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Print articleInvestment Guide in Mozambique
May, 2009 - Jorge Graça, Luís Sáragga Leal, Francisco Avillez, Nuno Morais Sarmento, Tiago Mendonça de Castro, Taciana Peão Lopes
The
by
very strategically located, providing a gateway to six other countries.
The currency used is the Metical (MT).
one million people. Situated in the south of the country on the western edge of
the city is an administrative municipality with an elected government and also has provincial
status. Other important Mozambican cities include
Quelimane, Tete, Xai-Xai,
strip bathed by the
with a parliamentary majority. Elections are held every five years.
The economy is precarious and relies on foreign investment. The soil is rich in gold, coal, salt,
graphite and bauxite but is underexplored.
marble, wood and oil. Most of the population lives off subsistence farming but the country
exports sugar cane, cotton, sisal, tea and tobacco.
The main natural resources are hydroelectric energy, gas, coal, minerals, wood and agricultural
land, while its main exports are prawns, cotton, cashew nuts, sugar, tea and copra.
The country has enormous tourism potential, with idyllic beaches and diving areas along its
over 2,000 kilometres of coastline and nature reserves and parks in the interior.
- Advogados e Consultores
Como componente importante da sua estratégia nacional, Portugal não perdeu a ligação histórica
aos países que falam a língua portuguesa, entre os quais se incluem a República de Moçambique.
dynamic and competitive with regard to
Portuguese-Speaking Countries (CPLP).
Bearing in mind the ties created by a common language, history and culture, PLMJ has
implemented an internationalisation plan to strengthen its presence in CPLP member states
by setting up joint ventures with local law firms.
The international joint venture network set up by PLMJ comprises several reputable law firms
or offices in various countries, including
International Joint Venture Network can be assisted in these countries by local professionals
who share the same excellence of quality, principles and values as PLMJ in the provision
of legal services.
In October 2008, PLMJ and MGA began working together with a view to setting up
an institutional joint venture for the practice of law and the provision of legal services in the
Mozambican market.
MGA boasts one of the largest and most reputable teams of professionals practising in the
Mozambican market and is unanimously viewed as a leading firm of lawyers and consultants
in
to the World’s Leading Financial Law Firms.
MGA was also distinguished by Professional Management Review Africa – a leading South
African research leader in the southern African region – for its part in the economic growth
and development of
a row (2007 and 2008).
The PLMJ joint venture with MGA is based on the similar and converging core values,
principles, capacities and practices of both firms as regards advocacy and legal advice.
The professional practices of MGA and PLMJ, when combined by the partnership in its very
own strategy for client service, provide it with a unique capacity to provide the widest range
of legal services in Mozambique, highly specialised in terms of the particularities and features
of the Mozambican legal order, so as to provide a response to the very specific needs of each
client that invests in Mozambique.
Through this joint venture, PLMJ and MGA intend to lead the field in the exercise of their
profession and the provision of legal services in the Mozambican market, combining the
highest standards of professionalism, quality of services and response capacity and a sense of
par excellence client service with the social and public responsibility MGA and PLMJ associate
with the provision of legal services.
MGA and PLMJ also intend by means of this venture to provide a significant contribution to
quality ongoing professional training for higher level Mozambican legal professionals so as to
supply the Mozambican market with new professionals of excellence with unique and distinct
characteristics which meet the highest quality standards and requirements of the clients.
By bringing together the mutual capacities and synergies of PLMJ and MGA, this joint venture
guarantees a wide specialised range of excellent legal services, not only for companies already
operating in Mozambique but also for international investors intending to set up in a country
rife with investment opportunities.
Local governments are so desirous of attracting strategic investors to local economies that
private investment by local and foreign citizens is being actively promoted, particularly in
Mozambique, through the grant of various incentives that seek to foster the development of a
very varied range of business activities, including tourism, real estate, energy, agriculture and
natural resources.
With all of this in mind, PLMJ and MGA have decided to put together this “Legal Guide to
Investment in Mozambique” with the aim of imparting to its readers a greater understanding
of the Mozambican legal system. The guide is not intended to be exhaustive and legal advice
should be sought with regard to any practical use of the information contained herein.
Investment Incentives
National or foreign companies and individuals intending to invest in Mozambique in any of
the ways permitted, which range from investment with equity or goods and machinery, rights
and loans, among others, may apply for incentives for projects in areas as wide-ranging
as industry, services, tourism, transport, public sector areas such as the production of
electricity, water supply and telecommunications, the manufacture, distribution and sale of
arms and ammunition, etc.
The investment benefits do not, however, apply to retail and wholesale trade activities except
when these are carried on in new infrastructures. Other sectors such as oil and gas prospecting,
research and production and the extraction of mineral resources are subject to specific terms
and conditions set out in the special legislation governing each of these investment sectors.
The investment incentives system in Mozambique comprises four major components, namely (i) tax
incentives, (ii) customs incentives, (iii) incentives related to the repatriation of invested capital and
profits, and (iv) the security and protection guarantee provided by the Mozambican state for private
property and investment.
