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Decree-Law no. 32/93/M
of July 5, 1993
(Unofficial translation, for reference only)
Financial System Act
Decree-Law no. 35/82/M of the 3rd of August, played a successful role within the context of the development and open door policy which Macau was experiencing at the time.
Nevertheless, the impressive rate of change and innovation worldwide has made it imperative that the traditional scope of banking activity, the regulation of operations and the role of the supervisory authorities be reappraised.
Across the globe legislative reforms have been introduced or are in the process of implementation, placing great emphasis on preventative actions, highlighting particular prudential rules for controlling entry requirements. monitoring the suitability of qualified shareholders and managers, new operating risks and the supervision on a consolidated basis of financial groups. The rationale of the new Financial System Act lies mainly in the recommendations of the Basle Committee on Banking Supervision and the efforts of the European Community to achieve harmonization in banking legislation while also drawing on the experiences of countries and territories whose financial systems are similar to Macau's. However, whilst remaining loyal to those approaches most frequently adopted internationally, it also aims at strengthening the capacity of Macau's credit system to support the territory's economic activities thus promoting more effective regional cooperation and integration.
By harmonizing those factors required for modernization of the financial system with past experience and the challenges of the future, the intention of the Financial System Act is to provide Macau with the basis for developing an international financial centre.
Under these terms;
After hearing of the Consultative Council;
Under the powers conferred in Article 13, paragraph 1. of the Macau Organic Statutes, the Governor of Macau hereby decrees that the following should be implemented as law in Macau:
Article 1
(Approval of the Financial System Act)
The Financial System Act of Macau is hereby approved, being an integral part of this decree-law.
Article 2
(Scope)
1. The Financial System Act of Macau defines the legal framework to be applied to the financial activity in Macau.
The following are exempted from the provisions made in this Act:
a) financial activity conducted by the Government of Macau including its own services and autonomous funds;
b) financial activity conducted within the Territory of Macau by international organisations of which Macau is a member or with which Macau is otherwise associated and according to whose statutes these activities are permissible under the terms specified at the time of joining or association;
c) insurance business and the management of pension funds;
d) activity conducted by pawnborkers.
Article 3
(Transitional Provisions)
1. Except for the provisions of the following paragraph, those actions provided for in Articles 121 and 122 of the Financial System Act which occur prior to the act coming into force are subject to the provisions of Articles 123 to 138 so long as these actions were punishable under the previous legislation and without prejudice to the application of whichever law is more favourable.
2. Those offences still pending when the Financial System Act comes into force shall still be subject to the previous substantive and procedural legislation until the court reaches a decision.
3. Credit institutions incorporated in Macau whose capital is less than the amount stipulated in Article 21 of the Financial System Act, have a maximum limit of three years to adapt to the new Act according to a schedule to be set by Autoridade Monet6ria e Cambial de Macau (Monetary and Foreign Exchange Authority of Macau).
4. The branches of credit institutions incorporated overseas have a maximum limit of two years to adapt to the provisions of Article 23 of the Financial System Act, also according to a schedule to be set by Autoridade Monet6ria e Cambial de Macau (Monetary and Foreign Exchange Authority of Macau).
5. There is a one year limit for adapting to the rules concerning the exposure of credit institutions set in Part 11, Chapter V11 of the Financial System Act with regard to operations carried out prior to the date on which this Act comes into force, without prejudice to longer exposures being maintained until the date of their maturity.
6. The remaining institutions covered by the contents of the Financial System Act which are operating on the date of its commencement have a maximum limit of one year to adapt to the new legal regime.
Article 4
(Amendments to the Financial System Act)
Any amendments to the Financial System Act should be included in the proper place through the necessary replacements, cancellations or additions.
Article 5
(Post Office Savings Department)
Caixa Económica Postal (Post Office Savings Department) is governed by its own articles of association which shall establish the terms under which the provisions in the Financial System Act and its regulations shall be applicable.
Article 6
(Amendment of Decree-Law no. 15/83/M)
Article 29 of Decree-Law no. 15/83/M, of the 26th of February, shall hereafter have the following text:
Article 29
(Applicable Law)
Finance companies shall be governed by the present Decree-Law and supplementarily by the provisions of Parts 1, /1 and IV of the Financial System Act with the necessary adaptations.
Article 7
(Amendment of Decree-Law no. 25/87/M)
Articles 28 and 34 of Decree-Law no. 25/87/M, of the 4th of May, shall hereafter have the following text:
Article 28
(Management)
Management of the OBU shall be entrusted to persons resident in Macau with powers to effectively direct its business.
Article 34
(Applicable Law)
OBU's shall be governed by the present Decree-Law and supplementarily by the provisions of Parts I, II and IV of the Financial System Act with the necessary adaptations.
Article 8
(Amendment of Decree-Law no. 40/90/M)
Article 24 of Decree-Law no. 40/90/M, of the 23rd of July, shall hereafter have the following text:
Article 24
(Regime)
Venture capital companies shall be governed by the present DecreeLaw and supplementarily by the provisions of Parts I, III and IV of the Financial System Act with the necessary adaptations.
Article 9
(Repealed Legislation)
1. The following legislation is hereby repealed:
a) Decree-Law no. 30689 of the 27th of August, 1940 and Executive Order no. 11490 of the 20th of September, 1946;
b) Decree-Law no. 32765, of the 29th of April, 1943;
c) Decree-Law no. 42641, of the 12th of November, 1959 and Executive Order no. 19841 of the 3rd of May, 1963;
d) Decree-Law no. 35/82/M, of the 3rd of August;
e) Articles 11 and 28 of Decree-Law no. 15/83/M, of the 26th of February;
f) Decree-Law no. 59/83/M, of the 30th of December;
g) Article 13 of Decree-Law no. 25/87/M, of the 4th of May;
h) Executive Order no. 32189/M of the 20th of February;
i) Paragraph 4 of Article 15 of Decree-Law no. 80/89/M, of the 20th of November;
j) Executive Order no. 119/90/M, of the 11th of June;
k) Article 23 of Decree-law no. 40/90/M, of the 23rd of July.
2. Authorizations granted to credit institutions under the former legislation shall remain in force insofar as they do not contravene the provisions of the Financial System Act.
3. Any reference to the repealed regulations shall be deemed to be done to the corresponding provisions of the Financial System Act.
Article 10
(Commencement)
This Decree-Law shall come into force on the 1st of September,
1993.
FINANCIAL SYSTEM ACT
PART I
FINANCIAL ACTIVITY IN GENERAL
CHAPTER I
GENERAL PROVISIONS
Article 1
(Definitions)
For the purposes of this Act:
a) "financial institution" means an undertaking whose principal activity is to grant credit facilities, to acquire holdings, to engage in investment activities, or to act as intermediary in the money, financial or foreign exchange markets;
b) "credit institution" means an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credit on its own account and risk;
c) "financial intermediary" means any individual or corporate body whose business is to buy and sell, on behalf of third parties, in a habitual form and with a view to profit, securities or other negotiable instruments transacted in the money, financial or foreign exchange markets, or to merely accept investors' orders relating to the disposal of these instruments;
d) "subsidiary" means a financial institution which is a legal entity in its own right and which is controlled by another financial institution through holdings in its capital or through statutory or contractual provisions;
e) "local branch" means a place of business which is not a legal entity in its own right and which functions as part of a financial institution and conducts all or some of the transactions inherent in the business of the same;
f) "branch" means any place or places of business in Macau of a financial institution incorporated overseas or any place or places of business overseas of a financial institution incorporated in Macau which. not being legal entities in their own right, directly conduct transactions inherent in the head office's activity;
g) "representative office" means an undertaking which represents a financial institution and, under its strict dependence, looks after its interests and reports on any operations in which the institution intends to participate.
Article 2
(Financial Activity)
1. Without prejudice to the provis ions of Articles 16 and 117, only those financial institutions which have been properly constituted and authorized under the terms of this Act or special legislation may carry on, in a habitual form and with a view to profit, activities referred to in Article 17, paragraph L, sub-paragraphs a) to i).
2. Apart from the rights attributed by law to other persons and entities, Autoriclade Monet6ria e Cambial de Macau (Monetary and Foreign Exchange Authority of Macau) may require the dissolution and judicial winding-up of any company or other corporate entity which, without authorization, is engaged in operations which are legally restricted to financial institutions.
Article 3
(Issue of Debt Securities)
1. For the purposes of this Act, funds derived from bonds or other debt securities of a similar nature issued, under the terms and limits permitted by commercial law, by companies which are not credit institutions are not regarded as repayable funds received from the public.
2. When intended for public subscription, the issue of the debt securities referred to in the above paragraph by any entity in the territory of Macau requires prior authorization from the Governor on advice from Autoridade Monet6ria e Cambial de Macau (Monetary and Foreign Exchange Authority of Macau).
CHAPTER II
DISCIPLINE AND PROTECTION OF FINANCIAL
ACTIVITY
Article 4
(Power of the Governor)
1. The Governor has the Power to oversee, coordinate and supervise the money, financial and foreign exchange markets as well as the business conducted by the respective authorized institutions.
2. When exercising the powers conferred in the above paragraph, the Governor may issue directives or adopt measures as he deems appropriate to the condition of the money, financial or foreign exchange markets.
Article 5
(Monetary and Foreign Exchange Authority of Macau)
1. Monetary and Foreign Exchange Authority of Macau, hereinafter referred to as AMCM, shall supervise, coordinate and inspect the money, financial and foreign exchange markets as well as credit institutions, financial intermediaries and other financial institutions.
2. In its capacity as the supervisory authority, AMCM shall be responsible for promoting the general stability and proper functioning of the financial system with particular regard to:
a) ensuring compliance with all the legal provisions which govern authorized institutions and the working of the financial, money and foreign exchange markets;
b) taking all reasonable steps to ensure that institutions under supervision are operated in a sound and prudent manner;
c) implementing and encouraging the adoption of correct standards of ethical conduct and sound business practices;
d) suppressing practices incompatible with the nature of the institutions and situations liable to adversely affect the proper running of the markets.
3. AMCM shall be governed by its own statutes and the applicable provisions of this Act.
4. AMCM's powers and responsibilities concerning institutions subject to supervision shall be retained in instances when the authorization expires or is revoked, as well as when business is Suspended or ceases for whatever reason, until all creditors have been satisfied or, in the event of winding-up, until the process of winding-up has been completed.
Article 6
(Regulatory Powers)
1. AMCM has the power to issue notices and circulars of a regulatory nature.
2. The notices shall be published in Boletim Oficial (Official Gazette) and the circulars shall be delivered by hand with a signed receipt or sent by registered post.
