Vítor Marques da Cruz and Teresa Pala highlight the legal issues 
associated with investing in Angola and Mozambique


Angola is rich in natural resources, particularly diamonds, oil, gas and iron. It also has deposits of copper, manganese, phosphate, salt, mica, lead, tin, gold, silver and platinum. Unsurprisingly exports depend on its main industries of oil exploration and diamond mining, although there are some agricultural industries in the form of wood production, and fisheries. Industrial production is fuelled by five hydroelectric plants with high available levels of energy. Exports for 2010 stood at US$50.59bn, although it has a slower growth rate than Mozambique – its economy expanded 3.4% in 2011.

New law on private investment (NPIL)

A new law on private investment (NPIL) came into force on 20 May 2011. For NPILeligibility, the investment project must be a minimum of US$1M per project and/or per investor. It is sometimes possible to approve a private investment in Angola of less than US$1M, but not all incentives and benefits under the new legislation will be available for such a project and no profits or dividends can be repatriated.

It should be noted that the NPIL is rather generous on what it considers ‘foreign investment operations’, including, among others, the following acts or contracts (if carried out without using Angola currency reserves):

  •  incorporation of local companies;
  •  acquisition of quotas/shares in existing companies;
  •  shareholders’ loans and supplementary capital contributions;
  •  increases in share capital of existing companies; and
  •  acquisition of certain assets and businesses.

Main forms of business structure

There are several mechanisms through which investments may be accomplished in Angola.

Limited liability companies

It is very common for foreign investors to choose to set up their own enterprise structures in Angola (including subsidiaries), thereby affording them direct control over their investment.

Amongst the various types of company provided for in the Companies’ Code the most significant are private limited liability companies (sociedade por quotas) and public limited corporations or joint stock corporations (sociedade anónima).

The minimum registered capital for a limited liability company is the equivalent to US$1,000 in Kwanzas (the Angolan local currency). Fifty per cent of the initial share capital contributions may be deferred for a maximum three year-period provided the legal minimum has been paid up in full (in cash, cash equivalents or in kind).

The capital is divided into ‘quotas’, which may or may not be of the same amount (but never be less than the equivalent of US$100).

The minimum share capital required for stock corporation is the equivalent to US$20,000, divided into shares (bearer or nominative) of the same nominal value, which may not be less than US$5 expressed in Kwanzas. It is possible to defer the payment of 70% of the share capital in cash or cash equivalents for a period not exceeding 
three years.

Branch offices

The Companies’ Code foresees no specific provision for a legal regime that applies to branch offices, and there are no regulations governing its operational structure, bodies and liabilities. Classified as non-autonomous legal entities by jurisprudence and legal doctrine, these are considered an extension of the parent company.

A branch office’s parent company, even if it is incorporated and operating in another country is liable, fully and without limit, for any obligations undertaken or attributable to that branch office.

The procedure for incorporating a branch office in Angola is similar to the procedure necessary for setting up a company, requiring the prior authorisation of the National Agency for Private Investment (ANIP), a notarial act and various registration requirements.

Representation offices

Decree-Law no. 7/90, dated 24 March 1990, governs the opening of representation offices by non-resident taxpayers and foreign exchange residents in Angola.

Representation offices are prohibited, in particular, from carrying out any legal acts and earning income in national or foreign currency. Payments made to or through the representation office should have the sole purpose of covering its operating expenses.

While effective mechanisms for streamlining currency exchange issues, they are not very flexible in the long run, particularly on what concerns the establishment of legally significant acts.

The representation offices of financial institutions have their own specific regime since they are also ruled by the Financial Institutions’ Law and supervised by Angola’s Central Bank (BNA), a state body with 
legal autonomy. This one also has powers over foreign exchange matters and Angolan state finance.

Financial market

Financial institutions

Several national, foreign and joint national and foreign banks are operating in Angola.

The incorporation of the Angolan Derivatives Exchange Market is soon to be announced, as of other financial instruments – such as securities and real estate investment funds – which may alter this market substantially.

Angolan financial institutions are essentially governed by the Financial Institutions’ Law (Law no. 13/05, dated 30 September 2005). The subjective scope of this legislation envisages banking and financial institutions such as foreign exchange agencies and financial leasing and factoring companies.

The incorporation of financial institutions in Angola requires the authorisation of BNA, following the completion of a process aimed at demonstrating, to this regulatory body, that the institution has the necessary human, material, technical and financial resources and is managed by professionals with the appropriate experience. Its subsequent activity will also be supervised by BNA.

