Mozambique: Amendments to the commercial code
Author: LEX Africa
With the publication of Decree-Law no. 1/2018, of May 4, some articles of the Commercial Code, passed by Decree-Law no. 2/2005, of December 27 and as amended by Decree-Law no. 2 /2009 of April 24, which aims to reduce bureaucracy and simplify the process of setting up or incorporation of companies, as well as operations thereof, mainly in aspects that follows:
- The articles of association may be signed by the representatives of the shareholders and their signatures may be attested as true and correct, exempting the requirement of witnessing the signatures;
- The registration of the registered offices before the commencement of activities is no longer mandatory, i.e., until the filing of the Declaration of Commencement of Activities before the Finances;
- The minority shareholder, holder of special rights, is barred from overwriting their individual interests to the interests of the company, under penalty of abuse of his/her minority position; for the same reason, he/she is barred from obstruct the taking of deliberation, under penalty to respond by the damages caused to the company, and the special right may be withdrawn (depending on the severity);
- The possibility of removing or modifying the special rights of the members without their consent, given at the General Meeting is withdrawn;
- The right of information of the shareholders regarding the consultation and/or obtaining a copy of the minutes of the company’s Board, is conditional upon the authorization of the company, which can refuse that accessibility and possible disclosure is likely to cause harm to the company; likewise it also enables any kind of company (not limited to limited liability companies), set a minimum percentage of the share capital not exceeding 5%, to exercise the right to request the Board written information on the management of the company. Moreover, it removes the obligation of the Board to compensate the shareholder (which happens to be possible, but not mandatory as before) – when it is refused his/her request for information and he/she request before the court that it be given to and the same request is granted – for the damages resulting from application of the provision of information to the court;
- The matters added falling within the exclusive competence of the General Meeting, namely: (i) treatment of losses; (ii) call and reimbursement of supplies; (iii) call for the return of supplementary and ancillary services; (iv) establishment and removal of shareholders’ special rights; (v) redemption (buy-out) of shares; (vi) exclusion of shareholder. The General Shareholders’ Meeting, unless otherwise provided in the Bylaws, shall: (i) determine the remuneration of the corporate bodies; (ii) sell and encumber shares; and (iii) appoint the external auditor
- Possibility of the shareholder to be represented by people alien to the company, that is not his/her spouse, ascendant or descendant, as long as the representative holds a representation letter signed by the shareholder;
- There removed the requirement that the signatures, in separate minutes, be notarized;
- The conduct of the director, applicable to all types of companies (subject previously regulated in public limited companies) is regulated, being prohibited, without prior consent of the company the following: (i) to exercise for his/her own or for any third party commercial activity competing with the activity covered by the corporate purpose, (ii) take or use of a loan or credit, resources or assets of the company, for their own benefit or of third parties, (iii) perform acts of liberality at the expense of the company, for the benefit of the company’s employees or of the community where it operates, targeting its social responsibilities; and (iv) to take advantage for itself or third parties, at the expense of having failed to take advantage of business opportunity in the interest of company and it is expressly forbidden: (i) to enter into contracts with the company to obtain guarantees from it and its obligations, to receive payments on account of personal obligations contracted or to receive advances of more than one month of monthly remuneration; and (ii) to receive from third parties any personal advantage, in whatever form, due to the exercise of the office.
- It is mandatory to lodge a copy of the articles of incorporation and the balance sheet and accounts of the company, before the Registry Office of Legal Entities (“CREL”), and any interested party may request the availability thereof together with the same entity, and it becomes mandatory that it comprises the simplified statement issued by CREL, the Tax payer Single Identification Number ( “NUIT”) of the company and shareholders;
- The division of shares becomes subject to the consent of the shareholders at the General Meeting, it is no longer needed to include a public deed, when there are real estate and nor a written document signed and notarized with witnessing of signatures, or court order, and it is no longer needed the registration and entry in the company’s books;
- For private limited companies it is set out that every 1.00 Metical of the par value of the share corresponds to one vote, but the articles of association may assign, as a special right other number of votes for each 1.00 Metical;
- It is set out that for private limited companies and public limited company that resolution is found as taken when it gets half of the votes plus one in favour; and
- It is repealed the article which assigns fiduciary duties of the director in public limited companies.
The amendments to the Commercial Code is aimed to eliminate some formalities that hindered the speed of the incorporation process as well as the decision making by the corporate bodies. On the other hand, there were included amendments aimed at identifying and regulate certain special rights of minority shareholders, as well as to broaden the general powers of the General Meeting. The right of information to shareholders or members also received special attention from the law maker, and there were set out some restrictions on the provision of information concerning the management of the company.