Shareholders' Rights & Shareholder Activism 2024 Comparisons

Commercial companies can only be incorporated in the Macau SAR by adopting one of the forms set forth in the Commercial Code:

• general partnerships (sociedades em nome colectivo);
• limited partnerships (sociedades em comandita);
• limited liability companies by quotas (sociedades por quotas); or
• limited liability companies by shares (sociedades anónimas) (Section 174 of the Macau Commercial Code, or MCC).

In general partnerships, each partner is subsidiarily liable with the company and jointly liable with other partners for the company's debts, even with regard to debts constituted before the individual/entity took a shareholding position (Section 331). The partners can contribute with capital or with industry (Section 332), and the articles of association shall value the contributions in industry to determine the profit-sharing structure (Section 333).

Limited partnerships can be created in the form of simple limited partnerships (comandita simples) or in the form of limited partnerships by shares (comandita por acções) when the shareholding of the partners with limited liability (sócios comanditários) is represented by shares (acções).

In a limited liability company by quotas, the capital is divided into shares designated as “quotas” and every shareholder is jointly liable for the payment of the other shareholders’ shares (Section 356). The maximum number of shareholders is 30 (Section 358). The share capital of this type of company shall correspond to the sum of the nominal value of all quotas, with a minimum of MOP25,000 (Section 359).

In a limited liability company by shares, the minimum number of shareholders is three (individuals and/or entities), while the registered share capital cannot be less than MOP1 million. The share capital is split into shares, all with the same nominal value, each of which cannot be lower than MOP100. Shareholders are only liable for the payment of the value of their subscribed shares (Section 393).

Before incorporating a new company, investors generally assess which type best suits their goals and needs by taking into account determining factors such as the number of shareholders, the minimum amount of share capital, shareholders’ rights, etc. Limited liability companies by quotas and limited liability companies by shares are the options most commonly chosen by foreign investors in the Macau SAR due to the fact that they provide the most protection against personal responsibility for the company’s debts or liabilities.

Please refer to 1.1 Types of Company for the characteristics of each type of company and 1.6 Minimum Number of Shareholders for the nationality or residence requirements for investors.

Only limited liability companies by shares can issue shares (Sections 393/2 and 416). The shares can be ordinary or preferred: ordinary shares grant voting rights as well as the right to receive a dividend out of the distributable profits, whilst preferred shares do not grant a voting right, but rather a right to a priority dividend and priority repayment upon the liquidation of the company (Section 408).

Regardless of the type of company incorporated, shareholders are generally entitled to:

• receive a share of the profits;
• elect the board of directors and the supervisory body, receive accounts and reports from them, and start liability actions against them;
• obtain information on the company’s activity; and
• attend and vote in the company’s general meetings (Section 195).

Besides the general rights set out in the Commercial Code, shareholders may create other general or special rights by means of stipulation in the articles of association. Please see 1.4 Variation of Shareholders’ Rights regarding the creation and removal of special rights.

Special rights may be created, but only through stipulation in the articles of association. However, such a provision shall neither determine a fixed share remuneration to shareholders nor grant certain shareholders a special right to obtain information on the activity of the company (Section 195). Suppression or variation of a special right requires the agreement of its respective beneficiary/holder, unless expressly provided otherwise in the articles of association (Section 184).

Rights such as that to receive profits pro rata to the share in the capital and to be appointed or to appoint members of the corporate bodies, or limitations of the right to participate in general meetings, may be customised in the company’s articles of association and/or resolved by the shareholders, as applicable. The right to receive profits cannot be changed in such a manner that a shareholder is prevented from receiving any profits at all.

Changes to the articles of association are subject to mandatory registration with the Commercial and Movables Registry Office and are hence available for public consultation.

Changes to those rights by means of a shareholders' agreement are subject to the limitations on scope and enforceability vis-à-vis the company, as referred to in 1.7 Shareholders' Agreements/Joint Venture Agreements.

There is no minimum share capital requirement for general partnerships and simple limited partnerships. For limited partnerships by shares, the registered share capital cannot be less than MOP1 million. Please refer to 1.1 Types of Company for minimum share capital requirements in a limited liability company by quotas and in a limited liability company by shares.

The minimum number of shareholders in each different type of company is as follows:

• general partnerships: two;
• simple limited partnerships: two (one shareholder with limited liability and one with unlimited liability);
• limited partnerships by shares: four (three shareholders with limited liability and one with unlimited liability);
• limited liability companies by quotas: one; and
• limited liability companies by shares: three.

The shareholders can be individuals and/or entities.

People interested in investing in the Macau SAR are welcome to do so via the incorporation of local entities, regardless of their (ie, the investor's) nationality or residence. However, the investor’s suitability may have to be verified by regulatory authorities prior to their entry in the capital of companies acting in regulated sectors such as gaming or financial.