Eligibility for the above incentives requires a minimum equity investment of 5,000 USD in the case
of national investment and 50,000 USD in the case of foreign investment.
The investment project or the investment contract implies the prior existence or incorporation of a
company registered in Mozambique and operating out of Mozambican territory, termed the
“Company Implementing the Project” or the prior existence or creation of a subsidiary, branch
office or agency of the foreign institution operating out of Mozambican territory.
In order to qualify for the above incentives, companies or individuals must submit an investment
project for the approval of the Mozambican state - represented by the Investment Promotion
Centre (CPI) - in the form of an Investment Project and, in return, must carry out the proposed
investments and meet certain objectives set in the approved investment project.
After the proposed investment has been submitted, the project is assessed and either approved or
rejected. Rejection may result from a lack of documents, information or details about the proposed
investment or the investors themselves (documents, information or details which are requested
from the proposers by the CPI prior to the rejection decision) or from a failure to meet the
conditions set out in the applicable legislation.
Work on the project must begin within 120 days of the approval having been notified to the
investors or the approval may be revoked.
The possible tax benefits include a tax credit for the investment, accelerated amortisation and
reintegration, costs arising from modernisation and introduction of new technologies and
vocational training and other expenses to be considered as tax costs, exemption from Stamp Duty
and a reduction of the tax rate on the transfer of real property.
It should be noted that certain sectors, projects and territories are eligible for specific incentives,
as is the case with agriculture (which is eligible for a substantial reduction in the income tax rate),
hotel and tourism activities, mining, oil, Rapid Development Areas and Industrial Duty-Free Areas
and, finally, large projects (that is to say, projects with a value of over 500 million USD).
Investors may opt to set up enterprise structures which they themselves hold, such as limited
liability companies or other types of representation, thus maintaining control over their
investment.
From among the types of enterprise provided for in the Mozambican Commercial Code,
enacted by Decree-Law 2/2005, of 27 December, the most significant are the limited liability
companies - sociedade por quotas (“S.Q”) and sociedade anónima (“S.A.”). Which of these
structures the foreign investor opts for depends on various factors, including the degree of
simplicity of structure and operating, the amounts of capital to be invested and confidentiality
issues as regards the ownership of the share capital.
Setting up a limited liability Company
Setting up a limited liability company today in Mozambique, whether it is an S.A or an S.Q.,
is a relatively simple and speedy process which involves the following formalities:
Approval of the company Name and Object - The company name must be approved by the
Companies Registry (“CREL”) by means of an application to reserve the name in question.
Depositing the Share Capital – The share capital must be deposited in a bank in Mozambique
which then issues documentary proof that the deposit was made.
The deposited share capital may be withdrawn after the company has been incorporated and
documentary proof has been presented to the banking institution of the deed of incorporation,
definitive commercial registry certificate, commercial licence and the Official Journal where
the statutes of the company were published.
Setting up the Company – The company may be set up by means of a private document
signed by the members - whose signatures must be duly certified by a notary or lawyer -
unless a more formal instrument is required, for example, to transfer the assets the members
bring into the company, in which case a deed of incorporation must be executed.
The company bodies are appointed and the statutes established during the incorporation process.
The statutes of the company must contain, among other things, the full names of the founding
members, the objects of the company, the registered office and share capital, the main
features of how its company bodies function, its structure and any other matters the members
may see fit to include. Apart from the compulsory provisions and limitations set out in the
Companies Code, the general rule is the contractual freedom of the parties.
Registration and Publication – After the company has been incorporated, it must be registered
at the relevant Companies Registry within 90 days of the date of incorporation. The commercial
registry then issues a certificate with the main details (name, registered office, members, form
of binding the company and the members of the Board of Directors).
Once the registration has been completed, application should be made to the Imprensa Nacional
to have it published in the official state journal (Boletim da República).
Subsequent formalities – This process is followed by registration for tax purposes, licensing
the activity (commercial/industrial/other) with the Ministry of Trade and the declaration of
commencement of activity at the tax office for the area where the registered office is based.
The company and its workers must also be registered with the Provincial Employment Directorate
(Direcção Provincial de Trabalho) and the National Social Security Institute (Instituto Nacional
de Segurança Social)
FAQ:
Is it compulsory to have a national member?
As a rule, under Mozambican commercial legislation it is not compulsory for a limited liability
company to be incorporated with a national member.
When is a company considered to be a foreign equity company?
Under Mozambican legislation, a foreigner is any individual who does not hold Mozambican
nationality or, in the case of a company, was originally set up in accordance with legislation
other than that of Mozambique or which, although incorporated in the Republic of Mozambique,
more than 50% (fifty percent) of the share capital is held by foreigners.
The Shares Companies - “Sociedade Anónima” (SA)
This type of company is governed by Articles 331 to 457 of the Commercial Code and is more
complex than the sociedade por quotas.
The main features of the SA are as follows:
Number of Shareholders – As a rule, the SA must have at least three shareholders who may
be national or foreign individuals or companies. This does not include companies in which
the state is a shareholder, whether directly or through a state or state-owned company or any
other legally equivalent entity, as these may have a single shareholder.
