Trading Funds Ordinance


Published: 1997-06-30

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Cap 430 - TRADING FUNDS ORDINANCE 1

Chapter: 430 TRADING FUNDS ORDINANCE Gazette Number Version Date

Long title 30/06/1997


An Ordinance to enable certain services of the Government of Hong Kong to be financed under trading funds
established by resolution of the Legislative Council on the recommendation of the Financial Secretary and for
related matters.


[12 March 1993]


(Originally 18 of 1993)

(Enacted 1993)

Section: 1 Short title 30/06/1997


This Ordinance may be cited as the Trading Funds Ordinance.
(Enacted 1993)


Section: 2 Interpretation 30/06/1997


(1) In this Ordinance, unless the context otherwise requires-
"certified statements" (經證明的報表) means the statements of accounts that the Director of Audit has certified that

he has examined and audited under section 7(5);
"Finance Committee" (財務委員會) means the Finance Committee of the Legislative Council;
"general manager" (總經理) means the general manager of a trading fund designated under section 6(2);
"government service" (政府服務) means an activity that the Government may undertake and includes the provision

of goods or services by a department or public body;
"trading fund" (營運基金) means an accounting entity within the Government (but not having a separate legal

existence) established under section 3(1).
(2) In this Ordinance, a reference to the resolution establishing a trading fund includes a resolution that varies

the resolution that establishes the trading fund.
(Enacted 1993)


Section: 3 Establishment of trading funds 30/06/1997


(1) The Legislative Council may, on the recommendation of the Financial Secretary, by resolution establish a
trading fund to manage and account for the operation of a government service for which the Government has the
financial objective that the service shall fund itself from the income generated from the government service whether it
is a service provided to the Government, to public bodies or to persons other than the Government.

(2) In considering whether to recommend the establishment of a trading fund for a government service the
Financial Secretary is to have regard to the capability of the provider of the government service-

(a) to provide an efficient and effective operation that meets an appropriate standard of service; and
(b) to have the capacity, within a reasonable time, to meet expenses incurred in the provision of the

government service and finance liabilities to be specified in the resolution out of the income of the
proposed trading fund.

(Enacted 1993)

Section: 4 Assets and liabilities of a trading fund 30/06/1997


(1) The Legislative Council may by resolution appropriate to the trading fund the assets and liabilities on the
terms set out in the resolution.

(2) The net value of the assets appropriated to a trading fund is a government investment shown in the Capital
Investment Fund as loan or trading fund capital or partially of one and the balance of the other, on the terms set out in



Cap 430 - TRADING FUNDS ORDINANCE 2

the Legislative Council resolution establishing the trading fund and is to be represented in the accounts of the trading
fund as the debt to, or trading fund capital of, the Government.

(3) Subject to the terms of the resolution establishing a trading fund and any directions of the Financial
Secretary given under section 6(5), the general manager may dispose of any asset accounted for under the trading
fund.

(Enacted 1993)

Section: 5 Income, expenses and liabilities 30/06/1997


(1) Notwithstanding any provision of another Ordinance, the income received for the provision of a
government service in respect of which a trading fund is established under section 3 is to be paid into the trading fund.

(2) The expenses incurred in providing the government service and the financing of liabilities of the trading
fund are to be paid out of the trading fund.

(3) With the approval of the Financial Secretary, the general manager may establish reserves in the accounts of
the trading fund and may make transfers into and out of those reserves.

(4) In this section, "income" (收益) includes a grant from the general revenue.
(Enacted 1993)


Section: 6 Control and management of a trading fund 30/06/1997


(1) The Legislative Council shall prescribe, in the resolution establishing the trading fund, the services to be
provided under a trading fund.

(2) The Financial Secretary shall designate a general manager to control and manage a trading fund and who is
accountable to the Financial Secretary for the operations of the trading fund.

(3) The general manager is not to vary the services undertaken by a trading fund other than in accordance with
the Legislative Council resolution.

(4) Notwithstanding subsection (3), the Financial Secretary may authorize a general manager to undertake
additional operations under a trading fund that are incidental to the prescribed services of the trading fund.

(5) The Financial Secretary may issue directions to the general manager for the control and management of a
trading fund and the general manager shall comply with the directions.

