Registration and De-Registration of foreign investment funds in Macau SAR

The Decree-law no.83/99/M of 22 November 1999 sets out the main rules applicable to investment funds in Macau Special Administrative Region of the People’s Republic of China (the “Macau SAR”).

The referred legal framework provides rules applicable namely to investment funds based in Macau SAR and to funds domiciled outside Macau SAR that intend to advertise and marketing fund investment units in Macau SAR.

  1. Procedure of registration of the Foreign Fund

Under the terms set out in Articles 61 and 62 of Decree-Law no.83/99/M of 22 November 1999, advertising and marketing in Macau SAR of investment fund units of funds domiciled abroad or managed by a management entity based outside Macau SAR (hereinafter referred as “Foreign Fund” or “Foreign Funds”) is subject to prior authorization by the Monetary Authority of Macau (the ”AMCM”). In other words, it is strictly forbidden under the terms of Macau Law to advertise and marketing in Macau SAR any fund units of Foreign Funds without obtaining the prior authorization of AMCM.

The nature of the Foreign Fund will determine if the petition to request the authorization with AMCM should be filed by the Manager entity of the Foreign Fund or by the Macanese distributor. In general terms, if the Foreign Fund qualifies as an open-ended type fund the petition should be filed by the Manager entity of the Foreign Fund. On contrary, if the fund qualifies as a close-ended fund said petition should be filed by the Macanese distributor.

It should be referred that petition requesting the authorization should contain the necessary information and documents to allow AMCM to assess if the Foreign Fund, Manager entity, Trustee and/or Custodian, fund units of the Foreign Fund are in accordance with Macau Law.

Notwithstanding the above, it should be noted that the referred authorization will only be granted by AMCM if the Foreign Funds have been duly authorized by the competent authorities of the country or territory of origin of the fund and if the Manager entity, Trustee and/or Custodian are subject to the supervision of the competent authority.

If the information and documents provided to AMCM are in accordance with its standards, the authorization should be granted. In accordance with our experience, AMCM usually takes one month – counting from the date of submission of all necessary information and documents – to issue an authorization letter to the Foreign Fund.

  1. After the issuance of the authorization

After the issuance of the authorization letter, the Foreign Funds may be advertised and marketed in Macau SAR.

In terms of marketing, it should be pointed out that any promotion in Macau SAR of the Foreign Funds must identify the Manager entity and the supervisory authority of the referred Manager entity as well as the Trustee and/or Custodian.

One important remark that should be taken into consideration, is that all changes to the main aspects of the Foreign Fund such as its designation, structure, change of the Manager entity, and/or of the Trustee and/or of the Custodian must be reported to AMCM within 30 days after the formal approval from the supervisory authority of the country or territory of origin of the fund.

In addition, AMCM must also be informed within 30 days as of the signing of any agency agreements with any new Macanese distributor. The AMCM must also be informed by the Manager entity on the termination of any agency agreement with any Macanese distributor.

If the Manager entity fails to comply with any of the referred obligations – as well with any other obligation referred to in the Decree-law no.83/99/M – it may be subject to the sanctions provided in the Financial System Act (Decree-law no. 32/93/M of 5 July).

 

  1. De-Registration of a Foreign Fund

The de-registration of the Foreign Fund before AMCM may be imposed to the Manager entity or may be voluntarily requested by the Manager entity.

If the supervisory authority of the country or territory of origin of the Foreign Fund withdraws its authorization, the Manager entity should stop immediately advertising and marketing the fund units in Macau SAR. In this scenario, the Foreign Fund investors in Macau SAR must be immediately notified by the Manager entity. The Manager entity must also file a petition with AMCM requesting the revocation of the authorization for the marketing and advertising of Foreign Fund in Macau SAR.

The de-registration of the Foreign Fund with AMCM may also occur if the Manager entity wishes so. In this case, the Manager entity must give a prior written notice of at least three months to the investors in Macau SAR of such fact. Moreover, the Manager entity must also file a petition with AMCM requesting the revocation of the authorization.

In both cases, the interests of the investors must be taken into account. Therefore, AMCM will only issue a de-registration authorization if the Manager entity ensures that the rights of the investors will be respected during and after the de-registration stage. This assessment must be carried out through a case-by-case analysis hence one might state that it is complicated to determine a priori a de-registration plan that protects the investors in Macau SAR.

If there are no investors in Macau SAR, the de-registration procedure may be simpler as there is no need to determine a plan to protect their interests.

 

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Covid-19 Outbreak and its Impact in Contracts

The outbreak of the novel coronavirus (COVID-19) now declared a global health emergency by the World Health Organization and on the eve of being eventually being considered a pandemic, has raised concerns globally. When it comes to business, COVID-19 has caused disruptions in virtually all economies and across all industrial sectors, from manufacturing, travel, shipping to technology businesses, amongst many others.