Share Capital – The commercial legislation sets no minimum capital, but the amount must
always be suitable for the pursuit of the company object and must always be expressed in the
national currency - the Metical.
The SA capital is divided into shares, which may be bearer, nominative or book-entry.
An SA may only be created when all of its share capital has been subscribed and at least
twenty-five percent has been paid up. The law prohibits the issue of shares at a value below
their nominal value and the statutes must establish the number of shares into which the
capital is divided. The nominal value of the shares, which may be paid up in cash or in kind,
must be a multiple of fifty meticals.
For the purposes of incorporation, the members must prove to the competent body that the
amount of share capital has been paid up by submitting documentary proof that the shares
are on deposit in a credit institution to the order of the company management.
As regards the paying up of capital in kind, the proof consists of a signed statement by the
directors of the company certifying that the title to the goods has passed to the company
and that these have already been delivered to the company, except in the case of deferred delivery. The goods with which the shares are paid up in kind must be identified, described
and valued by means of an auditor’s report prepared by an auditor or an auditing firm and
attached to the statutes.
Flexibility of Capital – The transfer of shares does not require any specific form and depends
on the type of shares issued by the company. Bearer shares are transferred by the delivery of
the share certificates to the purchaser while nominative shares are transferred by endorsing the
share certificate in the name of the purchaser. The company must be informed for registration
purposes. Book-entry shares are transferred by registration in the transferee’s bank account.
The company statutes may establish pre-emption rights in favour of the shareholders as well
as require the prior consent of the company for the transfer.
Liability – The liability of S.A. shareholders vis-à-vis third parties is limited to the amount of
their shareholdings.
Internal Structure – as companies, the SA have company bodies to carry out the necessary
functions: a deliberative body – the General Meeting – an executive or administrative body
– the Board of Directors – and a supervisory body – the Supervisory Board or Sole Supervisor.
i) The General Meeting is the supreme body of the company and has the power to:
− Convene within three months of the end of the financial year to deliberate on the
directors’ report and the annual accounts;
− Deliberate on the proposed use of the company results;
− Carry out a general appraisal of the company management and supervisory boards, and
− Carry out any elections within its scope of competence.
The General Meeting is where the shareholders elect the bodies to administer the company
and supervise the acts of the directors.
Resolutions are passed unanimously or as set out in the statutes. A General Meeting may
be called without any prior formalities, provided that all the shareholders are present or
represented and are willing for the meeting to be convened on a given matter, unless otherwise
provided by law or by the company statutes.
As a rule, resolutions are generally passed by a majority of the votes cast by the shareholders
present at the meeting and each share has one vote, unless otherwise stipulated by law or by
the company statutes.
The law requires a qualified majority for certain resolutions, including those related to
amendments of the statutes, merger, split, transformation and dissolution.
ii) The Board of Directors is responsible for company management and has full exclusive
powers to represent the company.
According to the Commercial Code, this body is composed of an odd number of members,
who need not be company shareholders, but must be individuals of full legal capacity. If the
share capital of the company is less than five hundred thousand meticals, a sole director may
be appointed. If a company is appointed as a director, it must appoint an individual to hold
the position in its name.
iii) The company is supervised by:
a) a Supervisory Board of 3 or 5 members, or
b) a Sole Supervisor, who must be an auditor or an auditing firm.
c) The company may also be supervised by means of an independent auditing firm.
The Quota Companies - “Sociedade por Quotas” (SQ)
The SQ are governed by Articles 283 to 330 of the Commercial Code and their main features
are as follows:
Number of Members – as a rule, the SQ must have a minimum of two and a maximum of
thirty members, all of whom must be equity partners.
It is possible for this type of company to have just one holder of the entire registered capital.
These companies are called unipessoal and this term must be included in the name.
Registered Capital – the minimum capital is twenty million meticals, which is the sum of the
nominal capital of the quotas. The capital must always be expressed in the national currency
and the value of each quota must always be a multiple of one hundred and greater than or
equal to five hundred thousand meticals. The quotas are always nominative, in the sense
that the names of those who hold them must be stated in the company statutes, as well as in
any subsequent agreement or resolution by means of which they are transferred or the share
capital increased, and also in the company’s commercial registry certificate.
Liability – The members are not liable to the creditors of the company, only to the company
itself. Each member is liable for the payment of their own contributions and, on a subsidiary
basis, is jointly liable with the others for the payment of the contributions of the other members.
Company Bodies – the SQ have company bodies to carry out the necessary functions:
a deliberative body – the General Meeting, and an executive or administrative body – the
Board of Directors. There may also be a Supervisory Board or Sole Supervisor, which is
governed by the applicable S.A. provisions
i) All the members must take part in the General Meetings. As a rule, resolutions are passed
by a majority of the votes cast by the shareholders present at the meeting, unless otherwise
stipulated by law or by the company statutes.
ii) The company is managed by one or more directors, who need not be members of the
company. The statutes of the company may establish that all the members are responsible
for the management of the company but this does not extend to those who become
managers at a later date. The duties of the directors continue until terminated by removal
or resignation, although the deed of incorporation may stipulate a certain term of office.
