Law Firm Says That Dividend Policy In Macau Is Unprecedented

Law Firm Says That Dividend Policy In Macau Is Unprecedented

The Macau authorities have proposed a dividend policy that if implemented, would require the casino operators to seek approval from the government prior to the distribution of dividends to investors. A local law firm has said that such a policy has no precedent that can be cited in policy in the legal framework of the special administrative region (SAR).

Impact of the policy

As a result of this policy, last month, the shares of concessionaires that operate in the largest casino market in the world have fallen in price on the stock market. Last month, the authorities in Macau announced the start of a new consulting period in order to discuss certain new policies. Amongst these policies is a policy that states that payment of dividends to shareholders would require approval of the government. The sentiment in the investor community is that the special administrative region will be heading towards more regulation and oversight from the authorities in the region.

Legal opinion on the policy

Attorneys Rui Filipe Olivera and Rui Pinto Proença from MdME Lawyers have prepared a report on the new dividend policy. They state in their report that the current Macau Civil Code doesn’t have the provisions to allow the new dividend policy. According to them, the Macau Civil Code states defines the ultimate aim of a private company as the pursuit of profit. The Code states shareholders can not be deprived of their rights to their share in the profits of the company.

They further write in their report that under the current legal system, the payment of dividends is only subject to approval from the shareholders. They further clarify that the only restriction on the discretion of shareholders is regarding the minimum percentage of profits that must be distributed in the form of dividends. However, no restriction exists in the code as regards the size of the dividends. The report states that the dividend proposal has three key policy areas namely, the ongoing investment by operators in the economic diversification of Macau, ensuring financial health concessionaries as well as profit maximization in the gaming industry.

Dividend policy in line with goals of authorities

One reason for the decline in the stocks of Macau companies is that the government has been acquiring larger equity stakes in these companies. The government would benefit from the dividends declared as shareholders in these companies. However, there is concern that these casino companies may in the future operate as state-owned enterprises (SOE). The policy areas outlined in the MdMe report are valid, however, the method to achieve them is in doubt.

About sherlock

Sherlock Gomes loves to write and express his views on anything related to Gaming, Gambling, & Casino. He has been covering Gaming for more than two years now.