Shareholders’ agreements and joint venture agreements are commonly used for private companies. Please see 1.8 Typical Provisions in Shareholders’ Agreements/Joint Venture Agreements for more detail.

By entering into a shareholders' agreement, shareholders can undertake to act in a manner that is not prohibited by law; namely, in respect of the exercise of the right to vote. However, they cannot validly agree to determine the actions of the company's directors or supervisory bodies. The agreement is effective between the signatory shareholders but does not bind the company, meaning that shareholders cannot challenge the company’s actions or the actions of shareholders vis-à-vis the company on the grounds that they breach their agreement.

Shareholders' agreements are null and void if, by virtue of them, a shareholder undertakes to:

• always vote following the instructions of the company or of one of its bodies;
• approve their respective proposals; or
• exercise the right to vote, or to abstain from exercising it, in return for a special advantage (Section 185).

Investors may also enter into joint venture agreements of different types. Besides incorporated joint ventures (where investors pursue their business goals as company shareholders), investors may start unincorporated joint ventures in the form of a consortium (consórcio, in which two or more business persons or companies undertake to perform a certain action or make a contribution, with the purpose of executing a certain enterprise, providing goods to third parties, researching natural resources, etc) or an association in partnership (associação em participação, in which an individual or entity associates with another’s business enterprise, participating in the latter’s profits or profits and losses). These are regulated in Sections 528 to 562 of the MCC. Only a consortium is subject to written form.

Both shareholders’ agreements and joint venture agreements are enforceable in case of breach. Pursuant to the provisions of Sections 807 to 821 of the Civil Code, a lawsuit may be filed against the breaching party with the goal of enforcing the agreement or seeking adequate compensation.

Generally, both types of agreement are confidential.       

It is mandatory to hold an annual general meeting within the first three months after the closing of the business year in order to resolve on the following matters:

• approval of the balance and of the profit and loss account;
• approval of the directors' report;
• allocation of the results of the business year; and
• election of the members of the board of directors and the supervisory board.

The calling notice must contain the following:

• the company’s name and registered office, and the registration number with the Commercial and Movables Registry Office of Macau;
• the location, date and time of the meeting;
• the type of meeting; and
• the agenda, with details of the topics that have to be decided by the shareholders.

The notice must also state that the relevant documents are available at the company’s registered office or, when it is permitted by the articles of association, on the company’s website for the shareholders to check (Section 222, paragraph 2). Please refer to 2.4 Information and Documents Relating to the Meeting for more detail.

If the calling notice is not signed by the chair or any other person with capacity to do so, or if it does not refer to the date, time, location or agenda, the meeting will be deemed as not having been called and any resolution passed therein will be deemed null and void.

In general partnerships, limited partnerships and limited companies by quotas, the calling notice must be sent to the shareholders at least 15 days before the actual date of the meeting. The articles of association may shorten the notice period up to a minimum of seven days. In limited partnerships by shares and limited liability companies by shares, the notice must also be sent at least 15 days before the actual date of the meeting, but the law does not provide for the possibility of shortening that period.

If there are any issues that by law are subject to the resolution of the shareholders after the annual general meeting of shareholders, shareholders holding 10% of the share capital can call an extraordinary general meeting (EGM). If such issues may imply any influence on the company’s interests and are subject to the resolution of shareholders, the directors, the chair or the supervisory body should call an extraordinary meeting (Section 220, paragraph 3).

Shareholders can also call EGMs. The requirements for calling EGMs, the mandatory contents of the calling notice and the notice period are the same as for annual general meetings; please see 2.1 Types of Meetings, Notice and Calling a Meeting.

Shareholders' general meetings are generally called by the chair of the respective board, with the exception of the first general meeting after incorporation, which shall be called by the shareholders (Section 221). The chair of the board of the general meeting is elected by the shareholders; in their absence, the duty shall be undertaken by any of the directors (Section 223).

If the chair of the board fails to call a general meeting when they should have, the directors, the supervisory body or the shareholders who have requested the general meeting to be convened can by law call it directly (Section 221).

All shareholders who are able to take part in a general meeting are entitled to receive a calling notice. If the calling notice is not sent, or if any of the mandatory information is missing, the shareholder illegally prevented from taking part in the meeting may invoke the invalidity of the resolutions.

