Lawyers contest controls over Macau casino dividend distribution
A group of lawyers says the proposal for casinos to require government endorsement before distributing profits is unjustifiable. They propose an alternative solution.
Macau.- Under the revision of the city’s gaming law, Macau has suggested that casino administrators should meet certain requirements and get government endorsement before distributing profits, regardless of whether it be in cash or shares.
However, a Macau law firm has questioned the proposal, arguing that “there is no legal framework to justify any intervention by the Macau authorities in the distribution of dividends from private companies.”
A paper issued by lawyers Rui Pinto Proença and Rui Filipe Olivera states: “The pursuit of profit as the ultimate goal of a private company is embedded in its legal definition prescribed by the Macau Civil Code and no shareholder can be deprived of its right to share in a company’s profits.”
They added that it is unknown if the proposed measure will efficiently accomplish its underlying policy goals. However, they suggested a series of alternatives that Macau could implement to reach its objectives.
According to Macau’s proposal, casino operators should find ways to attract new customers and will be required to invest to diversify their offerings. Following the model set under different concessions in Macau, objectives might be set in the law and the concessionaires would commit to convey a venture masterplan and execution plans and timetables.
The clearest approach to divert gaming income to the advantage of the nearby local area is via tax collection.
However, the current tax rate (35 per cent demanded over gross gaming income) is viewed as high for global norms. The current agreements predict further commitments (of up to 5 per cent) by the administrators to promote Macau’s travel industry area and social, cultural and scientific development.
The paper states that there is no inadequacy of legal mechanisms to assure the monetary capacity of the operators throughout the duration of the concession contracts. In addition, it could also determine rules similar to the ones used in the banking and insurance sectors.
Macau’s Gaming Inspection and Coordination Bureau (DICJ) has confirmed that a public consultation on the revision of the city’s gaming law will run until October 29. However, with new Covid-19 cases detected in Macau, the first two public consultation sessions have been cancelled.
Authorities expect to finish the amendment of the gaming law by the final quarter this year before presenting a draft bill to the Legislative Assembly.
Macau’s current casino licences are due to expire in June 2022. However, the city’s gaming laws state that licences can be extended for up to five years from the original 20-year term. Authorities say Macau’s gaming law should be reviewed before a fresh public tender process.
