HONG KONG SAR, CHINA Law and Practice Contributed by: Jeffrey Lee, Jessica Leung and Hilary Leung, Charles Russell Speechlys
6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries Corporate fiduciaries are prevalent in Hong Kong. Generally, a trustee must exercise the care and skill that is reasonable in the circumstances, having regard to any special knowledge or experience that the trus - tee has or holds out as having; if the trustee is acting in a professional capacity, they will have to adhere to the level of care and skill that is reasonably expected of a person acting in such a professional capacity, tak - ing into account any special knowledge or experience. In March 2018, a licensing regime was introduced that requires trust and company service providers (TCSPs) to apply for a licence from the Hong Kong Companies Registry. TCSPs need to satisfy a “fit-and-proper” test to be granted a licence. 6.2 Fiduciary Liabilities Trustees are liable for the liabilities of the trust, but it is possible to limit their liabilities in the absence of a breach of trust arising from the trustees’ fraud, wilful misconduct or gross negligence by including appro - priate exemption clauses in the terms of the trust. Anti-Bartlett clauses are commonly found in trust instruments, and seek to limit the trustee’s duties and obligations of supervising the investment and man - agement of the underlying investment companies of a trust. In 2019, the Court of Final Appeal of Hong Kong handed down a decision upholding the use of anti-Bartlett clauses, determining that they are effec - tive in excluding any high-level supervisory duty of the trustee in relation to investment decisions made by an investment adviser on behalf of the underlying investment company of the trust and that the trustee is not liable for any losses incurred as a result. 6.3 Fiduciary Regulation Unless the trust instrument provides otherwise, trus - tees may only invest in the authorised investments specified in the Trustee Ordinance and, in exercising such power, trustees would not be responsible for any loss to the trust fund if they have discharged the statu - tory duty of care.
Third parties’ interests may be involved in some cas - es, such as arguments over the beneficial ownership of assets paid by parents and a party’s entitlement in a dynastic trusts structure. Estates With regard to disputes over estates, aggrieved par - ties may attack the validity of wills by claiming that the testator lacked mental capacity or was unduly influ - enced by third parties while making the will, or they may attempt to vary distribution of the estate through claims made under the Inheritance (Provision for Fam - ily and Dependants) Ordinance or common law. Trusts Litigation involving contentious trusts – both offshore and onshore structures – mainly arise from actions for and against trustees over breach of trusts, asset Spouses in divorce proceedings may be awarded vari - ous forms of ancillary relief orders, as summarised in 5.1 Trends Driving Disputes . For disputes over estates or trusts, aggrieved parties typically seek to: • set aside a will; • make claims under the Inheritance (Provision for Family and Dependants) Ordinance; • vary a determination made by the trustee; or • obtain information (in particular, financial informa - tion) of the estate or the trust. The remedies available to address these claims include for the courts to order: • the making of periodical payments or lump sums, or transfer of property out of the net estate of the deceased; • for the recipient or holder of the assets (eg, trustee) disputes and duties or conflicts issues. 5.2 Mechanism for Compensation
to provide money or other property; • for information to be provided; and • for assets to be traced.
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