Legal Reserve – Commercial law requires the creation of a legal reserve. The company must
retain a portion of not less than 20% of the financial year’s profits, which must not be less than
one fifth of the registered capital.
Commercial Licensing
The objective of commercial and industrial licensing is to comply with the legal obligation that
requires state authorisation to pursue a business activity in Mozambique.
The licensing process culminates in the issue of the licence or permit, which provides
documentary evidence of the holder’s capacity to carry on the activity.
The licence to carry on the business activity may be granted to national or foreign individuals
with a fixed residence in Mozambique and companies duly registered in the Republic of
Mozambique.
The licence is usually granted within 30 days of application.
Types of Activity
Commercial activity – This includes agricultural sales agents, general trade, retail and
wholesale trade, exports, imports, service provision and external traders.
Foreign commercial registration – This covers the activities carried on in the Republic of
Mozambique through an affiliate, branch office, agency or other form of representation of a
corporate body domiciled abroad.
Rights over Land
The rights to use and profit from the land (the “DUAT”)
For any investor interested in investing in certain sectors in Mozambique, access to the land
is fundamental.
In Mozambique, the land belongs to the state and cannot therefore be sold, transferred,
mortgaged or charged.
The right to use and profit from the land (Direito de Uso e Aproveitamento da Terra, so-called
“DUAT”) is understood as the right that national or foreign individuals and companies and
local communities acquire over the land subject to the demands and restrictions imposed by
land legislation.
The Land Law sets out the terms under which the creation, exercise, alteration, transfer and
extinguishment of the right to use and profit from the land operate. The Land Law Regulation
applies to areas which are not covered by the areas under the jurisdiction of the Municipalities
that hold the Municipal Records Services, with the exception of Article 45 of the Regulation
which applies throughout the country. In turn, the Built-up Land Regulation applies to the
legally existing city and town areas and to settlements or population clusters structured
according to a plan of organisation.
With regard to individuals, only those who have resided in Mozambique for at least five years
and have an approved investment project can hold DUAT rights.
Foreign companies can only hold DUAT rights if they have an investment project duly approved
under the investment legislation, are incorporated and registered in Mozambique and have
obtained the legally prescribed formal authorisation. A foreign company is considered any
company or institution incorporated under Mozambican or foreign legislation (in the case
of representation offices) more than 50% of whose share capital is held by foreign citizens,
companies or institutions.
It should be noted that in public domain areas – those which are fully or partially protected
– no DUAT rights can be acquired, only special licences for the pursuit of certain business
activities. The special licences regime, by virtue of the absence of any specific regulation,
follows the rules laid down for the DUAT, with all the necessary changes, as regards the
duration periods and the competent bodies for the issue of such licences.
The creation, alteration, transfer and extinguishment of the DUAT must be registered at the
Land Registry.
Finally, it should be noted that DUAT rights may also be acquired by possession by individuals
and local communities, in line with customs and practices which do not breach the
Constitution of the Republic of Mozambique and ii) by individual Mozambicans who have
used the land, in good faith, for at least ten years. A failure to register the rights acquired by
possession has no adverse impact on the rights themselves.
Duration of DUAT rights
The duration of DUAT rights under the Land Law and Land Law Regulation are as follows:
Provisional authorisation – granted to the applicant by the Geographical and Records
Services for a period of two years for foreigners and five years for nationals.
Full authorisation – once the provisional authorisation period has elapsed or even before
if the interested party requests it, the land will be inspected to confirm that the proposed
undertaking has been carried out or for compliance with the exploration plan, according to
the approved schedule. Once compliance with the exploration plan or the undertaking has
been confirmed, the Geographical and Records Services will issue a full authorisation for
a period of fifty years, renewable for the same period, after which time a new application
must be made.
It should be noted that with regard to built-up land, the Built-up Land Regulation provides that
the national or foreign holder of DUAT rights has a period (provisional authorisation) of not
more than two years to begin construction. This time limit may be extended for a period of
not more than six months by means of a well-grounded application by the right holder to the
competent body. The time limit for the use of the land must be set by the competent body
upon the application of the right holder. This time limit should take into account the need to
conclude work and obtain licences of use.
Transfer of the DUAT
The DUAT rights may be transferred in two ways i) an inter vivos transfer by means of the
purchase and sale of infrastructures, buildings and improvements on the authorised land, ii) by
inheritance.
It should also be remembered that the purchase and sale of infrastructures, buildings and
improvements on parcels of land (the soil and buildings thereon are not economically
independent but function as a support for exploiting the earth and the source of income
derives mainly from the earth itself) does not imply an automatic transfer of the DUAT, which
is dependent on the authorisation of the same body which authorised it initially.
