Scope of the bill
In November 2021, the Macao Special Administrative Region (SARM) government delivered its 2022 political speech to the public. The development of the modern financial sector and the strengthening of the financial infrastructure are among the main priorities of the government to achieve the long-awaited economic diversification.
Financial sector development will include:
- issuance of bonds;
- asset management;
- green finance;
- financial leasing;
- a financial infrastructure data center; and
- a faster payment system.
Legislation and directives concerning the financial sector are the main aspects on which the government will focus its actions in 2022.
As part of that effort, a draft trust law was presented to the Macao SAR Legislative Assembly on November 25, 2021 and was referred to the Second Standing Committee for consideration. The introduction of the project indicates that it is considered as a measure to promote and develop activities related to asset management and to improve legislation and directives concerning the financial sector.
The project aims to promote the development of fiduciary activities by establishing a legal framework for trusts and by regulating in particular:
- the establishment and termination of trusts;
- trust property; and
- the capacity, rights and duties of trustees, trustees and beneficiaries.
The project is divided into eight chapters and consists of 38 articles. He defines a “trust” as a legal relationship in which a trustee transfers his rights of ownership to the trustee, so that the trustee, on his or her own behalf, manages or disposes of the trust property for the benefit of the beneficiary or for the benefit of the beneficiary. specific goal. .
In addition, the draft provides that a contractual trust can, in general, be established by means of a private document, unless the properties or rights to be included require otherwise. Likewise, if a contractual trust is subject to a deposit with official registers, failure to make such a deposit will render it unenforceable against third parties.
Regarding the necessary elements of the constituting act of a trust, they should include:
- the purpose of the trust;
- the list of assets and rights to be included in the assets of the trust and their identification or the procedure for their identification;
- the identity of the beneficiary (ies);
- the identity of the trustee (s);
- the powers attributed to the trustee (s), and in particular, all powers of disposal and acquisition;
- the identity of the beneficiary (ies) or the procedure for their identification; and
- the content of the beneficiary or beneficiaries’ right to the trust (benefício fudicário).
Given the particular nature of fiduciary activities, the trustees who exercise them have the duties to:
- retention and updating of records;
- separation of property;
- secret; and
Trustees must be one of the following types of entities:
- a credit institution (Decree-Law No. 32/93 / M of July 5);
- a finance company (Decree-Law No. 15/83 / M of February 26);
- a wealth management company (Legislative Decree No. 25/99 / M of June 28);
- an investment fund management company (Decree-Law No. 83/99 / M of 22 November);
- an insurance company (Decree-Law No. 27/97 / M of June 30);
- a pension fund management company (decree-law n ° 6/99 / M of 8 February); Where
- an entity authorized to carry out fiduciary activities in accordance with special legislation.
In accordance with the trust deed, the beneficiary:
- owns the right to the properties of the trust;
- may ask the trustee to place the property in trust; and
- may ask the trustee for information on the management of the trust.
In addition, if trust property is improperly transferred – that is, when such transfer is made in violation of the purpose of the trust or the terms of its constituting act – the trustee, beneficiary or another trustee (if applicable) may request the cancellation of such transfer.
Finally, the project under discussion establishes modalities for the termination of trusts. In particular, it is clarified that testamentary trusts must follow the relevant rules of the Macao Civil Code on wills.
Trusts have their roots in common law jurisdictions and, in private international law, civil law jurisdictions often have difficulty recognizing trusts in their original form, i.e. the Anglo-American concept of trust. . Legislating on such institutions in Macau is a big step forward, especially when trying to articulate them within the framework of the traditional property rights principles of civil law jurisdictions. SARM is not alone in this regard, and many experiences from other civil law jurisdictions, such as China, Japan, South Korea and Taiwan, can be considered valuable for the current legislative process of the project. of law.
Macau’s financial law landscape is expected to be renovated in the years to come. As indicated in the consultation document of the second five-year economic and social development plan (2021-2025), which aims to renovate the laws and regulations concerning the financial sector, Decree-Law No. 32/93 / M (the Law on financial system), Legislative Decree No. 7/95 / M (Macao Currency Issuance Law) and Legislative Decree No. 83/99 / M (Establishment and Operation of Investment Funds and investment fund management companies), among others, are laws subject to amendment or modification. Another major legislation for the financial sector is also expected to begin its journey soon.
For more information on this topic, please contact Calvin Tinlop Chui at Rato, Ling, Lei & Cortés Advogados by phone (+853 2856 2322) or by e-mail ([email protected]). The Rato, Ling, Lei & Cortés Advogados website can be accessed at the address www.lektou.com.