business links between Bermuda and Hong Kong.

Hong Kong is in the process of introducing new legislation to encourage companies based in the colony to set up pension funds for their employees.

And the Stamp Duties Amendment Act 1992, tabled before the House of Assembly last Friday, will help Bermuda win some of this business, said lawyer Mr. Alec Anderson, who specialises in trust law.

"This law will absolutely free Bermuda-based pension fund trusts of all stamp duties,'' said Mr. Anderson, who is a partner at Conyers, Dill and Pearman.

"It should help us tap into the very significant potential for lots of new pensions trust business out of Hong Kong.

"Companies and people in Hong Kong who want to set up a safe pension nest egg would be well advised to set up a trust outside Hong Kong bearing in mind the uncertainties in the lead-up to the hand-over of rulership to the Chinese in 1997.

"Hopefully they will look at Bermuda as a very competitive jurisdiction because of its low cost and well-known reputation in Hong Kong as a result of many businesses switching their corporate holding companies to Bermuda over the last few years.'' Currently, pension trust funds must pay $250 and a 0.1 percent charge on the market value of assets contributed to the trust up to a maximum of $4,000. The abolition of stamp duties was one of the recommendations made by a standing committee of the Bermuda international Business Association, which was chaired by Mr. Anderson.

Mr. Anderson praised Government for acting so quickly to the needs of this area of Bermuda's international business community.

Other committee members included Mr. John Campbell and Mr. Martin Collins, of Appleby, Spurling and Kempe; Mr. Peter Rodger and Ms Christine Campbell, of the Bank of Butterfield; Mr. James MacDonald, of the Bank of Bermuda; Mr. Greg Haycock, of Butterfield and Steinhoff; Mr. Peter Mitchell, of Cooper and Lines; and Mr. Nicholas Johnson, of Conyers, Dill and Pearman.

When the Amendment Act becomes law, it will bring Bermuda into line with other offshore jurisdictions which do not charge duties on pension fund trusts.

Mr. Anderson said: "Bermuda has done very well in the past. We have a strong reputation for responsibility. Some of the wealthiest people in the world are likely to have a trust in Bermuda.

"But there's been increasing competition over the last five to eight years and it's come to the point where our market share potentially could be lost to places like the Cayman Islands, the Channel Islands and, more recently, the British Virgin Islands.

"It's not so much that they have taken a lot of our new business but the trust industry is growing and we must do everything we can to win some of this new business. In Bermuda we have got steady growth but not explosive growth in any way, as we would like.

"In terms of numbers, more trusts have probably set up in the Caymans, Guernsey and Jersey rather than Bermuda over the last five to eight years.

That's my view based on speaking to people in London.'' Although the abolition of duties will lead to less money going to Government, Mr. Anderson said Bermuda would benefit in two ways from attracting more trust business.

"Firstly, the trust companies themselves will benefit from having more business,'' he said. "And, secondly, the accounting firms and law firms will have some extra work.

"If the number of pension trusts increased in a big way, Bermuda might become known as the best place for them to be set up, which would create new jobs, either in the banks or the trust companies.'' For several years, the only organisations which have been allowed to do trust business have been Bermuda's three banks and law firms Conyers, Dill and Pearman; Appleby, Spurling and Kempe; and Hallett, Whitney and Patten, and they did so without needing a special licence.

But from September 1, the existing trust companies will need a licence from Government. Other organisations which wish to offer similar services may apply for a licence.

Mr. Anderson's BIBA committee has recommended that Government abolish stamp duties on all international trusts, not just pension trusts, and has also recommended changes to Bermuda's asset protection trust laws. Both are currently being considered by the Ministry of Finance.

MR. ANDERSON: `Significant potential' for new Hong Kong business.