MACAU SAR, CHINA Law and Practice Contributed by: João Nuno Riquito, Bruno Almeida, Belmiro Leong and Kimberley Cheong, Riquito Advogados
5. Dividends 5.1 Payments of Dividends
list of their qualified shareholders annually, as per Sec- tion 85, paragraph 1, subparagraph 9 of Law 13/2023.
The payment of dividends generally takes place once a year and follows the procedure outlined in the Com- mercial Code. After each financial year, the directors must prepare and approve the company’s financial statements, prepare a report and issue a proposal on how to allocate the year’s results, which they will then submit for approval by the shareholders. If the com- pany happens to have a supervisory body, it must also approve the year’s accounts before they are sent to the shareholders. At the annual general meeting, shareholders then resolve on the percentage of profit to be distributed and the amount to be kept in reserve. In a limited com- pany by quotas, at least 25% of the profits must be assigned to the legal reserve until it reaches half of the company’s share capital. In the case of limited liability companies by shares, at least 10% of the profits must be assigned to the legal reserve until it reaches one quarter of the company’s share capital. Despite these rules, the articles of association can state that a percentage ranging from 25% to 75% of distributable profits must necessarily be paid as dividends. Under special circumstances, the Commercial Code also allows limited liability companies by shares to distribute dividends during the second semester of the year, in the form of advance payments, provid- ed that such is expressly allowed by the articles of association. The procedure begins with the board of directors preparing an interim balance, certified by an auditor, which must both show the existence of amounts available for that purpose and demonstrate that the company’s net equity would not become less than the sum of the share capital, the legal reserve and the statutory reserve, if any, should the advance payments take place. Advance payment of dividends is limited to once every financial year and cannot exceed half of the amounts shown to be available in the interim balance.
4. Cancellation and Buybacks of Shares 4.1 Cancellation The Commercial Code stipulates the following two situations in which the company’s shares, after the issuance, can be cancelled by resolution: • shares can be cancelled as a means of reducing the share capital of the company (Section 265, paragraph 1); and • in both general partnerships and limited liability companies by quotas, shares will be cancelled by the effect of redemption, due to, for example, the exclusion or exoneration of the shareholders in a limited liability company by quotas (Sections 338 and 368). 4.2 Buybacks Only limited liability companies by quotas and limited liability companies by shares can buy back their quo- tas and shares, under the following terms. • In a limited liability company by quotas, the quota buyback is subject to shareholders’ resolutions. The quotas involved in the buyback operation should be fully paid up by the selling sharehold- ers and, after the operation, the net worth of the company’s assets should not be less than the sum of the share capital, legal reserve and compulsory reserves (Section 373). • In limited liability companies by shares, the buy- back is subject to shareholders’ resolutions and against payment of the selling shareholder. The shares should be fully paid up by the selling share- holder. As a general rule, the company cannot buy back its own shares corresponding to more than 10% of its share capital. After the buyback opera- tion, the net worth of the company’s assets should not be less than the sum of the share capital, legal reserve and compulsory reserves (Section 426).
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