Section 209 of the MCC sets the general rule with regard to accessing the company's documents and information, stating that shareholders have the right to:

• check the meeting minutes and books of the general meeting and the supervisory body;
• check the charges and securities book;       
• check the shares registration book;
• check the attendance lists, if any;
• check all the documents that should be made available to shareholders before general meetings in accordance with the law and the articles of association (such as the documents in respect of the annual accounts, or the proposals submitted to the board of the general meeting in respect of any item on the agenda);
• request anything related to the matters on the agenda of the general meeting before voting, from the directors, the sole supervisor or supervisory board and the company secretary, when reasonably necessary for the informed exercise of the right to vote;
• request the directors to provide information in writing regarding the management of the company, particularly in respect of certain transactions or specific business; and
• request copies of resolutions or records mentioned in the first four points above.

The scope of information the shareholders may access pursuant to requesting the directors to provide information in writing regarding the management of the company can be limited in the articles of association. Such shareholders with limited liability may be restricted in the exercise of such right if their shareholding is less than 5%.

If the shareholders are denied access to the information, they can start legal action to enforce such right. If the court finds that access to the information should have been granted, the relevant director(s) may be liable to compensate the shareholder for the damages caused and reimburse them for the expenses they have reasonably incurred.

If the shareholder receives false, incomplete or unclear information in respect of the management, they have the right to seek a court order for the judicial examination of the company, which, following the report of the management, is conducted by a registered auditor. The court may order several remedies on account of discrepancies or irregularities found by the auditor, including the winding-up of the company. The applicant shareholder may, however, be called to provide a bond before the examination.

On the other hand, the misuse of information obtained by a shareholder renders the latter liable for the damages caused to the company, even if access to the information was valid.

In general partnerships, further to the rights mentioned above, all the shareholders who are not directors have the right to be informed about the status of the company's businesses and its patrimonial situation. The directors shall also let the shareholders inspect the company’s assets and check the company’s accounts, books and documents. While doing so, the shareholder can be accompanied by professionals.

Furthermore, the shareholders have the right to check the relevant information and documents before the general meeting. After the date when the calling notice is sent and published, such access shall take place during office hours and at the registered office of the company, and the following can be checked (Section 430):

• all documents that are essential to consider before making a resolution in respect of any items included in the meeting agenda;
• the text of the proposal that the board of directors, the supervisory board or the sole supervisor has decided to submit to the general meeting;
• the text of the proposal that any shareholder has submitted to the company, particularly when such shareholder has requested the meeting to be convened; and
• the complete identification and curricula vitae of people that the board of directors has proposed to take up the company’s corporate positions.

Consultation of the elements mentioned above can be done by the shareholder or anyone who can represent them in the general meeting. The shareholder or their representative can also obtain a copy of these elements and choose to be accompanied by auditors or professionals when consulting them. The articles of association may allow for all such information to be made available on the company’s website, starting from the day when the calling notice is issued.

Pursuant to Section 222, paragraph 3 of the MCC, the general meeting can take place at:

• the company’s registered office or, if the chair deems it more convenient, at any other place within the Macau SAR; or
• a location outside the Macau SAR, subject to the unanimous agreement of the shareholders.

If the articles of association allow it and regulate its respective terms and procedure, the general meeting can take place virtually, by telematics, subject to the assurance of the authenticity and security of the communications by the company.

Unless otherwise is validly stipulated in the articles of association, all shareholders have the right to participate at the general meeting and to discuss, make proposals and vote on any items in the agenda (Section 218). When a conflict of interests arises, the shareholder in question shall not vote, neither by themselves nor through a representative (Section 219).

The rules concerning the manner in which the voting rights are attributed to shareholders, when special quorums are required for resolutions by the general meeting and how majorities are formed vary for each type of company (Section 225).

There are matters for which the law requires a special quorum (rather than simple majority) for passing resolutions. The articles of association may also contain any such stipulation.

In limited liability companies by quotas, as a general rule, resolutions on changes to the articles of association and on any merger, demerger, transformation and winding-up of the company require favourable votes corresponding to at least two thirds of the capital. Resolutions with regard to other matters (eg, the exercise of pre-emptive rights, the exclusion of shareholders and amortisation of their respective shares) only require favourable votes of the majority of the capital if the general meeting resolves in first call, or the majority of the capital present or represented, when resolving on second call (Section 382).

In limited liability companies by shares, resolutions on changes to the articles of association and on any merger, demerger, transformation and winding up-of the company require the presence of at least a third of the capital (opening quorum) and favourable votes of at least two thirds of the capital present or represented (deliberative quorum). If resolving in second call, the opening quorum is waived.

In either type of company, if a resolution is not passed with the minimum quorum required by law or the articles of association, it is deemed as not passed.

The Commercial Code provides for three types of resolution:

• resolutions passed at a general meeting, pursuant to the rules on calling, attendance and voting;
• written resolutions, whereby each shareholder declares their vote on a written document without the need to call a general meeting; and
• resolutions passed through postal ballot, if the possibility to do so is expressly set forth in the articles of association.