3. In exercising its regulatory power, AMCM may issue directives regulating the working of the money, financial and foreign exchange markets and the activity of the institutions under supervision, namely to establish the following:
a) setting the composition and mini mum amount of cash in hand and minimum liquidity requirements;
b) criteria to observe in the valuation of assets and liabilities;
c) the minimum limits to be observed in the constitution of general or specific provisions and the criteria for constituting these provisions;
d) the items which may be included as own funds and their required characteristics;
e) the solvency ratios and criteria for weighting assets and off balance-sheet items;
f) the limits and terms on which debt securities, certificates of deposit or other debt instruments may be issued,
g) the limits and terms on which transferable loan certificates or other instruments of a similar nature may be issued;
h) the limits in respect of the underwriting of securities for indirect subscription or for the guarantee of their placement;
i) criteria to be observed in the accounting system and the procedures for internal control;
j) prescribing formats for the balance sheets, trial balances, reports on the source and application of funds, profit and loss accounts, periodic reports demonstrating the analytical situation and all other reports required for submission to AMCM or intended for publication;
k) other prudential rules in order to safeguard liquidity and solvency.
4. In the notices relating to liquidity rules, AMCM may establish forms for automatic compensation without prejudice to the applicable legal sanctions.
Article 7
(Duty of Cooperation)
1. Institutions subject to supervision shall submit to AMCM at such time and in such manner as the latter may prescribe, all accounting, statistical and other relevant information as AMCM may deem necessary for the proper discharge of its functions stipulated by law.
2. AMCM may also request any public or private entity to provide it directly with the information necessary to carry out its functions.
3. AMCM may use the services of other entities based in Macau or abroad whenever it is deemed necessary to carry out its functions.
Article 8
(Supervisory Actions)
1. Supervision of financial institutions may be carried out on their own premises.
2. AMCM may, either through its own examiners or through an appointed entity or individual, examine the books, accounts, transactions and other relevant records and documents of financial institutions at any time, with or without prior notice, as well as check the existence of any kind of valuables.
3. AMCM has the power to inspect any other entity operating in other sectors of economic activity whenever there are reasonable grounds to believe it is involved in an activity exclusively reserved to financial institutions, whenever an inspection of its operations is indispensable for a clarification of the activity of a specific financial institution, or whenever it is deemed necessary to assess the financial situation of the group to which a financial institution belongs.
4. During the course of supervision under the terms of this Article, AMCM may confiscate any documents or valuables which constitute the subject of the offence or which are deemed necessary for legal proceedings.
Article 9
(Consolidated Supervision)
1. Without prejudice to supervision on an individual basis, the supervision of financial institutions with head office in Macau shall be performed on the basis of consolidation of their financial situation with other companies in which the institution has a holding of over 50%.
2. In the case of holdings equal to or less than 50%, AMCM shall decide whether supervision should be done on a consolidated basis and in which manner, but always giving the institutions in question prior notice of its decision.
3. AMCM shall Adopt practices to permit and facilitate supervision on a consolidated basis by the competent authority of the home country of institutions incorporated overseas which have branches or subsidiaries in Macau and may, for this purpose, enter into agreements with the relevant authorities.
Article 10
(Disclosure of Information)
1. The institutions and companies referred to in paragraphs 1. and 2. of the above Article must submit to AMCM all information pertaining to those financial institutions which are their subsidiaries or in whose capital they have holdings and which is required for the supervision referred to in the same Article.
2. Institutions subject to supervision by AMCM and owned wholly or in part by institutions incorporated overseas are authorized to provide their parent company with the information required by the competent supervisory authorities in their home country for the purpose of verifying their financial situation on a consolidated basis.
Article 11
(Supervision Fee)
1. Without prejudice to special legislation, all financial institutions authorized to operate in Macau are subject to an annual supervision fee which shall not exceed two hundred thousand Patacas for the head office or main office, and twenty-five thousand Patacas for each local branch.
2. For the first year of activity and regarding the year in which it ceases its operation, the supervision fee shall be charged in proportion to the number of months in which the institution has been operating.
3. The supervision fee for each year of business shall be fixed by the Governor, on the advice of AMCM, in an Executive Order to be published by the 15th of January of the following year and shall be levied by and paid to AMCM by the 15th of February and shall constitute income for AMCM.
Article 12
(Use of Official Language)
1. Statutory books and records of institutions under AMCM's supervision and all applications submitted by the same to the Governor must be written in an official language of Macau.
2. Public notices issued by financial institutions must always be written in the official languages of Macau.
Article 13
(Advertisements)
1 . Financial institutions are prohibited from including in their advertisements or promotions financial information or other data, which is false, misleading or deceptive, or which may affect normal competition between credit institutions, disturb the credit system or disrupt the normal conditions of the money, financial and foreign exchange markets.
2. Without prejudice to the preceding paragraph, AMCM may, by notice or circular, establish specific rules on the form and content of advertisements of financial institutions.
3. AMCM may also take the following actions regarding advertisements which fail to comply with the requirements of this Article:
a) order the insertion of amendments which it deems necessary to correct the situation;
b) order the suspension of the advertisement in question;
c) order the immediate publication of an adequate rectification by the responsible entity.
4. If the responsible entities fail to comply with the orders referred to in sub-paragraph c), AMCM may. without prejudice to the applicable sanctions, replace the offenders in carrying out the above-mentioned rectifications.
Article 14
(List of Authorized Institutions)
AMCM shall publish in Boletim Oficial (Official Gazette), by the 31st of January of each year, a list of institutions under its supervision and authorized to operate in Macau.
PART II
CREDIT INSTITUTIONS
CHAPTER I
GENERAL PROVISIONS
Article 15
(Scope)
The following shall be considered as credit institutions:
a) Banks;
b) Caixa Económica Postal (Post Office Savings Department);
c) Financial leasing companies;
d) Other companies which, in conformity with Article 1 paragraph b), are legally classified as such.
Article 16
(Exclusive rights)
1. Only those credit institutions which have been duly constituted and authorized under the terms of this Act or other special legislation may operate a business involved in accepting deposits and other repayable funds from the public.
2. Credit institutions shall exclusively carry out authorized operations.
Article 17
(Authorized Operations)
1. Banks may carry out the following operations:
a) accepting deposits and other repayable funds from the public;
b) lending, guarantees and other commitments, financial leasing and factoring;
c) money transmission services;
d) issuing and administering means of payment such as credit cards, travellers' cheques and letters of credit;
e) trading for own account or for account of customers in money, financial and foreign exchange market instruments, financial futures and options, and transactions involving foreign exchange or interest rates and transferable securities;
f) participating in issues and placements of securities and provision of other services related to such issues;
g) operating in interbank market;
h) portfolio safekeeping, administration and management;
i) management of other assets;
j) financial consultancy;
k) investment in holdings in company capital;
l) credit reference services;
m) safe custody services;
n) sale of insurance contracts;
o) other similar transactions not forbidden by law.
2. Certain operations may, nevertheless, be temporarily suspended in relation to a specific institution or be subject to prior authorization by AMCM which shall take into account the existence of sufficient own funds and proof of adequate experience and technical ability of the relevant institution.
3. Banks with off-shore licenses (OBU's) and other credit institutions may only carry out those operations which are authorized by law or regulations governing the respective activities.
4. Prior to launching new financial products, credit institutions must inform AMCM of their respective nature and conditions.
Article 18
(Use of Title)
1. Any entity which has not been authorized as a credit institution under the terms of this Act is prohibited from including in its name or using in the company name in the course of its activity the words or expressions such as "bank", "banker", "banking", "deposit" or any other term which implies the idea of operating the business of a credit institution.
2. Authorized institutions may only use the above mentioned words or expressions in terms which do not give a wrong impression of the scope of business operations for which they are authorized.
3. Institutions incorporated overseas and authorized to operate in Macau must use the name adopted in their home country with an explanation of the same if needed to avoid confusion.
CHAPTER II
LICENSING AUTHORIZED INSTITUTIONS
SECTION I
GENERAL PROVISIONS
Article 19
(Authorization)
1. Special and prior approval granted on a case by case basis by the Governor, on advice from AMCM, is required for the following:-
a) incorporation of credit institutions in Macau;
b) opening of branches in Macau by credit institutions incorporated overseas;
c) setting up of subsidiaries and opening of branches and representative offices overseas by credit institutions incorporated in Macau.
2. The authorization provided for in the above paragraph shall be given in the form of an Executive Order in the case of a) and b), and by Executive Ruling in the case of c).
3. On granting authorization, the Governor may stipulate any requirements or specific conditions to be observed by the respective credit institution, namely those relating to the source and application of funds.
SECTION II
INCORPORATION OF CREDIT INSTITUTIONS IN MACAU
Article 20
(Form)
Credit institutions incorporated in Macau shall take the form of a public limited company and the respective shares shall either be nominal or registered to the bearer.
Article 21
(Share Capital)
1. Banks shall not be incorporated or thereafter carry on business in Macau if their share capital is less than one hundred million Patacas.
2. The remaining credit institutions incorporated in Macau shall observe the share capital limits set for them by special legal provisions or stipulated in the respective authorization.
3. At the time of incorporation, the share capital shall be fully subscribed and paid up in cash with at least half of the respective amount deposited with AMCM or to its account.
4. The deposit referred to in the preceding paragraph may be withdrawn after the commencement of business.
Article 22
(Procedures for Application for Authorization)
1. Entities wishing to incorporate a credit institution in Macau shall submit their application through AMCM accompanied by the following information:
a) a memorandum demonstrating the economic and financial reasons for wishing to incorporate the institution, indicating its feasibility and the manner in which the same shall fit into the economic and financial policies pursued by the competent authorities of Macau;
b) a description of the institution, giving its location and details of the technical and human resources at its disposal;
c) a draft of the memorandum and articles of association;
d) personal and professional identification of the founding shareholders, indicating the percentage of their respective holdings in the share capital and a statement confirming the adequacy of the shareholding structure with regard to the stability of the institution.
2. If there are shareholders who are corporate bodies with a holding equal to or greater than 5% of the share capital of the institution to be incorporated, the following information must also be included:
a) memorandum and articles of association;
b) annual report and accounts in respect of the preceding three years:
c) names and personal details of the members of the board of directors;
d) distribution of the share capital and a list containing the names of shareholders who hold over 5% of the respective share capital;
e) names of other companies in whose capital they have qualifying holdings and the structure of the respective group,
3. In addition to the information referred to in the preceding subparagraphs, any other information which AMCM deems necessary to allow a full analysis of the application should be submitted. AMCM may exempt entities from submitting documents and information which are already kept in its files.
4. The decision on the application for authorization shall, inter alia, take into account the following:
a) the suitability of the qualifying shareholders, under the terms of the following paragraph;
b) the ability of the institution to guarantee the safety of the funds deposited with it;
c) the adequacy of technical and financial resources required for the type and volume of transactions which the applicant proposes to conduct;
d) the adequacy of the objectives of the applicants with the economic and financial policies pursued by the official bodies in Macau.
5. If the Governor is not satisfied that all the shareholders with qualifying shareholdings meet the conditions to ensure the sound and prudent management of the credit institution, authorization shall be refused.
SECTION III
OPENING BRANCHES OF CREDIT INSTITUTIONS INCORPORATED OVERSEAS
Article 23
(Capital Requirements)
1. Branches of credit institutions incorporated overseas which are authorized to operate in Macau should maintain at all times in the Territory, in certain categories of assets to be defined by AMCM's notice, an amount equal to at least 50% of the minimum capital required for constituting institutions of the same type.
