Daniela Almeida Vaz of Couto Graça & Associados in Maputo looks at the structures governing financial and corporate transactions

Legal framework

When referring to corporate financial activity in Mozambique and all its formalities and complexities, one should take into account the following legislation:

  • Commercial Code (Decree-law number 2/2005 of December 27 as amended by Decree-Law number 2/2009 of April 24);
  • Foreign Exchange Law (Law number 11/2009 of March 11) and Foreign Exchange Law Regulation (Decree number 83/2010 of December 31) together referred as “Foreign Exchange Legislation”;
  • Securities Code (Decree-Law number 4/2009 of July 27);
  • Investment Funds Regulation (Decree number 56/99 of September 8 as amended by Decree number 36/2005 of 29 August);
  • Venture Capital Funds Regulation (Decree number 56/99 of September 8).

The aim of the present article is to provide a general overview of certain material aspects that we consider to be transversal to all investments and that one should consider whenever starting and operating an investment in Mozambique.

Foreign Exchange Legislation

The Foreign Exchange Legislation was adopted with the aim to adjust the legislation to increase of the foreign investment in Mozambique in the last few years.

In general, the scope of application refers to all acts, contracts, transactions and relationships that occur between a resident entity and a non-resident entity and that result and/or may result in payments or receipts to or from abroad and/or are qualified by the Foreign Exchange Legislation as exchange control transactions.

Depending on the qualification of the transaction at stake, it might require the prior approval of the Mozambican Central Bank (MCB) before its implementation or it might be qualified as a “current transaction”, which only requires the respective registration.

As an example, direct foreign investments, real estate investments, opening and movement of accounts with foreign financial institutions, loans and financial credits (amongst others) if executed between resident and non-resident entities require the prior approval of the MCB before the respective implementation.

On the other hand, if falling within the qualification of “current transaction”, e.g. payments or collections in foreign currency not connected to capital transfers, such operations and/or transactions do not require the prior approval from the MCB but only the registration, which can be performed by the interested party (ies) or by the operating bank against the submission of the supporting documentation.

Capital markets

The legislation applicable to the capital markets activity is the Securities Code, the purpose of which is to establish the principles and provisions inherent to the organisation and functioning of the capital markets as well as regulating the execution of transactions, activities and agents that compose such markets.

The capital markets activity in Mozambique is regulated and supervised by the MCB.

In general terms, the Securities Code governs the following relevant aspects:

  • The supervision of the capital markets by the MCB;
  • The definition of securities and the terms and conditions for its issuance, transfer and operation;
  • The primary and secondary markets; and
  • Public offers and private placement of securities.

The capital markets in Mozambique is in an embryonic stage, nevertheless, there is an intention to create favourable conditions for the investors to use this investment platform.

Commercial Code

Under Mozambican Law, only entities that are incorporated and/or represented in Mozambique may develop commercial activities. The Commercial Code provides for five types of entities, nevertheless, only two have limited liability and for such reason, they are the most common in Mozambique. They are the joint stock companies (sociedade anónima) and the limited liability companies (sociedade por quotas). Another form of exercising commercial activity is through the establishment of a commercial representation (branch) that shall be licensed by the competent entity (determined according with the activity to be performed).

In this regard, there are aspects that one must consider when incorporating a company (subsidiary) or a branch in Mozambique:

  • There are no minimum capital requirements for the respective incorporation (usually the amount of the share capital must be adequate for the performance of the respective activity);
  • In relation to the limited liability companies (sociedade por quotas) we highlight the following particularities:
  1. A private limited company must have at least two shareholders. Nevertheless, these companies may also have a single shareholder, provided that it is a natural person.
  2. On the corporate bodies, these companies have a relatively simple structure and their management may be ensured by one or more administrators or by a board.
  • On the other hand, vis-à-vis joint stock companies (sociedade anónima):
  1. They must comprise a minimum of three shareholders, with the exception of cases in which these are incorporated directly or indirectly by the State, in which situation the company may have a single shareholder.
  2. The share capital is represented by shares (issued or bearer) and they all must have the same nominal value;
  3. On what regards the corporate bodies it embodies a more complex structure as it is mandatory to implement a general meeting of the board, a board of directors, a supervisory board or a single supervisory.
  • The main difference in establishing a branch relates to its duration (from one to five years) and to the fact that it does not have legal capacity, therefore, all the liabilities incurred by the branch can be assumed by the assets of the foreign company.

The Commercial Code governs all the matters that are inherent to the incorporation and functioning of commercial companies in Mozambique including corporate governance matters, functioning of the general assembly and other corporate bodies, mergers and divisions, shareholders agreements, dissolutions, winding-up and many others.

Investment funds

By definition, a “fund” is an estate of assets and liabilities managed by a management company under the terms of a regulation and with the benefit of a custodian.

The investment funds can be materialised in investments either in securities or in real estate and they can be of an open-end and closed-end type. For each fund a management regulation shall be drawn up that must identify the management entity and depositors and respective rights and obligations as well as the administration and management policies and the conditions for the respective dissolution and winding-up.

The establishment and functioning of the investment funds is under the supervision of the MCB.

In what regards the legislation that governs investment funds and venture capital funds, it entered into force in 1999 and it still requires the intervention from the MCB for the implementation of the following matters:

• Definition of the rules for the composition of the portfolio of the investment funds;
• The definition thresholds on investment in securities of a single entity;
• The definition of thresholds on investment in other investment funds;
• Rules on the risk hedging;
• And others.


Daniela Almeida Vaz
Couto Graça & Associados

About the author

• LL.M. in “International Business Law” from Católica Global School of Law in Faculdade de Direito of Universidade Católica Portuguesa;
• Post-Graduate in Commercial Law from Faculdade de Direito da Universidade Católica de Lisboa – 2008 to 2009.
• Degree in Law from Faculdade de Direito da Universidade Nova de Lisboa – 2002 to 2007.

• Lawyer in the Law Firm CGA – Couto, Graça e Associados, (since June 2011).
• Lawyer in the Law Firm H. Gamito, Couto, Gonçalves Pereira, Castelo Branco & Associados (2010 to 2011).
• Professional internship in the Law Firm Cuatrecasas Gonçalves Pereira & Associados (2007 to 2010).
• Membership in the Bar Association of Mozambique, holder of the professional card no. 962.

• Incorproation, reorganization and restructuring of companies;
• Mergers and acquisitions;
• Foreign investment and regulatory impact on exchange control matters;
• Civil and Commercial Contracts.