Mozambique's new Commercial Code by vgs12124


									                                                                                                                     Mozambique                        639

Chamber of commerce:
Mozambique Chamber of Commerce
Mateus Sansco Muthemba Road
PO Box 1836
Tel:    +25 8 149 1970
Fax:    +25 8 149 2210

Mozambique’s new Commercial Code                                          sociedades em comandita por acções; (v) capital and industry firms,
                                                                          composed of partners that contribute capital while others contribute
Jose Caldeira                                                             labour and are not liable for the debts of the company (sociedade
Sal & Caldeira                                                            de capital e indústria), using the abbreviation SCI; (vi) limited liabili-
Maputo                                                                    ty quota companies; (vii) limited liability one-person companies
                                                                          (sociedade unipessoal limitada), using the abbreviation SUL; and
The waning days of December 2005 saw the first definitive step              (viii) limited liability share companes, which will no longer use the
towards the biggest change in the framework of Mozambican busi-           abbreviation SARL but rather SA (sociedade anónima).
ness law in more than a century. Under the terms of Law no                     In some circumstances, the official books and records firms are
10/2005 of December 23, parliament granted the government the             required to maintain (including, for example, minute books of certain
authority to change Mozambique’s Commercial Code. The Code was            corporate bodies and long-hand company account ledgers) in the
subsequently approved by Decree-Law 2/2005 on December 27.                form of physical bound volumes can be replaced by forms and stan-
   Although the Commercial Code has been amended in parts                 dardized accounting documents (article 43, no 3). These documents,
since it was passed into law in 1888, this is the first time since then    forms and, where necessary, books are to be submitted to the com-
that it has been reconsidered in its entirety.                            mercial registry rather than to the courts for legalization (article 44,
   Because the Mozambique of 2006 is different in many ways to            no 1). The firm’s legal documents must be completed using the
the Mozambique of 1888, a new commercial code was long over-              national currency and language – it will therefore no longer be pos-
due. As will be seen, the, the new Commercial Code (the New Code)         sible to record official minutes in a language other than Portuguese.
gives particular attention to facilitating the small businessperson’s     Documents can be stored on microfiche (article 50, nos 1 and 2).
entry into the formal world of business.                                       One section of the New Code is reserved for commercial estab-
   The New Code is composed of four books: (i) conduct of the             lishments, which are dealt with in detail. Contracts for the transfer of
commercial company; (ii) commercial companies; (iii) commercial           commercial establishments must be in writing. Contracts involving
contracts and obligations; and (iv) credit instruments.                   the transfer of commercial establishments that include real estate
   We note that considerable analytical work needs to be done to          must be accomplished by public deed. The default length for leases
understand the implications of the New Code for the business envi-        of commercial establishments, should the contract not say other-
ronment in Mozambique and the diverse participants therein, from          wise, is five years (articles 73 and 74).
publicly-held corporations to individual entrepreneurs.
                                                                          Commercial companies
Conduct of the commercial company                                         The nominal value of participations in the social capital of any of the
Book one includes a number of departures from the previous                types of firms mentioned above must be in multiples of MT50,000
Commercial Code. For example, it introduces the concept of small          ($2). Contributions made to social capital in the form of goods or
businesspersons.                                                          assets must be duly identified in an audit report carried out no more
    Firms’ names must use the country’s official language.                than 60 days before incorporation and presented at the time of
Exceptions to this requirement are admitted for: (i) firms that are        incorporation (article 113, no 1). This is a more rigorous approach
already registered; (ii) common words without an adequate transla-        than previously applied.
tion and which are in common usage; (iii) where the word corre-               Commercial companies are still required to have a general meet-
sponds wholly or in part to the names of the firm’s owners; (iv) legit-    ing and administration and audit functions. The New Code intro-
imate brand names or makes; and (v) if the use of another language        duces the single auditor concept (fiscal único) (article 127, no 1).
would permit greater market penetration. Firms registered outside         Companies with more than ten shareholders, all limited liability share
the country are required to present proof of registration in their        companies and all companies that issue bonds are required to have
country of origin, and to ensure that their name cannot be confused       either an audit committee or a single auditor.
with the name of a firm already registered in Mozambique.                      It is now clear that married couples can form limited liability
    The following types of firms are permitted: (i) small business-        quota companies whatever the marital regime under which they
people’s firms, using the abbreviation PE; (ii) individual commercial      were wed (article 284).
businesspeople’s firms, using the abbreviation EI; (iii) collective firms       A limited liability quota company cannot have more than 30 quo-
with unlimited liability (sociedade colectiva); (iv) firms in which only   taholders (article 288, no 1). The minimum capital of such compa-
some partners’ liability is unlimited (sociedades em comandita and        nies is MT20 million ($790).