2. At least half of the amount mentioned in paragraph 1. should be deposited CM or to its account prior to registration regulated by the provisions of Articles 36 to 39.
3. The deposit mentioned in the above paragraph may be withdrawn after the said institution has commenced business.
Article 24
(Procedures for Application for Authorization)
1. The application for authorization to open branches of credit institutions incorporated overseas should be submitted through AMCM along with the following documents:
a) an explanation of the economic and financial reasons behind the institution's intent to operate in Macau;
b) document issued by the supervisory authority in the home country proving that the institution is legally constituted and authorized to set up the branch with an indication of the operations which it is entitled to carry out;
c) the memorandum and articles of association of the credit institution;
d) the annual report and accounts for the preceding three years;
e) resolution from the general meeting of the shareholders, or authorization from the legal representatives of the institution if they are legally competent to approve;
f) the identity of the managers of the branch and management mandate for Macau issued under the terms stipulated in subparagraph 2 of Article 47.
2. In addition to the information referred to in the preceding paragraph, any other information which AMCM deems necessary to allow a full analysis of the application should be submitted.
3. The decision on the application for authorization shall take into account namely the provisions contained in Article 22, paragraph 4., sub-paragraphs b) to d).
Article 25
(Liability)
1.Credit institutions incorporated overseas shall always be liable for operations carried out by their branches authorized to operate in Macau.
2. Assets registered with local branches may be used to settle obligations undertaken by credit institutions abroad but only after settling all liabilities in Macau, including unrecorded liabilities when confirmed by a court decision enforceable in Macau.
3. An overseas authority's decision on the bankruptcy or liquidation of a credit institution shall only apply to the relevant branch in Macau after the provisions of the preceding paragraph have been satisfied, even when this decision is reviewed by courts with local jurisdiction, with the sole exception of adherence to a universal liquidation procedure.
Article 26
(Operating in Accordance with the Laws of Macau)
Credit institutions with their head office located overseas which are authorized to operate in Macau may not perform any operations in the Territory which, although permitted by their own articles of association. run contrary to this Act or any other laws in force in Macau.
SECTION IV
REPRESENTATIVE OFFICES OF INSTITUTIONS INCORPORATED OVERSEAS
Article 27
(Authorization)
The establishment in Macau of representative offices of credit institutions incorporated overseas depends on prior authorization from AMCM.
Article 28
(Permitted Activity)
1. Representative offices are only allowed to look after the interests of the credit institutions which they represent and to report on any operations in which the institution proposes to participate.
2. Representative offices are expressly prohibited from:
a) carrying out operations directly with the public or offering services within the scope of credit institutions;
b) acquiring shares or holdings in any other company;
c) participating in security issues of any company, including underwriting facilities;
d) acquiring real estate which is not indispensable for the establishment of their office.
Article 29
(Place of Business)
Each representative office must operate in a single place and is not entitled to open any other office.
Article 30
(Management)
Managers of representative offices shall be resident in Macau and have powers to deal with and resolve all matters concerning the relevant operations with the local authorities and private bodies.
SECTION V
OPENING LOCAL BRANCHES AND OTHER PLACES OF BUSINESS OF CREDIT INSTITUTIONS
Article 31
(Authorization)
1. The opening of any local branch to the public or any change of location of the same is subject to prior authorization from AMCM.
2. No authorization is needed for the opening of offices not serving the public but the respective institution must inform AMCM beforehand of the location and purpose as well as of any other changes thereafter.
SECTION VI
OVERSEAS ESTABLISHMENTS OF CREDIT INSTITUTIONS INCORPORATED IN MACAU
Article 32
(Application for Authorization)
1. Any credit institution which intends to set up a subsidiary, a branch or a representative office overseas should obtain authorization by submitting a formal application through AMCM along with the following documents:
a) indication of the country or territory in which the institution intends to operate;
b) type of establishment;
c) a full explanation of the economic and financial reasons for the application with an indication of the type of operations which it intends to carry out;
d) address of the place of business in the host country;
e) personal details and professional curricula of the managers in charge of the business of the establishment.
2. In addition to the information referred to in the preceding paragraph, any other information which AMCM deems necessary to allow a full analysis of the application should be submitted. AMCM may exempt entities from submitting documents and information which are already kept in its files.
Article 33
(Authorized Operations)
1. If authorization is not explicit as to the respective scope of operations, overseas branches of credit institutions incorporated in Macau may only perform those operations which the institution is authorized to do in Macau.
2. Overseas representative offices of credit institutions incorporated in Macau must observe the restrictions stipulated in Article 28.
SECTION VII
EXPIRY AND REVOCATION OF AUTHORIZATION
Article 34
(Expiry of Authorization)
1. Authorization to incorporate a credit institution in Macau shall expire if the applicants expressly renounce it or if the institution is not formally incorporated within 6 months or fails to start business within a period of 12 months.
2. Authorization to open a branch of an institution incorporated overseas shall expire if the applicants expressly renounce it or if the institution fails to start business within a period of 12 months.
3. Authorization shall also expire if the cr41t institution is dissolved, without prejudice to the actions required for winding-up.
4. All remaining authorizations granted under the terms of this Chapter shall expire if not used within the period set for this purpose or, failing this, within 6 months.
5. The time limit is counted from the date on which authorization is published or, if there is no publication, from the date on which the parties concerned are notified of the same.
6. The time limit may be extended by the entity which granted the authorization once or more times upon written request from the parties concerned.
Article 35
(Revocation of Authorization)
1. Authorizations granted under the provisions of this Chapter have a personal and non-transferable nature and, without prejudice to any other applicable provisions, they may be revoked when:
a) they have been obtained on the basis of false statements or other irregular means without prejudice to other sanctions which may be applicable;
b) the institution no longer offers any guarantee of fulfilling its obligations, in particular with regard to the safety of the funds therein deposited, namely due to serious irregularities in the management, accounting or internal audit, or when its own funds fall below the minimum legally required capital and are not increased within the time limit given for this purpose:
c) the institution ceases its business;
d) the institution maintains an insignificant level of activity for over 12 months;
e) the members of the company boards are not appointed or the boards fail to function in a normal manner;
f) the institution, in a systematic and serious manner, fails to observe the laws and regulations of Macau or the decisions and guidelines issued by the Governor or AMCM;
g) any changes are made to the articles of association which are incompatible with local legislation in the case of institutions incorporated overseas.
2. Authorization granted for the opening of branches, local branches or representative offices of credit institutions incorporated overseas shall be revoked if the competent authorities in the home country withdraws the authorization on which the institution depends.
3. Apart from duly justified exceptional circumstances, the institution in question shall be notified of the intention to withdraw authorization and the same institution may present its defence against the revocation within a period of 5 days.
4. Withdrawal of authorization shall be decided by the entity which, at that time, is the competent authority to issue authorization.
5. In the course of appeal against the decision to revoke authorization, it shall be assumed, until proven otherwise, that suspension will involve serious damage to the public interest.
6. The revocation of authorization for whatever reason implies the winding-up of the same institution.
CHAPTER III
REGISTRATION
Article 36
(Obligation of Registration)
1. Credit institutions are subject to special registration with AMCM without which they shall not commence business.
2. The provision of the above paragraph does not prejudice any other registration requirements to which the institutions are legally bound.
3. Certificates of extracts from the register and of the amendments contained therein may be issued to those who can demonstrate legitimate interest.
Article 37
(Information Subject to Registration)
1. The registration of credit institutions incorporated in Macau shall include the following information:
a) the name of the institution;
b) the date of incorporation and of commencement of business;
c) the company objects;
d) the address of the head office;
e) the address and date of commencement of business of all places of business;
f) the share capital;
g) the identity of the qualified shareholders and their respective holdings in the share capital;
h) any agreement among shareholders concerning the exercise of voting rights;
i) the identity of the members of the board of directors and supervisory body, as well as of the general meeting committee and of any other persons holding management mandates;
j) the identity of the external auditors;
k) a notarized photocopy of the memorandum and articles of association;
l) any amendments to the information described above.
2. The registration of credit institutions incorporated overseas shall include:
a) the name of the institution;
b) the date on which authorization was granted to open a branch in Macau and the date of commencement of business;
c) the scope of authorization in the home country and in Macau;
d) the share capital of the head office;
e) the address of the head office;
f) the addresses of the branch and all places of business, or the address of the representative office with the respective dates of commencement of business;
g) the identity of persons with management powers;
h) the identity of the external auditors;
i) any amendments to the information described above.
3. AMCM may request additional information for the purpose of registration.
Article 38
(Time Limit for Registration)
1. Applications for registration shall be submitted within a period of 30 days to be counted from the date on which the institution is incorporated or authorization is granted for it to open a branch in Macau.
2. Amendments to the register should be submitted within a period of 30 days to be counted form the date on which they occurred.
Article 39
(Refusal of Registration)
1. Registration shall be refused whenever any of the conditions on which authorization to establish or operate a credit institution is not met, namely when any one of the individuals referred to in Article 47 fails to meet the conditions relating to the suitability and experience required by law, or as provided for in Article 42, paragraph 7.
2. The provision of the preceding paragraph is also applicable, with the appropriate adaptations, to the refusal of amendment of the information contained in the register of AMCM.
3. When the submitted application or documentation has insufficient or irregular information which may be rectified by the interested party, the latter shall be notified to provide the same within a period to be specified and any failure to comply shall result in refusal to proceed with the registration or amendment.
CHAPTER IV
SHAREHOLDERS, MEMBERS OF COMPANY BOARDS AND MANAGERS OF CREDIT INSTITUTIONS
SECTION I
SHAREHOLDERS
Article 40
(Suitability of Qualifying Shareholders)
1. No individual or corporate body may acquire, either directly or indirectly, a qualifying holding of a credit institution incorporated in Macau or increase the same by over 5% of the share capital or voting rights, in one or more stages, without prior approval from AMCM, unless by its very nature this should be impossible and in which case AMCM should be informed within a maximum of 30 days to be counted from the date on which the same occurred.
2. A qualifying holding is that which, either directly or indirectly, represents 10% or more of the share capital or voting rights, or in any other form which confers the possibility to exercise a significant influence over the management of the institution.
3. For the purposes of the above paragraph, the following shall be deemed equivalent to voting rights held by the shareholder:
a) those held by a spouse from whom the shareholder is not judicially separated, regardless of the regime of marital property;
b) those held by minor descendants;
c) those held in the name of or ascribed to other persons or entities but for the account of the shareholder;
d) those held by companies controlled by the shareholder or the persons referred to in sub-paragraphs a) and b);
e) those held by a third party with whom the shareholder has entered into an agreement which obliges him, by combining his voting rights, to adopt a common policy with regard to the management of the company;
f) those held by a third party under an agreement with the shareholder or with a company controlled by him, which provides for a provisional transfer of these voting rights;
g) those inherent to shares held by the shareholder which have been given as collateral, except when the creditor holds these rights and declares his intention to exercise them, in which case the respective voting rights shall be regarded as belonging to the creditor;
h) those inherent to shares which the shareholder has the usufruct;
i) those which, under an agreement, the shareholder or one of the other individuals or entities referred to in the above sub paragraphs are entitled to acquire;
j) those inherent to shares deposited with the shareholder and which the same is entitled to use to his best judgement in the absence of specific instructions from the respective holders.
