Macau

The Macau Legislative Assembly has just approved the long anticipated Investment Funds Law (“IFL”), aimed to modernise and diversify the city’s financial sector, marking a bold step toward the development of a competitive, transparent, and globally integrated investment fund market. The IFL replaces the outdated 1999 regime, and is expected to come into force on 1 January 2026. We summarise below the main features of the IFL: Scope & Key Definitions The IFL governs the creation, functioning and supervision of investment funds and management entities of investment funds, defines core concepts such as fund units, management entities, custodians, investors, external investment manager, and commercialising entities. It further  distinguishes between public fundraising (mass-market) and private fundraising (targeted at investors who fulfill certain criteria). Funds may be constituted as contractual funds, investment companies (“SIC”) or limited partnerships (“FPL”). Funds may also adopt flexible structures such as umbrella funds with sub-funds (fund composed of two or more subfunds), master-feeder funds (fund composed of a main fun – “master” – and several subordinate funds – “feeders”) and funds of funds. Furthermore, the IFL classifies funds by investment objective: Securities Investment Funds; Real Estate Investment Funds; and Alternative Investment Funds. In addition, funds may be open-ended (fund made up of a variable number of participation units), closed-ended (fund consisting of a fixed number of participation units, which, in principle, cannot be redeemed), or hybrid (fund that combines the characteristics of open-ended and closed-ended funds, whose participation units can be partially redeemed or partially fixed under specific conditions), and investors acquire and transfer units via regulated account systems ensuring traceability and integrity. 2.     Fund managers Authorised entities — SGFs, credit institutions, finance companies or other entities authorised to manage funds— must meet strict governance, capital adequacy, and staffing criteria. Their responsibilities include, inter alia: Investment management: portfolio selection and risk management; Administrative management: accounting, reporting, valuation; Commercialisation management: communication with commercialisation entities and compliance. They are prohibited from certain high-risk activities, such as excessive leverage or extending credit from fund assets. 3.     Custodians Only authorised entities (authorised credit institution and other financial institutions) may carry out custodian activities. Custodians should establish appropriate policies and procedures to ensure compliance with legal and contractual obligations by its staff and leadership. It must implement strong administrative, accounting, and internal control systems, along with effective risk assessment and information system protections. In addition, custodians should maintain complete records of all activities, and use adequate resources to ensure operational continuity. Moreover, all senior managers and board members must act with integrity and possess a good reputation, knowledge, and professional experience.   4.     Commercialisation Entity When promoting or marketing a fund, the commercialisation entity must act publicly, impartially, and objectively, avoiding any misleading practices. It must comply with the fund’s governing documents and applicable laws, avoid making false or exaggerated return promises, clearly disclose associated risks to ensure investor understanding, and timely forward subscription and redemption orders to the fund manager as per their agreement. 5.     Marketing of foreign investment funds Foreign funds must obtain AMCM’s prior authorisation before being marketed to Macau investors. They must disclose the fund’s structure, fees, risks, and regulatory details. All promotional materials must clearly state the fund is not domiciled in Macau and may be subject to different regulatory standards. AMCM may also require regular sales and marketing reports from commercialisation entities. If foreign funds violate Macau’s laws or supervisory rules during promotion or marketing activities, the AMCM may, depending on the severity: Order corrective action within a set deadline; Suspend or revoke their marketing authorisation, or Take other necessary legal or regulatory measures. 6.     Redomiciliation The redomiciliation of foreign funds to Macau preserves their legal personality and continuity, with no need for re-incorporation. All rights, obligations, and contracts remain valid. It shall not treated as a transfer or sale and shall be tax-neutral in Macau. Legal and financial records remain uninterrupted. The fund adopts a Macau tax domicile, must protect investor rights through proper disclosures and governance, and comply with local AML/CFT and regulatory standards. 7.     Recordkeeping and registration requirements The fund manager must continuously record and update all fund-related operations to ensure data integrity, accuracy, and security. This includes details like order ID, timestamp, number of participation units subject to the transaction, and value of the operation. Fund units must be registered in the accounting system to be constituted as securities, which legitimises investor rights and tracks all transactions, ownership, and legal annotations. AMCM may specify, by notice, the additional information that must be produced and retained. If the registered holder isn't the beneficial owner, they must maintain and provide identification records of the ultimate beneficiaries upon request. 8.     