Common Legal Issues in Macau - BBAM | British … Legal Issues in Macau Macau Trade Mission 2012 –...

25
Common Legal Issues in Macau Macau Trade Mission 2012 BBAM Macau, 20 September

Transcript of Common Legal Issues in Macau - BBAM | British … Legal Issues in Macau Macau Trade Mission 2012 –...

Common Legal Issues in Macau

Macau Trade Mission 2012 – BBAM

Macau, 20 September

1. Corporate

2. Employment

3. Property

4. Dispute Resolution

5. Q & A

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

[email protected]

www.dsl-lawyers.com