Current number of listed companies

17

Exchange

Maputo Stock Exchange / Bolsa de Valores de Mozambique

Regulatory body or bodies

Regulated by government decree and by the Central Bank Rules and Regulations

Migration

There are three main types of entry visas to Mozambique concerning personal, professional or business activities:

• Settlement Visa - required for foreigners who wish to live in Mozambique. This is available for a single entry for a period of 30 days and is extendable to 60 days. A foreigner who intends to remain in Mozambique for more than the stipulated time frame is required to obtain a resident permit.
• Visitor Visa - allows entry for foreigners when a Settlement Visa is not justified. The visa is valid for 15 days and extendable to 90 days.
• Work Visa - allows entry for foreigners who intend to be employed in Mozambique and is valid for a period of 30 days and extendable to 60 days.

Main forms of business enterprise structure

Commercial Companies

Pursuant to Decree-Law no 2/2005 of 27 December 2005, which approved the Mozambican Commercial Code, foreign and domestic investors can choose any of the following six ways to set up their business:

1. partnership;
2. limited partnership;
3. capital and industry companies;
4. private company limited by quotas;
5. private company limited by quotas with a single holder; and
6. public companies controlled by shares.

The forms most commonly used by investors are private companies limited by quotas and public companies controlled by shares.

(A) Private Company Limited by Quotas

Private companies limited by quotas are limited liability companies regulated under articles 283 to 330 of the Commercial Code. They must be owned by two or more shareholders who assume secondary joint liability for the total share capital.

Rules apply about how these companies may be named. The name must be followed by the mandatory addition of Limitada (Limited), which may be abbreviated to Lda.

Other special characteristics

• The shareholders must be adults of at least 21 years of age with legal capacity.
• A company must have a minimum of two and a maximum of thirty shareholders. However, the law provides for an exception: the single shareholder company. These comprise of a single shareholder who must be an individual and hold the whole of the capital of the company.
• The liability of shareholders is limited to the value of share capital they have subscribed to and the company's liability towards its creditors is limited to its assets.
• There is no minimum capital required. Therefore, a shareholder may set the capital at a level that is appropriate to carry on the company's activities.
• The shares (quotas) are always nominative - the names of their holders must appear expressly in the articles of association, in the commercial registration certificate, and in any subsequent agreement or resolution by which the quotas are transferred or the share capital is altered.
• Decisions by corporate bodies are made by either a general meeting of shareholders or the board of directors. All shareholders must take part in general meetings and decisions are taken by a simple majority of the votes cast by the shareholders present at the meeting.
• Companies are managed by one or more directors who may also be from outside the company.

(B) Private Company Limited by Shares

This type of company is governed by articles 331 to 457 of the Mozambican Commercial Code. Typically, this form is adopted by large companies due to a number of advantages. These advantages include flexibility when it comes to share capital and the lack of special procedure required for the transfer of shares.

Characteristics of the Private Company Limited by Shares

Liability - The liability of shareholders towards third parties is limited to the value of their shareholding.

Number of Shareholders - A company must have at least three shareholders which may be Mozambican or foreign individuals or legal entities. There is an exception for companies in which the State is a shareholder (either directly or through the intermediary of a public or state company) - these can be set up with a single shareholder.

Share Capital - There is no minimum capital requirement. However, the share capital must always be appropriate for achieving the corporate object and always be expressed in Metical (Mozambican currency).

Internal Structure - Besides the bodies common to other companies (namely general meetings and a board of directors), companies also have a supervisory body in the form of either a supervisory board or a sole supervisor.

Supervision - A company must be supervised by either:

• a supervisory board of 3 or 5 members;
• a sole supervisor, who must be an auditor or auditing firm; or
• an independent auditing firm.

The General Meeting - A general meeting is where the shareholders elect the persons or bodies to manage the company and supervise the acts of the directors.

The law requires a qualified majority for certain resolutions, such as those related to the amendment of the articles, mergers, splits, transformation or dissolution of the company.

