GGRAsia – Proposed dissolution of Macau concession is problematic: experts

Proposed dissolution of Macao concession poses problem: experts


An article in Macau draft new gaming law, creating a mechanism to dissolve an existing gaming concession in the event that it is not granted a new license after the current six concessions expire in June, is legally problematic for a number of reasons, according to several Macau law experts , in a comment to GGRAsia.

The bill should have a first lecture Monday, January 24 at the Legislative Assembly of Macau. The government said the bill needed to be enacted before there could be a new public tender for gaming rights in Macau.

Referring to Article 50 of the bill, which deals with the dissolution of concessions, António Lobo Vilela, lecturer in gaming law at the University of Macau and former adviser to local government, explained some of his reservations. .

“It doesn’t make sense that the company is being asked to dissolve because it can’t get a gaming concession,” he said.

In this case, although the company “cannot operate casino games”, it could still “continue to operate other businesses, such as hotels, MICE facilities, retail, etc.”, said Mr. Villela.

Mr Vilela added: ‘Do those writing the… bill understand the tax burden ‘they would face’ to transfer all those [non-gaming] assets to a new company? A mandatory change of scope of activity seems more than sufficient.

Local gambling lawyer Sérgio de Almeida Correia took a similar view. Referring to the existing legal framework for casino games in Macau, he said: “It is true that the current law stipulates that a concession can only be granted to a company whose exclusive objective is gambling.”

But he added: “If one of the current concessionaires fails to obtain a concession in the future tender, there is no legal reason to prevent the company from modify its corporate purpose and pursue non-gaming activities.”

Liability issues

Another proposition under Article 50 is that those who are either shareholders with 5% or more; administrators; or on a management body of a gaming concessionaire, must bear all the responsibilities of the company, including the guarantee of all gaming chips in circulation, in the event of termination of the gaming concession. Mr. Vilela and Mr. Correia see this as a difficulty.

Mr Correia said: ‘This is a legal aberration since the concession companies are limited liability companies.’

He added that with such wording under the article, “an accepted principle regarding corporate responsibility is doomed to death.”

The proposed approach “seriously compromises legal predictability, good faith and investor expectations,” the lawyer said, because “a limited liability partner/shareholder is…not liable for the debts of the company generated by his commercial activity “.

“The company’s assets are the only guarantee for the company’s debts arising from its commercial activity: only the company’s assets are liable for these debts. The situation would only be different if companies had unlimited liability, which they do not,” Correia added.

Macau lawyer José Alvares told GGRAsia that it is “important to understand how crucial” the gambling sector is to Macau’s economy, and that – from the government’s point of view – it does not would not be unreasonable to ensure that a dealer “has sufficient funds to repurchase”. the chips he put into circulation”.

“I think the underlying government concern is to make sure that a current operator is not in a position of over-indebtedness,” Mr Alvares said. But he warned that the way the section is worded in the bill “is a departure from the normal rules”.

“Shareholders are liable only to the extent of their stake in the company and directors only to the extent that they are deemed to have contributed to the default situation,” he said. “By making this change, it will certainly force operators to be extremely careful.”



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