In the case of built-up land (a building is affixed to the soil and the land around it and the
source of income derives mainly from the existing constructions and not from the land itself),
the DUAT rights are transferred with the transfer of the property itself and do not require the
prior authorisation of the state
Furthermore, the holders of DUAT rights are allowed to create mortgages over the properties
and the duly authorised buildings they have erected on the land or over which they have
legally acquired title.
Extinguishment of the DUAT
The DUAT may be extinguished in one of the following ways:
i) The failure of the DUAT holder, without reasonable grounds, to comply with the
exploration plan even if the tax obligations (annual duties) are being honoured. There
are no requirements of form for the extinguishment of the DUAT rights, which extinguish
automatically as soon as the time limit elapses.
ii) Revocation of the DUAT rights on public interest grounds, preceded by payment of a just
compensation;
iii) Expiry of the time limit or the renewed time limit;
iv) Waiver by the right-holder.
Tourism Law
General overview of the legal regime
Viewed as a vital sector for the development of the country owing to its natural, ecological
and geographical diversity and wealth, the tourism sector has merited particular attention
not only from the Mozambican government but also from foreign investors and multi-lateral
co-operation agencies.
One of the sectors that has shown a higher growth rate in recent years – 17% in the last year
almost 163 million US dollars in revenue – tourism in Mozambique is one of the most stable
sectors as regards attracting foreign investment. In 2007 alone, projects in the region of 980 million
US dollars were approved, making it the third largest investment sector in the country.
Within the development context, the tourism sector has a place in the Mozambican government’s
strategy for combating absolute poverty through the Action Plan for Reducing Absolute Poverty
(“PARPA). In the first PARPA 2001–2005, tourism was one of the supplementary activities
whose strategy and plan of action helped generate income and job opportunities.
In recent years therefore the Ministry of Tourism (“MITUR”) has been reorganising the tourism
sector, reforming and modernising tourism sector legislation which has until very recently
been completely out of touch with the national, regional and international reality.
The Tourism Policy and Implementation Strategy approved by Resolution 14/2003, of 30 April,
in itself bears living witness to the above. Conscious of the important role of tourism for
economic growth in general and for generating revenue and creating jobs, the main aim of the
Tourism Policy is the “promotion and development of tourism as a driving force for economic
growth and employment in the public and private sectors and communities in making the
provision of services in this area a reality” through the “interaction and active commitment of
a wide range of partners: the state and government at central, provincial and district levels,
local government, the private sector, local communities, international, regional and national
tourists, NGOs, financial institutions, international cooperation agencies, the press and the
public”.
The Âncora Programme for Investment in Tourism in Mozambique
As regards the promotion of private sector investment, the Policy makes specific provision for
attracting direct foreign investment by means of strategic partnerships with national investors
and through the development of “Âncora projects”, which will act as catalysts.
In addition, the tourism sector in Mozambique currently has two primary mechanisms for
investment and the promotion of foreign investment. One of these mechanisms – The Âncora
Programme for Investment in Tourism in Mozambique, already approved by Resolution of
the Council of Ministers - is the largest tourism investment initiative currently in place in
Mozambique and aims to attract over one billion USD in foreign investment.
This investment programme is the result of an agreement concluded with the World Bank in 2007
for making the highest level investments in the tourism area in Mozambique. It is a joint initiative
of the Ministry of Tourism (MITUR) and the International Financial Corporation (IFC) with a view
to facilitating investment in tourism and converting the entire tourism potential of Mozambique into
a tangible quality investment.
Using a pro-active approach, the Programme focuses on creating investment opportunities in
specific “Âncora Locations”, and aims to improve the business background and environment
and substantially reduce the administrative and regulatory obstacles and constraints on
investment.
The Programme is managed and implemented by the Instituto Nacional de Turismo (the National
Tourism Institute) (INT), the IFC, MITUR and other state bodies.
The programme will run for a period of three years and will be implemented in the following
three stages:
Phase 1: Selection of the locations and preparation of a detailed programme plan;
Phase 2: Development of the “Ancora Locations”, and
Phase 3: Development of links with small and medium-sized companies (SMEs)
and local communities.
Time Sharing
Along with this project, MITUR has passed a number of legislative packages, including the
recent approval of the Periodic Residence Rights Regulation (“RDHP”).
This legislation regulates the concept of timesharing or right of periodic residence. Closely
linked with the real estate sector, the philosophy underlying this right was developed in
various schemes, but has taken on some more obvious common features such as the division
of the periods of use of the properties normally included in tourist resort development into
weeks, as these are easier to sell and use.
The RDHP sets out four types of rights:
1. Right of periodic residence – property right which allows its holder to use accommodation
located on tourist resorts or real estate properties, in return for a price, for one or more
stipulated or unstipulated periods each year for accommodation purposes.
2. Tourist residence right – consists of the use of accommodation located on tourist resorts
or real estate properties, in return for a price, for one or more periods – which are usually
stipulated - each year for accommodation purposes.
3. Right of shared residence – consists of the acquisition of a property right over a share of a
given property located on a tourist or real estate resort along with the furniture and fittings
thereon, as well as the premises and services associated with the common areas of use,
subject to a schedule established in the contract and in the regulation on the use of the
services.
