The Macau land law: Overview and status quo

1. The old law vs the new law

Much has been said and written about the expiration of concession leaseholds under Law no. 13/2013, of 2 September (the “New Land Law”), as opposed to the former Law no. 6/80/M, of 5 July (the “Old Land Law”).

In comparative terms, it should be noted that there are very little differences between the Old Land Law and the New Land Law, within the relevant controversial context, with particular emphasis to the preclusion of renewal of the provisional concessions as set forth by the New Land Law – within the terms set in paragraph 1 of its Article 48.

In this sense, a closer look at the Old Land Law and the New Land Law reveals that the previous article 55 and the current article 48 both converge on the understanding that there is no room for land lease renewal within provisional concessions, as this merely applies to definitive ones.

What did in fact change is the Government’s disposition towards the matter, now choosing to terminate the concessionaires licence due to expiration and to withhold any further concession leasehold awards, whereas in the past, it was customary practice from the Government to declare the expiration of the concession leaseholds due to term expiration, alongside the decision to regrant the licence with exemption of public tender, on the grounds of public interest – as shown, e.g. by Dispatch of the Secretary for Transport and Public Works No. 20/2006 –.

This decision has ultimately led to entirely unreasonable, disastrous and unfair economic and social practical results – which were certainly not the goals pursued by the legislator when the New Land Law was discussed and approved –, thereby sentencing to death the validity and effectiveness of legal instruments such as contracts of developers with promissory buyers by the thousands, as well as the concessionaire’s trust alongside with that of the investors and the general public, ultimately jeopardizing a massive volume of legal transactions.

2. How has the New Land Law been applied?

From this viewpoint, both the Administration and the Macau Courts have consistently made it clear that once the provisional concession period has expired without it becoming definitive – i.e., without developing the land within the (development) period set out in the contract – the concession shall be deemed expired ipso facto, simply due to a mere passing of time and regardless of whether or not the land was effectively used by the concessionaire, and whether or not the concessionaire was at fault for the non-development of the land.

This claim is sustained by the notion that in such cases there would be no other alternative for the Chief Executive except to declare the expiration of the concession leaseholds, and therefore honour the principle of administrative legality and legal security and certainty.

In truth, the aforementioned understanding is based on a possible interpretation / application of the New Land Law, but it is certainly not what this legislation had initially intended for, and neither does it comply with the Macau legal system as a whole. Also, the said interpretation is seemingly inconsistent with the land concession leasehold regime, and it does not benefit the enforcement of the principles on which such interpretation is supposedly based, namely the principle of legality and the principle of security and certainty of the legal trade.

3. There are other interpretations

Following a close scrutiny of the New Land Law’s legal framework it is not entirely difficult to find other viable and more suitable interpretations which, although they may follow a different dogmatic approach to the matter, are however more beneficial, revealing a more harmonious outcome and leading to a better aligned and overall fairer legal system. This might allow for the period of the concession leaseholds to be legally and legitimately extended (and not renewed), suspended, and more importantly, for the provisional concession to be converted into a definitive concession.

Let’s have a closer look at these alternative interpretations:

  1. The concession leasehold as a surface right

    The scope of the concession leasehold is first and foremost to grant powers to build, transform or maintain the works for the purposes set forth in the respective title (vide article 42 of the New Land Law).

    Granting the concessionaire powers to maintain the works on the concessioned land, which were absent from previous laws, which only mentioned powers to build and transform, is symptomatic of the New Land Law’s acknowledgement of the confluence of the substance of the right arising from the concession leasehold and the surface right.

    On the other hand, the concession itself is governed by contract and additionally by civil law, according to article 41 of the New Land Law.

    With regard to the expiration period, it is clear from the surface right’s regime set out in the Civil Code (vide paragraph 3 of Article 1427 of the Civil Code) that the termination of the surface right by way of lack of use after 7 years is subject to the rules on the suspension and interruption of the limitation period.

