Mozambique: Proposed Amendments to the Commercial & Corporate Laws

Published in furtherafrica.com

1. the creation of a simplification and debureaucratisation regime related with the companies’ incorporation procedures, registration, organisation, operation, transformation and liquidation of commercial entrepreneurs;
2. the improvement of the existing corporate types and the creation of new types of companies and/or businessmen;
3. reviewing the rules governing commercial contracts
4. reviewing the rules on debit securities; and
5. reviewing the legal charges applicable to the process of incorporation of individual businessmen and commercial companies, in the national, regional and international context of the commitments assumed by the country within the scope of regional integration.

Commercial Code

In the case of the Commercial Code, the concept of business activity is now defined as: “the practice of organised acts for the production and/or circulation of goods or the provision of services, for profit”.

Those who carry out a business activity as individual businessmen or a business company are considered to be businessmen.

Regarding the size of companies, the criteria were transferred from the specific Statute to the Commercial Code, with an alteration in the criteria for small companies, which are now considered to have five to ten workers, instead of the current maximum limit of forty-nine. Following on and accordingly, the criterion for medium-sized companies was also altered to harmonise with that of small companies, without prejudice to the increase in the turnover ceiling from MZN 29.270M to MZN 80M.

Regarding whom may perform commercial acts, the individual businessman is expressly provided for and is entitled to a much more detailed regime. The concept of individual businessman is established as being the natural person who professionally and habitually carries out business activities and whose turnover does not exceed 750,000.00 meticais. In the event the turnover is surpassed, the businessman is required to incorporate a commercial company.

Obtaining the individual businessperson status does not require any formality and may be granted upon registration at the Commercial Registry Counter, by means of a proper application.

Regarding the types of commercial companies, only one of the following types may be established:

1. general partnership (sociedade em nome coletivo);
2. limited partnership (sociedade em comandita);
3. private limited liability company (sociedade por quotas);
4. public limited liability company (sociedade anónima); or
5. simplified joint stock company, this being an innovation in relation to the legislation still in force (sociedade por acções simplificada).

Regarding the company’s bodies, a new one is foreseen: the Company Secretary, which is merely optional. Its competences are:

1. to act as secretary for the meeting of the governing bodies;
2. to draw up the minutes and sign them together with the members of the respective governing bodies and with the Chairman of the General Meeting;
3. to ensure that the signatures of the members or directors have been affixed to the documents by them and in their presence;
4. to promote the registration and publication of corporate acts that are subject to registration or publication;
5. certify the content, in full or in part, of the memorandum of association in force, as well as the identity of the members of the various company bodies and their powers;
6. request legalisation and ensure that the company’s books are kept up-to-date and in good order;
7. ensuring that all books that must be made available for consultation by a member or third party, do so for at least two hours each working day, during business hours and at the place of their storage indicated in the register;
8. to initial all documentation submitted to the General Assembly and referred to in the respective minutes;
9. to satisfy, within the scope of its competence, any requests made by shareholders exercising their right to information and to provide the information requested from the members of the corporate bodies performing supervisory functions regarding decisions taken by the administration.

Matters such as the setting of the remuneration of the corporate bodies and the appointment of the external auditor will now compulsorily be decided by the General Meeting (the articles of association cannot provide otherwise). In the opposite direction, the call and reimbursement of shareholders’ loans and additional payments is no longer compulsorily decided by the General Meeting.

In addition, incompatibilities for exercising the role of Manager were stipulated.

Commercial Contracts

Regarding the amendments to existing commercial contracts, we highlight the intention to meet international standards, namely the UNIDROIT principles.

Some of the principles incorporated in the general part are those related to good faith in contractual relations, fair treatment and consistency in the parties’ actions. The first of such principles obviously implies that the parties must act with good faith and commercial loyalty at all times during the contracting process, whether at a national or international level, including the moments of its formation, compliance, performance, settlement and termination.

The principle of choice of law now governs the conclusion of commercial contracts and is stipulated in the new Principles on Choice of Law for International Commercial Contracts of the HCCH (Hague Conference), which is a key element of a global legal framework for international commercial transactions.

Debt Securities

Concerning debt securities titles, it is the will of the holders of political power to remove these from the Commercial Code, to be included in a specific regime.

Freedom of issue continues to be the essential pillar on which the entire regime is based, there being bearer, demand and nominative instruments, which must always necessarily contain the object of the payment.

In bearer certificates the transfer is made by means of an agreement between the seller and buyer and delivery of the certificate to the buyer.

Concerning securities to order, these may be subscribed by more than one debtor; the transfer is made by endorsement and depends on the delivery of the security to the endorsed

The transfer is made by endorsement and depends on the delivery of the security to the endorsed party; the delivery is made under the terms foreseen for bearer securities.

The endorsement must be written on the security or on a sheet attached to it, on which the same security is transcribed in its entirety or by another means that is sufficiently individualised and must be signed by the endorser.

Finally, nominative titles are based on the legitimation of the exercise of the right contained therein. For the transfer of registered securities to be effective against the issuer and other third parties, either the name of the purchaser must be entered on the security and on the issuer’s register or the purchaser must be given a new security in his or her name and the surrender recorded in the register. The endorsements on the title and registration must be made by and under the responsibility of the issuer.

Other credit instruments such as bills of exchange and promissory notes and cheques follow the long legislative tradition arising from the uniform laws governing such instruments.

Company incorporation process

In order to reduce bureaucracy and the costs of incorporating commercial companies, the Government intends to approve legislation that will exempt individual businessmen from the payment of any emoluments, apply a single fee of MZN 10,000 for public limited companies and other companies will be subject to a single fee of MZN 5,000. In addition, the following acts are free of charge

1. statistical registration certificate issued by the National Institute of Statistics;
2. registration of the individual entrepreneur and business company at the National Institute of Social Security;
3. tax registration, the obtaining of the Unique Tax Identification Number and the issuance of the Taxpayer Card;
4. declaration of commencement of activity for employment purposes, nominal relation and working hours.

In addition to the value of the single fee, only the value of the publication of the simplified extract in the Bulletin of the Republic, in the value of MZN 1,250, is due.

With the aforementioned amendments, Mozambique simplifies the costs and bureaucracies related with the set up of businesses in the country, thus allowing investors to set up their businesses faster and cheaper.

Article by Duarte Marques da Cruz

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Duarte Marques da Cruz is partner of the Portuguese law firm MC&A, specialised in international business advisory, with a special focus in Lusophone markets. With extensive experience in the Energy sector (Renewables and Oil & Gas) and in International Taxation, he has supported international companies in major upstream, midstream transactions and projects, including in implementing, exploration and development programs. Duarte has also supported international clients in other areas of practice, namely, Mining, Transport & Logistics, Regulatory Compliance and Mergers & Acquisitions in Mozambique, Angola and Portugal.
Through this Simplification Project, Angola shows to investors and economic players that intends to maintain its bet on the internal and external investment; on other hand, it is important to note that this simplification procedure is only at its beginning and is expected a wider range of facilitation in multiple public administration proceedings and regarding more sectors of the economy.