640   Mozambique

           Limited liability quota companies are now held to have adminis-     Monteiro Graça e Associados
      trators rather than managers (article 320). Serious or repeated vio-     Monteiro Graça comprises 12 lawyers, which makes it one of the
      lations by administrators are considered just cause for their removal.   largest of the corporate law firms operating in Mozambique. The
           Any individual can form a one-person company (article 328, no       firm’s founding partner is Jorge Graça, who continues to impress:
      1). Limited liability share companies can be formed with as few as       “he’s probably Mozambique’s best lawyer,” said one peer. Oscar
      three shareholders (article 332, no 1); the previous rule required ten   Monteiro also came in for praise for his expertise on corporate
      shareholders, complicating many otherwise large undertakings. The        matters.
      exception to the three-shareholder rule is state-owned companies             The firm has an excellent reputation for litigation and project
      or companies in which the state is a shareholder. In these cases, the    finance matters in the oil and gas sector.
      company can have a single shareholder (article 332, no 2).
           The ease with which the New Code is received into the business      Leading lawyers                   Key contact partners
      life of the country will depend in part on the extent to which busi-     Jorge Graça                       Jorge Graça
      nesspeople are trained to understand its requirements and opportu-       Oscar Monteiro                    Oscar Monteiro
                                                                               Pimenta Dionísio e Associados
                                                                               Pimenta Dionísio e Associados is the Mozambique branch of the
                                                                               Miranda Alliance, an international association of law firms and
                                                                               lawyers covering seven countries – Portugal, Angola, Cape Verde,
      Corporate and commercial                                                 Equatorial Guinea, Guinea Bissau, Macao and São Tomé e
                                                                               Príncipe – as well as Mozambique. A ninth office in East Timor
      Recommended firms                                                         was being set up at the time of writing.
      Tier 1                                                                       The two-partner, nine-associate firm, headed by Paulo
      H Gamito Couto Gonçalves Pereira Castelo Branco e Associados             Pimenta, has been “very active” over the past year, and as such
      Monteiro Graça e Associados                                              enjoys “a good reputation” among peers in the Mozambican legal
                                                                               market. The firm has represented an impressive range of clients –
      Tier 2                                                                   especially oil companies – over the past year, staking its claim on
      Pimenta Dionísio e Associados                                            the recent growth in foreign investment into the country. Much
      Sal & Caldeira                                                           of this increased investment has come from South Africa, but the
                                                                               signs now suggest that the country might witness UK and US
      H Gamito Couto Gonçalves Pereira Castelo                                 investment in the future, and the firm is well positioned for such
      Branco e Associados                                                      a development.
      Mozambique is seeing an increase in the numbers of investors                 Over the past year, the firm, in conjunction with other firms
      entering the country, mainly due to the presence of a number of          in the Miranda Alliance, has acted for Malaysian, Norwegian and
      new projects (especially in the oil and gas exploration arena)           South African oil companies in negotiating oil exploration and
      launched over the past year. This can only be good news for H            production contracts with the Mozambican government.
      Gamito Couto Goncalves Pereira Castelo Branco e Associados,
      which remains at the forefront of the Mozambique legal market            Leading lawyer                    Key contact partners
      and is a great choice for foreign investors seeking reliable exper-      Maria João Dionísio               Nuno Cabeçadas
      tise.                                                                                                      Paulo Pimenta
          The firm was formed as a result of the association of partners
      H Gamito and Pedro Couto with leading Portuguese practice                Sal & Caldeira
      Gonçalves Pereira Castelo Branco e Associados. Its “excellent rep-       The Sal & Caldeira merger means that the firm now has 16
      utation” is due in no small measure to the continued presence of         lawyers, which means that it is well-equipped to handle a range
      managing partner Pedro Couto, who one client described as                of large projects. The firm has developed an expertise in repre-
      “very experienced ... extremely good”. But the firm is keen to            senting oil firms in their negotiations with the Mozambican gov-
      develop a deep bench by retaining respected lawyers beneath              ernment, and the increase in oil and gas-related work in recent
      Couto, and in associate Tomas Timbane it has done just this.             times means that the firm has been kept busy.
      Timbane was picked out by peers as being “very good”, and is                 Both José Manuel Caldeira and Sam Levy, a US lawyer, come
      “certainly one to watch for the future”.                                 highly recommended by the market, and the firm as a whole is
          Representative transactions of recent times include acting on        seen as being a “good operation”. Over recent times the firm has
      the merger of Banco Internacional de Mozambique (BIM) with               advised on company incorporations, conducted due diligence
      Banco Comercial de Mozambique (BCM), and representing                    exercises and provided general transactional support. The firm
      Banco Tota, a Portuguese bank, in relation to its financing of the        has a self-professed special interest and expertise in legal and reg-
      construction of a sugar factory in the country.                          ulatory reforms that strengthen the country’s legislative frame-
      Leading lawyers                    Key contact partners
      Fernando Couto                     Fernando Couto                        Leading lawyers                   Key contact partners
      Pedro Couto                        Pedro Couto                           José Manuel Caldeira              José Manuel Caldeira
      Tomas Timbane                                                            Samuel Levy                       Samuel Levy

                                                                                                                                 2007 EDITION

To top