    Therefore, in cases where the Government has deliberately prevented the concessionaire to develop the land within the stipulated term, there are grounds to suspend the time period given to exercise the right, pursuant to paragraph 2 of art. 313 of the Civil Code.

  2. Expiration as a punitive sanction

    On the other hand, should it be chosen to dismiss any discussion around the nature of the provisional concession period (expiration / limitation period), the fact that should also be considered is that (and contrary to the current understanding of the Macau Courts) the New Land Law prescribes an expiration regime which itself is a true punitive expiration, as in fact already did the Old Land Law. In this sense, and to the extent that the expiration of the provisional concession is associated with the failure to carry out the development, it always bears a punitive intent, aiming to sanction the concessionaire who failed to develop the land due to his inertia or negligence.

    Consequently, when expiration is invoked due to failure to comply with obligation to develop the land within the concession’s set term, the following circumstances must be verified simultaneously:

    1. expiration of the concession leasehold period;
    2. whether the land was in fact developed or not;
    3. failure to carry out the land development; and
    4. whether such failure was due to a breach of the contract’s development clauses attributable to the concessionaire;

    Therefore, only in case all of the abovementioned conditions are met will the declaration of expiration be legitimate.

  3. The condition thesis

    From a different perspective, it should also be noted that the land development is itself a condition for converting the provisional land concession into a definitive concession.

    As such, under paragraph 2, article 268 of the Civil Code, such condition is considered to have been met should the land development be barred, in breach of good faith, by the obligee.

    Now, let’s assume that the lack of development is due to the Government’s decision to suspend works and carry out an assessment of development projects aimed at approving a new urban plan, and such approval is pending for over a decade. In this case, the Government is exclusively liable for the fact that the building was not constructed and the land not developed, which was a resolutory condition of the concession’s provisional nature and a suspensive condition of its definitiveness.

    Therefore, in this case one can argue that the aforementioned condition was not fulfilled due to fault of the obligee and should be considered applicable by analogical application paragraph 2 of article 268 of the Civil Code.

  4. Extension / Suspension

    Lastly, articles 103 and 104 of the New Land Law provide that the term for development can be suspended or extended in the event it is not attributable to the concessionaire the failure to carry out the necessary steps in the development within the indicated term, and the Chief Executive deems the reasons invoked admissible.

    In light of such circumstance, should it be assumed that the referred suspension or extension is included within the time-limit for the concession period?

    The New Land Law provides no indication to the contrary. What would happen if under the abovementioned provisions the development period was suspended for such an extended period of time that it would inevitably cause the concession period itself to be exceeded? Would the provisions set out in article 48 of the New Land Law be applicable unconditionally? It does not seem a judicious understanding.

    In fact, the extension of the leasehold period does not consist on a renewal (the extension is not automatic and is only granted for a strictly necessary period of time), and the fact that the New Land Law states that the concession period cannot exceed the duration of 25 years does not necessarily mean that the land concession overall duration might not exceed the said 25 years, suspensions included. Should there in fact be a suspension, the leasehold period reaches a standstill and therefore the same is not increased.

4. Conclusion

Although different legal solutions and interpretations consistent with the New Land Law’s ratio and sentiment of justice do exist, it is by far convenient that a matter of such importance as the one under scrutiny is carefully analysed and made uncontentious for the sake of security and stability of the legal trade in Macau. This may only be achieved by manner of legislative intervention, which is in fact badly needed.

32nd Birthday of Manuela Antonio Law Firm

It is with great pride that we commemorate yet another birthday here at our law office, crossing milestone after milestone in our already rich history. On the 28th of this month our firm completes 32 years of its establishment. We take this occasion to thank the support of our excellent team of collaborators, and indeed of our loyal clients for their priceless aid in our success.

As usual, our law office stands tall amongst the professional leads of the time, with countless achievements and accomplishments along the years, including this year which proved to be exceptionally productive.