From the outset, banking or financial activities carried out permanently in Angola by foreign companies cannot be accomplished on a cross-border basis. As a rule, these services should be rendered through an appropriate local form of representation, which should be duly authorised by BNA. Representation offices are prohibited from engaging in banking or financial operations.

Any amendments to the statutes of Angolan financial institutions require the prior authorisation of BNA. The acquisition or disposal of qualified holdings – understood as a percentage of no less than 10% of the votes in the financial institutions – also requires BNA notification and confirmation that this regulatory body does not oppose the project.

Moreover, the Financial Institutions’ Law sets out the codes of conduct applicable to financial institutions in respect of professional secrecy, client information, prevention of conflicts of interest, competition and advertising. On rather conservative terms, the legislation includes provisions concerning equity, compulsory reserves, prudential limits and relationships and accounting.

Financial investments

The Angolan investment sector covers, among other things, brokers, investment funds, securitisation management companies, asset management companies, stock exchanges and holding companies. The main governing legislation for this sector is the Securities’ Law (Law no. 12/05, dated 23 September 2005) and the regulatory body is the Angolan Capital Markets Commission (CMC).

The Securities’ Law demands the authorisation of the CMC for the incorp-oration of an investment company in Angola, following a process in which it must be demonstrated that the company meets the necessary conditions to pursue its activity.

The CMC also has the power to supervise the daily activity of these institutions both in terms of rules of conduct and compliance with its prudential requirements. These safeguards are in place to ensure adequate capitalisation and to constrain any risks of contagion.

Foreign exchange regime

Angola has a particularly limited foreign currency regime and the Angolan financial institutions play a key role in the clearance of transactions between residents and non-residents to ensure compliance. The main transactions subject to this specific treatment include:

  • Clearance of ‘goods transactions’. This one may only be processed by purchasing currency from a bank resident in Angola and providing proof of its importation or dispatch to the institution, or by means of accounts in foreign currency. As a rule, the clearance of export and re-export of goods requires the intermediation of a banking institution authorised to engage in foreign exchange operations in Angola.
  •  ‘Invisible current transactions’ between national and foreign territory or between Angolan residents and non-residents are generally subject to the authorisation of BNA. It should not be necessary for any finance entity to establish a place of business (or to be licensed, qualified or otherwise entitled to carry out business) in Angola or to meet any other criteria applicable under the laws of Angola for the entry into, performance or enforcement of any invisible current transactions, depending, of course, of the particularity of such transaction.

Tax regime

Angola is currently ongoing a major reform of its tax system. Relevant to the banking sector are the new ‘diplomas’ which entered into force 1 January 2012. These include a review of the Investment Income Code and a new Stamp Tax Code. [1]

In fact, in light of Angola’s increasing financial circuit and growing economical development, the Investment Income Code was adapted to match the new realities and eliminate several inefficiencies deriving from the previously existing diploma.

Investment income tax will be levied on income arising from invested capital, for instance:

  • interest from loans granted and income deriving from credit facility contracts will be subject to a 15% rate; and
  •  interest deriving from deposits with agreed maturity will be taxed at a 
10% rate.

Exemptions include income from financial institutions and cooperatives, when subject to industrial tax, even if exempt, as well as interest deriving from loans on life insurance policies, made by insurance companies.

As for the Stamp Tax Code, there was a generalised reduction of the applicable rates and the implementation of new obligations for companies and financial institutions regarding tax accounting, assessment and reporting.

Most financial operations (for example, credit, interest, commissions, guarantees, leasing) are taxed, including funding of Angolan companies by foreign companies and insurance taken out abroad as long as the risk covered is located in Angola.



Mozambique is a successful south-eastern African country with significant growth potential. In the 17 years since the end of a long and devastating civil war, the country has enjoyed impressive economic growth, supported by solid macroeconomics policies and international assistance. Although this dipped to 6.3% in 2009 it rose to 7.2% in 2011 with exports of US$3.6bn.

With an area of 799,380 km2 and around 20.5 million inhabitants, the country’s main cities are its capital Maputo, along with Nampula, Beira, Chimoio, Nacala, Quelimane, Tete and Pemba. Natural resources include oil, gas and mineral resources (particularly aluminium). Aluminium, electricity, gas and ilmenite contribute almost 80% of the country’s export earnings. It is therefore hugely attractive to overseas investors. The local currency is the metical (MT).

Like Angola, the official language is Portuguese with national and local languages also spoken.  

