MACAU SAR, CHINA Trends and Developments Contributed by: João Nuno Riquito, Bruno Almeida, Belmiro Leong and Kimberley Cheong, Riquito Advogados
ties of modern business operations and international or inter-regional trading. The global regulatory environment is becoming increasingly rigorous, featuring a shift towards trans - parency, sustainability and more demanding risk man - agement. Due to the rapid digitalisation of commerce, the higher number of cross-border transactions and the increased expectations of global investors, the MSAR faces the need to evolve to a modernised CG framework, and it has been acting upon such demand. Accordingly, in recent years the Macau legislators (Macau Legislative Assembly; LegCo) passed legisla - tion to update the financing reporting standards and the complementary income tax regime (the latter in particular though the approval of the new Tax Code) to incorporate international trade practices. However, the pace of the modernisation of the Com - mercial Code is not on a par, and the Code is awaiting an overall review. Since its publication in the Official Gazette in August of 1999, the Commercial Code was only subject to a few (important, but not structural) amendments via the following laws: • Law 6/2000 introduced some amendments to the general regime on the incorporation and manage - ment of companies and reviewed the provisions on the composition, appointment and termination of the management of limited liability companies by quotas (quota companies); • Law 16/2009 inter alia introduced various amend - ments on provisions related to shareholders’ general meetings and the terms and conditions for the advance payment of dividends to shareholders (Article 432-A); • Law 4/2015 mostly dealt with the elimination from the Macau legal system of the issuance and circu - lation of shares to the bearer, and with the requi- sites under which foreign entities having activity in Macau may be subject to certain provisions of the Macau corporate and registration laws; and • Law 18/2024, as part of the overall digital reform of the land and companies registers and of the notary practice. The stagnation of the Commercial Code is particularly reflected in the lack of systematic regulation for cor -
porate group structures. In modern times, businesses often operate through complex networks of subsidi - aries, affiliates, branches, special purpose operation vehicles, joint ventures (incorporated and unincor - porated), etc. Macau’s legal system currently lacks a dedicated CG framework that allows updating of the intra-group liability or fiduciary duties of directors who serve multiple entities within a conglomerate. On the other hand, it lacks modern mechanisms to ensure the transparency of the members of corporate bodies, in particular within boards of directors. The Commercial Code, besides a general provision to act in a diligent manner and in the best interest of the company, only provides for a general prohibition of deals between directors and the companies (Article 460 of the Commercial Code) and prevents shared seats between management and supervisory bodies (Article 240 of the Commercial Code). The system continues to rely on traditional mechanisms such as shareholders’ information rights, periodical election of directors and corporate bodies in general, the possi - bility of their removal with and without cause, and ex post facto liability. These governance measures are inherently reactive and defensive. They operate based on a remedial logic whereby stakeholders are often only able to intervene once management’s actions have already caused harm to shareholders or have already affected the value of corporate assets. This defensive govern - ance lacks a proactive preventive approach, where real-time monitoring and risk mitigation intervenes beforehand. At the disclosure and transparency level, it should be noted that the vast majority of companies incorporat - ed in Macau, or subject to the Macau companies’ laws and regulations, are not subject to external auditing of their accounts, nor do they have to make their quar - terly/yearly results available for public consultation; only financial institutions (under Law 13/2023), gam - ing concessionaires (under Law 16/2001, as amended by Law 7/2022), concessionaires of public services in general (under Law 3/90/M) and public capital com - panies (under Law 16/2023) are subject to such dis - closure obligations and hence to the public’s scrutiny.
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