Unless the articles include specific provisions, there are no precise requirements determining which type of resolution must be passed, although the number of votes required differs according to the type of company. Please see 2.6 Quorum, Voting Requirements and Proposal of Resolutions and 2.8 Shareholder Approval for more detail.

Without prejudice to other matters especially attributed by law to be resolved by the shareholders, shareholders can generally resolve on the following issues (Section 216):

• the election and removal of directors and of members of the supervisory board;
• the balance, profit and loss account, and the directors' report;
• the supervisory board or the sole supervisor's report and opinion;
• the application of the financial results of the year;
• the modification of the articles of association;
• the increase and reduction of the company capital;
• the demerger, merger and transformation of the company;
• the winding-up of the company; and
• the issues that other corporate bodies are not competent to approve, according to the law or the articles of association of the company.

Shareholders of limited liability companies by quotas are also competent to resolve on other matters, such as the exercise of pre-emptive rights, the exclusion of a shareholder from the company, or the calling for quasi-capital contributions.

Contrary to limited liability companies by quotas (in which the shareholders have the right to resolve on matters of management of the company and directors must act in accordance with such resolutions), shareholders of limited liability companies by shares can only resolve on matters of management when they are specifically asked by the directors to do so.

In particular, directors of limited liability companies by shares are competent to resolve on the following management matters, among others:

• the sale, purchase and charge of assets;
• the provision of corporate and real securities by the company;
• the opening and closure of business enterprises; and
• major changes in the company’s activity.

Please see 2.6 Quorum, Voting Requirements and Proposal of Resolutions regarding the percentage of votes necessary for the approval of resolution.       

Shareholders may be represented at a general meeting by one of their peers, by their spouse or by a descendant or ascendant, for the purpose of which a letter will have to be sent to the chair. Shareholders may also be represented by individuals or entities to which they grant a proxy letter.

In limited liability companies by shares, rather than following the Commercial Code’s rule of granting one vote for each share, the articles of association may provide that only a certain number of shares will entitle their holder to that right. Shareholders whose individual number of shares does not reach that number may form a group, choose a representative from among them and cast a vote.

There is currently no specific provision in the Commercial Code with regard to electronic voting.

Please refer to 2.8 Shareholder Approval regarding the matters to be included in the agenda and to be resolved by the shareholders.       

Unlawful resolutions may be challenged, and may be either declared null and void or annulled. Annulment applies to procedural or substantive irregularities, as specified by law.

As a general rule, a declaration of nullity may be pursued by all shareholders, whilst irregularities sanctioned with annulment may only be argued before a court by shareholders who:

• participated in the general meeting and voted without the winning majority in an unlawful resolution;
• were illegally prevented from participating in the meeting; or
• failed to participate because the meeting was not properly convened.

Annulment proceedings shall be started within 20 days from the date on which the resolution is passed, or the date on which the shareholder had knowledge of the resolution if they have been irregularly prevented from participating in the meeting (Section 229, paragraphs 1 and 3). Alternatively, an action shall be filed up to five years after the date of registration of the respective resolution for those situations the law sanctions with nullity (Section 228, paragraph 3).       

There are no specific instruments through which institutional investors or shareholder groups can influence or monitor the company’s actions; the only way to achieve such purpose is through the exercise of shareholders' rights. Please see 1.3 Types or Classes of Shares and General Shareholders’ Rights for more detail.

In the Macau SAR jurisdiction, there are no special regulations on holding shares through a nominee. The nominal ownership of shares implies the effective ownership of the rights inherent to the shares; consequently, the nominee shareholder is legally empowered to fully and independently exercise all the shareholder rights. If the shareholder wants to hold the shares through a third party, there are no corporate law mechanisms to control the behaviour of the nominee.

Please refer to 2.7 Types of Resolutions and Thresholds.

If there is an issue of new shares by new contributions, in a limited liability company by quotas, the existing shareholders are entitled to the pre-emptive right to subscribe the new quotas (Section 363).

In a limited liability company by shares, the existing shareholders are entitled to the pre-emptive right to subscribe the new shares, in proportion to the number of shares they owned. This pre-emptive right can be restricted by a resolution of the shareholders (Section 469).

Limitations on the disposal of shares vary depending on the type of company in question, without prejudice to the limitations that may be agreed upon in the articles of association (within the limits of the law).

In general partnerships, any shareholder who wishes to transfer their share (the transferor) must obtain prior unanimous consent from the other shareholders to complete an inter vivos transfer of the shares (Section 337).

In limited partnerships, the transfer (inter vivos or mortis causa) of shares of unlimited liability shareholders requires unanimous consent from the remaining unlimited liability shareholders as well as a resolution passed by the majority of the limited liability shareholders; on the other hand, inter vivos transfers of shares by limited liability shareholders require a favourable resolution by the majority of all the remaining shareholders (Section 354).

