Daniela Almeida Vaz of Couto Graça & Associados in Maputo looks at the structures governing financial and corporate transactions
When referring to corporate financial activity in Mozambique and all its formalities and complexities, one should take into account the following legislation:
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.
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 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.
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:
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.
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.