Given the uncertainties currently hanging in the air, different businesses, individuals and even states are grappling with situations of extreme difficulty in contract performance, whatever their nature.

In an attempt to deal with the Covid-19 outbreak, many private entities and even governments, (including the Macau SAR Government, through the application of Law no.2/2004 – Communicable Disease Prevention, Control and Treatment Law), have taken steps that inevitably clash with the good performance of contracts, such as: the closure of certain businesses by imposition of the Government; the prohibition of certain activities; restrictions on travel and transportation etc.

Under Macau law, it is possible to frame solutions for different situations in which non-compliance with contractual obligations precedes events beyond the control of the parties, namely, as is the case, the outbreak of an epidemic. These cases are commonly outlined as force majeure events, but the question arises as to the extent to which force majeure may or may not be invoked to justify non-compliance with contracts.

The contractual law in force in Macau allows that in the event that the provision becomes impossible due to a cause not attributable to either party, the party becomes excused to perform the contract.

However, the impossibility must be absolute, in the sense that if the provision is still possible, even if extremely onerous or difficult, it is not a cause for the party to be exempted from the performance of the obligation. It will be the case, for example, that due to the measures imposed regarding the quarantine of certain persons, someone is prevented from entering Macau or is forced to be quarantined at the only time when the contract was possible to be executed.

Another solution that we believe it is possible to defend, despite the fact that the Macau Courts are very reluctant about the application of this institute, is the modification or termination of contracts due to changing circumstances.

Now, this institute is underpinned by the idea that the security of legal relations leads to the stability of contracts, but it may happen, however, that a profound change in the circumstances in which the parties are bound makes it excessively onerous or difficult for one of them to comply with that to which it is obliged, or causes a marked imbalance between the respective obligations, in the case of long-term or deferred contracts. In these situations, despite the benefits of contractual stability, it is necessary, in the name of justice, that the contract be terminated or modified.

Although it is possible for the contracting parties to beware of adverse situations that may affect contracts, namely by including hardship clauses (“Wirtschaftsklauseln“) or force majeure clauses, there is also judicial mechanisms to either terminate or modify the contracts, based on the verification of unexpected circumstances.

In order for the change in circumstances assumed by the contracting parties to lead to the termination of the contract or to the modification of its content, the following requirements must be cumulatively fulfilled:

  1. that the change considered relevant relates to circumstances on which the decision to celebrate the contract was based, that is, to circumstances that, although not determinant for both parties, are presented as evident, according to the typical end of the contract, that is, which are at the base of the deal, with awareness of both contracting parties or reasonable notoriety;
  2. that these fundamental circumstances have undergone an abnormal change, that is, unpredictable or, although predictable, affecting the balance of the contract;
  3. that the stability of the contract involves injury to one of the parties, either because it has become too costly, in an economic perspective, to provide one of the parties, either because the change in circumstances involves, for the injured party, great personal risks or excessive non-patrimonial sacrifices;
  4. that the maintenance of the contract or its terms seriously affects the principles of good faith;
  5. that the situation is not covered by the risks inherent in the contract, that is, that the anomalous change in circumstances is not included in the specific section of the contract, that is, in its normal fluctuations or purpose or in the risks specifically contemplated by the parties in the contractual agreement entered into.

An epidemic seems to fit perfectly with the classic academic hypothesis of force majeure or changing of the circumstances on which contracts were founded.

In fact, it seems clear that the appearance of an epidemic will not be predicted in the risk sphere of most contracts, so it is difficult to argue that the contract, whatever its nature, cannot be revised in the light of the ongoing exceptional circumstances.

In view of the above, it is certain that, in face of the Covid-19 outbreak, all over the world, but especially in Mainland China, Macau and Hong Kong, the consequences will be severe, given the draconian impositions of the respective governments and also due to internationally imposed limitations on the traffic of people, goods, etc. Therefore, it is expected that many contractual situations must have to be reviewed on a case-by-case basis, in order to mitigate the harmful effects that this epidemic may have on the economy and on the stability of the legal trade.

 

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Amendments to Law no. 21/78/M – Complementary Tax Regulation

The Government of the Macao Special Administrative Region (the “MSAR”) has recently approved an amendment to the Complementary Tax Regulation (Law no. 21/2019), which entered into force on the 25th of January this year.

Law no. 21/2019, also contemplates certain amendments to the legal regime of the Tax Information Exchange (Law no. 5/2017) (the “Tax Information Exchange Law”).