Fundraising Regimes: Public and Private Funds The IFL defines two modes of capital raising: public fundraising, directed at the general public, and private fundraising, limited to qualified investors. Each regime is subject to distinct formation, disclosure, and oversight rules, with the IFL introducing, for the first time, a formal legal framework for private funds in Macau. Public Funds Under the IFL, public funds are defined as investment funds that raise capital from the public through general solicitation, including mass media, digital platforms, and other public-facing communication channels. These funds are typically open to retail investors and are therefore subject to stringent regulatory requirements to ensure investor protection. Public funds require AMCM’s prior authorisation before launch. This includes the approval of core fund documents (e.g., constitutive instrument, prospectus, key investor information), designation of a qualified fund manager and custodian, and satisfaction of minimum disclosure and structural conditions. Public funds may only be constituted in two forms: as contractual funds or as investment companies (SICs). They are also subject to comprehensive ongoing obligations, including periodic reporting (annual and semi-annual reports), disclosure of net asset value (NAV), investor meetings, and strict oversight over marketing practices. Redemption rights, pricing mechanisms, and suspension policies must be clearly defined in the fund documents and disclosed to investors. Public funds are expected to maintain a high standard of transparency and operational governance in line with international benchmark Private Funds The IFL introduces, for the first time, a dedicated and comprehensive regime for private funds, representing a major departure from the prior legal framework under Decree-Law No. 83/99/M, which solely addressed public fundraising. Under the old law, private funds were not legally recognised and lacked any formal structure or regulatory guidance. Private funds under the IFL are defined as those that do not conduct public offerings and instead raise capital through private placements directed exclusively at qualified or professional investors. This new regime allows Macau to align with international fund jurisdictions by enabling institutional-grade investment structures with regulatory proportionality. Unlike public funds, private funds operate under a communication regime rather than requiring prior AMCM authorisation. Fund sponsors must submit a communication notice at least 15 business days before the intended offering, accompanied by key fund and manager information. If the AMCM raises no objection within the period, the fund may proceed to market to eligible investors. Private funds benefit from greater structuring flexibility, with the ability to adopt any of the three legal forms — contractual fund, SIC, or limited partnership (FPL) — and without being subject to the public offering requirements of minimum investor count or capital thresholds. However, they remain subject to baseline governance and compliance standards, including verified investor qualification, annual audited financial reporting, and sound operational separation of assets. They are prohibited from engaging in any public advertising or general solicitation. The AMCM retains oversight powers and may inspect or intervene in private fund operations to protect market integrity or investor interests. In addition to compliance with the IFL, private fund managers must also adhere to the detailed operational and supervisory rules set out in AMCM’s Circular 007/B/2023‑DSB/AMCM (“Guideline on Management and Operation of Private Investment Funds”), effective 21 August 2023. By introducing this new private fund regime, the IFL opens a strategic opportunity to develop Macau’s wealth management industry. Private funds offer an efficient and professionally governed vehicle for high-net-worth individuals (HNWIs) to access bespoke investment strategies, including family office structures, co-investment platforms, or alternative asset pools. The combination of legal certainty, structuring flexibility, and light-touch supervision positions Macau as a viable fund domicile for private wealth solutions and cross-border capital planning. By introducing this new private fund regime, the IFL broadens the financial ecosystem, attracting sophisticated capital and positioning Macau as a more versatile fund domicile. 9.     Transition period Existing funds and managers operating in Macau have one year from the law’s entry into force to adapt to its provisions. This includes regularisation of documents, systems, and operational procedures to ensure compliance with the new regime.     Our Contributors: José Leitão, Partner [email protected] Visit Profile Rui Pinto Proença, Partner [email protected] Visit Profile Daniela Guerreiro, Associate [email protected] Visit Profile Emanuel Soares, Consultant [email protected] Visit Profile  

In recent years, the Macau Special Administrative Region has continued to promote the development of the modern financial industry and has introduced a series of legal, regulatory and market infrastructure measures.From the establishment and enhancement of bond market infrastructure, to the formal implementation of the new Investment Funds Law, and more recently the introduction of the Government Guidance Fund Management Regime, these developments indicate that Macau is gradually building a modern financial regulatory framework covering financing, asset management and industrial investment.For enterprises and market participants intending to use Macau as a platform for financing, investment or asset management activities, these regulatory developments merit continued attention.Continued Enhancement of the Bond MarketAs one of the key achievements of Macau’s modern financial development in recent years, Macau’s bond market has gradually established a comprehensive institutional foundation.Under the current regime, debt securities issued in Macau are required to be centrally registered, deposited and settled through Macau Central Securities