Board of Directors - The board of directors is responsible for company management and has exclusive powers to represent the company. The board of directors must be composed of an odd number of members, who do not need to be company shareholders.

(C) Branch offices and representation offices

Representative offices and branch offices are non-autonomous legal entities that are considered to be an extension of the parent company. The parent company of a branch office, even if it is incorporated and operating in another country, is fully liable, without limitation, for any obligations undertaken or attributable to the branch office or any other type of local establishment emanating from the corporate body domiciled abroad.

Employment Regime

The general principles and legal rules applicable to individual and collective subordinate employment relationships, in respect of remunerated work done by hired employees, are defined on the Law no.23/2007, of 1 August 2007.

The Law provides for the employment of foreign workers by Mozambican employers or employers established in Mozambique.

Work performed by foreigners under employment contracts in Mozambique is governed by the principle of equality. However, when there are substantial grounds to do so, the Mozambican state may still reserve the performance of certain activities for Mozambican citizens.

The hiring of foreign workers is regulated by specific legislation (Decree no.55/2008 of 30 December 2008 and Decree-Law no.2/2011 of 19 October 2011).

Under the Employment Law and Regulations, Mozambique has four different schemes for hiring foreign workers:

• the quota scheme;
• the employment authorisation scheme (outside the quota);
• investment projects approved by the Government; and
• the short term employment scheme.

Impact of Regulatory Regime on Business

Mergers and Takeovers

Any merger involving firms with or resulting in a substantial market share, business volume or annual turnover will be subject to notification. The threshold of a substantial market share, business volume or annual turnover and the method of calculation will be determined by the minister responsible.

The firms engaging in a merger are responsible for filing the notification with the Regulatory Authority within seven days of the conclusion of the agreement to merge. Parties who fail to notify will be subject to penalties. Mergers subject to the notification requirement cannot be implemented until a final competition clearance is obtained.

Legislation

Background

Mozambique does not have a competition legislation. However, the Mozambican government is in the process of formulating such legislation. A policy was developed in 2007 but the regulatory framework is still in discussion and development.

The policy combats anti-competitive practices such as the imposition of excessive prices, price discrimination, predatory pricing, refusal to sell or to buy and conditional sales, abuse of dominant positions, agreements between companies designed to reduce the competition in the market and concentrations that impede competition.

Draft Legislation

Draft competition legislation was drawn up in 2008 but has yet to be formally enacted. The draft law makes provision for the establishment of a competition authority whose principal functions will be to regulate and prohibit anti-competitive practices and to control mergers. 

Scope

The draft legislation covers:

• restrictive trade practices / horizontal and vertical agreements
• price control (cartel conduct)
• abuse of a dominant position
• mergers and takeovers

Corruption Perception Index score for 2017

25

Corruption Perception Index rank worldwide for 2017

153

Ratified?

Yes - Ratified on 2 August 2006

Signatories to the African Union Convention on Preventing and Combating Corruption?

Signed on 15 December 2003

Signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?

No

Signatories to United Nations Convention against Corruption (UNAC)?

Signed on 25 May 2004

UNAC ratified?

Yes - Ratified on 26 December 2006

Arbitration

The legal framework governing arbitration is set out in the Arbitration, Conciliation and Mediation Law (ACML) which is primarily based on the UNCITRAL model of arbitration.

Recourse to arbitration to settle disputes arising from foreign investment in Mozambique requires the consent of the parties involved. The rules of international arbitration will apply to disputes arising from relationships that are established between foreign investors and private law entities established in Mozambique.

In Mozambique, there are specialist institutions for the resolution of disputes by arbitration, such as:

• the Maputo Centre for Arbitration;
• the Conciliation and Mediation for legal and commercial issues in general; and
• the Commission for Employment Mediation and Arbitration for issues of employment law.