4. Residential tourism – tourism based on an investment of a real estate or tourist nature which
aims to provide accommodation in tourist interest areas for certain or permanent periods.
The common denominator of all of these rights is the accommodation unit, the legal regime
for which varies according to the type of right in question.
The tourism or real estate investor who intends to develop any of these types individually or in
conjunction will have to apply to the competent bodies for a licence. This process is divided
into two stages: advance information and authorisation of the premises and the exploration
licence.
The licensing process begins with the submission of the project and the intended type to the
MITUR, accompanied by an informational document about the development and payment of
the deposit. The MITUR then issues an accreditation certificate for the project which confirms
the characteristics and capacities of the resort and the investor.
These rights may only be sold by the investors or, alternatively, duly-licensed tourism promoters.
Intellectual property in the Mozambican legal order has two main facets: industrial property
-governed by the Industrial Property Code enacted by Decree 4/2006, of 12 April, and
copyright - governed by the Copyright Law (Law 4/2001, of 27 February).
The Industrial Property Institute (IPI) was created by Decree 50/2003, of 24 December, and
is responsible for administering industrial property, while the National Book and Disc Institute
(INLD) – set up under Decree 4/91 of 3 April - is responsible for administering copyright.
Mozambique became a signatory to the following conventions and international agreements
on intellectual property:
Convention establishing the World Intellectual Property Organisation (WIPO) by means
of Resolution 12/96 of 18 June;
Patent Co-operation Treaty (PCT of 19 June 1970, amended on 28 September 1979 and
3 February 1984) by means of Resolution 35/99 of 16 November;
1981 Madrid Agreement and its 1989 Protocol on International Trademark Registration
by means of Resolution 20/97 of 12 August;
African Regional Industrial Property Organisation (ARIPO) by way of the Harare Protocol
on Patents and Industrial Designs, signed at Harare on 10 December 1982
and revised on 28 November 1997 and 26 May 1998, by means of Resolution
34/99 of 16 November.
Industrial Property
General regime
The Industrial Property Code (CPI) sets out a protective regime for industrial property rights
and obligations. Industrial property covers commerce, services and industry (agriculture
and cattle breeding, fishing, forestry, food, construction and mining as well as natural or
manufactured products).
Industrial property rights are registered by the IPI. The registration process begins when the
registration application is filed and may be followed by a challenge stage (where interested
parties can make their claims and challenges). Finally the registration is granted or rejected
(partially or wholly). Decisions on industrial property rights may be appealed, with suspensory
effect, to the administrative courts.
The duration of intellectual property rights varies according to the type of right in question:
20 years for patents, 15 years for utility models, 5 years for industrial designs (renewable up
to a maximum of 24 years), 10 years for trademarks, logotypes, business names and symbols
(renewable), and unlimited for appellations of origin and geographic indications of source.
The law provides that the rights arising from patents, utility models, trademarks, industrial
designs, business establishment symbols, business names, appellations of origin, geographic
indications, logotypes and awards may be wholly or partially transferred for valuable
consideration or otherwise, inter vivos or mortis causa. The same applies to the rights arising
from the applications. An inter vivos transfer must be made in writing. These rights may also
be the subject of an operating licence.
The principle of priority is therefore particularly important as registration is granted to whoever
files the application first. The rights are created by registration, which means that it is only by
registering that the holders can be granted the right of exclusive use.
The CPI provides a provisional protection regime whereby the applicant can provisionally
enjoy the protection conferred by the right from the time the application is published in the
Industrial Property Bulletin.
Industrial property rights can be terminated in four different ways: (i) invalidity; (ii) annulment;
(iii) expiry and (iv) waiver.
Patents
In Mozambique, patents (or utility models) can be obtained for any invention in any field of
technology, whether it is a product or a process, provided that: (i) the invention is new,
(ii) implies some inventive activity and (iii) is capable of industrial application.
However, certain things may not be patented, including discoveries, scientific theories and
mathematical methods, systems, plans, rules and methods of intellectual activities in terms of
play or in the field of business activities, computer programmes as such, surgical, therapeutic
or diagnostic treatment methods for humans or animals.
As a rule, the right to a patent belongs to the inventor or his successors. However, if the item
is invented during the course of an employment contract which envisages inventions, then the
right to the patent belongs to the employer.
Anyone who has incurred liability to another may be deprived of the patent while a patent
may also be expropriated for public use. Compulsory licences may be granted in respect of a
given patent on the grounds of (i) insufficient exploration of the patented invention, (ii) patent
interdependency, or (iii) public interest reasons.
Trademarks
A trademark is a sign that distinguishes a company’s products or services. It may consist
of a sign or set of signs capable of being represented graphically, that is to say, in words,
including personal names, designs, letters, numerals, sounds or the shape of the product or its
packaging, which are capable of distinguishing the products or services of one company from
those of other companies. Advertising slogans may also be trademarks.