In fact, this year has surpassed the impressive figure of more than 15000 clients.

Also, we won numerous awards, among which the prestigious International Financial Law Review’s market leader award for the principal of our firm Manuela Antonio, as well as the Chambers and Partners top tier law firms.

On the other hand, and looking towards the future generation of lawyers, our firm has also grown larger on the inside, adding three new trainees to our already capable team of counsels.

As always, we plan on keeping our professional relationship with our clients thriving, and to continue providing the excellence that throughout the years has constantly accompanied the name of our law office. Another year, another shower of success!

Happy birthday to us!

Macau Perspective over Financial Derivatives

Derivatives are financial instruments that result from fixed-term contracts whose value is ascertained by reference to a specific underlying asset or group of assets that play a very important role in the financial markets.

Other than its speculative purpose, derivatives are nowadays a useful risk management tool at disposal of financial institutions to cover exposures to important risks inherent to market variations like interest rates, currencies, index, etc.

Although derivatives can be traded on organized market places, they are predominantly traded over-the-counter (OTC). According to figures disclosed by the Bank for International Settlements, in the end of 2017 the global market for OTC derivatives amounted to more than 531.91 trillion US Dollars, and derivatives traded on organised markets amounted to 33.1 trillion US Dollars.

When trading in a OTC market, the counterparties commonly agree to govern their arrangements by standard terms and conditions (Master Agreement) drafted by worldwide recognized expert organizations like ISDA – International Swaps and Derivatives Organization.

However, when negotiating OTC Master Agreements across different jurisdictions, lawyers and legal counsels are frequently concerned about the validity and enforceability of the netting and close out netting provisions laid down in such contractual standards.

Although the Macau Legal System does not contemplate a definition of derivatives, it however recognizes this kind of financial instrument under the paragraphs e) of article 17.º of the Decree-Law no. 32/93/M of 5 July 1993 (Macau Financial System Law) and of paragraph c) of article 12.º of the Decree-Law no. 25/99/M of 28 June 1999 (Asset Management Companies Law) as regards to the activities that either Banks and Asset Management Companies are allowed to perform.

As in many other jurisdictions, Macau insolvency rules are deemed to be part of public policy and so, although the Parties are allowed to validly choose a foreign law to govern their Master Agreement, in the insolvency scenario the Macau Law shall prevail.

In such case, the enforceability of netting and close out netting provisions foreseen in OTC´S Master Agreements becomes quite problematic. Indeed, provided that the status of insolvent is declared by Macau Courts, it will be impossible to proceed with any set-off with regard to the credits / liabilities of the insolvent party, which shall be frozen and under control of Court-appointed administrator. As such, in our jurisdiction the set-off provisions will only operate, in principle, until the start of any insolvency proceedings against a Macau Counterparty.

In conclusion, Macau is not, for the time being, a “friendly jurisdiction” to netting provisions, although pursuant to the n.º 4 of the article 6.º of the Macau Financial System Law, the local regulator (Monetary Authority of Macau – AMCM) has the authority to enact regulatory requirements towards the establishment of automatic compensation mechanisms. Legislation clarity is therefore a must-do task that the local authorities shall have to embrace in order to create a proper environment in the business development of derivative instruments in Macau.

Weapons and Ammunition Regulation

Two weeks ago, tragedy struck the United States of America after a gunman rampaged through a high school in Parkland Florida killing 17 people. The occasion quickly gave rise to a yet another nationwide discussion over gun control, regarding whether it is appropriate to implement rules limiting the access and ownership of guns – and the respective type of weaponry.

In the context of this discussion, we have decided this month to take a glimpse at our laws concerning gun ownership and usage. In fact, gun control regulations have been in place for a long time in the Macau SAR. At least since 1973, since the approval of the first Weapons and Ammunition Regulation, the possession of any firearm or other object normally used by security forces, among others, is regarded as a weapon and requires a license issued by the Public Security Police.