The amendment to the Complementary Tax Regulation comes as a follow-up measure after the MSAR has joined “The Inclusive Framework on BEPS” of the Organisation for Economic Co-Operation and Development (OECD), notably as an answer to BEPS Action 13 which in general terms provides that “all large multinational enterprises (MNEs) are required to prepare a country-by-country (CbC) report with aggregate data on the global allocation of income, profit, taxes paid and economic activity among tax jurisdictions in which it operates”.

With this amendment, the Government of the MSAR signals its will to adjust its tax administration to international standards, and to improve the exchange of tax information between jurisdictions.

It is also a clear sign that the MSAR intends to attract multinational companies to Macau without neglecting its commitments to fighting tax evasion and prevention of money laundering as well as terrorism financing.

Although relatively simple and straightforward, there are a few details worth pointing out, specifically:

  • the introduction of new legal definitions to the local legal system, being the definition “locally based ultimate parent entity of an MNE”, the most relevant;
  • the imposition of specific duties to report aimed at the said local ultimate parent entity of an MNE (and the correspondent amendments to the tax information exchange law); and
  • the inclusion of locally based ultimate parent entity of an MNE in the list of persons and entities subject to the Tax Information Exchange Law, which generally follows the international standards.

 

There are also changes regarding compliance with the provisions of the Complementary Tax Regulation, namely through the definition of new infractions and setting of new penalties.

Under the terms of Law no. 21/2019, locally based ultimate parent entities of MNEs will be considered Group A taxpayers, an exception to the general rules applicable in Macau[1].

Also, it is important to note that, with Law no. 21/2019, the criteria used to determine the companies qualified as Group A taxpayers have been amended, increasing the current threshold of the average annual taxable profits in the past 3 years from MOP 500,000.00 to MOP1,000,000.00.

Moreover, following the amendments introduced by Law no 21/2019, Administrative Regulation no. 1/2020 was enacted to regulate the reporting obligations imposed on locally based ultimate parent entity of an MNE.

In this context, it is worth noting that there are specific duties to provide reports (e.g. on the activities carried out globally by the group) and to maintain proper accounting books and records, in situations where the total earnings of the said entities is equal or higher to MOP 7,000,000,000.00 (equivalent to USD875 million) as shown in the respective consolidated financial records for the previous fiscal year.

Finally, we call the attention for two new exemptions implemented by Law no. 21/2019:

  1. the global income generated in Macau by the airlines whose registered office or place of effective management is located abroad, resulting from the operation of aircraft and activities complementary thereto, provided that an equivalent exemption is granted to companies of the same nature with registered office or effective management in the MSAR, and reciprocity is recognized in an Air Transport Agreement or in an order from the Chief Executive of Macau published in the Official Gazette of the MSAR; and
  2. the interest obtained from government bonds, local governments or state-owned enterprises of People´s Republic of China (“PRC”) issued in the MSAR, as well as the income related to the sale and purchase, redemption or other form of availability.

These exemptions are in line with the Government’s recent attempts to diversify the MSARs economy by stimulating the growth of new industries, among which particular relevance has been given to the aviation sector and to the development of securities markets.

In the overall, it is our opinion that solid steps are being taken by the Macau Government towards the alignment of the MSAR with the international taxation standards.

However, it seems at first sight that it will be at least challenging to the local authorities to determine in practical terms which are the companies that fit the new concept of local ultimate parent entity of an MNE.

On the other hand, taking into account that the government of the PRC has already issued bonds in the MSAR of 1Billion yuan, the exemption related with bonds issued by the government of the PRC and by state-owned enterprises is particularly encouraging.

In fact, it signals the MSAR’s Government strong commitment to develop a well supported bond market, which will certainly stimulate the economy of the MSAR in the context of the Greater Bay Area.

Finally, it is as well as an important step for the MSAR to attempt to become a service platform for commercial and trade cooperation between China and Portuguese-speaking countries, as aimed by the Chinese Central Government.

 

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[1] For better reference, under the Complementary Tax Regulation taxpayers in Macau are divided into Group A and Group B.

Group A taxpayers are (i) companies that have maintained proper accounting books and records, with a share capital of MOP1,000,000 and above, or which, prior to the enactment of Law no. 21/2019, had average assessed annual taxable profits in the past 3 years of MOP 500,000 or above, or (ii) those which opt to be in Group A, filing a declaration on or before 31 December of the financial year chosen for the option. While Group B taxpayers are those who do not meet the criteria mentioned above.

As general rule, all the first-time taxpayers will automatically be assigned to Group B, unless they fall within the criteria mentioned above or they apply to be classified as Group A taxpayers.  

 

Impacts of coronavirus outbreak prevention measures on labour agrements

Dear all,

In face of the recent measures being taken by the Macau Government for prevention of coronavirus and in anticipation of the possibility of employees based in Zhuhai being prevented to come to Macau to work, it is important to be aware of the legal framework applicable to the case.

