Common Legal Issues in Macau - BBAM | British … Legal Issues in Macau Macau Trade Mission 2012 –...
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Transcript of Common Legal Issues in Macau - BBAM | British … Legal Issues in Macau Macau Trade Mission 2012 –...
Corporate Options
• Local corporate presence vs. Operation from offshore
• Local Company or a Branch of a foreign company
• What type of company (a company by quotas, by shares, an
offshore (MCO), etc)?
•These are the basic decisions that an investor would face.
Corporate
Local corporate presence
• not necessary to sell equipment or provide service from abroad
• not necessary to acquire property in Macau
• not required to enter into contracts with local companies
• a MUST for services under the scope of Section 9, Industrial
Tax Ordinance (“Technical services” and “civil constructions”
services) – Tax domiciliation
• a MUST if a business involves employment (either of Macau
residents or non-resident workers).
Corporate
Macau Company Vs. Macau Branch
same tax treatment
limitation of liability (by share capital)
corporate actions taken/approved locally
similar incorporation costs and procedures
similar maintenance procedures
same tax treatment
liabilities will extend to company abroad
corporate actions taken by Board of Company abroad
similar registration costs and procedures
similar maintenance
procedures
Corporate
Most Common (90% of Macau Companies) Limited Liability Company by quotas
• simple incorporation procedures
• low maintenance costs
• straight forward operational procedures
• low capitalization requirements
• mainly under Group B Tax Payer category
Corporate
By Quotas (Lda.) Vs. By Shares (S.A.)
Minimum Incorporation Minimum Incorporation
Share capital 25,000.00 Share capital 1,000,000.00
Number of Shareholders
min: 2 max: 25
Number of Shareholders
min: 3 max N/A
No supervision body
(“Conselho Fiscal”)
Statutory supervision body
(“Conselho Fiscal”)
No Board of Directors (Collective body) Board of Directors (Collective body)
Normally under Group B Statutorily under Group A
Any type of accounts (audited or not) Audited accounts are statutory
Less corporate bodies More corporate bodies
Corporate
MCO – Macau Commercial Offshore
• Not a legal type, only specific tax treatment
• Could either be a Company by quotas or a Company by Shares
• Subject to prior licensing by IPIM
• Limited business scope:
- only for the activities listed by IPIM
- business activities should be fully offshore with Macau
contracts only if ancillary to main business (vg tenancy of
premises, employment of staff)
- not allowed to contract in Macau currency (MOP$)
Corporate
Common Pitfalls
• The Directorship is not necessarily organized as a collective body for
companies by quotas, as the individual Directors are vested with powers
to act on behalf of company
leads to difficulties in understanding the requirements of resolution and resolutions being taken/ produced without any legal requirement
• no distinction between legal ownership and beneficial ownership under
Macau Laws/ absence of trust legal concept
leads to alternative arrangements for the so-called “nominee” shareholder
(given the min. requirement of 2 shareholders) such as irrevocable
powers-of-attorney
Corporate
Recruiting
• Preference to Macau residents
Ads in local newspapers
Macau employment agencies
Online employment service
at Labour Affairs Bureau (DSAL) –
www.dsal.gov.mo
• Macau law as a minimum applicable
Favor laboratoris
Internal Regulations or Employee Handbook
Employment
Keeping a payroll
Mandatory Employment Insurance
Quarterly payments to Social Security Fund
Quarterly payments for Professional Tax
Fair amount of paperwork
Requires a person-in-charge or a service provider to maintain
payroll
Cannot be handled remotely
Employment
Termination by the Employer
With Just Cause:
No prior notice or compensation;
Written dismissal within 30 days with summary of facts justifying (or double
compensation);
Possible grounds:
Disobedience to legitimate orders;
Repeated lack of interest in inherent obligations;
Repeated delays, early leaves or absences without authorization;
Absence for 3 consecutive days or 5 interspersed days in a year;
Repeated conflict with other employees; etc.
Without Cause:
Anytime with prior notice agreed (or 15 days) or payment in lieu.