After 1973, two other pieces of legislation were further approved, namely Decree-Law no. 11/93/M – which reviewed the sanctions for the possession, usage and bearing of weapons – and Decree no. 139/SAS/99 – setting annual fees to be charged for issuing or renewing licenses for the usage and possession of defense and competition weapons and for issuing authorizations for possession of collection items.

The said legislative diploma no. 21/73, the Weapons and Ammunition Regulation, then underwent a major revision, in order to bring it in line with the current times, namely given the considerable technical and technological evolution of weaponry in general. The result of such review was Decree-Law no. 77/99/M, which was approved and published in the Official Gazette on 8 November and thus entering into force 30 days later in the same year, having revoked the majority of the previous legislation.

The legislator began by classifying the different existing weapons, separating self-defense weapons from competition, ornamental and collection weapons, and also defining forbidden weapons and ammunitions

In Macau, the license for usage and possession of a defense weapon may be granted to a common citizen provided that the necessary legal requirements are observed. Accordingly, these defense weapons consist of pistols and revolvers of a caliber not exceeding 7,65 mm (•32) and having a barrel length not exceeding 10 cm. It should be stressed that this is no ordinary license, and the administration holds a high degree of discretionary power in the process and under substantial criteria, which results in the fact that only a few are able to meet the administration’s standards for holding a gun. The conditions set by law to obtain a license are as follow:

  1. to be of age;
  2. to show adequate moral and civil creditworthiness;
  3. to show the need to carry a weapon for personal or family-related defense, due to special life situations or the risk inherent to carrying out a given professional activity;
  4. to have basic weapon handling ability.

On the other hand, certain political and government official entities benefit from a special exemption which entitles them to the possession, usage and bearing of any of the aforementioned defense weapons without having to apply for a license. They are, namely:

  1. The Chief Executive and the President of the Legislative Assembly;
  2. Ministers or equivalent entities;
  3. Members of the Legislative Assembly;
  4. Judges and Prosecutors;
  5. Other entities exceptionally authorized by the Chief Executive.

Other important aspects are also regulated in this diploma such as internal and external weapons and ammunitions sale, other registrations, exchange of weapons between license holders, among others.

As far as sanctions are concerned, the regime prescribes a wide range of fines applicable up to the amount of 200,000.00 patacas, without prejudice to criminal liability in the more serious offences.

We would like to finish by highlighting that our system does not provide for a constitutional right to bear arms – unlike in the United States of America, in which the Second Amendment to the United States Constitution protects the right of the people to keep and bear arms since 1791 – and overall, the access to firearms is, in the Macau SAR, as aforementioned, quite restricted.

Amended tenancy regime comes into force

As you might recall from our previous article back in October 2017, the Macau SAR Legislative Assembly approved on 21 August 2017 the amendment of the tenancy regime provided in the Macau SAR Civil Code, setting it to come into force within 180 days after its publication in the Macau Official Gazette. In other words, the new tenancy regime will come into effect on 21 February 2018.

The said legislation altered articles 1015, 1032 and 1038 of the Macau Civil Code and established an Arbitration Center for Tenancy Disputes. In this last regard, it should be noted that the implementation of the said arbitration center is referred to the Chief Executive, which has yet to issue any ordinance in that regard. In any case, the law hints that the arbitration will be voluntary and thus the parties will still be able to resort to the courts directly.

As we previously stated, the major changes to the tenancy regime concern, on the one hand, the need for the parties’ signatures on the tenancy agreement to be notarized and, on the other hand, that the unilateral termination by the landlord (without cause attributable to the tenant) can only be effected after a three-year tenancy term.

Accordingly, landlords might consider including additional safeguards in the tenancy agreements to alleviate the said restrictive provisions that were imposed with the new law, while tenants should be aware of the additional protection granted with the amendments to the regime.