4. A controlled company is that in which the qualifying shareholder:
a) holds over half the voting rights;
b) is a shareholder and has the right to appoint or dismiss over half the members of the board of directors or of the supervisory board; or
c) is a shareholder and, under an agreement with other shareholders of the company, has exclusive control of the majority of voting rights.
5. For the purposes of the above paragraph, voting rights and the right to appoint and dismiss to which a company is entitled should include those rights held by any other company controlled by it, as well as those held by any other person or entity operating under its own name but on behalf of the said company or on behalf of any other company controlled by the said company.
Article 41
(Assessment of Suitability)
1. If AMCM is not satisfied that the shareholders can ensure the sound and prudent management of the institution, it may oppose the acquisition of or increase in the qualifying holding.
2. The following may constitute grounds for opposition:
a) the manner in which the person habitually conducts his business or the character of his professional activity if these display a propensity towards taking excessive risks;
b) the person's economic and financial situation being inadequate, as evaluated in terms of the value of the holding which he proposes to acquire;
c) reasons for AMCM to doubt about the legitimacy of the source of the funds to be applied in acquiring the holding, or doubt about the true identity of the owner of these funds;
d) the structure and characteristics of the group in which the credit institution would be included if they hinder adequate supervision;
e) the person does not show his willingness to fulfill or to ensure that he will fulfill the necessary measures to restore the financial standing of the credit institution in accordance with the determination of AMCM.
3. Approval shall be deemed granted whenever AMCM does not issue any response within a period of two months to be counted from the date of application.
4. When there is no opposition, AMCM may set a period for carrying out the plan.
Article 42
(Restrictions on Voting Rights)
1. Without prejudice to the applicable sanctions, acquisition of or increase in a qualifying holding without prior approval from AMCM shall result in the prohibition of exercising the voting right which has been acquired.
2. When AMCM becomes aware of the existence of any of the situations mentioned in the above paragraph, it shall inform the board of directors of the credit institution of this occurrence and of the prohibition from exercising the respective voting right by the offender.
3. On receipt of the information referred to in the above paragraph, or should it become aware of these facts from other sources, the board of directors of the credit institution in question must provide the shareholders' meeting with this information.
4. Any passed resolution in which the shareholder has exercised voting rights subject to prohibition under the terms of paragraph 1. shall be voidable unless it is proven that the same resolution would have been reached even without those votes.
5. If, in spite of the provisions of paragraph 3., the shareholder exercises voting rights subject to prohibition, the minutes must record how he casted his votes.
6. The petition on the voidance of the vote may be lodged by the shareholders, by the supervisory board or by AMCM.
7. While civil action on the voidance of the vote concerning the election of the board of directors or supervisory board is pending, the registration referred to in Article 37, paragraph 1., sub-paragraph 1) may be refused on the grounds of the exercise of voidable voting rights that have been decisive in the decision.
Article 43
(Termination of Prohibition)
Should the provisions in Article 40, paragraph 1. not be observed, the prohibition referred to in the preceding article shall cease if the party in question subsequently informs AMCM and there is no cause for opposition from AMCM.
Article 44
(Reduction in Qualifying Holding)
Any individual or company, who intends to sell a qualifying holding in a credit institution with its head office in Macau or to reduce it by 5% or more of the share capital or voting rights, shall inform AMCM in advance and indicate his holding after reduction.
Article 45
(Information to be Provided by Credit Institutions)
1. Credit institutions with their head office in Macau shall inform AMCM as soon as they become aware of any changes referred to in Articles 40 and 44.
2. Credit institutions with their head office in Macau shall submit to AMCM, in April each year, a list of shareholders with holdings of more than 5% of the respective capital or voting rights.
Article 46
(Agreements between Shareholders)
1. Agreements between shareholders of credit institutions with their head office in Macau concerning voting rights are subject to registration with AMCM otherwise they shall have no effect.
2. Application for registration may be submitted by any of the parties in the agreement.
SECTION II
MEMBERS OF THE COMPANY BOARDS AND THE MANAGEMENT OF CREDIT INSTITUTIONS
Article 47
(Management of Credit Institutions)
1. The board of directors of credit institutions shall have a minimum of three persons, all of recognized suitability, and at least two of whom shall be residents in Macau sufficiently able and experienced to carry out their duties and with full powers to effectively direct the business of the institution.
2. Branches of credit institutions incorporated overseas shall be managed by at least two persons resident in Macau of recognized suitability and with adequate professional experience and have powers to effectively direct the business of the branch.
Article 48
(Suitability of Managers of Credit institutions)
1. The criteria for suitability as required in the preceding Article must take into account the manner in which the person habitually conducts his business, or exercises his profession, with particular regard to indications that may reveal lack of sound judgement or a failure to fulfill his responsibilities or to adopt modes of behavior which are incompatible with the good repute of the credit institution.
2. Among other relevant circumstances, the following shall be considered in the evaluation of suitability:
a) if the person has been declared bankrupt or insolvent or found to be responsible for the bankruptcy or insolvency of a company under his control or in which he was a managing director, director or manager;
b) if the person has been the managing director, director or manager of a company in which bankruptcy or insolvency has been prevented, suspended or avoided through extraordinary financial measures, or has held a controlling position in a company under these conditions so long as it is recognized as culpable for this situation;
c) if the person has been convicted or is indicted of fraud, robbery, theft, embezzlement, bribery, extortion, abuse of confidence, usury, corruption, issuing cheques without cover or unauthorized receipt of deposits and other repayable funds;
d) if the person has been responsible for breaches of the legal rules or regulations which govern the activity of credit institutions and other institutions subject to supervision of AMCM, when the seriousness or reiteration of these offences justifies.
3. The provisions of this Article are applicable to the members of the supervisory board and of the general meeting committee of the credit institution, with the necessary adaptations made in accordance with the nature of their duties.
Article 49
(Procedures to be followed prior to Commencing Duties)
1. Members of the board of directors and supervisory board of credit institutions as well as the managers of branches must register their respective appointment with AMCM prior to commencing their duties.
2. The application for registration shall include a detailed professional curriculum and a certificate of the criminal record or equivalent document acceptable to AMCM, regarding the person or persons in question.
3. In the case of refusal of registration for the majority of the members of the board of directors or supervisory board or if the legal or statutory requirements for the normal running of the boards in question are not fulfilled in any other way, the credit institution must submit to AMCM, within a period to be set by AMCM, a new list of members with the outgoing members continuing to serve during the interim period.
4. Failure to comply with the provisions of paragraphs 1. and 3. shall, without prejudice to the applicable legal sanctions, be grounds for the revocation of authorization of the credit institution or for the implementation of the provisions of Articles 83 to 105 but the absence of registration does not imply that the acts practiced by the person in question in the course of his duties are invalid.
Article 50
(Supervenient Events)
l. Credit institutions must inform me aware of any of the events referred to in paragraph 2. of Article 48 which are supervenient to the registration and are connected to any of the members of the general meeting committee, the board of directors, the supervisory board or the managers.
2. Supervenient facts are those which take place following registration as well as those which are only known following registration.
3. The duty referred to in paragraph 1. is superseded if AMCM is informed by the persons in question.
4, Upon being informed or having knowledge by whatever means of the supervenient events, AMCM shall notify the credit institution and the person in question to clarify their position unless they have already done so.
5. If, after the additional inquiries which may be necessary. AMCM concludes that the person in question is not suitable for the position he is holding, then the relevant registration shall be cancelled and the credit institution shall be informed so that it may take the necessary steps for this person to cease his duties immediately.
6. The provisions of Article 49, paragraph 4. shall be applied to any failure to observe the provisions of the final part of the preceding paragraph.
Article 51
(Performance of Duties)
1. Persons responsible for managing credit institutions shall perform their duties in a prudent and judicious manner, with integrity and full independence, and observing the laws, regulations and rules of good professional conduct. promoting an adequate diversification of the risks involved and safety in the application of funds and taking into account the interest of the institution, its depositors and other creditors.
2. The members of the board of directors and supervisory board of any credit institution shall not participate in the assessment and decision of operations involving companies in which they are shareholders or partners or of which they are members of the board of management or which concern them either directly or indirectly and these operations must be unanimously approved by all the remaining members of the board of directors and endorsed by the supervisory board.
3. The general managers, managers and other employees as well as the consultants of credit institutions shall not participate in the assessment and decision of operations involving companies in which they are shareholders or of which they are members of the board of management or in which they have either direct or indirect interests.
4. It is assumed that the persons referred to in the preceding paragraphs have an indirect interest in the operation when the beneficiary of the operation is their spouse, child, parent. step-child, step-parent, son-in-law, daughter-in-law or parent-in-law, or is a company controlled by any of them either directly or indirectly.
5. For the purposes of this Article, the acquisition of equity capital in the capital of companies referred to in the above paragraphs is regarded as granting of credit.
6. The directors, general managers and managers, members of the supervisory board, or chairman of the general meeting committee, lawyers, external auditors, consultants or employees of a credit institution, when performing management duties or are mandataries with management powers in another institution with identical activity, shall not participate in decisions which may create a conflict of interest between the institutions in question nor take part in the initial decision process.
7. The provisions of paragraphs 2. to 5. shall not be applied to those companies included in the consolidated supervision to which the relevant credit institution is subject.
Article 52
(Liability)
1. Members of the management bodies of credit institutions shall be jointly liable for all acts in which they are actively involved and ard contrary to law or the articles of association of the relevant credit institutions unless they have expressed their opposition or disagreement in writing.
2. Members of the supervisory bodies are also liable for the above-mentioned acts contrary to the law or articles of association whenever they have been aware of the same and have not expressed their opposition or disagreement in writing.
CHAPTER V
EXTERNAL AUDITORS
Article 53
(Compulsory Appointment)
1. The financial statements of credit institutions shall be compulsorily audited by independent audit firms approved in advance by AMCM.
2. Whenever possible, the audit firm of the head office or parent company of credit institutions incorporated abroad should be the same for branches and subsidiaries.
Article 54
(Contract of Service)
1. The service contract signed between each institution and its auditors shall at least specify the scope of the work to be carried out, the term and the corresponding remuneration.
2. Early termination of the contract at the request of the credit institution may only occur upon mutual accord, or based on justa causa.
3. Credit institutions must inform AMCM in writing within 30 days of their reasons for terminating the contract.
4. The auditors must inform AMCM immediately in writing of any decision to terminate the contract prior to its term, or if they do not wish to be re-appointed, specifying the reasons behind their decision.
Article 55
(Relationship between the Auditors and AMCM)
1. AMCM may, of its own accord or upon a duly justified request submitted by the credit institutions or their respective auditors, call meetings to discuss any relevant matters concerning the said credit institutions and, as long as all parties have been notified, these meetings may take place or proceed without the attendance of the representatives from the credit institutions.
