In mid-June, the Chief Executive issued a regulation concerning the publishing of information on companies with public participation, that means companies where the region or any of its entities are shareholders, be they wholly or partly owned by the SAR.
By José I. Duarte | Economist, Macau Business Senior Analyst
Remember that on the first day of his mandate, in another dispatch, the CE created a new supervising body to monitor and supervise public assets. The “public assets” under supervision also include public funds (Pensions’ and Social Security funds excepted), and real estate assets.
In its website, the supervisory office lists 22 entities classified as public capital companies. In fourteen of them, the public share equals or exceeds 50 percent of the capital. Most are, in the legal sense, public companies (SAs) and a few are private companies (Limited). Three are not companies in a proper sense, and one appears, rather surprisingly with the same name, as both a public fund and a private company. But let us leave these details aside.
The new obligations appear quite demanding, especially if set against the fairly lax canons more commonly followed here. Those companies are bound to publish information on their internal structure, shareholder composition, and liabilities and acquisitions that may impact their activities. As might be expected, they have to release financial and business reports. There are two caveats, though.
Firstly, it is only mandatory for the ones that are wholly-owned or where the public share is bigger than 50 percent. The others, where the public stock is less than half, “may” abide by it. The latter include the companies that provide our electricity, water, and telecommunications, plus the local airline and the harbor management company.
Secondly, some exceptions may apply, including information “framed within the scope of trade secrecy” or “subject to a confidentiality agreement.” There is no indication of criteria, limits, or rules that might apply to the handling of these exceptions. It may mean that its mere invocation might become sufficient, if not in principle, at least in practice.
Remember that in a slightly different context, yet with apparent similarities, investments made by the financial reserve were kept secret, invoking, precisely, an agreement of confidentiality with the recipients of those funds.
Furthermore, the general reporting standards have been on the dismal side for a long time, and one might even argue that they have been degrading over time (for the sake of justice, there are also some noticeable exceptions). That state of affairs has been tolerated, if not implicitly encouraged, without much of a fuss.
However, guidance and rules for proper accounting and reporting practices are available for anyone willing to follow them. Moreover, for several types of companies, IFRS standards have been mandatory since 2005. Those companies include public companies or those holding public concessions. International standards are not limited to internal accounting procedures. They also apply – and it would be nonsensical if they didn’t – to the information provided to the public and investors about the financial performance and all relevant business activities.
A brief perusal of the Official Gazette is enough to show how poor those standards still are. Most of the company accounts (if we can call them such) published there are ‘summarized’ to the point of impenetrability. Some will not deign to show the statement of the year results. Activities reported can hardly exceed one, quite generic, paragraph. Auditor reports will occasionally be concise and of the congratulatory kind (is that their job?).
Time alone will tell if the new regulations, welcome as they may be, will change this state of affairs in any meaningful fashion, or if the exceptions will someway “become” the law.