As usual, we remain fully available to provide any clarification as deemed necessary.
We also take the opportunity to inform that during the Chinese New Year, we will be closing slightly earlier on the 15th of February and closed all day during the 16th and 19th.

Until next time!

Macau, 28 January 2018

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* Sai Van Lake – recorded by a hobbyist photographer lawyer of the office

Animal Protection Law

Here at Manuela Antonio – Lawyers and Notaries, aside from our utmost commitment to our clients, we care deeply for the Macau SAR community with whom we have an established connection which dates back to over three decades. In fact, we have not only seen the ups and downs of the community but also celebrated its victories whilst sharing the not so cheerful moments that it had to endure.

Although scarcely in the past, animal welfare is an ever-increasing concern of our citizens. In fact, a new wave of trendy global concerns of this nature has seemingly sensitized the general public. The past recent years have brought to light a few animal-friendly institutions such as ANIMA (2003) and the Macau Animal Rescue Association (2009), seeking to turn the region into a role model community in terms of awareness and prevention of neglectfulness and cruelty to animals. And unavoidably reaching the governmental entities as well. Under the authority of the Civic and Municipal Affairs Bureau (“IACM”), the subunit “Division of Animal Control and Inspection” was created in 2002, seeking to safeguard the public health, preventing the spread and outbreak of animal-borne diseases, and raising the public’s awareness of their civic responsibilities in raising pets.

Moreover, the trend also developed a sense of growing awareness in the local legislator, having meanwhile created important general regulations tackling the matter such as the Administrative Regulation no. 28/2004 – regarding the Approval of the General Regulations Governing Public Places. The law sets requirements in terms of cleanliness, personal hygiene and public health and protecting natural environment as well as the balance of a variety of habitats, including that of domestic pets. Also, the said regulation was followed by two executive orders stating a list of contraventions and other relevant additional provisions – Chief Executive Orders no. 106/2005 and 432/2005).

While the said regulations did not address specifically the issue of animal protection, it somewhat paved the way for Law no. 4/2016, also known as the Animal Protection Law. This legislative piece, which was published in the Macau Official Gazette on July 25 and came into force on September 1st, 2016, among other provisions, prohibits and punishes cruelty and violence towards animals, especially actions that may subject the same to pain and suffering.

Accordingly, animal owners are in general prohibited from abandoning their pets and must provide food, drinking water, sufficient space for free movement, proper living conditions, and necessary preventive and medical care to animals. One of the most controversial issues that arose during the legislative debates on the law was the mandatory requirement of muzzles in public areas (including public spaces in buildings) for dogs that weigh 23 kilograms or more, or those considered dangerous by the IACM (in alternative to a muzzle, it is possible to opt for a cone collar). It should be noted, however, that dog owners may apply for a license to exempt certain dogs from such requirement.

In addition, dogs must be leashed or put in carriers when in public areas. Also, all dogs living in construction sites and junkyards must be neutered and owners or the people responsible for those sites must cooperate with government authorities when the latter perform their relevant duties in that regard. The law further enlists which animals are not allowed to be used for human consumption and expressly provides for a prohibition of the instigation of animals to fight. Animal usage for scientific research is also an important aspect regulated by the Animal Protection Law, as well as the mandatory registration of animals used in competitions.

In terms of liability, perpetrators may face criminal charges, punishable by a one-year term of imprisonment, as well as administrative sanctions of up to MOP100,000 in fines and other additional penalties such as depriving the owner of the animal’s care, the prohibition on the acquisition or breeding of animals for a period of up to 2 years, the disqualification from the practice of commercial activities linked to any kind of animals for a period up to 2 years, and the temporary closure of a given shop or business for a period between 1 month and 1 year.