In limited liability companies by quotas, there are no restrictions for the inter vivos transfer of a quota, unless there is a stipulation to the contrary in the articles of association (Section 367). The transfer shall be documented in writing, with certification of signature by a notary and further registration. However, the transfer is only effective vis-à-vis the company after being communicated in writing (Section 366).

Transfers of shares of limited liability companies by shares incorporated by means of public subscription shall be unrestricted, except in respect of those shares that shall be subscribed and paid by the underwriter (Section 407). Transfers of shares of limited liability companies by shares are generally only subject to the limitations expressly set forth in the articles of association (eg, pre-emptive right of the existing shareholders). Such limitations shall be expressly referred to in the shares’ scripts.

Shareholders are entitled to constitute liens or charges over their shares in a company's capital, within the limitations set forth in the law and in the articles of association (where applicable). The constitution of liens or charges over shares of gaming concessionaires is subject to prior authorisation from the government, as per Article 17, paragraph 7 of Law 16/2001.

In general terms, companies’ books, correspondence and documents are secret and shall only be disclosed by a court and in the limited cases prescribed in the law.

The identity of companies’ shareholders, however, is available for public consultation at the Commercial and Movables Registry Office in respect of general partnerships, simple limited partnerships and limited liability companies by quotas. The identity of the shareholders of both limited partnerships by shares and limited liability companies by shares is not publicly available at the Commercial and Movables Registry Office. However, in limited liability companies by shares, the identity of the dominant shareholder has to be disclosed in the published annual report (Article 472).

In certain situations expressly set forth in the law, the company may be obliged to report the identity of its shareholders and any changes in its respective shareholding structure, to a certain extent. For example, gaming concessionaires are obliged to publish a list of their qualified shareholders (holding shares representing 5% or more of the respective share capital) every year, as per Section 31, paragraph 1, subparagraph 1 of Law 16/2001; credit institutions must also publish a list of their qualified shareholders annually, as per Section 75, paragraph 1, subparagraph g) of Decree Law 32/93/M.

The Commercial Code stipulates the following two situations in which the company’s shares, after the issuance, can be cancelled by resolution:

• shares can be cancelled as a means of reducing the share capital of the company (Section 265, paragraph 1); and
• in both general partnerships and limited liability companies by quotas, shares will be cancelled by the effect of redemption, due to, for example, the exclusion or exoneration of the shareholders in a limited liability company by quotas (Sections 338 and 368).

Only limited liability companies by quotas and limited liability companies by shares can buy back their quotas and shares, under the following terms.

• In a limited liability company by quotas, the quota buyback is subject to shareholders' resolutions. The quotas involved in the buyback operation should be fully paid up by the selling shareholders and, after the operation, the net worth of the company’s assets should not be less than the sum of the share capital, legal reserve and compulsory reserves (Section 373).
• In limited liability companies by shares, the buyback is subject to shareholders' resolutions and against payment of the selling shareholder. The shares should be fully paid up by the selling shareholder. As a general rule, the company cannot buy back its own shares corresponding to more than 10% of its share capital. After the buyback operation, the net worth of the company’s assets should not be less than the sum of the share capital, legal reserve and compulsory reserves (Section 426).

The payment of dividends generally takes place once a year and follows the procedure outlined in the Commercial Code. After each financial year, the directors must prepare and approve the company’s financial statements, prepare a report and issue a proposal on how to allocate the year’s results, which they will then submit for approval by the shareholders. If the company happens to have a supervisory body, it must also approve the year’s accounts before they are sent to the shareholders.

At the annual general meeting, shareholders then resolve on the percentage of profit to be distributed and the amount to be kept in reserve. In a limited company by quotas, at least 25% of the profits must be assigned to the legal reserve until it reaches half of the company’s share capital. In the case of limited liability companies by shares, at least 10% of the profits must be assigned to the legal reserve until it reaches one quarter of the company’s share capital.

Despite these rules, the articles of association can state that a percentage ranging from 25% to 75% of distributable profits must necessarily be paid as dividends.

Under special circumstances, the Commercial Code also allows limited liability companies by shares to distribute dividends during the second semester of the year, in the form of advance payments, provided that such is expressly allowed by the articles of association. The procedure begins with the board of directors preparing an interim balance, certified by an auditor, which must both show the existence of amounts available for that purpose and demonstrate that the company’s net equity would not become less than the sum of the share capital, the legal reserve and the statutory reserve, if any, should the advance payments take place.

Advance payment of dividends is limited to once every financial year and cannot exceed half of the amounts shown to be available in the interim balance.