(6) The general manager shall manage a trading fund with the objectives of-
(a) providing an efficient and effective operation that meets an appropriate standard of service;
(b) within a reasonable time, meeting expenses incurred in the provision of the government service and

financing liabilities of the trading fund out of the income of the trading fund, taking one year with
another; and

(c) achieving a reasonable return, as determined by the Financial Secretary, on the fixed assets employed.
(Enacted 1993)


Section: 7 Financial period and accounting requirements 30/06/1997


(1) The financial year for a trading fund is from 1 April to 31 March in the following year.
(2) If a trading fund is established after 1 April in any year, the first financial year for the trading fund is from

the date it is established until 31 March following.
(3) A general manager shall keep the accounts and records of all transactions of the trading fund in such

manner as the Director of Accounting Services may require.
(4) A general manager shall submit statements of the annual accounts of the trading fund prepared in

accordance with generally accepted accounting principles and signed by him to the Director of Audit within a
reasonable time after the end of each financial year to allow for audit and the tabling of the certified statements and the
report of the Director of Audit in accordance with section 8.

(5) The Director of Audit shall examine and audit the statements of the annual accounts of the trading fund and
prepare a report on his examination and audit and certify that he has conducted the examination and audit of the
statements.

(6) The Director of Audit shall state in the report whether in his opinion the statements-
(a) give a true and fair view of the state of affairs of the trading fund at the end of the financial year;



Cap 430 - TRADING FUNDS ORDINANCE 3

(b) give a true and fair view of the results of the operations of the trading fund for the financial year then
ended; and

(c) have been properly prepared in accordance with the manner provided in subsection (4).
(Enacted 1993)


Section: 8 Reporting requirements 68 of 1999 01/07/1997


Remarks:
Adaptation amendments retroactively made - see 68 of 1999 s. 3


(1) A general manager shall submit to the Financial Secretary a signed annual report on the operation of the
trading fund, the certified statements and the report of the Director of Audit on the certified statements within 14 days
of receipt of the certified statements and the report from the Director of Audit.

(2) The Financial Secretary shall table in the Legislative Council not later than 31 October next following the
end of each financial year, or such longer period as the Chief Executive may allow- (Amended 68 of 1999 s. 3)

(a) the signed annual report on the operation of each trading fund; and
(b) the certified statements and the report of the Director of Audit for each trading fund.

(Enacted 1993)

Section: 9 Investment of funds and borrowings 30/06/1997


(1) A general manager may invest trading fund money that is surplus to its immediate requirements in the
manner approved by the Financial Secretary.

(2) A general manager may not-
(a) make loans out of the trading fund; or
(b) borrow funds for the trading fund other than-

(i) from the Capital Investment Fund or the Loan Fund; or
(ii) by way of temporary overdraft facilities in the manner and up to the limit that the Financial

Secretary approves.
(Enacted 1993)


Section: 10 Surplus funds 30/06/1997


(1) If, after having regard to estimated future requirements of the operation of the government service
undertaken by a trading fund, the Financial Secretary is satisfied that any surpluses in the nature of distributable
profits disclosed in the certified statements are in excess of the reasonable requirements for the provision of the
service including the repayment of loans, the Financial Secretary may direct that the surpluses or a part of the
surpluses be transferred into the general revenue.

(2) If fees authorized by an Ordinance are structured so as to recover more than the cost of the provision of a
government service, including a reasonable return as set out in section 6(6)(c), the Financial Secretary may direct that
the whole or part of the fees as determined by the Financial Secretary to be more than the cost of the provision of the
service, including a reasonable return as set out in section 6(6)(c), shall, after collection, be paid from the trading fund
into the general revenue.

(Enacted 1993)

Section: 11 Application of the Public Finance Ordinance (Cap 2) 68 of 1999 01/07/1997


Remarks:
Adaptation amendments retroactively made - see 68 of 1999 s. 3


Part I (Preliminary), section 10 (General powers and duties of the Financial Secretary), section 16 (Duties of
Director of Accounting Services), section 28 (Guarantees), Part V (Surcharge), section 40 (Power of Chief Executive
to give directions), section 40A (Director of Accounting Services may give certain directions, etc. to public officers in
receipt of certain moneys) and section 43 (Effect of dissolution of Legislative Council) only of the Public Finance
Ordinance (Cap 2) apply to a trading fund.



Cap 430 - TRADING FUNDS ORDINANCE 4

(Amended 68 of 1999 s. 3)
(Enacted 1993)


Section: 12 Closing of trading fund 30/06/1997


(1) The Legislative Council may, on the recommendation of the Financial Secretary, resolve to close a trading
fund.

(2) The Financial Secretary shall set out the arrangements to be made for the closure of the trading fund in the
proposed resolution.

(Enacted 1993)

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