Lawyer says Macau laws already sufficient for bond transactions

Calvin Tinlop Chui (right) and BritCham president Keith Buckley

Despite the relevant laws not being reviewed since 1993, they are sufficient to allow or facilitate transactions of bonds in Macau, lawyer Calvin Tinlop Chui said yesterday.

Chui gave a presentation with his views on Macau’s future bond market – from a legal perspective – at a lunch hosted by the British Chamber of Commerce in Macao (BritCham Macao).

In his view, the city is more than ready to commence transactions related to bonds. In fact, several offerings have been staged previously, including in 2018 and 2019.

For example, he noted that, in December 2018, Luso International Banking Limited, commonly known in the city as Luso Bank, issued a type of bond denominated in Hong Kong Dollars.

The issuance of this product followed a set of guidelines promulgated by the Monetary Authority of Macao (AMCM) specifically for local enterprises. The monetary value of the bonds issued amounted to HKD580 million.

He stressed that this was fully a Macau bond except for the currency of denomination — all parties taking part in the handling and issuance of the bonds were locally registered. The key highlight of this bond issuance, according to Chui, was that matters related to the product and its issuance were governed by the laws and courts of Macau.

A year after the issuance of the Luso Bank bonds, a Zhuhai-founded property developer, Huafa Group Co. Ltd., issued a US-dollar-denominated bond in Macau. The issuance was founded on laws governing the activities of mainland Chinese enterprises in Macau.

Although the Bank of China, Macau Branch and the ChongWa (Macao) Financial Asset Exchange Co., Ltd. (MOX) handled parts of the work on the issuance, Hong Kong firms and entities managed other parts. Hong Kong laws and courts prevailed in this offering.

Chui used these two examples to prove that not only is the law in Macau ready for the issuance of bonds, it is also ready to sell bonds that have competent jurisdictions outside of Macau.

These products were issued before the amendments to the commercial and financial laws in Macau which have been hinted at by local officials.

Previously, local senior officials have reiterated that, in order to facilitate financial product transactions, laws in Macau have to be updated.

They have also said that, under a civil law system, financial markets cannot easily thrive in Macau as anything that financial institutions want to do requires legal grounds or permission.

In contrast, the senior officials said, a common law system allows a lot of room for interpretation, which is why financial markets have flourished in New York, London, Hong Kong and Singapore, where common law prevails.

Chui added his own views to those of the government officials, saying that there may be a historical factor at play. For example, over the past 100 years, all economies that prospered have been under common law systems. He did not dare to rule out the possibility of “coincidence” in this phenomenon.

Meanwhile, he believed that China, with its large economy, population and strong vitality, may be able to prove otherwise: that a jurisdiction operating under a civil law system can have a vigorous financial market.

That said, he does not oppose the local government commencing a law review because many new financial concepts are now commonplace, but were not considered 30 years ago.

Chui commented that the development of Macau’s financial law should be based on a firm commitment to uphold the constitutional order of the Special Administrative Region as established by the Constitution and the Basic Law.

He added that the target financial market should act as a guide to the legal construction. The development of Macau’s financial law, moreover, should be based on the principle of “guiding the smooth flow of capital.” The city should not block bonds issued in other currencies.

In addition, the city’s financial services practitioners, including lawyers, should adopt a pragmatic mindset and appropriately incorporate the best practices of the industry in order to provide the best legal support and protection for the two major financial components, namely capital and the market.

Chui is a lawyer and partner at local firm Rato, Ling, Lei & Cortés, who specializes in commercial and corporate law, banking and finance, capital market, as well as bond issuance and listing.

He joined the firm in 2015 and became a partner in just six years. A member of the Bond Audit Committee of ChongWa (Macao) Financial Asset Exchange Co. Ltd., he is president of the Executive Committee of the Macau Financial Law Association and vice-president of the Macau Youth Law Society.

As well as holding a registration to practice in Macau, he is also registered in the State of New York in the U.S.

Holding a Master of Law from the University of Chicago, the 30-year-old teaches at the University of Macau and the City University of Macau.

He is the son of lawmaker José Chui Sai Peng and nephew of former Chief Executive Fernando Chui Sai On.