First of all, please note that currently there are no guidelines issued by the Macau Government in respect of this matter. As such, the below advice may have to be adjusted in the coming days, subject to the measures adopted by the Macau Government.

Bearing the above in mind, in case workers based in Zhuhai are barred, by order of the Macau Government, from crossing the border to come to Macau to work, the following legal framework shall apply:

 

Macau residents

In case of border closure, the absence from work shall be considered justified, for force majeure reasons, non-attributable to the worker (article 50. Par. 2 subpar. 2) of the Labour Relations Law).

As such, Macau residents will be entitled to not show up for work until the border closure ceases. Although their absence is justified, employees will not be entitled to remuneration while the absence lasts.

In case the closure of borders lasts for an extended period of time (or for an indefinite period), the possibility of the employment agreement lapsing may be considered, due to the fact that it is impossible for the worker to perform his/her duties (article 73 par. 1 subpar. 2) of the Labour Relations Law). In this event, no compensation shall be due to the employee for termination of the employment agreement.

However, at this stage, it is still too early to determine whether it would be reasonable to consider that the employment relationship has lapsed, specially taking into account that there are no known measures adopted by the Macau Government in this respect.

Finally, please note that the above does not prevent the employer and the employee from reaching alternative arrangements (e.g. negotiating a period of unpaid leave; arranging for the annual leave of the employee to be taken during the border closure period; or providing the employees with accommodation in Macau) or negotiating some kind of settlement/compensation for early termination of the employment agreement.

 

Non-resident workers

As with Macau resident workers, in case of border closure, the absence from work by Non-resident workers shall be considered justified, for force majeure reasons, non-attributable to the worker (article 50. Par. 2 subpar. 2) of the Labour Relations Law).

As such, Non-resident workers that live in Zhuhai will be entitled to not show up for work until the border closure ceases. Although their absence is justified, employees will not be entitled to remuneration while the absence lasts.

In addition, the employer may elect not to renew the work permit of Non-resident workers whose work permit reaches its term during the period of border closure.

With respect to the lapsing of the employment agreement in case the closure of borders lasts for an extended period of time (or for an indefinite period), due to the fact that it is impossible for the worker to perform his/her duties (article 73 par. 1 subpar. 2) of the Labour Relations Law), it is our view that it is still to early to determine whether such action would be justified.

Nevertheless, it should be noted that that the hiring of Non-resident workers is subject to stricter requirements than those imposed on the hiring of resident workers and is subject to effective limitations (such as the imposition of quotas).

As such, depending on the evolution of the coronavirus outbreak, this may become a pressing matter and may lead to the determination that the employment agreement has lapsed, so that the employer is allowed to replace the positions left vacant by the Zhuhai based employees. In this circumstance, no compensation shall be due to the employee for termination of the employment agreement.

Nevertheless, for now, it is important to wait for the announcements made by the Macau Government, as it is possible that specific measures are adopted to allow employers to temporarily fulfill the job vacancies created by the absence of Non-resident workers based in Zhuhai.

In any case, the above does not prevent the employer and the employee from reaching alternative arrangements during the border closure (e.g. negotiating a period of unpaid leave; arranging for the annual leave of the employee to be taken during the border closure period; or providing the employees with accommodation in Macau) or negotiating some kind of settlement/compensation for early termination of the employment agreement.

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We will monitor the developments of the measures taken by the Government and we will let you know in case there are any updates.

 

Best regards,

Manuela António – Team

 

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Manuela António – Lawyers and Notaries signs strategic partnership with Jingsh Law Firm

We are pleased to announce that on January 3rd, 2020 our Law Office signed a long-term strategic partnership with Jingsh Law Firm, one of the biggest law firms in China.

The event took place in Beijing and was attended by our Partner Hugo Maia Bandeira and our Associate António Zhang, both of which also joined the 2020 Jingsh Global Partners & Directors Summit, the very next day.

More than 300 people attended the 2020 Jingsh Global Partners & Directors Summit. Our partner Hugo Maia Bandeira was one of the panel speakers at the event. It was an important opportunity to speak about the future of Macau and the development of the Greater Bay Area project, among other relevant topics.

 

Check out some of the highlights of the events below:

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Residency, work, entry and stay authorizations in Macau

Overview and responsible governmental entities

The exponential growth and economic prosperity of the Macau Special Administrative Region (the “MSAR”, “Region” and “Macau”) in the last few decades have brought a wave of business and investors to the Region, and with them an increasing demand for work, residency and stay authorizations.

In general terms, no person is allowed to stay in the MSAR without either an Authorization to Stay, a Special Stay Permit, a Special Authorization to Stay, an Extension of Stay or a Residency Authorization.

