The Monetary Authority of Macao (AMCM) has recently issued the Guideline on Issuance and Information Disclosure of Corporate Bonds and the Guideline on Underwriting and Trustee Business of Corporate Bonds (collectively referred to as the “New Guidelines”). These guidelines, as stated in Circular No. 011/B/2023-DSB/AMCM, came into effect on 1 November 2023.
AMCM has established the Guideline on Underwriting and Trustee Business of Corporate Bonds pursuant to article 21(1)(6) of the Financial System Act (Law 13/2023): participation in the issuance, underwriting, and distribution of marketable securities or other financial instruments, as well as the provision of related services, are regulated financial activities that can only be carried out by specific licensed financial institutions.
The Guideline on Issuance and Information Disclosure of Corporate Bonds was established pursuant to Article 5 of the Financial System Act: any entity intending to issue bonds through public subscription in Macau must register with the AMCM or its designated organizations.
These two Guidelines introduce new or revised requirements for licensed financial institutions regarding the issuance, underwriting, and distribution of marketable securities or other financial instruments, as well as the provision of related services.
Previously, the relevant guidelines defined the modes of bond issuance as “Public Subscription” and “Non-Public Subscription”.
However, these definitions have been removed in the New Guidelines, and instead, the definitions of “Retail Bonds”, “Professional Investor Bonds”, and “Private Placement Bonds” have been adopted. Additionally, the previous guidelines regulated the “Pricing and Placing of Public Subscriptions” and “Pricing and Placing of Non-Public Subscriptions” for bond offerings. In the Guideline on Underwriting and Trustee Business of Corporate Bonds, these have been replaced with “Pricing and Placing of Retail Bonds and Professional Investor Bonds” and “Pricing and Placing of Private Placement Bonds”, respectively.
The main regulatory requirements for the issuance of various types of bonds in Macau set out in the Guideline on Issuance and Information Disclosure of Corporate Bond(the “Guideline“) are summarized below :
| Types of Bonds | Conditions of Issue | Information Disclosure Requirements | ||
| Contents of the Offering Circular | Interim and Annual Reports | Disclosure of Material and Other Matters | ||
| Retail Bonds | Paragraph 4 of the Guideline | Paragraph 5.1 and Part I of Annex I of the Guideline | Paragraph 5.2 and paragraph 1 of Part I of Annex II of the Guideline | Paragraph 5.2 and paragraph 2 of Part I of Annex II of the Guideline |
| Professional Investor Bonds | Paragraph 4 of the Guideline (except paragraph 4.2) | Paragraph 5.1 and Part II of Annex I of the Guidelines | Paragraph 5.2 and Part II of Annex II of the Guideline | Paragraph 5.2 and Part II of Annex II of the Guideline |
| Private Placement Bonds | Paragraphs 4.3-4.4 of the Guideline | Paragraph 5.1 and Part III of Annex I of the Guideline | Paragraph 5.2 and Part III of Annex II of the Guideline | Paragraph 5.2 and Part III of Annex II of the Guideline |
The main regulatory requirements for the underwriting and the trustee Business for various types of bonds issued in Macau under the Guideline on Underwriting and Trustee Business of Corporate Bond(the “Guideline“) are summarized below:
| Types of Bonds | Underwriting Business | Trustee Business |
| Retail Bonds | Paragraphs 4.1, 4.2, 4.3.1 – 4.3.6, 4.4 and 6 of the Guideline | Paragraphs 5 and 6 of the Guideline |
| Professional Investor Bonds | Paragraph 5 (except paragraph 5.1.1 c)) and paragraph 6 of the Guideline | |
| Private Placement Bonds | Paragraphs 4.1, 4.2, 4.3.1 – 4.3.3, 4.3.7 – 4.3.8 and 6 of the Guideline |
Regarding the conditions and requirements for bond issuance, the Guideline on Issuance and Information Disclosure of Corporate Bonds has been amended.
The amendments now require the issuance of Professional Investor Bonds to be supported by three years of audited financial reports and a sound financial position, including a reasonable balance sheet and normal cash flow. Additionally, the most recent period’s net assets (excluding intangible assets) must exceed MOP100 million. The previous requirements of “the profits of the past three years must be after-tax profits” and “the average net profit after tax for the past three years must be 100% of the total annual interest payable of the bonds of the company to be issued” have been deleted from the previous relevant guidelines.
The Guideline on Issuance and Information Disclosure of Corporate Bonds is accompanied by two annexes. Annex I outlines the information disclosure requirements for the Offering Circular in the case of issuing Retail Bonds, Professional Investor Bonds, and Private Placement Bonds. Annex II regulates the continuous disclosure requirements for Retail Bonds, Professional Investor Bonds, and Private Placement Bonds throughout the lifespan of the bonds. Specifically, the conditions and contents of routine information disclosure and timely information disclosure are separately regulated for Retail Bonds.
*Please note that the text of this communication is of a general nature and should not be considered as a source of advertising, an offer of services, or legal advice. Readers should not solely rely on the information contained herein and should always seek the advice of a Macau qualified lawyer.
For further information, please contact:
Calvin Tinlop Chui , Partner, Rato Ling
chui@lektou.com
