Commercial Code | Gov’t launches public consultation looking to abolish bearer shares

The Macau government is looking to introduce changes to the Commercial Code, determined to put an end to bearer shares and therefore avoid criminal activity related to money laundering or the financing of terrorist activities. The administration is launching a public consultation on the matter today.
Macau’s Commercial Code allows joint-stock corporations to issue bearer shares, if such a rule is included in the company’s by-laws. As a type of transferable security, a bearer share is an unnamed security, which does not allow the company or the public to know who its shareholders are – as opposed to registered shares, where the bearer’s name is public.
In a press conference held yesterday, Law Reform and International Law Bureau (DSRJDI) officials explained that current legislation does not allow authorities to get information regarding ownership of these companies in a precise and timely manner.
The Macau government is looking to amend current legislation, hoping to meet international standards, such as those set by the Asia Pacific Group on Money Laundering (APG) and the Organization for Economic Co-operation and Development (OCDE). Macau is also a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, which conducts periodic evaluations.
DSRJDI’s sub-director, Mr Chou Kam Chon, recalled that Macau has failed to meet important standards set by APG so far, and will likely fail to meet the required standards of the Global Forum’s third phase of evaluation, due to be conducted in 2016.
“Given that bearer shares are considered an obstacle to transparency in relation to joint-
stock corporations’ ownership, there is a need to launch efficient measures to ensure that company shares are not used unduly for laundering money or financing terrorism,” they said.
There are 125 corporations in Macau, which include in their by-laws the right to issue bearer shares. Once legislation has been amended, the government has suggested that these companies be provided with a six-month deadline to convert its bearer shares into registered shares.
The sub-director of the Financial Services Bureau (DSF) recognized that Macau is lagging behind places like Hong Kong, Singapore or Malaysia when it comes to meeting international standards, since these regions have already abolished bearer shares.
Mr Chou Kam Chon stressed that the third phase of evaluation carried out by APG in Macau is crucial to the territory’s development. If the territory fails to meet international standards on combating money laundering and other related criminal activities, its image abroad will be affected, he added.
In the public consultation documents, the government goes even further to suggest that not meeting international standards might have a negative impact on Macau’s economy, even discouraging foreign investment.
The public consultation will be carried out between today and November 19, as the authorities are looking to hear more opinions on the matter. Stakeholders and businessmen, they said, are also to be consulted on these amendments to the Commercial Code. The government has also urged residents to provide their opinions and suggestions on the matter between today and November 8.
Consultation documents are available at the DSRJDI headquarters, at the Financial Services Bureau, and the Civic and Municipal Affairs Bureau (IACM), amongst other government services.