2. The provisions of the above paragraph do not preclude the possibility, in exceptional circumstances, of AMCM and the auditors dealing directly with any matters concerning the duties of the latter as expressed under the terms of this Act.
Article 56
(immediate Reporting of Situations)
Without prejudice to the other duties of information provided for in this Act or in other general laws in force in Macau, the auditors must inform AMCM immediately in writing of any matter which they detect during the course of their duties which may cause serious damages to the credit institution or jeopardize the soundness of the financial system of Macau, namely:
a) involvement by the institution, its representatives or employees in criminal activities or money-laundering;
b) irregularities which may put the solvency of the institution immediately at risk;
c) carrying out of operations which are not permitted;
d) other facts which, in their opinion, may seriously affect the institution.
Article 57
(Special Audits)
Under exceptional circumstances duly justified, and upon consultation with the institution itself, AMCM may decide to carry out a special audit to be conducted by the commissioned auditor or any other entity indicated by AMCM.
CHAPTER VI
SHARE CAPITAL, RESERVES, DIVIDENDS, PROVISIONS AND AMORTIZATIONS
SECTION I
SHARE CAPITAL AND OWN FUNDS
Article 58
(Reduction of Share Capital)
1. When it becomes advisable for a credit institution to reduce its share capital, taking into account its financial s ituation, the Governor may, on the advice of AMCM, impose or authorize this reduction and may waive the fulfillment of some of the provisions applicable to companies in general.
2. The reduction mentioned in the preceding paragraph shall be done by deducting from the share capital losses incurred in previous financial years and assets whose valuation is deemed unacceptable to AMCM.
Article 59
(Own Funds)
1. The amount of own funds of a credit institution shall not fall below the minimum share capital set in Article 21.
2. Whenever the own funds fall below the limit stipulated in the preceding paragraph, AMCM shall fix a period and the conditions for the credit institution to rectify the situation when the circumstances justify it.
3. In exceptional circumstances, AMCM may, on a case by case basis, set capital adequacy ratios higher than those set out in Article 6, paragraph 3., sub-paragraph e) which shall be directly communicated to the institution in question.
SECTION II
RESERVES, DIVIDENDS, PROVISIONS AND AMORTIZATIONS
Article 60
(Legal Reserve)
1. Credit institutions incorporated in Macau shall transfer at least 20% of their net annual profits to their legal reserve account until that fund amounts to half of the share capital.
2. Once the amount referred to in the preceding paragraph has been reached, credit institutions shall transfer at least 10% of their net annual profits to the legal reserve account until the reserve fund is equal to the share capital.
3. The legal reserve may only be incorporated into the share capital, or used to compensate losses or brought forward losses when no other reserves are available for these purposes.
4. The transfer from the legal reserve into the share capital shall only be allowed for the part which exceeds 25% of the said share capital.
Article 61
(Restrictions on Distribution of Dividends)
1. Credit institutions incorporated in Macau shall not distribute to their shareholders as dividends or under any other pretext, any sum of money which reduces in any way the amount of the legal reserve specified in the preceding Article.
2. Credit institutions incorporated in Macau are also prohibited from distributing to shareholders any sum of money as dividends prior to the annual accounts being approved.
Article 62
(Provisions and Amortizations)
1. Without prejudice to the general or specific provisions determined by AMCM under the terms of Article 6, paragraph 3., subparagraph c), credit institutions must create additional provisions as they prudently deem necessary to deal with other risks and obligations.
2. Credit institutions must maintain an appropriate method of amortizations based on generally accepted accounting principles.
CHAPTER VII
PRUDENTIAL RULES ON EXPOSURE OF CREDIT INSTITUTIONS
Article 63
(Definitions)
1. For the purposes of the limits set in this Chapter:
a) "exposure" shall mean any facility whether drawn or undrawn, granted to a client or group of connected clients, on or off balance sheet, including guarantees and other commitments, whether or not it is used, and also the acquisition or holding of financial holdings and securities of any kind issued by the client or group of clients;
b) "large exposure" shall mean the exposure a credit institution takes with a client or group of closely related clients when its value is equal to or exceeds 15% of the institution's own funds;
c) "group of closely related clients" shall mean:
i) two or more persons, whether individual or corporate, who unless proven otherwise, represent a single risk because one of them controls, directly or indirectly, the other or others, or because liability for their respective debts are transferable; or
ii) two or more persons, whether individual or corporate, who do not share a relationship of control as described in i) above but who are interconnected in such a way that if one of them experiences financial problems, the other or all of them are likely to encounter repayment difficulties.
2. Controlling power exists when:
a) a company has a holding in another company, or when the majority shareholders of the former company have holdings in the latter, or when companies in which the former company or its majority shareholders have holdings which amount to over 50% of the capital assets of the said company either individually or in aggregate;
b) an individual or corporate person is in one of the situations provided for in Article 40, paragraph 4.
3. A system of interconnected liabilities exists between general partnership companies and their partners, between partnership associations and their full partners and between couples married under the regime of shared property or shared acquired property, as per the terms of the applicable civil law.
4. The interconnections referred to in paragraph 1., subparagraph c), ii) of this Article, may include, namely, the existence of common ownership or common directors, cross guarantees or direct commercial interdependency which cannot be substituted in the short term.
Article 64
(General Exposure Limits)
1. Without prejudice to other lower limits set in this Act or in other regulations issued by AMCM, credit institutions shall not incur an exposure to a client or a group of connected clients, which exceeds 30% of its own funds.
2. Credit institutions shall not incur large exposures which in the aggregate exceed 800% of its own funds.
Article 65
(Exposure to Holders of Qualifying Holdings)
1. Credit institutions shall not incur an exposure to any person, individual or corporate, which holds, directly or indirectly, a qualifying holding in it, or to companies in which this person has direct or indirect control, which at any time in the aggregate exceeds 20% of its own funds.
2. The aggregate exposure of all holders of qualifying holdings and companies referred to in the preceding paragraph may not exceed at any time, 40% of the credit institution's own funds.
3. The operations referred to in the preceding paragraphs require approval from all the members of the board of directors and a favourable o inion from the supervisory board of the credit institution, and the respective terms shall be notified to AMCM within 10 days counted from the date of the respective approval.
4. Paragraphs 4. and 5. of Article 51 are applicable, with the necessary adaptations, to the operations referred to in the preceding paragraphs.
Article 66
(Specific Limits)
1. Credit institutions shall not incur any exposure in the following cases and above the following limits:
a) against the security of its own shares;
b) to the members of the board of directors and supervisory board, their spouses so long as they are not judicially separated or married under the regime of separate property, children, parents, step-children, step-parents, sons-in-law, daughters-in-law, parents-in-law or companies under their control or to which board of directors or supervisory board they belong, to an aggregate amount exceeding 10% of own funds;
c) to each of the entities mentioned in the above paragraph, to an amount exceeding 1% of own funds;
d) to each employee, for an amount which exceeds his or her total net annual income.
2. Investment in shares which are not for financial holdings must observe the following rules:
a) shares issued by companies incorporated overseas should be listed in a stock exchange;
b) the holding of shares issued by the same company may not exceed 5% of the credit institution's own funds nor represent more than 5% of the capital of the issuing company.
3. Shares which are not traded within six months from their purchase or whose purchase violates the stipulations of the above paragraphs shall be assumed to be financial holdings.
Article 67
(Exceptions)
1. The following are exempted from the exposure limits set in the preceding Articles:
a) the Territory of Macau;
b) central governments or central banks of countries or territories previously accepted by AMCM;
c) financial subsidiaries subject to supervision on a consolidated basis with the credit institution in question.
2. The following are not considered for the purposes of calculating exposure limits:
a) those covered by express and irrevocable guarantee of the entities referred to in sub-paragraphs a) and b) of the preceding paragraph, or guaranteed with securities issued by the same entities;
b) those covered by cash deposits. or by certificates of deposit issued by the lending institution and deposited there;
c) exposures with a maturity of 12 months or less to other credit institutions subject to supervision deemed adequate by AMCM;
d) credits secured by or granted through discounting of bills or of other properly documented instruments which represent exports from Macau;
e) undrawn credit facilities with an original maturity of up to one year or which may be unconditionally cancelled at any time without notice so long as an agreement has been made with the client or group of connected clients that their exposure cannot exceed the limits indicated in Articles 64 and 65;
f) operations or certain categories of operations which have been authorized under exceptional circumstances by the Governor, on advice from AMCM.
3. The exposure referred to in paragraph 1, sub-paragraphs b) and d), of the preceding Article may exceed the limits set therein when the credit is intended for home purchase by the respective beneficiary, collateralized by a real guarantee which has been evaluated by an independent valuer and registered in the name of the institution in question.
Article 68
(Relationship between Holdings and Own Funds)
1. No credit institution may have a shareholding in another company which exceeds, either directly or indirectly, 15% of its own funds.
2. The aggregate amount of holdings referred to in the preceding paragraph may not exceed 60% of the credit institution's own funds.
3. The following shall not be counted for the limits fixed in the preceding paragraphs:
a) shares held temporarily during the normal course of underwriting, within the limits set in paragraph 3., subparagraph h) of Article 6;
b) shares held in its own name but for account of third parties, without prejudice to the limits set in accordance with Article 6.
4. AMCM may, under exceptional circumstances, authorize the limits set in paragraph 1. and 2. to be exceeded in which case the credit institution must increase its own funds or take other equivalent measures deemed adequate by AMCM.
5. The provisions of this Article shall not apply to holdings in financial institutions subject to supervision deemed adequate by AMCM.
Article 69
(Relationship between Holdings and the Capital of the Relevant Companies)
1. No credit institution shall, directly or indirectly, have a holding of more than 25% of the voting rights attributed by the share capital of the relevant company.
2. For the purpose of the preceding paragraph. the provisions of Article 40, paragraphs 3. to 5. shall apply.
3. The limit set in paragraph 1. shall not apply to the credit institution's holdings in:
a) financial institutions subject to supervision deemed adequate by AMCM;
b) insurance companies and pension fund management companies;
c) companies whose activity is complementary to the activity of the credit institution, when prior authorization from AMCM has been granted.
Article 70
(Other Limits)
1. The net aggregate value of the real estate, financial holdings and other tangible and intangible assets of a credit institution shall not exceed the value of its own funds.
2. For the purposes of the preceding paragraph, real estate properties received by the credit institution as repayment for credit granted by them and which are not used in its activity. or items which are deducted from the credit institution's own funds in accordance with the applicable norms shall not be considered.
3. Unless they receive express authorization from AMCM, credit institutions shall not acquire real estate which is not essential to opening and running their business or for training, social purpose and staff housing, except as repayment for credit granted by them.
4. Credit institutions are prohibited from acquiring their own shares unless as repayment for credit granted by them.
5. The provisions of paragraphs 1. to 3. do not apply to assets which are the object of a financial lease.
Article 71
(Assets Received as Repayment of Own Credit)
1. Situations arising from credit institutions receiving as repayment immovable assets which are not used in the credit institution's activity, or other assets which exceed the limits set in this Chapter, shall be normalized within a period of two years.