Alongside resolving disputes arising from investments made in Mozambique through the courts or by arbitration, article 71 of the Regulation approved by Decree no. 13/93 of 21 August 1993 establishes the right to make claims that arise from the application of the Investments Law in respect of investment issues.

Such claims must be submitted to the Centre for the Promotion of Investments and to the Office of Accelerated Development Economic Zones, in accordance with their respective areas of operation. Claims must be responded to within 20 days of the request for consideration by the entity to which the claim is submitted.

Enforcement of arbitral awards

Mozambique is a signatory to the 1958 New York Convention on the Recognition of Foreign Arbitral Awards.

Enforcement of foreign judgments

Any foreign judgment can be recognised and enforced by a Mozambican court, provided that the following requirements are met:

• the foreign judgment must be legible and genuine;
• the foreign judgment must be final and non-appealable;
• the Mozambican courts must have no jurisdiction to hear the dispute, and the foreign court which rendered the judgment must have such jurisdiction;
• the foreign proceedings were conducted properly in accordance with applicable procedures;
• there are no concurrent proceedings pending in a Mozambican court;
• the foreign judgment does not conflict with a prior Mozambican or foreign judgement in the same matter; and
• the foreign judgment is not contrary to the public policy of Mozambique.

Perception of the local courts

Many disputes among Mozambican parties are settled privately or go unresolved. The business community is still small. Damage to an organisation's reputation as a result of a commercial dispute or an accusation of illegal activity can seriously damage the organisation's overall business.

Structure of the court system

Under article 25/1 of the Investment Law, if differences relating to the interpretation and application of the legislation cannot be resolved amicably or by negotiation, the disputed must be submitted to the competent legal authorities for resolution, in compliance with the Mozambican law. Therefore, dispute resolution in the context of foreign investment falls under the jurisdiction of the Mozambican courts.

Listing companies

There are no restrictions on equity participation.

There is no impediment to control of a local company by a foreign investor.

Entities intending to develop commercial or industrial activities are required to obtain a licence from the regulatory authority for each specific activity.

Investment proposals must be submitted to the Centre for the Promotion of Investments. This facilitates national and foreign investment in Mozambique and offers a comprehensive support service to foreign investors. Proposals can also be presented to the Office for Accelerated Development Economic Zones by completing the proper form.

Documentation may also be required to support the application, for example:

• the commercial registration certificate or reservation of the official name of the company implementing the project;
• a copy of the identification document of the proposed investor; and
• topographic plan or sketch of the location where the project is to be implemented.

It is also necessary to have the appropriate licence when the project is to be carried out by foreign commercial representation.

Foreign companies are advised to use a local consultancy service to assist with submitting the relevant applications and proposals.

Under the Investment Law (Law no. 3/93 of 24 June 1993), tax and customs incentives as well as other benefits are afforded to private investors, such as the right to import capital, export profits and re-export invested capital.

The following investments do not benefit from the above incentives:

• public investments financed by funds from the general state budget;
• investments that are exclusively social in character; and
• investments made in the areas of prospecting, search and production of oil, gas, mineral resources and the extractive industry.

The private investment may be made in any of the following forms: cash, infrastructure, equipment and respective accessories, material and other goods, investment with own capital, assignment of rights and shareholder loans among others.

Investment guarantees

There is legal protection of property and rights, including industrial property rights.

There are no restrictions on borrowing, the payment of interest abroad or the transfer of dividends abroad.

In order to benefit from these incentives, specifically regarding the transfer abroad of invested capital and profits made, the investor must meet at least one of the following requirements:

• the minimum value of the direct foreign investment is equal or greater than USD 93,000 equivalent to MZN 2 500 000;
• as from the third year of activity, the company implementing the investment product generates an annual turnover greater than USD 279,000;
• the annual export of goods or services reaches a minimum value of MZN 1,500,000, equivalent to approximately USD 56,000; or
• direct employment of at least 25 Mozambican workers registered in the social security system from the second year of activity.

Restricted areas

Media - Foreign ownership of media enterprises, including TV channels and newspapers, is restricted to a maximum shareholding of 20%.