As for the handling of the procedures, there are four main governmental entities responsible for issuing authorizations related to residency, work and stay in Macau: the Trade and Investment Promotion Institute (“IPIM”), the Residence and Stay Affairs Department of the Public Security Police Force (“PSP”) and the Identification Services Bureau (“DSI”) and the Labour Affairs Department (“DSAL”) – each of them playing a defining role in the Region’s Immigration.

 

Entry and Stay in the MSAR

According to the Region’s legal framework, non-residents are required to possess a valid passport and an “Entry Permit” or a “Visa” to enter into Macau, in accordance with Administrative Regulation No. 5/2003 (Regulations of Entry, Stay and Residence Authorization). There are however a few exceptions, such as individuals making use of the Macao International Airport for transit up to 48 hours, to other destinations, who are able to enter and stay in Macao without the said documents.

On the other hand, individuals who are not exempted from a “Visa” or an “Entry Permit” are granted an authorization to stay for generally 30 days from the date of entry with a “Visa”, an “Entry Permit” or an “Authorization to Enter and Stay”. In these cases, such persons can enjoy multiple entries within the referred 30 days without having to apply for another “Visa”, “Entry Permit” or an “Authorization to Enter and Stay”.

 

Work in the MSAR: the Blue Cards

Regardless of their country of origin, no one can work in Macau – with the exception of Residents of course – unless they have the authorization to do so, including Portuguese and Chinese nationals. Therefore, non-resident workers must be employed by an MSAR employer with a valid work permit issued by the DSAL, and also apply for a stay permit, commonly known as Non-resident Worker’s Identification Card (“Blue Card”) in the PSP.

This Blue Card is mainly issued to three separate categories of workers:

  1. specialized non-resident workers that possess a high level of academic qualifications and/or a highly qualified technical aptitude or professional experience, and intend to perform duties requiring a high degree of specialization;
  2. non-specialized non-resident workers, due to unsuccessful hiring or insufficient local employees in the local labour market; and
  3. domestic workers.

In any case, and regardless of the category that the non-resident workers fit, these workers can be directly recruited by their future employer, who must be duly authorized to hire non-resident workers. Further, the employer must ensure that there are no resident workers available to perform the same duties under the conditions of equal cost and efficiency, and there must be a specific need for the worker’s competences from the MSAR’s labour market.

As far as criticism goes, the past few years have not been the easiest for the working class in Macau, as they have been subject to an extremely precarious position and overall and dependency on the local authorities. Also, some of the requirements demanded by the authorities have proven to be more and more difficult to meet, especially with regards to specialized and non-specialized non-resident workers during the Blue Card’s approval process – surrounding the procedure with a great deal of obstacles and red tape procedures. This is mainly due to the MSAR’s employment policies, which have been increasingly protectionist towards local workers.

 

Residency authorizations in the MSAR

In a nutshell, individuals living outside of the MSAR may apply for a Residency Authorization with three different entities:

  • the IPIM, for people who intend to apply for residency in the MSAR as investors (major investment / investment plan), managerial personnel or technical personnel;
  • the PSP, notably, for (a) Portuguese nationals; (b) spouses/partners of de facto marriages on the basis of family reunion, from Mainland China, and holders of the “People’s Republic of China (the “PRC”) Permit for Travelling to Hong Kong and Macao”; (c) children born outside of the MSAR and whose parents are Macao permanent residents / “PRC Permit for Travelling to Hong Kong and Macau” holders, on the basis of family reunion; and
  • the DSI, through application of a Certificate of Entitlement to the Right of Abode, for people who claim the right of abode in the MSAR but do not possess a valid Macau Resident Identity Card, and who are not living in any part of the PRC (except for Hong Kong and the Taiwan Region). This option is applicable to (a) Chinese nationals or their descents, and (b) Portuguese descents with some level of affinity to the MSAR, either because they were born in Macau or they have lived in Macau no less than 7 years before or after the establishment of the MSAR, in 1999.

 

Residency authorization in particular: entanglements and delays

As hinted above, foreigners who intend to apply for a Residency Authorization in Macau and by family reunion must process their application process through IPIM. Unfortunately, this group of people have not experienced a very positive outcome regarding the issuance of their Residency Authorization.

In fact, not only have the requirements for the attribution of Residency Authorization have become more and more strict, but also the procedure itself has become cumbersome and lengthy – dragging itself, in some cases, for more than a year.

In terms of success of the application, historical reasons are still an important factor when applying for Residency Authorization in Macau, making the entire procedure much easier for people of Chinese and Portuguese nationality and/or their respective descendants.

