman, I beg to move.

End