There are specific provisions for free trademarks, collective trademarks (association or
certification), well-known trademarks and renowned trademarks. The same trademark
destined for the same product or service may only be registered once. Only after the
registration has been accepted and for the duration thereof can the holder of the trademark
use the works “registered trademark”, the initials TM or ®. Apart from minor changes that do
not affect the identity of the trademark, the trademark must remain unchanged as any change
will trigger the need for a new registration.
Every five years from the date of registration, a declaration of intention to use the trademark
must be filed with the IPI. Any trademarks for which this declaration is not filed cannot be
enforced against third parties and the IPI will declare the lapse of the registration, at the request
of any interested party, or when rights are seen to be prejudiced at the time other registrations
are granted. If the expiry of the registration has not been requested, it will again be considered
fully enforceable if the holder files a declaration of intention to use the trademark and provides
evidence of actual use of the trademark.
Unfair Competition and Trade Secrets
Under the CPI, unfair competition is any action that is contrary to the honest customs and
uses of any field of business activity. The law also lists examples of typical unfair competition
acts, which can be divided into four categories:
(i) acts designed to create confusion,
(ii) acts designed for the purposes of discrediting,
(iii) acts designed to bring about an unfair gain, and
(iv) acts designed to deceive.
A breach of trade secrets also constitutes unfair competition, that is to say, acquiring, disclosing
or using a competitor’s trade secrets without its consent in a manner that is contrary to honest
business practices, provided that this information i) is secret in the sense that it is not generally
known or easily accessible in its entirety or in its exact shape and setting to persons outside
the circles who usually deal with such information, ii) is commercially valuable due to its
secrecy, iii) has been the subject of reasonable precautions, in view of the circumstances, by
the person that legally controls it to keep it secret.
Infringements
In Mozambique, industrial property is afforded the guarantees that are available to property
rights in general, as well as the protection specifically provided for in the CPI. This means that
an interested party can resort to the protection against civil wrongs that is available under the
civil law, more specifically under the law of tort. Recourse may also be had to the provisions
of the CPI which penalise infringements with fines or penalty payments.
Copyright
The Copyright Law (Lei dos Direitos de Autor, so-called “LDA”) provides protection for
literary, artistic and scientific works and the rights of the authors, artists or performing artists,
record and video producers and broadcasting organisations. It seeks to stimulate the creation
and production of intellectual work in literature, article and science.
The personal and territorial scope of the LDA applies to:
i) Works whose author or other copyright holder is Mozambican or a foreigner whose
habitual residence or registered office is in Mozambique;
ii) Audio-visual works whose producer is Mozambican or a foreigner whose habitual residence
or registered office is in Mozambique;
iii) Works published in Mozambique or works published for the first time aboard and
subsequently in Mozambique;
iv) Architectural works erected in Mozambique;
v) Works protected under an international treaty to which Mozambique is a signatory.
Copyright is a subjective right that confers upon its holder the power to use a work exclusively,
in whole or in part, according to the types of use prescribed by law. Works are intellectual
creations in the literary, scientific or artistic fields, expressed in any medium. What is protected
is the form of expression of the work (an intangible asset), which may be reproduced in several
formats. These formats are separate from copyright.
The right to copyright begins the moment the work is expressed and it is recognised irrespective
of registration, deposit or any other formality. Copyright registration is therefore merely a
declaration. The fundamental requirement for the existence of a work is its originality, whereas
merit, for instance, is considered irrelevant, and ideas, processes, systems, operational
methods, concepts or discoveries are not afforded copyright protection.
Copyright encompasses both economic and personal rights, the latter of which are known as
moral rights. Moral rights cannot be assigned or encumbered.
The LDA also provides for the protection of neighbouring rights, which are those of artists
or performing artists, record and video producers and broadcasting organisations. These
neighbouring rights are separate from copyright but the copyright regime applies to such
rights on a supplementary basis.
As a rule, copyright lapses 70 years after the death of the intellectual creator of the work when,
with the exception of the safeguarding of moral rights, the work enters the public domain.
In principle, copyright belongs to the intellectual creator of the work but there are some
special regimes. For example, copyright on a work done to order or on behalf of another,
whether under a duty or an employment contract, is determined according to the agreement
of the parties. There are also specific provisions covering multiple authorship, such as those
connected with collaborative, composite or collective works.
The owner of the work and his or her successors or assignees are entitled to: (i) authorise the
use of the work by a third party; or (ii) transfer or encumber, wholly or partially, the financial
component of the copyright over the work.
An infringement of copyright law may give rise to liability in tort as well as for criminal offences
such as usurpation, counterfeiting and infringement of moral rights, all of which are punishable
with a term of imprisonment.
The Mozambican tax system has the following taxes:
National taxes:
(i) Direct taxation (on income):
- Personal Income Tax (Imposto sobre o Rendimento das Pessoas Singulares, so-called “IRPS”);
- Corporate Income Tax (Imposto sobre o Rendimento das Pessoas Colectivas, so-called “IRPC”);
- Inheritance and Gift Tax; and
- Special Gambling Tax.