The most flagrant and well-known cases happen within the IPIM, a public institute which undeniably serves very little of its legal purposes in terms of promoting the investment in the Region, as well as handing out residency authorizations as it should – little over 20 per year.

Moreover, it should be noted that the IPIM’s decision for handing out residency authorizations is mainly focused on the potential growth of certain sectors of the economy in the MSAR.  In their own words, the IPIM seeks to “attract overseas talents to Macao to motivate the diversification of Macao’s industries, improve the competitiveness of industries”, giving priority to specific professions within the following sectors of activity: the (i) Financial Sector; the (ii) Information Technology Sector; the (iii) Traditional Chinese Medicine Industry; the (iv) Lusophone Markets and Chinese-Portuguese Translation; and the (v) Convention and Exhibition Industry.

Also, applicants must bear a high-level academic background, profuse professional qualifications and in some cases sufficient experience for the job, and the position must be filled by an applicant whose qualifications are more competitive than local workers.

 

Conclusion

In the end, the issuance of authorizations to work to live in the MSAR has become increasingly constrained due to the overall requirements demanded by different local entities, current local policies which are biased towards local workers, and especially due to the long and exhausting procedures.

In reality, meeting all of the requirements for these authorizations has proven to be an intimidating task, especially considering that in some cases, such as with residency, the IPIM holds full authority and discretion and is given no particular timeframe for handling these procedures. This, of course, discourages the applicants, driving away potential contributors to the development of Macau’s social and economic wellbeing.

 

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Another year, another milestone here at Manuela António Law Office

Another year, another milestone here at Manuela António Law Office.

On this day, 28 of November 2019, our firm completes 33 years of its establishment.

As always, we take this occasion to thank the support of our excellent team of collaborators, as well as of our loyal clients for their priceless aid in our success.

As the saying goes, keeping together is progress. Working together is success.

On today’s competitive world of business, our firm is still going strong amongst the professional leads of the time, with countless achievements and accomplishments along the years, having once again won numerous awards as one of the top law firms in Macau.

Until we meet again,

Happy anniversary!

THE KIMBERLEY PROCESS RULES FOR DIAMOND TRADE IN MACAU

The Legislative Assembly of the Macau S.A.R. recently passed two legal diplomas which will enable Macau to implement the Kimberley Process Certification Scheme (KPCS): Law no. 15/2019, and Administrative Regulation no. 29/2019 – complementing the former. This will allow the Region to formally engage in the international trade in rough diamonds, in line with the currently established international standards.

The above legislation came into force on the first day of October and aims to help Macau develop its already significant diamond and jewellery trade sector

I. Requirements and liabilities

In accordance with the new laws, an individual or entity that intends to import, export, transit, purchase, sale or transport rough diamonds in Macau will be required to obtain an operator License (the “License”). The License will be valid for two years and is renewable for equal periods, provided that the applicant submits the request for renewal and the necessary information at least 10 working days before its expiry date. It should also be pointed out that this request must be submitted with the Macau Economic Services Bureau (the “DSE”).

The issue or renewal of the License is subject to the cumulative fulfilment of the following requirements:

  1. having not the commencement of activity at the Macau Tax Bureau (the “MTB”);
  2. to not have been declared bankrupt or insolvent unless they have been rehabilitated according to the law;
  3. to have a permanent registered office in order to pursue their activity in Macau;
  4. having no tax debts towards the Macau S.A.R.;
  5. to be considered suitable for the exercise of the activity.

It should be noted that the operator or its directors may be considered unsuitable for the exercise of their activity if they have practised in the Macau S.A.R. or abroad certain acts that may be deemed as adverse to the transaction of rough diamonds. Nevertheless, it should be noted that such acts will not be considered for the issuance of the License if the individual or entity was rehabilitated under the law.

In terms of the actual application, the DSE is the responsible entity for the handling of the procedures, and the applications should be accompanied by the following documents (notwithstanding certain exceptions provided for in the law):

  1. the address of the registered office where the applicant is operating in Macau and the identification details of his/her name or business name and, in the case of a legal person, the identification details of its directors;
  2. a certificate of the applicant’s criminal record or equivalent document and, in the case of a legal person, that of its directors;
  3. a certificate of the Commercial Registry or a photocopy of the document proving the declaration of commencement of the activity for taxation purposes and, in the case of a legal person, a certificate of Commercial Registry, including copies of the articles of association duly updated;
  4. a declaration issued by the applicant stating that he/she has not been declared bankrupt or insolvent, in accordance with the applicable legal provisions, in the case of a legal person, as well as a statement issued by the applicant stating that the members of the governing bodies have not been declared bankrupt or insolvent;
  5. a document which proves that the applicant does not owe any taxes in the Macau S.A.R.