General Partnerships

Unless the articles of association regulate to the contrary, directors who are shareholders can only be removed if there is cause, by a resolution approved by the majority of the remaining shareholders, or by a court decision in proceedings initiated by any of those shareholders.

If the company only has two shareholders, or if the shareholder to be removed is appointed as such by a special clause in the articles of association, the removal can only be decided by a court. A director who is not a shareholder can be removed at any time by a shareholders’ unanimous resolution, or by majority only when with cause (Section 345).

Limited Partnerships

Unless the articles of association regulate to the contrary, the directors who are unlimited liability shareholders can only be removed if there is a justified reason, by resolution approved by the majority of the remaining unlimited liability shareholders and the majority of limited liability shareholders, or by a court decision from proceedings initiated by either of those shareholders.

If the company only has one or two unlimited liability shareholders and they are the only directors, the removal can only be decided by a court and with cause. A director who is not a shareholder can be removed at any time by getting the same number of votes necessary for their election; if there is a justified reason, it is only necessary to get votes from a majority of the shareholders of limited liability and from a majority of the shareholders of unlimited liability (Section 353).

Limited Liability Companies by Quotas

Shareholders can resolve on the removal of directors at any time. The articles of association can establish that the removal of one or more directors has to be resolved by a qualified majority. If a shareholder is granted a special right to the management of the company (which must be stipulated in the articles of association), they can only be removed by court decision, not by a shareholders’ resolution.

Any director can be removed with cause, by means of court decision, or per the request of any other shareholder or director. “Cause” means a material or continuous breach of the directors' duties, understood as the failure or undue delay to register facts or acts that must be registered, the failure to maintain the company's books in proper order and to keep them updated, and the exercise of competing activities (Section 389).

Limited Liability Companies by Shares

A director’s mandate can be terminated at any time by a shareholders' resolution, without prejudice to the compensation rights granted to such director, particularly if terminated without cause. Besides, shareholders holding 10% or more of the capital may request the court to terminate a director’s appointment with cause at any time (Section 463).

Please refer to 2.8 Shareholder Approval, 2.3 Procedure and Criteria for Calling a General Meeting and 2.6 Quorum, Voting Requirements and Proposal of Resolutions for further detail. The election and removal of the members of a board of directors are resolved by shareholders in a general meeting.

Directors are also liable for the actions made and decisions taken in the exercise of their duties. Please refer to 10.2 Remedies Against the Directors regarding actions and remedies against the directors.

The supervisory body is not mandatory for all types of companies. If a company is obliged to have a supervisory body, or chooses to have one, the respective duties shall be trusted to a single supervisor, who must be a registered auditor or an auditing firm, or to a supervisory board, composed of three members, one of whom must also be an auditor or audit firm.

The single supervisor or the supervisory board is appointed by resolution of the shareholders in the annual general meeting, and generally stays in office until the following annual general meeting. The chair of the supervisory board (when applicable) must be designated by the shareholders as well.

Shareholders may not take the duty of the single supervisor, but may be elected as members of the supervisory board, provided that there is still a place left for an auditor or audit firm (or respective representative).

The shareholders are only entitled to terminate the single supervisor or the members of the supervisory board with cause and subject to prior hearing (Article 241, paragraph 6).

At the end of each company's financial year, and before the annual general meeting, directors have to provide a report to the shareholders on the company’s corporate governance arrangements and accounts of the year (Section 254). This report is subject to the analysis and comment of the supervisory board of the company (Section 256), and to discussion and resolution by the shareholders (Section 216, paragraph b).

As the dominant shareholder, the controlling shareholder of a company has no special duties and liabilities to the minority shareholders. If the controlling shareholder abuses its controlling power, it may incur responsibility for compensating any loss caused to the company and shareholders (Section 212).

Pursuant to Section 212, paragraphs 2 and 3, the controlling shareholder may have to compensate the company and the minority shareholders when:

• they elect a director or member of a supervisory board despite knowing that the individual is morally or technically incapable of complying with the duties;
• they induce a director, manager, attorney, member of a supervisory board or secretary to practise an unlawful act;
• they enter into contracts with a company they dominate in favourable and discriminatory conditions, to their own benefit or to the benefit of a third party, either by themselves or by inducing the directors of the company to do so; or
• they pursue the approval of resolutions with the purpose of obtaining an advantage, for themselves or for a third party, to the detriment of the company, the other shareholders or the creditors thereof.

Shareholders who intentionally compete with their votes for the approval of resolutions with the purpose of obtaining an advantage are jointly liable alongside the dominant shareholder for the damage caused, whilst the directors, managers, members of the supervisory board or secretary who contribute to the situations mentioned in the second and third points above are liable to the company and minority shareholders under the same terms as the dominant shareholder (Section 212, paragraphs 4 and 5).