Depository and Clearing Limited (MCSD), while bonds offered by public subscription are also required to complete the relevant registration procedures. Macau has now established market infrastructure covering issuance, registration, custody, settlement and ongoing management.Recently, the Monetary Authority of Macao further updated the Guideline on the Issuance and Information Disclosure of Corporate Bond, the Guideline on Underwriting and Trustee Business of Corporate Bond, and the Guideline on Registration System for Bond Issuance through Public Subscription.Although these amendments are primarily regulatory refinements, certain updates also reflect Macau’s continued alignment with international bond market practices. For example, in transactions involving bonds issued to professional investors and private placements, issuers may consider whether to appoint a trustee based on the needs of the transaction, thereby providing greater flexibility for the professional investor market.From a market development perspective, these updates further strengthen the institutional foundation of Macau’s bond market. The Investment Funds Law Establishes a New Legal Framework for FundsIn addition to the bond market, the funds and asset management market has also been an important direction for Macau’s modern financial development in recent years.Macau’s new Investment Funds Law formally came into effect on 1 January 2026.The new law establishes a more comprehensive and modern legal framework for the establishment, management and operation of funds, and further enhances the regulatory arrangements for fund managers, fund governance and investment fund operations.Although the law has only been in force for a relatively short period, from a policy perspective its introduction is generally viewed as an important step in further promoting the development of Macau’s asset management market and as providing a clearer legal basis for future fund management and related financial services activities. Introduction of the Government Guidance Fund RegimeFollowing the establishment of the new legal framework for funds, the Macau SAR Government has recently introduced the Government Guidance Fund Management Regime.Unlike ordinary commercial funds, the purpose of establishing government guidance funds is not limited to generating investment returns. Rather, it is to use capital as a guiding mechanism to attract social capital to participate jointly in industrial projects aligned with Macau’s future development direction.The regime also introduces arrangements relating to management entities, fund managers, investment committees and performance evaluation, and expressly permits policy objectives to be pursued through investment funds, co investment arrangements and other means.It is worth noting that the regulations refer several times to concepts such as “Long Termism” and “Patient Capital”, reflecting a regulatory design that places greater emphasis on long term industrial cultivation and the broader economic benefits generated by industrial development. From Financial Services to Industrial DevelopmentRecent policy developments suggest that Macau’s modern financial development has gradually moved beyond financial services in a narrow sense and is increasingly being integrated with industrial policy.Government officials have recently referred on various occasions to concepts such as “chain leading enterprises”, “spillover effects” and “re investment requirements”, while the establishment of the government guidance fund regime provides a new institutional tool to support these policy objectives through capital arrangements.Against this background, market attention may not be focused solely on the number of funds, fund size or the number of fund managers. Instead, the key issue is whether the relevant capital can support policy objectives such as industrial development, enterprise establishment in Macau and regional coordinated development.From the perspective of regulatory design, market participants with industrial resources, technological capabilities, cross border networks and enterprise resources may have more opportunities to participate in the relevant market development in the future. Implications for Enterprises and InvestorsFor market participants, this series of institutional developments does not merely reflect updates to individual laws or regulatory rules.Key points to watch include:Macau’s bond market continues to improve, offering enterprises additional financing channel options;The new Investment Funds Law provides a more comprehensive legal framework for fund establishment and asset management business;The government guidance fund regime creates new potential development space for fund managers and industrial investors;Macau is gradually establishing a modern financial system covering financing, asset management and industrial investment;For enterprises and investors intending to develop their presence in the Greater Bay Area, Hengqin and Portuguese speaking countries, these institutional developments may create new cooperation and investment opportunities. ConclusionViewed together, the development of the bond market in recent years, the implementation of the Investment Funds Law and the introduction of the government guidance fund regime show that Macau’s modern financial development is gradually forming an institutional system that extends from financing markets to asset management and industrial investment.These developments may not indicate that Macau is simply seeking to become another financial market. Rather, they may reflect Macau’s efforts to build a regional platform connecting capital, markets and industrial resources. For enterprises, financial institutions, fund managers and investors, these developments merit continued attention.AuthorsTirso Olazábal | [email protected] Wong | Senior [email protected]