The presentation of the necessary documents for the request of the certificate, import license, export license or transit license is made by electronic data transmission, and the electronic processing provisions set forth by Law 5/2005 (documents and electronic signatures) are applicable.

After due submission, the head of the DSE shall then decide to grant or reject the application within 10 working days from the date of receipt of all documents pertaining to the application.

As referred, upon being granted, the License will be valid for a period of 2 years, renewable for equal periods. It should also be noted that the License can be cancelled by DSE (please see below paragraph III).

In addition to the License, the economic operator will also require to request a license for importation, exportation and transit as well as certificates, whenever it desires to carry out an importation, exportation or transit operation. These requests need also to be submitted with DSE.

The period of validity of these certificates cannot exceed 60 days and the export, import and transit licenses shall be valid for 30 days.

In terms of the overall reach, importation and exportation of rough diamonds from non-participating countries of the KPCS or regions are strictly prohibited.

 

II. Obligations of the operator

Any individual or entity engaged in the importation, exportation, transit, purchase, sale or transport of rough diamonds is required to:

  1. keep up to date records concerning the activities of rough diamond trading for a period of five years, through a digital database – including import, export, purchase or sale, namely the names of the customers and suppliers, license and certificate numbers and the quantity and value of rough diamonds sold, exported or purchased;
  2. to submit to the DSE whenever required the complete records regarding the activities of importation, exportation and purchase and sale of rough diamonds; and
  3. to pay all the expenses arising from inspection reports carried out abroad regarding rough diamonds.

 

III. License Cancelation and consequences

The License is cancelled in any of the following situations:

  1. If the licensee requests it;
  2. If the licensee no longer meets any of the requirements for the exercise of the activity and this situation has not been remedied within the legally determined timeframe;
  3. If the holder of the License does not fulfil any of the requirements for the exercise of the activity at the time of the License application, within the validity period of the License (with certain exceptions);
  4. The licensee assigns his License.
  5. The License holder dies (in case of an individual), or there is a termination of his activity (in case of a legal entity);
  6. Expiry of the License, without being renewed;
  7. The License has been obtained through false declarations, misrepresentation or other unlawful means;
  8. The licensee does not voluntarily pay the fine imposed under the law no. 15/2019;
  9. The licensee is prohibited, by a Court decision, from exercising the activities regulated by the law no. 15/2019 for a period that exceeds the remaining period of validity of the License.

Should the License be cancelled, the holder is required to immediately cease the pursuit of rough diamond trading activities, without prejudice of obtaining a new License, if the necessary legal requirements are met.

IV. Compliance and Sanctions

Apart from licensing procedures, the DSE is in charge of undertaking inspections and surveys as it deems necessary to ensure the application and enforcement of the new law, notably by overviewing the activities and the facilities of the relevant entities – who are legally compelled to cooperate with the DSE. Also, the DSE acts as an assistant to the Macau Customs Services (the “MCS”), which is the general supervisory body for the purposes of Law no. 15/2019 and Administrative Regulation no. 29/2019.

The MCS is responsible for verifying the conformity between certificates, licenses and documents submitted by the operator carrying out import or export activities of rough diamonds – without prejudice to the supervisory powers conferred on the DSE.

In that regard, the DSE alongside the MCS hold the authority to undertake, within their discretion, the precautionary seizure of rough diamonds which are in breach of the provisions of the law. Upon such seizure, the MSC or the DSE will notify the holder of the diamonds or the offender, in order to remedy the situation within 30 days. Should the situation remain unsolved within the period provided for in the preceding paragraph, the DSE or the MCS will then determine the definitive seizure of the respective rough diamonds.

 

Lastly, it should be noted that Law no. 15/2019 contemplates a section for criminal responsibility and administrative sanctions.

In this context, the crime of disobedience is the only criminal sanction which the law prescribes, as a result of the failure to comply with the duty to cooperate with the DSE – in regard of the abovementioned inspections and surveys.

As far as administrative sanctions are considered, the fines may range between the amounts of MOP10,000 and MOP5,000,000 for violation of certain legal provisions. Here are the relevant administrative offences:

  • The lack of certificates for diamond import and export issued by the competent authority is sanctioned with a fine of MOP500,000 to MOP5,000,000;
  • The continuation of exercise of the diamond trading activities upon cancellation, suspension and declaration of nullity of the License to trade diamonds is sanctioned with a fine of MOP200,000 to MOP2,000,000;
  • Participating in trade or exporting rough diamonds to KPCS non-participating countries or regions is sanctioned with a fine of MOP200,000 to MOP2,000,000;
  • The violation of the obligation to keep continuously updated all records concerning the activities of diamonds for a period of five years, via a computer database, is sanctioned with a fine of MOP10,000 to MOP50,000;
  • The non-return of a License upon its expiration date or the declaration of its nullity is sanctioned with a fine of MOP10,000 to MOP50,000.

