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by: António Isóo de Azeredo, Senior Associate Lawyer

We are excited to share important updates regarding the financial landscape of Macau.

Law 11/2025 – the new Investment Funds Law (IFL) – was published on 1st of August 2025 and will come into effect on January 1, 2026.

The IFL establishes a comprehensive framework for the creation, operation, and supervision of investment funds and fund management companies in the Macau Special Administrative Region.

IFL aims at modernizing the financial sector and promoting economic diversification. It proposes replacing the nearly 25-year-old Decree-Law n.º 83/99/M with updated regulations to achieve four key objectives:

1. Alignment with International Supervision Standards: 
   • Optimizes regulations for related-party transactions to increase investment flexibility while preventing conflicts of interest.
   • Introduces prudential limits for entities within the same group to reduce risks and protect investors.
2. Enhanced Investor Protection:
   • Expands mandatory disclosure requirements for fund prospectuses and key information, including risk factors, valuation methods, and transaction policies.
   • Adds provisions for general meetings of fund unit holders to safeguard their rights.
3. Removal of Barriers to Fund Management Development:
   • Eliminates minimum requirements for fund establishment, such as participant numbers and initial capital.
   • Abolishes the annual supervision fee for investment funds to boost competitiveness
4. Optimization of Fund Management Environment:
   • Expands the scope of activities for fund management companies, allowing them to manage other assets and be established as commercial companies by quotas.
   • Broadens eligibility for fund depositaries to include qualified foreign entities.
   • Introduces regulations for private investment funds, including their definition, operational principles, and requirements.
   • Clarifies that investment funds can be established as contracts, commercial companies, or civil societies.

Below, you may find a detailed overview of the key provisions and implications of this new legislation.

Key Highlights of the Investment Fund Law

1. Types of Investment Funds

The IFL categorizes funds into public and private:

• Public Funds: Open to public capital raising and subject to stricter regulatory oversight.
• Private Funds: Limited to qualified investors and private capital raising, with tailored compliance requirements.

Funds can be structured as contractual funds, collective investment companies (SIC), or limited partnerships (FPL).

2. Fund Structures

The IFL introduces diverse fund structures, including:

• Umbrella Funds: Comprising multiple sub-funds with independent investment policies.
• Master-Feeder Funds: Subordinate funds channel investments into a principal fund.
• Fund of Funds: Investing primarily in other funds.

3. Investor Rights

Participants in investment funds are granted robust rights, including:

• Voting on key decisions.
• Redemption and transfer of fund units.
• Access to detailed financial reports and disclosures.

4. Regulatory Oversight

The Monetary Authority of Macau (AMCM) remains as the primary regulatory body, responsible for:

• Supervising fund operations.
• Approving fund creation, amendments, and cross-border activities.
• Enforcing compliance and imposing penalties for violations.

5. Cross-Border Activities

The IFL regulates the promotion and commercialization of funds:

• Funds domiciled in Macau can be marketed abroad with prior notification to AMCM.
• Foreign funds can be marketed in Macau with AMCM authorization, ensuring transparency and investor protection.

6. Transition Period

Existing funds and entities have a one-year grace period to align with the new regulations. By January 2027, all funds must comply with the updated legal framework.

7. Enhanced Transparency

Fund managers are required to publish:

• Regular financial reports (interim and annual).
• Key fund information, including investment policies and risks.
• Notices of significant events affecting fund operations.

Implications for Stakeholders

• For Investors

The IFL enhances investor protection by ensuring transparency, accountability, and fair treatment. Investors will benefit from clearer disclosures and stronger safeguards against risks.

• For Fund Managers

Fund managers must adopt robust governance practices, comply with prudential limits, and ensure accurate reporting. The IFL also allows for the sub-contracting of certain functions, provided compliance standards are met.

• For Foreign Funds

Foreign funds seeking to operate in Macau must meet stringent requirements, including clear risk disclosures and AMCM authorization. This ensures alignment with Macau’s financial stability goals.

Looking Ahead

The IFL represents a significant step forward in modernizing Macau’s financial sector. By fostering transparency, investor confidence, and regulatory alignment with international standards, IFL positions Macau as a competitive hub for investment fund activities.

We encourage all stakeholders—investors, fund managers, and financial institutions—to familiarize themselves with the provisions of IFL and prepare for its implementation.

For more information and assistance, please contact us at www.ccadvog.com

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