Fixed line telecommunications - The fixed line telecommunication sector is reserved for public investment only.

Land - All land is owned by the state. Land use concessions are granted by the Government for up to 50 years.

Advertising

Advertising regulations are set out in Decree No. 65/2004.

Alcohol

Currently there are no legally binding regulations in respect of alcohol advertising, product placement, sponsorship or sales promotion.

Pharmaceuticals

The Government via the Departamento Farmaceutico, is responsible for regulating the promoting and advertising of medicines.

Direct advertising of prescription medicines to the public is prohibited.

Regulatory pre-approval is required for medicine advertisements.

Currently no guidelines for advertising and promotion of non-prescription medicines.

Tobacco

Legislation: Decree No. 11/2007 - read the decree.

Capital allowances

The capital allowances below are specific to certain industries. Fixed maximum rates of depreciation are deductible on a straight line basis.

• Industrial buildings - 4%
• Commercial buildings - 2%
• Office equipment - 10% to 14.28%
• Motor vehicles - 20% to 25%
• Plant and machinery - 5% to 25%

Capital Gains Tax

Capital gains or losses incurred as a result of the sale of assets are included in ordinary income and subject to income tax at the standard rate applicable to the taxpayer.

Corporation Tax

Corporate Income Tax 32% - A resident company is taxed on its worldwide income; non-resident companies are taxed in respect of its Mozambique sourced income. 

Corporation Income Tax is levied on all income and gains. Expenses incurred in the generation of such income or gains are tax deductible.

Dividends

20% (Withholding Tax) - This applies to both resident and non-resident companies.

There is an exemption from the above tax in respect of dividends paid by a resident, who is not exempt from income tax, to another tax resident parent that (i) holds at least 20% of the share capital of the subsidiary, and (ii) has held the participation for more than two years.

Exploration taxes

Special Tax on mining exploration 3% to 10% - This depends on the nature of the mineral being mined. There is also a tax for the mining concession area depending on the type of ore and the year of the concession.

Special Tax on oil exploration - 10%

Special Tax on gas exploration - 6%

Foreign tax

Mozambique applies an ordinary foreign tax credit as a unilateral method to avoid the double taxation of income obtained abroad. Unused credits may be carried forward for up to five years.

Mozambique has concluded tax treaties with the following jurisdictions:

• Italy
• Mauritius
• Portugal
• UAE
• South Africa
• Macau
• Vietnam
• Botswana 
• India

Interest

20% (Withholding Tax) - This applies to both resident and non-resident companies.

Losses

Losses may be carried forward for 5 years.

Personal income tax

10% - 32% depending on income bracket - This is levied on income from employment, rendering services, capital gains, real estate and other income.

Residents are taxed on their worldwide income; non-residents are taxed only on their Mozambique-sourced income.

Real property tax

0.4% - 0.7% - There is a Municipal tax system that includes the following taxes:

• Municipal Personal Tax;
• Real Property Tax;
• Municipal Transfer Tax; and
• other contributions.

Property transfer is subject to a property transfer tax at a 2% rate.

Royalties

20% (Withholding Tax) - Applies to both resident and non-resident companies.

Stamp duty

0.4% - payable on a transfer of shares.

0.2% - payable on a transfer of buildings.

Tax Free special/industrial zones

Exemption - Operators and entities in these zones are exempt from income tax for the first ten years.  Thereafter they benefit from a 50% reduction for year 11 to year 15 and then from a 25% reduction for the remaining years of the project.

Thin capitalisation

Indebtedness is considered excessive when the amount of debt is more than twice the value of the concerned holding in the equity of the liable person. The rules are applied when the debt-to-equity ratio exceeds 2:1.

Transfer pricing

Transfer pricing legislation requires an arm's length consideration for transactions between related parties.

Value Added Tax

17% standard rate - The law allows for several exemptions, notably services connected to hospital and medical care, certain food products and exports in general.