2. AMCM may extend the above-mentioned period upon a duly justified application submitted in advance.
Article 72
(Subsidiaries and Branches of Overseas Institutions)
1. Subsidiaries of credit institutions incorporated overseas may benefit from exposure limits higher than those stipulated in this Chapter when they are subject to supervision on a consolidated basis and they present a letter of comfort from the parent institution, duly endorsed by the respective supervisory authority in terms deemed acceptable to AMCM.
2. Branches of credit institutions incorporated overseas are subject to the limits set out in this Chapter, index-linked to the own funds of their head office unless lower limits are set by the supervisory authority of the home country.
Article 73
(Special Limits)
The limits set in this Chapter do not prejudice the Governor's power, under exceptional circumstances, on advice from AMCM, to set lower limits, including for branches of credit institutions incorporated overseas, which shall be directly communicated to the relevant credit institution with an indication of the circumstances justifying the same.
CHAPTER VIII
ACCOUNTING AND COMPULSORY PUBLICATIONS
Article 74
(Accounting and Internal Control)
Credit institutions shall maintain their own properly organized accounting records, a sound administrative structure and an adequate internal control system.
Article 75
(Compulsory Publications)
1. Credit institutions incorporated in Macau shall publish by the 31st of May of each year in Boletim Oficial (Official Gazette) and in two of the most widely circulated newspapers in Macau. one being Portuguese-language and the other one Chinese-language. the following documents relating to their activities in respect of the previous year ended 31st of December:
a) the balance sheet;
b) the profit and loss account;
c) a summary of the management report;
d) the report from the supervisory board;
e) a summary of the external auditors' report;
f) a list of the institutions in which they have holdings in excess of 5% in the share capital, or over 5% of their own funds, with an indication of the respective percentage;
g) a list of the shareholders with qualifying holdings;
h) the names of the members of the company boards.
2. Without prejudice to the preceding paragraph, credit institutions shall publish in Boletim Oficial (Official Gazette), within a period of forty-five days from the end of the respective calendar quarter, the trial balance in respect of the quarter.
3. Credit institutions with subsidiaries overseas should, in addition to the information specified in paragraph 1. above, publish the consolidated balance sheet and profit and loss account.
4. The time limit referred to in paragraph 1. can be extended by AMCM under exceptional circumstances upon receipt of a duly justified application from the credit institution in question.
Article 76
(Branches of Credit Institutions Incorporated Overseas)
1. Branches of credit institutions incorporated overseas shall publish, under the terms of the preceding Article, their quarterly trial balance, annual balance sheets, profit and loss account and external auditors' report, and a brief management report on their activity in Macau.
2. Branches of credit institutions incorporated overseas shall also submit to AMCM a copy of the annual report and duly approved accounts of the respective head office within a period of thirty days of these being published and keep an additional copy of the same for public consultation in their main office in MaC3U.
Article 77
(Provision of Information)
Credit institutions shall lodge with AMCM a copy of all information to be published under the terms of this Chapter at least ten days prior to its publication.
CHAPTERIX
SECRECY
Article 78
(Duly to Maintain Secrecy)
1. Members of the company boards of credit institutions, their employees, auditors, advisors, mandataries and other persons who work for them on a permanent or temporary basis shall not reveal or take advantage, for their own or anybody else's benefit, of inside information obtained during the course of their duties.
2. The duty to maintain secrecy shall apply namely to the names and other information related to customers, deposit accounts and respective transactions, application of funds and other banking operations.
3. The duty to maintain secrecy continues even when the functions described in paragraph 1. have terminated.
4. Persons currently or previously employed by AMCM and all those who have provided AMCM with services on a permanent or casual basis are bound by the duty to maintain secrecy concerning information obtained during the course of their employment or the provision of services and shall not reveal or take advantage of infnrmnfinn cn nhtained.
5. The information described in the above paragraphs is still subject to secrecy when, by virtue of a specific legal provision, it has been conveyed to other entities.
6. Information given to AMCM by foreign supervisory authorities is also protected by banking secrecy and cannot be revealed or used for any purpose other than the assessment of the conditions to grant an authorization to, or the carrying out of the supervision of financial institutions.
Article 79
(Exceptions)
The stipulations of the preceding Article do not in any way prejudice:
a) the duty to provide information for statistical or supervisory purposes to which financial institutions are subject;
b) exchange of information between AMCM and other supervisory authorities provided that the information remains subject to secrecy and is not used for any purpose other than supervision;
c) the use of the necessary information to defend acts practiced under the terms of the powers conferred by this Act and which are the object of any appeal;
d) the possibility of credit institutions organizing a system of information pooling with the aim of reducing risks and increasing the security of operations;
e) the right of credit institutions or their mandataries to use the data in their possession to set in motion the necessary means for recovery of their debts from customers in default;
f) the possibility of credit institutions assigning their credits or entrusting the respective collection to third parties who, in turn, are also subject to secrecy;
g) the prudent use of information required for technical advice;
h) the use of confidential information concerning credit institutions within the scope of special measures for the reorganization or winding-up, except for information on persons who have taken part in the plans to reorganize the institution;
i) the disclosure of summarized or aggregate information, which does not permit individual identification of persons or institutions, namely for statistical purposes.
2. Other than the cases provided for in the preceding paragraph, the disclosure of information may only be allowed for specific legal provisions. I
Article 80
(Exemption from Secrecy)
The duty to keep secret facts or other information concerning relations between the institution and its customers may only be waived at the customer's consent or by court order under the terms provided for in criminal law or in criminal procedural law.
Article 81
(Liability)
Persons who breach the rules of secrecy described in this Act are liable to disciplinary, civil and criminal action.
CHAPTER X
EMERGENCY MEASURES
SECTION I
UNSTABLE SITUATIONS
Article 82
(Duty to Inform)
Credit institutions shall inform AMCM as soon as possible of any difficulties in forming or running their respective company boards as well as of any other unstable situations, within or outside the company, which due to their continuity and gravity, could affect the proper functioning of the institution itself or of other institutions particularly with regard to liquidity or solvency, or the normal running of the financial, money and foreign exchange markets.
SECTION II
SPECIAL MEASURES
Article 83
(Scope)
1. When a credit institution encounters any of the difficulties referred to in the preceding Article, or if it persists in violating the disciplinary regulations governing its operations, or the conditions of authorization or the instructions or guidelines from the supervisory authority, the Governor may, on advice from AMCM, issue an executive ruling to:
a) order the investigations required for clarifying the activity of a specific credit institution;
b) impose temporary restrictions on the activity of a specific credit institution or order it to adopt practices or measures appropriate to the situation;
c) appoint one or more persons to advise a specific institution in decision-making;
d) suspend one or more of the directors from their office as a preventive measure;
e) provide adequate monetary or financial support to the institution or institutions in question;
f) temporarily waive one or more institutions from fulfilling certain obligations stipulated in the applicable legislation;
g) issue conditions for orderly reimbursement of deposits to customers;
h) revoke or suspend the authorization granted for carrying on the business or. if this authorization is to be continued, incorporate new clauses and conditions;
i) implement the intervention status and the extra-judicial winding-up provided for in this Act;
j) request the office of the Attorney General to file a petition with the competent court to declare the bankruptcy of the institution.
2. The special measures shall only subsist so long as the situation which required their implementation persists.
Article 84
(Notification of Special Measures)
1. The institution or institutions concerned shall be notified of the special measures to be adopted and, unless in an emergency situation, implementation shall be deferred for a period of five working days to allow the institutions time to request suspension or modification of the same.
2. The application referred to in the preceding paragraph must be presented to AMCM and shall contain an explanatory statement mentioning the specific measures taken or to be taken to overcome the irregular situation.
SECTION III
INTERVENTION STATUS
Article 85
(Scope)
1. Whenever the unstable situation of a credit institution is such that it may jeopardize the fulfillment of its obligations to depositors or other creditors, or if it puts at risk the confidence in the financial system, then the Governor may, on advice from AMCM, order immediate intervention in the management of the institution in question, namely by appointing one or more delegates or an administrative committee for this purpose.
2. In addition to the other measures stipulated in Article 83, the intervention status may be accompanied by:
a) temporary waiver from fulfilling timely obligations previously undertaken by the institution;
b) temporary closure of service counters of the institution;
c) order to carry out certain operations or activities only upon prior approval from AMCM.
3. The provisions of sub-paragraph a) in the preceding paragraph do not in any way affect the rights of the creditors against anyone jointly liable, or against the guarantors.
4. As soon as the Governor decides to implement a status of intervention, and throughout the duration of the same, the following shall be suspended:
a) all execution proceedings, including fiscal proceedings, against the credit institution or those which affect its assets, including those intended to recover preferential loans;
b) the statutes of limitations or forfeiture opposed by the credit institution.
Article 86
(Appointment of Delegates and Administrative Committees)
1 . Unless otherwise specified in the executive ruling from the Governor, delegates and administrative committees are appointed for a period of six months.
2. The period referred to in the preceding paragraph may be extended one or more times up to a maximum limit of two years.
3. The provisions of the preceding paragraphs do not prejudice the Governor's power to terminate the intervention at any time, or likewise to replace the administrative committee with one or more delegates or vice-versa, or to replace the individual delegates or members of the administrative committee.
4. The periods referred to in paragraphs 1. and 2. of this Article are counted from the date of publication of the respective executive rulings in Boletim Oficial (Official Gazette).
Article 87
(Delegates' Powers)
1. The Governor shall establish the powers of the delegates but these shall not involve the entire replacement of the board of management or board of directors.
2. Unless otherwise provided, it shall be assumed that no decision other than those involving the day-to-day running of the business can be taken without the express consent of the delegate or one of the delegates in the case of more than one, and if the delegates concerned fail to pronounce a decision on any matter within a period of five days following the date on which a proposal was made, it shall be assumed that their silence constitutes tacit refusal.
3. In the case of refusal by the delegate or delegates, an appeal may be submitted to the Governor.
Article 88
(Effects of Appointment of Delegates)
1. With the appointment of one or more delegates, one or more managers or directors of the credit institution may be suspended as long as this does not prevent the smooth running of the same.
2. The Governor may determine, in an executive ruling, that the resolutions passed by company boards, other than the supervisory board, namely the general meeting, shall depend on the consent of the delegate or delegates to come into force.
3. The convocation notice for any ordinary or extraordinary general meeting requires the express consent of the delegate or of one of the delegates, and must be so stated on it.
Article 89
(Powers of Administrative Committees)
1. The administrative committees shall have management powers as stipulated by the Governor with the exception of those powers reserved by law only for the general meeting or the supervisory board.
2. Unless otherwise determined, the administrative committee shall have the duties and competences conferred by law or by the articles of association of the credit institution in question to the members of its board of management or board of directors.
Article 90
(Effects of Appointment of the Administrative Committee)
1. The appointment of the administrative committee determines the suspension of the powers of the board of management or of the board of directors of the credit institution.
2. Unless otherwise provided for by the Governor, the appointment of the administrative committee determines the suspension of the powers of the general meeting, the supervisory board and any other statutory board.
