by: António Isóo de Azeredo, Senior Associate Lawyer
Back in February we shared that Macau was finally taking the last steps of a long legislative path for the approval and implementation of a Trust regime in Macau.
The new Trust Law (“Law”) was approved by Macau Legislative Assembly early this month, providing for the respective legal regime which was absent from Macau Laws, preventing the use of this legal figure, accepted in many jurisdictions around the world, by Trustees, Trustors and beneficiaries.
The Law now approved intends to meet the market expectations by offering a legal safe net for the wealth management through the Trust.
The Law foresees the definition, the incorporation and winding up, the assets of the Trust as well as the capacity, rights and obligations of all parties involved, i.e., the Trustee, Trustor and beneficiary.
Under the Law, the Trust is defined as the legal relationship under which the Trustor transfers the rights over specific assets to the Trustee so the later manages the same, as their own, having in mind the interests of the appointed beneficiary.
The Trust is incorporated through the execution by the relevant parties of a private contract, unless the assets to be part of the Trust require a specific form of transfer (eg. real estate properties which require a notarized deed) in which case, such form requirement must be followed. Likewise, the setting up of a Trust shall be subject to registration if the transfer of the underlying assets must be registered as well.
The Trust may also be formed by way of a will, in which case the rules applicable to the elaboration of wills provided under the Macau Civil Code shall be followed.
Any person or entity, capable of disposing its own assets and goods, has the capacity to set up a Trust. Likewise, any person or entity – even the Trustor – may be appointed as beneficiary of a Trust, however, a Trustee cannot be appointed as sole beneficiary.
Credit institutions, insurance companies, finance companies, investment funds management entities, wealth management companies and pension funds management companies are the listed Macau entities allowed to provide Trust services and undertake the Trust activity.
The new Law specifically regulates the Trustees’ activity, rights and obligations, in order to ensure the safeguard of all parties’ best interests. The rigorous compliance of diligence, loyalty, impartiality, confidentiality and information duties are among those obligations to be followed by Trustees.
It is allowed to appoint several beneficiaries which, in the absent of specific rule providing otherwise, will have equal rights over the Trust’s estate.
The Law allows that any types of assets may be included under the Trust, including movable and immovable assets, as well as rights, provided both assets and rights are determined or determinable.
However, while managed as their own by the Trustees, the underlying assets and rights of a Trust shall be separated and independent from those of the Trustee, Trustor and beneficiary.
The Law also provides for the rights of the beneficiaries and respective heirs that, unless stated otherwise, will become the beneficiaries of the Trust’s rights upon the decease of the original beneficiary.
The Trust is incorporated without a termination date, unless specifically provided otherwise under the constitutional contract. The Law states when the Trust is deemed terminated and the termination shall occur, among others situations, (i) when provided so by the Trust’s constitutional contract, but also (ii) by written agreement between the parties or (iii) when the same person becomes the sole beneficiary and the Trustee, and even (iv) when all beneficiaries waive their rights to the Trust’s estate or (v) when such estate is totally lost.
Finally, we are yet to understand how Macau Tax laws, which are also under a thorough review by the legislative assembly, will consider the setting up, the termination and transfer of rights of a Trust, which means that for now Macau tax general legal provisions would apply.
Considering the above, the new Trust regime will create significant opportunities for the finance and wealth management market’s stakeholders, enhancing the Macau finance services available to the public.
If you wish to know more about the new Macau Trust Law, feel free to contact C&C Lawyers & Notaries.
António Isóo de Azeredo, Senior Associate Lawyer | firstname.lastname@example.org