Macau Banking And Financial Services Overview – Legal Update

12 September, 2019

 

Introduction

 

Since 2018, much has happened in Macau's legal-financial sector. In summation: 

 

• two laws were approved;
• two laws remain under discussion by the Macau legislature; and
• three sector newcomers entered the market, including an innovative entity relating to financial assets transactions.

 

Legislative developments

 

In 2018 and 2019 the legislature approved the following laws to reinforce Macau's economic stability and international

fiscal cooperation:

 

• Law 4/2018 of 12 March 2018 (Amendment to Law 9/2012 – Deposit Guarantee Scheme) – which simplifies the calculation of compensation due to depositors by switching from the 'full netting' to the 'gross payout' approach; and
• Law 15/2018 of 27 December 2018 (Abolishment of the Offshore Regime) – which responds to the possibility of being included in the EU list of non-cooperative jurisdictions in tax matters. All authorisations for offshore companies will expire on 1 January 2021 (for further details please see "Macau Sino-Portuguese offshore activities").

 

Further, the government put forth for discussion the following draft laws to stimulate diversification in the economy and encourage the development of the financial leasing industry:

 

• the Draft Tax Advantage Scheme for Financial Leasing Law – which provides stamp duty and profit tax exemptions for elevating Macau's ability to attract the establishment of financial leasing companies and the development of their activities; and
• the Draft Financial Leasing Companies Act – which:
  • redefines financial leasing companies from 'credit institutions' to 'financial institutions' subject to lighter regulation;
  • provides a legal definition of 'affiliate companies' for financial leasing;
  • lowers the registered capital requirement for the establishment of a financial leasing company to MPtc10 million (approximately $1.2 million); and
  • establishes respective penalties for protecting the act's effectiveness.

 

 The above draft laws were approved by the legislature on 21 March 2019.

 

Real-world newcomers

 

In the past year, Macau has welcomed numerous newcomers to the banking and financial sector with the following

executive orders:

 

• Executive Order 69/2018 of 25 April 2018 – which authorises the constitution and functioning of a bank under the trade name Xinghui Bank Limited and imposes of a minimum registered capital requirement of MPtc100 million;
• Executive Order 101/2018 of 21 September 2018 – which authorises the constitution and functioning of a bank under the trade name Macao Development Bank Limited and imposes a minimum registered capital requirement of MPtc1 billion; and
• Executive Order 94/2018 of 13 August 2018 – authorising the constitution and functioning of a financial institution under the trade name Chongwa (Macao) Financial Asset Exchange Co, Ltd for providing services relating to financial assets transactions and imposes a minimum registered capital requirement of MPtc120 million.

 

Exciting news

 

Among the newcomers, one stands out: financial institution Chongwa (Macao) Financial Asset Exchange Co Ltd(MOX), which is reputed to be the first entity authorised in Macau to perform debt securities registration, custody, settlement and clearing services.

 

The debut financial products listed by MOX were a Hong Kong dollar-denominated bond of Luso International Banking Limited and a Macanese pataca-denominated bond of Bank of China Limited, Macau Branch.

 

Going forward

 

With Macau's government and legislature growing more resolute, further diversification and progress in the banking and financial sector are anticipated in 2019 and 2020. Additional measures are expected to develop the Guangdong-Hong Kong-Macao Greater Bay Area, particularly to overcome the challenges presented by today's cross border financial activities.

 

This update was first published in the International Law Office Offshore Services Newsletter – www.internationallawoffice.com.