3. In the case of the suspension provided for in the preceding paragraph, the following shall be observed:
a) authorizations or approvals which were granted by the general meeting shall hereafter be granted by AMCM's Board of Directors;
b) all remaining acts within the competence of the general meeting and acts of the other statutory boards with the exception of the supervisory board shall be dealt with by the administrative committee and become effective after authorization or approval is granted by AMCM's Board of Directors;
c) The duties and competence of the supervisory board shall be exercised by AMCM's Audit Committee.
Article 91
(Duties of the Delegates and Administrative Committees)
1. The delegates and administrative committees shall propose and take all necessary steps to end the unstable situation and return to the normal running of the institution or, if this is not possible, to minimize the adverse effects of the situation with a particular view to protecting depositors' interests.
2. The delegates and the administrative committees shall also assess whether any offences or irregularities have occurred in the management of the institution and report these to the competent authorities.
3. The delegate or delegates or the administrative committee shall, within forty five days of their appointment, submit to the Governor, through AMCM, an inventory of the assets and liabilities of the credit institution and a report of the respective valuation criteria based on the opinion of qualified valuers selected by them or in accordance with the legally approved criteria.
4. The delegates and the administrative committees shall keep AMCM constantly informed of their activities and they shall also submit through AMCM to the Governor, before the termination of their appointment, a comprehensive report on their activities in addition to other reports which they deem necessary or which the Governor has requested.
Article 92
(Special Powers)
1. Regardless of the powers referred to above, with a view to eliminating the unstable situation or minimizing its effects, the concerned company boards may, with the consent of the delegate or delegates, or the administrative committee may:
a) sell all or part of the institution's assets or assign its business premises;
b) transfer all or part of the institution's debts or renew them after substituting the debtor;
c) raise loans;
d) divide or merge the credit institution, increase or decrease its capital under the conditions they deem appropriate, or else issue bonds independently of the statutory limits;
e) enter into judicial or extra-judicial transactions.
2. Acts referred to in the preceding paragraph shall depend on the Governor's approval to come into force, unless he has granted authorization beforehand.
Article 93
(Increase in Capital)
If, during the course of restoring the financial situation of a credit institution, it is deemed necessary or appropriate to increase its share capital, the following shall be observed:
a) the increase shall be conducted with the shareholders' preferential rights suppressed, and may be done by private subscription, the subscribed shares being fully paid-up at the time of subscription;
b) the increase in capital shall always be preceded by the respective reduction to cover losses so that the value of the existing shares on the date of the decision to adopt an intervention status shall be assessed on a balance sheet drawn up for that date.
Article 94
(Termination of Intervention)
1. Intervention is deemed to have ended when:
a) the appointment of the delegate, delegates or members of the administrative committee expires;
b) a final judicial decision confirms the bankruptcy covenant, creditors' agreement or the judgement for declaration of bankruptcy.
2. If, after intervention has been implemented, an application is made for a judicial summons of the creditors in order to prevent bankruptcy, the duration of appointment of the delegate or delegates or administrative committee shall be automatically extended until judicial confirmation of the bankruptcy covenant, other voluntary agreement or the declaration of bankruptcy becomes unappealable.
Article 95
(Extra-Judicial Winding-Up of Credit Institutions)
1. When a credit institution under intervention is to be wound up, namely as a result of the revocation of the authorization to operate, the liquidators shall be appointed by the Governor's executive ruling and, should there be no such ruling, the liquidators shall be the delegate or delegates or the members of the administrative committee.
2. Notwithstanding any statutory provisions to the contrary, the liquidators appointed under the terms of the preceding paragraph shall have the powers to execute all the necessary acts for winding-up, after being granted by the Governor the authorizations that, by law or in accordance with the articles of association, belong to the shareholders.
Article 96
(Creditors' Meeting)
The liquidators shall, from time to time, inform depositors and other creditors of the progress of the winding-up procedure and shall submit, in creditors' meetings, any decisions, plans or winding-up formalities for their approval, the meeting's decision being binding on all creditors so long as it has been taken by two thirds of the creditors attending the meeting.
Article 97
(Bankruptcy)
1. From the moment when intervention begins and until it has ceased, it shall not be possible to file for or order bankruptcy, nor to sign any creditors' agreements unless so requested by the delegate or delegates or the administrative committee or unless they do not oppose the declaration of bankruptcy or the signing of creditors' agreement.
2. When intervention has been implemented, the period for the legal summons of the creditors under the preventive means to avoid bankruptcy shall only end thirty days after the intervention has been lifted.
Article 98
(Prohibition on Paying Dividends and Other Profits)
During the period of intervention, dividends and other profits shall not be distributed or paid to shareholders with qualifying holdings without prior approval from AMCM.
Article 99
(Statute of the Delegates, Members of the
Administrative Committee and the Liquidators)
1. The delegates, the members of the administrative committee and the liquidators are solely responsible to the Governor.
2. The remuneration of the delegates, members of the administrative committee and the liquidators shall be set in a Governor's executive ruling.
Article 100
(Revocation of Authorization)
If the relevant credit institution cannot be rescued through the status of intervention, authorization for conducting the business of the same shall be revoked.
SECTION IV
GENERAL PROVISIONS
Article 101
(Disclosure of Information)
The measures provided for in this Chapter shall be disclosed depending on the circumstances or the requirements of the law.
Article 102
(Expenses)
1. Expenses arising from the execution of the actions ordered by the Governor under the terms of this Chapter shall be borne by the relevant institutions, without prejudice to any claims which these institutions may have against third parties.
2. Under exceptional circumstances which are duly justified, the Governor may authorize AMCM to pay in part or in total the expenses mentioned in the preceding paragraph.
Article 103
(AMCM's Role)
1. Notwithstanding the provisions in AMCM's Statutes, if any of the situations provided for in this Chapter occurs, AMCM may, after being authorized by the Governor in an executive ruling, carry out the actions deemed necessary to maintain the stability of the financial system in Macau.
2. For the purposes of the preceding paragraph, AMCM credits on credit institutions either granted or to be granted, acquired or to be acquired, should, in the case of winding-up, be given preference and be settled immediately after judicial expenses and taxes have been paid.
3. If a credit institution ceases to make payments and AMCM makes a public offer to pay part or all of the credit, those credits shall prescribe in part or in total, as the case may be, if the creditors fail to come forward to receive the payment within six months of the public offer being made.
Article 104
(Appeals)
In appeals against the decisions taken by the Governor under the terms of this Chapter, it shall be assumed that, unless proven otherwise, suspension of the measures shall imply serious damage to the public interest.
Article 105
(Branches of Credit Institutions Incorporated Overseas)
1. The provisions of this Chapter with the necessary modifications are applicable to branches of credit institutions incorporated overseas.
2. In the case of the universal liquidation of a credit institution incorporated overseas, the liquidators of the local branch may propose to a meeting of the creditors that they join this procedure, but the transfer of any assets or local property rights is subject to prior authorization from AMCM and shall only be granted after all debts with the Administration of Macau have been settled.
CHAPTER XI
MISCELLANEOUS
Article 106
(Identity of Customers)
1. Credit institutions should verify the identity of the customers, record the identity of all customers who make significant transactions and refuse to serve those who decline to provide evidence of their identity.
2. Opening of accounts, deposits in cash or other valuables and the hiring of safe deposit boxes shall only be conducted in the name of customers identified by name, address and official proof of identity.
3. The provisions of the preceding paragraphs do not prevent credit institutions from offering numbered accounts to customers whose identity shall only be known to a restricted number of employees but no credit facilities shall be granted to this type of account.
Article 107
(Term Deposits)
Credit institutions shall, on receipt of a term deposit, issue a document indicating the number, currency, amount, maturity, and interest rate for the deposit.
Article 108
(Tenor for Credit Operations)
A maturity date must always be set for credit operations.
Article 109
(Delay in Repayment of Debts)
1. When there is a delay in the repayment of a debt, credit institutions may levy an additional charge of up to 40% of the agreed interest rate or an additional 3% over and above the agreed interest rate, such additional charge to be stated in the terms and conditions of the credit granted.
2. Any clause setting higher penalties for late payment than those specified in the preceding paragraph shall be deemed as reduced to the maximum limit specified above.
Article 110
(Pledges)
1. A pledge to secure credit from credit institutions shall be valid either between the two parties concerned or by a third party without the owner of the relevant collateral being obliged to hand it over to the creditor or third party.
2. If the pledged collateral remains in possession of the owner. he shall be considered the trustee in lieu and shall be liable to prosecution for larceny if he sells, changes. destroys or misappropriates the property without written authorization from the creditor, or if he takes out a second pledge on the same property without expressly mentioning that it is already pledged the pledges shall be redeemed in the order in which they were taken out.
3. If the collateral pledged belongs to a corporate body, the provisions of the preceding paragraph shall be applied to those responsible in general terms for the management of the same.
* This Article has been cancelled by Decree-Law no 40/99/M of 3rd of August
1999. The replacement has been inserted under the Chapter of commercial
pledge of the above mentioned Decree-Law.
Article 111
(Proof)
1. Credit contracts of any amount drawn up by credit institutions can be secured under private signature even if the borrower is not a merchant.
2. The pledges of collateral mentioned in the preceding paragraph can be proven under private signature even when the person pledging the collateral is not receiving the credit and the same pledges shall come into effect from the date of surrender of the collateral pledged or of the document which proves its availability to the credit institution or third party.
Article 112
(Protection from Competition)
1. Credit institutions shall not enter into contracts or agreements with each other or use any other means which would put them in a dominant position in the money, financial or foreign exchange markets or adopt any other practices which may restrict or distort competition within the markets or alter the normal running of the same.
2. Contracts signed between credit institutions are exempted from the above paragraph when they relate to:
a) the participation in the issue and placement of securities or other similar instruments;
b) the granting of credit to an undertaking or a group of undertakings by a group of institutions which have joined together specifically for this purpose;
c) other contracts or agreements allowed by law.
Article 113
(Division, Merger and Reorganization)
Any division, merger or reorganization of credit institutions must be authorized beforehand by the Governor in an Executive Order on advice from AMCM, and may be exempted from certain legal provisions applicable to companies in general or may be subject to fulfilling certain requirements or specific conditions as the situation requires.
Article 114
(Amendments to Memorandum and Articles of Association)
1. Credit institutions incorporated in Macau shall submit to AMCM for prior approval any proposed amendments to their memorandum and articles of association in particular those concerning the name, object, company boards, location of the head office and share capital.
2. Credit institutions incorporated overseas with branches in Macau should inform AMCM of any changes made to their memorandum and articles of association within thirty days.
Article 115
(Cessation of Activity)
1. Any credit institution operating in Macau which intends to cease its activity shall notify AMCM of its intention at least six months in advance.
2. If the institution concerned is incorporated overseas, it shall maintain in Macau a suitable mandatary accepted by AMCM to take care of settling the institution's responsibilities.
PART III
INTERMEDIARIES AND OTHER FINANCIAL INSTITUTIONS
Article 116
(Scope)
The provisions in this Part apply to financial intermediaries and financial institutions other than credit institutions, excluding those regulated by special legislation.