Employment
Termination by the Employee
With Just Cause:
Entitled to compensation
Requires notice (or payment in lieu of notice) with justification
Possible grounds:
systematic delay on payment of the salary;
offense to physical integrity, liberty, honor or dignity, punishable by law;
sale of business of the corporate employer;
significant changes to the working conditions agreed; etc.
Without Cause:
- Anytime with prior notice agreed (or 7 days) or payment in lieu.
Employment
Payments upon termination
With just cause by Employer
No termination compensation
Only outstanding amounts
Without cause / Just Cause by Employee
Compensation limited to 12 x base salary
Maximum base salary of MOP 14,000.00, except higher agreed
Formula:
7 days base salary for 1 year;
10 days base salary for each year when 1 – 3 years;
13 days base salary for each year when 3 – 5 years; (…)
Term employment calculation formula
3 days base salary for 1 month (or lower) for the remainder of initial term agreed.
Employment
Common Pitfalls
Prohibition of cross border employment (Administrative Regulation
17/2004)
Residents prohibited to hire unauthorized non-residents
Unauthorized non-residents prohibited to work in Macau
Working permit required
Non-skilled
Skilled
Employment principles apply to non-residents
There is no concept of secondment – Macau employment relationship is
a must
Employment
Common Pitfalls
Majority of employment legal rules are imperative
Contractual clauses that are to the benefit of employee have
legal standing
Employment handbooks, workplace guidelines and any
instructions to employees are subject to Macau laws
Involvement of counsel in setting the employment foundations is
a must
Employment
Types of ownership
There are essentially two types of ownership –
freehold and leasehold
Older parts of Macau are predominantly freehold - Taipa and Coloane are mostly leasehold
All reclaimed areas are under leasehold regimen
Leasehold term is standard
– 25 years, renewable indefinitely for 10 years terms
Leasehold contents are standard
Property
Legal framework
Legal framework is stable and solid
No relevant changes have been made for the last 20 years
Property rights and similar rights regulated by Civil Code and extensively supported by Court decisions
Pre-sale is not regulated and is not restricted
New regimen for the concession of industrial buildings into residential property
Subsidies and other financial support available for reconstruction or recuperation of old buildings within historical areas
Property
Common Pitfalls
Construction, zoning and re-development approvals are
time consuming
Obtaining Occupation Permits and strata title registrations
are lengthy procedures
More legislation is expected for property agencies and
pre-sale of properties
Problems of Developers are mostly related to licensing of
works
Property
Property
Tenancy is not over regulated
Existing framework is more protective of the tenant
The standing of tenancy agreements is not disputed
Limitations of existing regulations in terms of rent adjustments
and minimum period of a tenancy agreement
Currently is 2 years for residential tenancies (previously 3 years)
Property
Court system
Macau is a civil law system
Macau Special Administrative Region:
– Self-legislated
– Last instance of appeal in Macau
No rule of Court precedents
Simplicity inherent to the size of Macau
Dispute Resolution
Court system 2
Court proceedings are relatively fast
No control of the parties on the proceedings timing
Lack of consistency of Court decisions
Courts could struggle with complex cases – either
commercial, construction or financial ones
No specialized jurisdictions for IP, taxation or financial
matters
Dispute Resolution
Arbitration
Arbitration is increasingly important
Clauses for arbitration in Hong Kong are prevalent
Often Hong Kong laws are applicable under governing
laws clauses to obtain some “common law” comfort
Macau arbitration is increasingly popular and substantially
less expensive
Macau arbitration centres still aiming at recognition
Dispute Resolution
Common Pitfalls
HK and Macau are autonomous and independent
jurisdictions
CCP requires a reconfirmation process for foreign judgments or awards to be enforced in Macau (unless there is bilateral convention) at the Court of Appeal
Under the New York Convention enforcement of HK awards in Macau (and vice-versa) should be enforceable without the need for a reconfirmation process
Cross references could make arbitrations necessarily complicated
Dispute Resolution
Thank You!
DSL Lawyers
Av. da Praia Grande 409
China Law Building 16/F
Macau
www.dsl-lawyers.com