MACAU SAR, CHINA Law and Practice Contributed by: João Nuno Riquito, Bruno Almeida, Belmiro Leong and Kimberley Cheong, Riquito Advogados
6. Shareholders’ Rights as Regards Directors and Auditors 6.1 Rights to Appoint and Remove Directors General Partnerships Unless the articles of association regulate to the contrary, directors who are shareholders can only be removed if there is cause, by a resolution approved by the majority of the remaining shareholders, or by a court decision in proceedings initiated by any of those shareholders. If the company only has two shareholders, or if the shareholder to be removed is appointed as such by a special clause in the articles of association, the removal can only be decided by a court. A director who is not a shareholder can be removed at any time by a shareholders’ unanimous resolution, or by major- ity only when with cause (Section 345). Limited Partnerships Unless the articles of association regulate to the con- trary, the directors who are unlimited liability share- holders can only be removed if there is a justified reason, by resolution approved by the majority of the remaining unlimited liability shareholders and the majority of limited liability shareholders, or by a court decision from proceedings initiated by either of those shareholders. If the company only has one or two unlimited liabil- ity shareholders and they are the only directors, the removal can only be decided by a court and with cause. A director who is not a shareholder can be removed at any time by getting the same number of votes necessary for their election; if there is a justified reason, it is only necessary to get votes from a major- ity of the shareholders of limited liability and from a majority of the shareholders of unlimited liability (Sec- tion 353). Limited Liability Companies by Quotas Shareholders can resolve on the removal of directors at any time. The articles of association can establish that the removal of one or more directors has to be resolved by a qualified majority. If a shareholder is granted a special right to the management of the com- pany (which must be stipulated in the articles of asso-
ciation), they can only be removed by court decision, not by a shareholders’ resolution. Any director can be removed with cause, by means of court decision, or per the request of any other share- holder or director. “Cause” means a material or con- tinuous breach of the director’s duties, understood as the failure or undue delay to register facts or acts that must be registered, the failure to maintain the compa- ny’s books in proper order and to keep them updated, and the exercise of competing activities (Section 389). Limited Liability Companies by Shares A director’s mandate can be terminated at any time by a shareholders’ resolution, without prejudice to the compensation rights granted to such director, particu- larly if terminated without cause. Shareholders holding 10% or more of the capital may request the court to terminate a director’s appointment with cause at any time (Section 463). Please refer to 2.8 Shareholder Approval , 2.3 Proce- dure and Criteria for Calling a General Meeting and 2.6 Quorum, Voting Requirements and Proposal of Resolutions for further detail. The election and remov- al of the members of a board of directors are resolved by shareholders in a general meeting. 6.2 Challenging a Decision Taken by Directors Directors are also liable for the actions made and deci- sions taken in the exercise of their duties. Please refer to 10.2 Remedies Against the Directors regarding actions and remedies against the directors. 6.3 Rights to Appoint and Remove Auditors The supervisory body is not mandatory for all types of companies. If a company is obliged to have a super- visory body, or chooses to have one, the respective duties shall be trusted to: • a single supervisor, who must be a registered audi- tor or an auditing firm; or • a supervisory board, composed of three members, one of whom must also be an auditor or audit firm. The single supervisor or the supervisory board is appointed by resolution of the shareholders in the annual general meeting, and generally stays in office
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