Also, there are also a few accessory sanctions which may additionally be carried out, either cumulatively or on their own. Specifically:

  1. loss of rough diamonds in favour of the Macau S.R. government – which are then destroyed;
  2. prohibition of issuance of certificates to the offender for a period not exceeding two years;
  3. cancellation of valid certificates issued to the offender.

 

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New law concerning restrictions on the supply of plastic bags in retail activities in Macau

Following the general and increasing trend on the worldwide environmental protection measures, the Legislative Assembly has recently approved and the Chief Executive ordered the publication of Law no. 16/2019, setting forth a number of rules with respect to the restrictions on the supply of plastic bags within the Region. The legislation, which comes into force on November 17th of this year, primarily seeks to reduce the negative impact of plastic bags on the environment, as a way to gradually refine the consumer’s environmental awareness and behaviours by means of imposing a contribution/tax over the use of those items.

Although relatively simple and straightforward, there are a few details worth pointing out, notably in terms of some of the legislator’s options, restrictions imposed and respective exceptions, and also with regards to the inspection on compliance with its provisions through the definition of infractions and setting of penalties.

Firstly, the sole focus of the law is to tax every plastic bag used within the acts of retail sale in commercial establishments, leaving wholesale out of the equation. We should bear in mind however that there is an overwhelming difference in the usage of plastic bags between retail sale and wholesale, which is much more significant, and therefore, the government might have opted to introduce a new tax on plastic packaging, which was not done.

The second observation to be made is related to the choice made by the legislator allowing for free plastic bags to be supplied to carry both unpackaged food or medicines not previously packed, as well as for products purchased at retail outlets located within the passenger boarding or disembarkation areas of the airport, or in corridors giving access to such areas. In this instance, one could argue that most unpackaged food consists of fruit and vegetables, which are washable and often come in their own – compostable – natural wrapping. Plastic packaging can, of course, help to keep food hygienic, and also makes it more convenient for consumers to grab and go, although the overall result might not be in the best interest of the environment.

In terms of monitoring of compliance with the law, the Directorate of Environmental Protection Services is responsible for this task, having free access to any retail establishment, in particular for the verification of data records, if any, concerning the collection of plastic bags supplied to customers.

The violation of the provisions of the law constitutes an administrative offence sanctioned by MOP1,000.00 for each plastic bag and MOP10,000.00 patacas in the case of breach of the duty to cooperate by the retailers and respective staff, such as managers, directors and assistants. This being said, it is also worth noting that companies (even if irregularly incorporated) are also liable for the offences set forth in this law when committed by their corporate bodies or representatives, on their behalf and in their collective interest.

As for the charging value, there is still no price tag on each plastic bag, and it will be determined by an Order from the Chief Executive later on, during this year and presumably before the law comes into force (November).

 

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Acquisition of Portuguese Citizenship Through Marriage and Common-Law Marriage

The Portuguese government, through recent changes in the Portuguese Nationality Act (“PNA”) – Law no. 31/81 of 3 October – has lessened the requirements for the acquisition of Portuguese citizenship.

Over the years, the PNA has undergone several changes, sometimes making it more accessible for individuals to successfully meet the requirements stipulated for the acquisition of the Portuguese nationality, but on other occasions making it much more difficult, mainly due to legal and bureaucratic encumbrances.

However, a substantial amendment was made recently to the PNA through approval of Organic Law no. 2/2018 of 3 July, making matters much more comfortable for cases where married couples (including those under common-law marriage) with one of them being a Portuguese national, have children in common.

One of the changes in the PNA that made things easier in case of acquisition by marriage, is the barring of the possibility of opposition by the Portuguese Attorney General with the argument that the foreign spouse has no effective connection with the national community, whenever the couple has children in common.

Although the procedure may take its time for completion, this change in the PNA represents a tremendous fostering of the mechanism for acquisition of the Portuguese nationality, as it relinquishes the element of connection to the Portuguese community, which was in the past an essential burden of proof for eligible candidates.

To put it plainly, as long as the couples mentioned above provide the right documentation – which includes, among others, a declaration expressing the will to become Portuguese and a clean criminal record certificate –, the application for Portuguese nationality for the spouses and their underage children would not be subject to opposition from the Attorney General.

As visible throughout our website, our office has the necessary know-how in dealing with these complex matters with expediency and proficiency, and shall be more than happy to assist not only in cases involving acquisition of Portuguese nationality, namely through marriage, but also in those cases of acquisition of Portuguese residency through application of the Golden visa, which is also a popular gateway process for attaining the Portuguese citizenship on a long-term basis.

 

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