Subsequently and following the enactment of the Animal Protection Law, other animal-friendly legislation has been approved: Chief Executive’s Notice no. 355/2016, regarding the prohibition of obtaining, raising, breeding or importing animals of specific species and Law no. 2/2017, which seeks to enforce in the Macau SAR the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

As concerned citizens and seeking to fulfill our referred commitment as members of this great community, our office is proud to have recently made a donation to ANIMA – we had the honor of having been received by the organization’s President and delivered the cheque personally.

Until next time!

Macau, 28 December 2017

Manuela António Lawyers and Notaries turns 31

Today, 28 of November, is a very special day for our law firm as we turn 31!

Given another successful year and due to our Corporate Social Responsibility policies, we decided this year to make a donation to the Society for the Protection of Animals (Anima) in order to help man’s best friends!

We also take this opportunity to send a special thanks to Anima and to Dr. Albano Martins for receiving us and for all of the excellent work being done!

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Law no. 13/2017 – Amendment of the Macau Civil Code tenancy regime

One of the consequences of the astounding growth of the Macau Special Administrative Region of the People’s Republic of China after the end of the gaming monopoly has been the asset value increase in the real estate market. In this overnight success that transformed what was formerly a fisherman’s bay into the largest gross income casino industry in the world, the Macau SAR also achieves the feat of having the most densely populated city in the world – more than 20,000 people per square kilometer.

It is said that the real estate market in the Macau SAR is and has been for the past decade slightly unbalanced in the sense that there is excessive demand for a reduced supply, having led to the referred increase of the transaction prices and, consequently, in the rents charged. As a result, the legislator even considered, based on the demands of a group of citizens, implementing a rent control mechanism, later dropped as it would constitute an excessive intervention of the Government in the rental private market.

Taking into account the herculean challenge of establishing an equilibrium between keeping the Government away from intervening in the market (a cornerstone of the Macau SAR economy), and ensuring a minimum level of protection to the lessee (deemed the weaker party in a lease relationship), the Macau SAR Legislative Assembly amended a few provisions of the Civil Code tenency regime, as per the new bill promulgated on 21 August 2017 and which will come into force within 180 days after its publication in the Macau Official Gazette, meaning 21 February 2018:

(i) the execution of the tenancy agreements should be subject to notarization (meaning the signatures therein must be certified by a Macau SAR notary, (ii) the period during which the landlord cannot exercise the right to prevent the renewal of the lease agreement is extended from two years to three years, (iii) the landlord is allowed to proceed directly to enforcement proceedings in case the signatures of the parties in a tenancy termination agreement were notarized; and (iv) an Arbitration Center is established to resolve tenancy disputes (which mode of operation and structure will be detailed in a dispatch from the Macau SAR Chief Executive).

As always, given our long experience in real estate transactions and lease agreements, our team remains ready and willing to advise in any specific matter in this regard.

Macau, 28 October 2017

Law no. 12/2017 – Condominium management services

It became clear, after the massive building construction which strongly influenced the economy in the Macau Special Administrative Region of the People’s Republic of China during the past few decades, that the regulations governing condominium management had to be reviewed to meet the specific issues arising in the Macau SAR from the elevated concentration of condominiums, from the complexity of the inherent ownership relations and to maintain or increase the standards of the provision of condominium management services.

In the Macau SAR, condominium management services tend normally to be provided by the so-called developers (meaning the entities that construct the buildings) or arranged by the unit owners themselves, and thus the law should seek to improve such services and to ensure that the entities providing the same are subject to proper supervision.

In a government-initiated bill, and after a great deal of effort from the Macau SAR Legislative Assembly, the latter approved a diploma regulating the condominium management services, which was promulgated in the Macau SAR Official Gazette on the 21 August 2017 and is slated to come into effect exactly one year after.

In a nutshell, the legislation focuses on (i) regulating the access and provision of condominium management services in the Macau SAR, (ii) improving the overall management of the common areas of the condominiums, and (iii) tackling the condominium management-related disputes between the condominium management committees and condominium management companies.

