The proposed trust law that the Macau Legislature recently approved on first reading requires revision and updates to address issues such as inconsistencies with the Civil Code or its potential exclusion from the creation of the trust. for non-commercial purposes, according to some experts.
Their point of view was put forward Monday evening at a roundtable gathering lawyers, jurists and bankers from the Greater China region, during an online seminar organized by the Macau Financial Law Association (MFLA). The webinar, titled “Theory and Practice: Confidence,” attracted over 200 participants.
In order to advocate the development of the local financial industry to reduce the city’s dependence on the gambling industry, Macau authorities introduced the Trust Bill, which was approved by the legislature at first reading. End of november. The bill – which defines the concept of a trust, the objectives of creating the trust, the requirements and obligations of the trustees, the protection of beneficiaries and others – is now in the stage of discussion in committee in the legislature before final reading. .
According to lawyer Bi Jingwei, one of the speakers at Monday’s webinar, the draft trust law states that trust ownership is an “independent asset” separate from the existing assets of trustees, trustees and beneficiaries. “But article 54 of the Civil Code also speaks of ‘independent property’ which has different interpretations [from the definition stipulated in the proposed Trust Law]”, Illustrated the assistant professor and program director at the Faculty of Law of the University of Science and Technology of Macao (MUST).
He suggested that the authorities could omit the term “independent property” from the bill to avoid possible contradictions with the Civil Code, simply declaring that the ownership of the trust is independent of the existing assets of the trustees, trustees and directors. beneficiaries.
The academic MUST also pointed out other discrepancies in the draft trust law, for example, Article 15 of the draft law only allows institutions and organizations, but not “natural persons” – to namely individuals – could be trustees while article 27 speaks of “trustees of natural persons”.
The bill proposes that the trustees be credit institutions, financial services companies, asset management companies, investment fund management companies, insurers, pension fund management companies or other entities authorized to carry out this type of activity.
Given the proposed requirements for trustees and other clauses, Professor Bi said the bill appears to focus only on trusts established for business purposes – or known as commercial trusts – for the time being, leaving out trusts for other purposes such as civil trust and charitable trust. . “Certain clauses [in the bill] say that trust could be created for [other] specific purposes… but could it be interpreted that the bill covers other purposes? »The scientist’s questions.
In Taiwan, the trustees of commercial trusts are usually banks or other financial institutions, which have established a schedule of fees that the trustees must pay. When it comes to non-commercial trusts like civil and charitable trusts, the trustees are typically individuals like lawyers, accountants, and other professionals, and whether and how much the trustees are paid depends on the circumstances.
“It’s a problem for the bill [of Trust Law] in Macau to stipulate that only financial institutions can be trustees while individuals cannot, ”said another speaker, Wang Chih Cheng, dean of the faculty of law and vice president of the Cultural University on Monday. Chinese Taiwanese. “The bill is called ‘Trust Law’ but it seems to only facilitate commercial trust activities… It’s quite strange.
The scholar, who has been tasked with drafting many financial regulations like Taiwan’s trust law, said the trust regulations could be simple but should set a framework regarding all the goals. The Trust Law in Taiwan came into effect in 1996, followed by the Trust Industry Law in 2000 which specifically governs financial institutions in the conduct of such activity, as well as other ordinances and regulations. relevant in the following years, he illustrated.
“Commercial trusts are just financial wealth management products, which do not fully unleash the value of trust,” Yang Zhenfeng, managing partner of the Guangdong Jifang law firm, told the webinar on Monday.
Speaking of the challenges faced by the continent since the implementation of the trust law in 2001, the lawyer said that the continent does not have a clear trust registration system, which makes it “difficult” to register. trusting assets such as stocks, stocks and real estate. There has also been a lack of a relevant tax regime on the continent to avoid unnecessary levies on the transfer of assets between trustees, trustees and beneficiaries, said Mr. Yang, who is also director of Trust and Wealth Transfer. Business Committee at Guangzhou Lawyers. Association.
Macau authorities should “examine the successful experiences and challenges faced by other jurisdictions in implementing regulations and trust rules” and incorporate this information into local rules in accordance with local conditions, he said. added.
Meanwhile, another speaker, Ric Yu, a Macau banker involved in custody services, told the seminar that the local financial sector is anxiously awaiting the implementation of the city’s first trust law, which could advance the development of the sector and offer new opportunities to practitioners. .
Chan Wa Keong, chairman of the MFLA board, remarked at Monday’s seminar that the information provided by the panelists on Monday could be compiled and submitted to the Legislature for its deliberation and assessment of the bill.
The “Theory and Practice: Trust” webinar was moderated by Calvin Chui, Chairman of the MFLA Executive Committee and Partner at Macao Law Firm Rato, Ling, Lei & Cortés Lawyers; and Ho Lok Sum, executive director of the MFLA.