At the end of the financial year, if the directors find that the company’s net asset value (NAV) is lower than half of the nominal value of the registered share capital, the directors shall call the matter to the attention of the shareholders and propose the winding-up of the company or the reduction of its respective share capital, unless the shareholders pay an amount necessary to reinstate the company’s NAV up to the nominal value of its registered share capital (such payment must occur within 60 days from the resolution being passed by the shareholders on the directors’ proposal). As a general rule, the matter shall be discussed and subjected to a vote in the annual general meeting.

If the directors do not act in the manner so prescribed, or if the shareholders do not pass either of the resolutions above, any shareholder or creditor may request the winding-up of the company at court during any time the capital situation persists. However, the shareholders may still replenish the capital within 90 days after receiving a summons (citação) to the court proceedings (Section 206).

If a shareholder suspects the existence of material irregularities in the company’s activity, they may request a judicial examination to assess the substantiation facts from the court. If the court verifies the existence of any such irregularity, it may order the winding-up of the company, if that is the most adequate remedy (Section 211, paragraphs 1 and 6).

A resolution or court decision to wind up a company has the result of putting the company into liquidation (Section 316). As a result of the company’s liquidation, shareholders are entitled to share the remaining assets (if any) in the manner described in the articles of association or, in the absence of any such stipulation, as prescribed in the MCC (first, for reimbursement of cash contributions, pro rata to the shareholder's share in the company’s capital).

Companies act through their directors, attorneys and representatives. Shareholders are allowed to file lawsuits if there are any unlawful actions or omissions by corporate bodies, attorneys and representatives, in the terms prescribed in Sections 245 to 251 of the MCC. Although an action against a director, attorney or representative to seek their liability vis-à-vis the company may be brought directly by shareholders, only those who bear unlimited liability or hold 10% or more of the share capital are entitled to do so. However, that does not affect the minority shareholders' right to seek compensation for their own personal damages under the general terms of the civil law.

Directors are not liable vis-à-vis the company if the above actions or omissions are made in the context of the execution of a resolution passed by the shareholders, unless such resolution was passed upon a director’s proposal or if the respective execution is the result of fraud.

Please see 10.2 Remedies Against the Directors for more details on compensation claims against directors, and 2.11 Challenging a Resolution for how to invalidate a resolution.

Shareholders may also seek interim relief by requesting the suspension of a shareholders' resolution or of its respective effects (Section 232).

The MCC and the Civil Procedure Code further provide for special legal mechanisms and special forms of procedure for the enforcement of shareholders’ rights, such as the judicial examination of the company, the appointment, suspension or removal of members of corporate bodies and the provision of information. These remedies are available to minority shareholders.

Lastly, shareholders may resolve on the winding-up of the company, subject to the verification of the requisites set forth in the law – in particular, by filing for bankruptcy – and in such context pursue the prohibition of its respective directors to continue doing business or undertaking duties as members of corporate bodies in any other companies.

Where the management of the company belongs to a board (as is the case with limited liability companies by shares, and may be the case with limited liability companies by quotas, if so chosen by the shareholders), resolutions are subject to annulment or the declaration of nullity in similar terms to those described in 2.11 Challenging a Resolution. That was also confirmed by Awards 848/2009, 981/2009, 878/2012 and 73/2014 of the Court of Second Instance and by Award 71/2012 of the Court of Final Appeal. However, depending on the particulars, decisions by non-collegial management may also be challenged and their respective execution prevented by the shareholders.

There are two other sets of legal remedies to be adopted by shareholders against the directors:

• the dismissal of directors during their office term; and
• compensation claims due to the breach of legal or statutory duties.

Regarding the termination or dismissal of directors, as a general rule all directors can be removed by simple majority at any time, even without any justified reason, unless the director is a shareholder with a special right to management. In this exceptional case, the dismissal is only possible with cause (Section 389, paragraphs 1 and 3 and Section 463).

In general partnerships, if the directorship is undertaken by the shareholders, directors are only subject to dismissal with cause; otherwise, the dismissal can occur at any time without any reason (Section 345, paragraphs 3 and 5). In limited partnerships, the dismissal of directors who are unlimited liability shareholders can only occur with cause and according to the quorum rules set forth in 6.1 Rights to Appoint and Remove Directors, or by a court.

Compensation claims against directors to cover losses resulting from the breach of legal or statutory duties may be started upon a resolution of the shareholders in a general meeting, by simple majority, and within three months from the date of resolution. A shareholders' resolution such as this implies the dismissal of the targeted directors (Section 247, paragraphs 1 and 2). While the company does not resolve to, and/or does not, start such action, shareholders with 10% or more of the capital may do so.