The major aspect of this new law is evidently the fact that the provision of condominium management services now becomes subject to licensing by the Housing Bureau, which is valid for a period of 3 years and cannot be transferred to another entity. Among the requirements to obtain a license, the company must have its registered address in the Macau SAR, its business scope must include condominium management services, its registered capital must be a minimum of MOP 250,000, at least one specialized manager, the directors must be in good standing and the entity proposing to conduct such business cannot have any debts to the Macau SAR Treasury.

Moreover, in order to provide condominium management services, the entity must effect a deposit with the Macau SAR Government as well as comply with several obligations in the provision of such services (such as preparing the annual accounts of the previous year and the budget for the upcoming one).

Finally, licensed entities are obliged to notify the Housing Bureau within 30 days of the occurrence of the situations provided in the law, such as the commencement of bankruptcy proceedings or the change of the firm, registered office or directorship. Evidently, non-compliance with the said obligations can subject the entities to fines, suspension of the license or even its revocation and most notably to criminal liability (which, in some circumstances, can be imputable to the directors and others that exercise de facto senior management positions although not formally appointed as such).

Considering its practical and wide application, we recommend a careful analysis of the implications of the new law. Moreover, our dedicated team of property practitioners shall be glad to assist in any enquiries concerning this very important matter.

Law no. 7/2017 – the non-mandatory central provident fund

Macau’s latest provident fund scheme for the private sector

Seeking to strengthen the social security scheme in the Macau SAR and its existing provident fund scheme, the Social Security Fund (SSF) ran a detailed study and a public inquiry on the peoples’ thoughts and remarks regarding the creation of a central provident fund. Thereafter, the Macau SAR Government submitted a proposal to the Legislative Assembly for the implementation of the said new central provident fund scheme, based on the modus operandi of the private pensions’ schemes.

The law was subsequently approved with the clear objective of ensuring a sustainable retirement plan for the Macau residents, based on the contributions of both employers and employees (or individuals if that is the case), as well as from the Macau SAR Government. In this regard, it is worth noting that given its non-mandatory nature, the law includes incentives to the employer such as tax benefits.

Simply put, the new law, published in the Macau Official Gazette on the 19 June 2017, defines the participation in a non-mandatory central provident fund scheme, providing that the access to the same can either derive from an agreement between the employer and its respective employee or through a voluntary individual application.

Within this legal framework there are two main functioning schemes: (a) the contributive regime, implemented through voluntary participation under provident fund plans, and (b) the distributive regime, which is implemented through transfer of funds from the Macau SAR’s public purse to its residents.
As specified in the law, the main purposes of the non-mandatory central provident fund scheme are (i) the reinforcement of the social protection of the Macau SAR residents in old age, and (ii) complementing the existing social security scheme.

It is stated that the SFF will be the entity responsible for executing the law, namely establishing and supervising the non-mandatory central provident fund, namely ensuring the automatic opening of individual accounts for every Macau resident over 18 years old (although it can also include younger residents if the same are enrolled on the Social Security scheme), which is composed by three subaccounts: government contributions, general contributions and maintenance.

In respect to the individual account holders of the non-mandatory central provident fund scheme, the law states that they can only access the funds when reaching 65 years of age or prior if under certain circumstances such as serious illness or when faced with substantial medical expenses. The scheme is considerably flexible in the sense that it is not susceptible of being canceled merely on the grounds of the termination of the employment.

Meanwhile, the government contributions subaccount is managed by the SFF, whereas the general contributions and maintenance subaccounts are managed by the management entities of the respective pension funds from which they originate from.

To ensure proper and adequate enforcement of the provisions, the law also encompasses a sanctions framework, including administrative sanctions, but also criminal liability in the more serious cases.

The new law comes into force on 1 January 2018.

As usual, we are fully available to elaborate on the particular features of the law, namely the advantages and obligations for the employers when applying for this non-mandatory central provident fund scheme. In our humble opinion, it is an option worth considering.