Proposed appointment of government representative to Macau’s concessionaires could be a win for all: MdME

A proposed amendment to Macau’s gaming law that suggests appointing a designated government representative to each concessionaire could be welcomed by both parties, with the representative unlikely to be granted undue powers, according to Macau law firm MdME Lawyers.

In the second of a series of papers examining some of the proposed amendments, which were made public by the Macao SAR Government last month, MdME’s Rui Pinto Proença and Rui Filipe Oliveira note that the implementation of a designated government representative is already part of Macau’s concession landscape with most public utilities including a representative who oversees the contract performance and activities of the company related to the concession.

It is also nothing new to the gaming industry: SJM Holdings parent company STDM had a designated government representative when it was Macau’s monopoly casino operator pre-2022 while sports betting concession Macau SLOT Co Ltd and horse racing concession Macau Jockey Club remain subject to such a provision to this day.

According to MdME, the fundamental purpose and key duties of a government representative are to supervise the concessionaires’ compliance with its legal and contractual obligations and to protect public interest within the activities pursued by the concessionaire.

This could include having the authority to participate in board and shareholders’ meetings, to inspect the company’s financials, to request documents and information deemed necessary to exercise it duties and to participate in the negotiation of relevant concession contracts and amendments.

In doing so, the representative must inform their relevant supervising body of any circumstances that may affect the public interest within their purview and propose measures to address them. They must also regularly report on matters addressed in the board and shareholders’ meetings, however MdME says the representative has neither executive nor voting powers within the company they are designated to and should therefore not be mistaken for a director.

More importantly, “Should the proposed amendments be kept within the boundaries of existing legislation, the introduction of a government representative may be welcomed.

“For the government, it may provide a valuable insider’s perspective on the operations of concessionaires. For the operators, it may serve as a useful liaison officer, capable of streamlining communications with different government agencies and reducing bureaucracy.

“Any suggestion that this role could be broadened by giving it a say over the operations of the company – for instance, exercising voting/vetoing rights in management decisions – would be implausible and contradictory to the framework provided by existing legislation.

“Such extension of power would overlap with the role typically attributed to a director. This scenario would have overarching implications, not the least of which concerns the liability for decisions taken, or not taken, due to the vote/veto of the government’s representative.”

According to MdME, the government’s consultation document does not provide any indication that a departure from the observant nature of a designated representative is being considered, which in itself should ease some concerns currently held by investors.

The government’s proposed amendments to the gaming law are currently out for 45 days of public consultation, coming to an end on 29 October.

MdME’s full paper can be found here.

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