Investing in Mozambique

The Centre for the Promotion of Investment (CPI) is the public investment authority in Mozambique and its function is to assist the national and foreign investors. [3]

Providing assistance to investors in the approval and implementation of investment projects, such as the concession of tax and customs benefits, the CPI also provides support with the business licensing, entrance visas, work and residence permits, customs exemption authorisations and licensing of land.

Once a project is submitted to the CPI, the public investment authority coordinates the project approval and negotiates the terms under which the project may be authorised with the respective investors together with the local and central authorities. When agreement on the terms of the authorisation is reached, the project is then submitted for approval by the central authorities (minister of the area involved or the provincial governor).

The approval of the investment project grants the investors the following rights:

  •  legal protection of rights and property;
  • no restrictions on the transfer of dividendsabroad, on borrowing or payment of interest abroad;
  •  submission to arbitration (ICSID or ICC rules) for the resolution of disputes in respect of investments; and tax incentives.

Main forms of business

It is very common for foreign investors to set up their own enterprise structures in Mozambique, as this grants them direct control over their investment. The most significant limited liability companies are:

a) public or joint limited liability companies (sociedade anónima);

b) private limited liability companies (sociedade por quotas);

c) branches;

d) representation offices.

The commercial legislation sets no minimum capital for the incorporation of a limited liability company but the amount must always be suitable for the pursuit of the company’s social purpose and must always be expressed in the national currency – the Metical.

Financial market

Financial institutions

Several national, foreign and joint national and foreign banks are operating in Mozambique.

Mozambique financial institutions are essentially governed by the Financial Institutions’ Law – Law no. 15/99, dated 1 November 1999 (amended in 2004). The subjective scope of this legislation envisages banking and financial institutions, such as foreign exchange agencies and financial leasing and factoring companies.

These institutions are supervised by the Mozambican Central Bank (BM), a state body with legal autonomy, which also has powers over foreign exchange matters and Mozambican state finance.

The incorporation of financial institutions in Mozambique requires BM’s authorisation, following the completion of a process aimed at demonstrating that the institution has the necessary human, material, technical and financial resources, and is managed by professionals with the appropriate experience.

Foreign exchange regime

The foreign exchange transactions carried out in Mozambican territory or between residents and non-residents are regulated by the exchange control law and respective regulations (the ‘forex laws’). For the forex laws, the corporate residents are:

  • private companies with head office in Mozambique;
  •  agencies, branches and commercial representations of non-resident private corporate entities, duly registered in Mozambique; and public entities.

All forex transactions are subject to registration (the current transactions and the capital transactions) but not all are subject to approval from BM.

The current transactions (as classified by the forex laws) were released from the obligation of prior approval and are subject to registration at the commercial banks. Due processes should be adopted and specific documents should be provided.

The capital transactions require prior approval from BM and respective registration with this entity including all the relevant information to complete the transaction. This includes parties, amount, purpose, to name a few examples.

It should not be necessary for any finance entity to establish a place of business (or be licensed, qualified or otherwise entitled to carry on business) in Mozambique or to meet any other criteria applicable under the laws of Mozambique for the entry into, performance or enforcement of any invisible current transactions.

Tax regime

Unlike Angola, Mozambique did realise early on that its tax system needed reforming if it was going to attract foreign investment. Tax reforms date back to a period between 2007 and 2009. While Angola has a principle of not entering into double taxation treaties (DTTs), Mozambique has nine of them in force.[2]

The modernisation of its tax system included the implementation of a Tax Benefits Code, which foresees reductions and exemptions from corporate tax, deductions to the taxable base and accelerated depreciations for fixed assets.

The Stamp Tax Code presents similarities to the Angolan tax system, in that it is also levied on financial operations (for example, credit, interest, commissions, guarantees, leasing), including funding of Mozambican companies by foreign ones. This includes financial institutions.

As a general rule, for non-resident companies, investment income is subject to final withholding tax at a 20% rate, unless reduced under a tax treaty.


Vitor Marques da Cruz is a partner and Teresa Pala is a senior associate at MC&A, an international legal consultancy created in association with SNR Denton headquartered in Portugal, operating in Portugal and the African Portuguese- speaking countries, with emphasis on Angola and Mozambique.




[1]. The authors produced a useful guide to this at: http://legalmca.com/wp-content/uploads/2012/04/Newsletter-2.2012-Angolan…

[2]  KPMG’s Fiscal Guide summarises what these are 


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