Shareholders are further entitled to initiate a claim against company directors seeking compensation for the damages caused directly to them, and not as a mere reflection of their shareholding position in the company (ie, the loss of profits). Direct actions against directors are available to minority shareholders as well.

As a general rule, an action to seek a director’s liability shall be brought before a court by the company upon resolution of the shareholders. While the company does not act in such a manner, shareholders holding 10% or more may start an action in which the company shall be summoned as a party. Please see 11.1 Legal and Regulatory Provisions and 10.2 Remedies Against the Directors for more detail.

Please refer to 2.8 Shareholder Approval in respect of shareholders' competence in matters of management. Shareholders of limited liability companies by quotas retain the right to resolve on management matters and directors must respect such decisions; therefore, a shareholder or group of shareholders with the required voting rights (in particular, where the law or the articles of association may require qualified majorities to resolve) may to a great extent direct the management of the company as they deem convenient.

Shareholders of limited liability companies by shares are generally prevented from passing resolutions on matters of management and may only do so, aside from the specific matters set forth in the law, when requested by the directors. Therefore, their activism usually takes place indirectly, by means of the exercise of voting rights (eg, in respect of the appointment and removal of directors), the access to the company’s business information, the request for a judicial examination of the company’s activities, or the commencement of judicial proceedings to enforce liability against directors.

The exercise of the rights mentioned in 2.4 Information and Documents Relating to the Meeting and 2.6 Quorum, Voting Requirements and Proposal of Resolutions – such as the right to participate in, and vote at, general meetings or the right to request information from the management in respect of the company’s business – is (or may be) limited to a minimum shareholding position.

Similarly, only unlimited liability shareholders or shareholders holding 10% or more of the capital may file an action to seek liability against directors (Section 248).

The rights and mechanisms described in 11.1 Legal and Regulatory Provisions are set forth in the law and/or in companies’ articles of association, so they are enforceable. It is common to have court actions for the enforcement of various rights, such as the right to information or to seek liability against directors.

Shareholders and their respective advisers are aware of the existence and enforceability of the above rights and make use of them as necessary or convenient.

It is a common situation in the day-to-day business of Macau companies that shareholders with majority voting rights (or majority shareholders) take decisions that may not suit the interests of the remaining shareholders, while minority shareholders may either group with others to vote differently or use eventual blocking rights in matters that require qualified majorities.

The most common interest shareholders pursue is to secure a majority of the capital, or at least a majority of the voting rights, in order to take decisions on key matters of the company to the extent permitted by law and the articles of association, and/or to appoint the companies' governing bodies. Access to information is also a key goal of shareholders, particularly in order to assess the adequacy of the management’s conduct and financial results.

The nature of their agenda may be financial (increasing their share in the company’s annual net profits, or blocking a capital variation) or non-financial, as would be the case of pursuing a company’s restructuring or blocking certain major transactions.

One of the strategies that shareholders may adopt to build their stake in a company is to establish a shareholders' agreement among those who can form a majority, or a blocking minority, in the company. Please refer to 1.7 Shareholders' Agreements/Joint Venture Agreements regarding the matters that can and cannot be covered by such agreements, as well as the terms of respective enforceability.

Beside shareholders' agreements, other strategies that can be used by an activist shareholder to increase their stake in the company include procuring changes in the company’s management team or provoking – and voting in favour of – a capital increase when they expect the remaining shareholders (or a significant part of them) will not be able to exercise their right to contribute pro rata, or will not be interested in doing so, and will therefore be diluted.

No particular industries or sectors have been targeted by activist behaviour recently.

Although it may happen in the near future, there is currently no stock exchange in the Macau SAR, so local companies are not targets in view of the variation of their stock price. The holding companies of several high-profile Macau-based companies, such as the gaming concessionaires, are listed on the Hong Kong Stock Exchange, but there have not yet been any reports of them being the subject of any such activism.

There are no particular active groups or active shareholders, as the phenomenon is not a feature in the Macau SAR. These are matters of a private nature for private entities and there are only rare cases of public attention in their respect.

No particular data has been released in respect of the fulfilment of activist demands in the Macau SAR.

The position or mechanisms available to the company vary with the particulars of the interests and agenda of the shareholders in question.

The company must assess whether the shareholder is misusing or misrepresenting certain corporate rights. If the shareholder is found to be rightfully exercising their rights, the company shall endeavour to comply with the relevant provisions set forth in the law and the articles of association.

Similarly, when shareholders make decisions on management matters in a legal and binding manner, directors shall comply with such decisions, and adequately and conveniently implement them.

In matters that substantially affect the company’s business, management members shall act in a reasonable manner and avoid disputes with the shareholders, sharing information with them in advance and/or inviting them to find a resolution on the matter, even if such is not legally required.