Legislators have suggested that the government extend the period for locally registered companies to convert their bearer shares to registered shares, as the city is considering passing a bill that abolishes bearer shares in compliance with a review by the Organisation for Economic Co-operation and Development’s (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes. The bill, which obtained its first approval by legislators on January 12, proposes a six-month period for the conversion of the existing bearer shares issued by local companies into registered shares. But the first permanent committee of the Legislative Assembly suggested that the conversion period be stretched further, the committee’s president, Kwan Tsui Hang, told media following their meeting yesterday. The revised new bill suggests that a ‘transitional period’ of one year instead of the previous six months would be given when it comes into force. During this period, bearer share holders should change their shares to inscribed ones. Otherwise, the shareholders would be banned from joining shareholder meetings or receiving interest in the second year. After two years, shareholders in interest could only convert their shares through lawsuits although their right to hold shares would not be abolished. There are currently only 10 local companies that issue bearer shares. All have been informed by the government regarding the proposed law revision. But the value of these shares and the type of these share issuing companies cannot be disclosed, Ms. Kwan said. Bearer shares are a type of freely transferable security that enjoys the advantages of simplicity and rapid transmission, cost saving and high level of privacy, whilst with registered or conventional shares the name of the owner is included and will also be entered in the shareholder’s company register. The draft bill is a response to a review by the Global Forum on Transparency and Exchange of Information for Tax Purposes conducted in September 2013. The organisation indicated that Macau lacked an effective scheme to obtain information about bearer shareholders. The Legislative Assembly is to pass the bill soon as the Forum is set to conduct a third phase review of Macau’s compliance with international standards on transparency of corporations’ ownership next year.
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