Article 117
(Authorized Operations)
1. Financial intermediaries shall only be authorized to purchase or sell on behalf of third parties, securities and other instruments transacted in the money, financial or foreign exchange markets, or to accept investors' orders relating to these instruments.
2. The remaining financial institutions may only carry out the operations permitted by legislation governing the respective activity.
Article 118
(Authorization)
1. No person shall conduct a business as a financial intermediary or as any other financial institution unless authorized beforehand, on a case by case basis, by the Governor, on advice from AMCM, through an Executive Order which shall define the respective scope of business.
2. Financial intermediaries and other financial institutions shall not be incorporated in Macau with a share capital of less than the minimum specified by special law or in the Executive Order granting the authorization.
Article 119
(Application for Authorization)
1. Entities wishing to conduct any of the activities covered by the preceding paragraph shall submit their application through AMCM with the following documents:
a) an explanation of the economic and financial reasons behind the entity's intent to operate in Macau;
b) specification of the activity which the entity intends to conduct with a feasibility study on the investment plans with specific information concerning the capital, technical and human resources to be used;
c) description of the type of company, indicating its administrative and accounting structure;
d) full identification of the applicants as well as the partners or shareholders, their respective holdings and, in the case of a corporate body, a copy of the existing or drafted memorandum and articles of association;
e) full identification of the persons in charge of the management of the company and their respective professional curricula;
f) any other additional information which AMCM may consider necessary to process the application.
2. The decision on the application shall take into account the following points in particular:
a) the adequacy of the objectives of the applicants with the economic and financial policies pursued by the official bodies in Macau;
b) the existence of sufficient financial resources and an adequate legal form with regard to the nature of the activity;
c) the reputation and professional experience of the persons who effectively manage the business;
d) the suitability of the applicants and of the persons who hold qualifying holdings in the case of a corporate body.
Article 120
(Supplementary Regime)
The provisions stipulated in Sections V to VII of Chapter II, Chapters III, IV, VI, Vill and IX, paragraph 1 of Article 106, and Articles 113, 114 and 115 of Chapter XI, all of which are in Part II of this Act, shall be applied on a supplementary basis, after the necessary modifications, to the entities discussed in this Part.
PART IV
OFFENCES
CHAPTER I
CRIME OF UNAUTHORIZED ACCEPTANCE OF DEPOSITS
Article 121
(Unauthorized Acceptance of Deposits or Other Repayable Funds)
1. Any person who accepts deposits or other repayable funds from the public, with or without interest, in his own name or that of a third party, without being authorized under the terms of this Act or special legislation, shall be liable to imprisonment for a term not exceeding two years.
CHAPTER II
CONTRAVENTIONS AND THEIR PROCEDURES
Article 122
(Contraventions)
1. All acts which violate the rules of this Act and regulations contained in notices or circulars from AMCM, or which disturb the credit system or intentionally alter the normal running of the money, financial and foreign exchange markets are contraventions Punishable under the terms of this Chapter.
2. The following practices and acts are especially serious:
a) institutions subject to supervision engaging in any activity not included in their object as well as engaging in transactions which are not authorized or from which they are especially prohibited;
b) any other unauthorized persons or entities conducting transactions reserved for the institutions referred to in the preceding sub-paragraph;
c) tampering with or inexistence of a properly organized accounting system as well as failing to observe the applicable accounting norms and procedures in consequence of which the information presented on the financial and asset standing of the institution may be distorted;
d) refusing or hindering AMCM's supervisory activity;
e) failure to observe legal, regulamentary or administrative provisions and prudential limits for ensuring the institutions' liquidity, safeguarding against exposures and guaranteeing depositors and creditors when this failure shall or may affect the balance of their financial structures;
f) failure to observe the duty to inform referred to in Article 82;
g) paying the share capital or respective increase on terms different from those authorized;
h) violation of the legal conditions pertaining to the concession of credit and the issuance of guarantees to the persons referred to in Article 65 and Article 66, paragraph 1., b), c) and d);
i) division, merger or reorganization of credit institutions and other financial institutions without observing the respective legal conditions;
j) advertising in a manner which violates AIVICNI's directions;
k) refusal to provide information or send compulsory data to AMCM;
1) submitting or showing AMCM any false information or documents;
m) failure to respect the regime governing company holdings provided for in Articles 40 to 46;
n) violation of the guidelines contained in Articles 49 to 51;
o) failure to observe registration duties;
p) subsistence of facts which constitute a contravention after a sanction has been applied, when the irregular situation has not been remedied within the deadline set by AMCM.
Article 123
(Territorial Application)
The provisions of this Chapter are applicable, independently of the nationality of the agent for:
a) acts which occurred in Macau;
b) acts which occurred outside Macau for which institutions incorporated in Macau, branches in Macau of institutions incorporated overseas or persons who, with regard to such institutions, are in one of the situations provided for in paragraph 4. of the following Article.
Article 124
(Responsibility)
1. Natural persons, legal persons even when not legally incorporated, and associations with no legal identity, may be prosecuted, jointly or not, for the offences provided for in this Chapter.
2. Legal persons even when not legally incorporated, and associations which are not corporate entities shall be liable for those offences committed by any board members, directors and managers in the course of their duties as well as offences committed by representatives of these entities in acts carried out on behalf of or in their interests.
3. The provisions of the preceding paragraph shall be applicable even if the power to act on behalf of the entity is granted in a void or ineffective act,
4. The liability of the entity shall not preclude the individual liability of the board members, shareholders, directors, managers or those acting legally or voluntarily on their behalf.
5. The liability of the representatives shall not be precluded even if the offence, by its own nature, either requires personal elements which only pertain to the principal or requires that the agent has carried out the act in his own interests and the representative has acted on behalf of the principal.
Article 125
(Criminal and Contraventional Responsibility)
The procedure for applying sanctions for the contraventions referred to in this Chapter does not preclude potential criminal prosecution.
Article 126
(Sanctions)
1. Without prejudice to any other sanctions provided for by law, the offences described in Article 122 shall be punishable with the following penalties:
a) fine;
b) suspension of the voting rights of any shareholder for a period of one to five years.
c) prohibition from ho!ding any board position or carrying out management or directorship duties in any institution under AMCM's supervision for a period of six months to five years.
2. The sanctions referred to in the above paragraph may be applied concurrently.
Article 127
(Additional Sanctions)
The following sanctions may be applied in addition to those specified in the preceding paragraph:
a) loss of capital invested in the operations carried out;
b) publication of the sanctions.
Article 128
(Fines)
1. Unless provided for in the following paragraphs, fines shall be fixed at between ten thousand Patacas and five million Patacas.
2. In the case of a repeated offence, the minimum and maximum limits for the fine shall be twice the originals and an offence shall be deemed to have been repeated if the offender commits an identical offences within a period of one year counted from the date on which the conviction was handed down.
3. When the economic benefits gained by the offender exceed half of the maximum limit set in paragraph I., the fine may be increased to the value of twice the benefits.
Article 129
(Attempt and Negligence)
Any attempt to commit an offence and any offence committed through negligence are punishable, but the minimum and maximum limits of the fine shall be reduced by half.
Article 130
(Warning)
1. When the offence committed can be remedied and has not resulted in significant damage to Macau's economy or its financial and monetary system, AMCM may decide to issue a simple warning to the offender instructing him to rectify the offence within a period fixed by AMCM.
2. Failure to rectify the situation within the period fixed shall result in starting the procedures for applying the sanctions to which the offence is subject.
Article 131
(Procedure)
1 . AMCM shall be responsible for preparing and initiating proceedings arising from any of the offences provided for in this Act.
2. Once the proceedings have begun, charges shall be prepared indicating the offender, the facts of which he is accused and the respective time and place where they occurred and also the law which prohibits and punishes the same.
3. The accused shall be informed of the charges with an indication of the time limit for submitting a written defence and the relevant proof.
4. The time limit referred to in the preceding paragraph shall be fixed at between ten and thirty days taking into account the accused's place of domicile, head office or permanent establishment and the degree of complexity of the proceedings.
5. The accused shall be notified personally, in a registered letter with receipt of reception, or through the police, via a court order valid 30 days thereafter, published in Boletim Oficial (Official Gazette), when the accused cannot be located, if he refuses to receive the letter or if his address is unknown.
6. The accused may not call more than five witnesses for each offence.
7. After the defence submitted by the offender has been duly analyzed, the case shall be submitted to the Governor together with an opinion issued by AMCM stating which offences have been duly proved and recommending therein the application of sanctions appropriate to the seriousness of the offence.
Article 132
(Duty to Appear before the Authorities)
1. Any person who has been duly notified that he should take part in the proceedings and who fails to appear at the appointed date, hour or in the appointed place without providing any justification within five days thereafter shall be subject to a fine of one hundred Patacas to ten thousand Patacas.
2. Independently of the provisions set out in the preceding paragraph, AMCM may request the competent juridical authorities to order the appearance under custody of any person who has failed to appear without good cause.
Article 133
(Preventative Suspension)
If the accused is one of the persons indicated in Article 124, paragraph 4., the Governor may issue a ruling determining the preventative suspension of the respective duties whenever deemed necessary for the proceedings or to safeguard the interests of the economy of Macau or of the public.
Article 134
(Suspension of Sanction)
1. Any sanction can be suspended upon a ruling explaining the reasons for the same from the body which imposed the sanction, after taking into account the degree of culpability of the offender, its prior conduct and the circumstances of the offence.
2. The suspension of the sanction may be subject to fulfillment of certain conditions deemed necessary for disciplining the offending entity or to return irregular situations to normal.
3. The period of suspension shall be not less than one year nor more than three years to be counted from the date of conviction.
4. If, during the period of suspension, the offending entity does not repeat a similar offence and fulfills all conditions imposed, the conviction shall become null and void. If, however, the opposite occurs, an order to carry out the conviction shall be given.
Article 135
(Payment of Fines)
1. Fines must be paid within a period of ten days to be counted from the date on which the ruling imposing the penalty becomes a final decision.
2. If the fines are not paid voluntarily within the fixed period, AMCM shall send a certified true copy of the above-mentioned ruling to the competent judge so that payment can be demanded, said certified true copy being deemed sufficient.
Article 136
(Expiry of Sanctions)
1. The procedure for applying the sanctions provided for in this Chapter expires after three years from the date on which the offences occurs.
2. Notwithstanding, the above-mentioned limit shall only expire:
a) in case of permanent offences, from the date the offences end;
b) in continued and habitual breaches, from the day on which the last relevant act occurred;
c) in infractions which have not been consummated, from the date of the last act.
3. The fines and sanctions provided for in Articles 126 and 127 shall be prescribed five years after the ruling has become a final decision.
Article 137
(Fulfillment of Omissions)
Whenever the offences occurs due to an obligation not being fulfilled, the offender must still fulfill his obligations if this is still possible, in addition to paying the fine and having the sanction applied.
Article 138
(Supplementary Law)
Code of Criminal Procedure and other additional legislation shall
supplementarily be applied to proceedings filed by AMCM.
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