(ii) Indirect taxation (on spending):
- Value-Added Tax (Imposto sobre o Valor Acrescentado, so-called “IVA”);
- Customs;
- Specific consumption tax (Imposto sobre Consumos Específicos, so-called “ICE”);
- Tax on property transfer and title (so-called “SISA”);
- Stamp Duty
Local government taxes:
- Local Government Personal Tax (Imposto Pessoal Autárquico, so called “IPA”);
- Local Government Land Tax (Imposto Predial Autárquico, so called “IPRA”); and
- Business Activities Charge (Taxa de Actividades Económicas, so called “TAE”).
Corporate Income Tax (“IRPC”)
Scope and incidence
This direct tax is levied on the revenue (profit) of companies even if it derives from unlawful acts.
IRPC is levied on the entire revenue, including revenue from abroad, of companies and other
entities whose registered office or management and effective control is based in Mozambique,
while those which do not have a registered office or effective control in Mozambique are only
liable for IRPC on any income obtained in Mozambique.
There are no exemptions from IRPC except for the state itself and non-profit organizations
Taxable profit
The taxable profit is computed from the sum of the net financial year result and the positive
and negative asset variations in the same tax period, with the necessary corrections in
accordance with the law.
The normal tax year runs concurrently with the calendar year, however, it is possible to obtain
authorisation to use a different tax period, by means of an application to the Ministry of
Finance, which will imply that tax obligations need be complied with at different times.
The taxable profits attributable to the permanent establishment (branch office) are calculated
as if it were a company governed by Mozambican law, with all the necessary changes.
The taxable profit attributable to non-residents is calculated by applying the withholding rates
(between 10% and 20%) or the different types of income liable to Personal Income Tax
(IRPS), as the case may be.
The law sets down certain rules on transfer pricing and thin capitalisation which confers broad
powers upon the tax authority to adjust and correct the taxable income.
As a rule, the income paid to non-resident bodies is taxed at 20%, except for income deriving
from the provision of international transport and telecommunications services and income
from the assembly and installation of equipment for such bodies, which is taxed at 10%.
For instance, services agreements entered into with non-resident bodies and individuals and
interest owed on loans and dividends paid to non-resident shareholders are taxed at 20%.
Carrying forward Tax Losses
Tax losses may be deducted against taxable profits up to the fifth financial year after they were
computed.
International Double Taxation
The lower of i) the income tax paid abroad and ii) the portion of the IRPC taxable income
prior to deductions which is equivalent to the taxable income in the country in question can
be deducted from the amount of IRPC due.
If the country has a tax treaty with Mozambique, the deduction described above cannot
exceed the tax paid abroad under the treaty.
The payment of IRPC
IRPC is paid on account (in three annual instalments) and corrected at the end of the tax year
upon the filing of the annual return, if necessary.
Companies that make no profit during the financial year are obliged to make a special payment
on account (in three annual instalments), calculated on turnover and subject to a minimum of
30,000 MT ($1,200) and a maximum of 100,000 MT ($4,000).
Value-Added Tax (IVA)
Scope and incidence
IVA is charged on paid transfers of goods and provisions of services in Mozambique and on imports.
Exemptions
Generally speaking, there are no exemptions from IVA, with the exception of the state and
state companies - when they carry on activities for the public good, even if these activities
are paid for -and taxable persons – who are neither obliged to keep organised accounts nor
involved in import and export transactions – who did not reach a turnover of over 750,000 MT
($30,000) in the previous year.
There are, however, some objectively applicable exemptions to the transfer of some goods
and certain service provisions, including i) primary goods, ii) banking and financial operations,
and (iii) lease of property for residential, commercial or industrial purposes in rural areas.
There are also some IVA exemptions on the import of goods used for certain activities, such
as oil and mining activities.
Rate and payment
The IVA rate is 17%.
In order to calculate the amount of tax due monthly to the state, the taxpayer must deduct the
amount paid on purchases from the amount charged on sales.
Sisa
Sisa is levied on paid transfers of property title or similar rights over real property. The general
rate is 2% but if the transferee is resident in a country with a more favourable tax regime than
the Mozambican regime, the rate is 10%.
Stamp Duty
Stamp Duty is charged on all documents, contracts, books, papers and acts as set out in the
General Table of the Stamp Duty Code.
The rates are prescribed in meticals for each act/document and in percentages on the acts/
documents.
Double Tax Treaties
Mozambique currently has treaties with Portugal, Italy, Mauritius, the United Arab Emirates
and Macao.
Tax Benefits and Special Tax Regimes
Mozambican law establishes some special tax regimes such as for mining and oil activities as
well as various tax benefits granted under the Investment Law.
The current employment legislation introduced at the end of 2007, mainly by Law 23/2007, of
1 August – the Employment Law – aims to facilitate employer investment and development,
and is therefore protective of businesspeople and more open to the trade union movement. It
has been hailed as a more wide-ranging, liberal and flexible law than its predecessor.
The following are some of the main features and principles of Mozambican employment
legislation, with particular emphasis on the following:
- Terms and conditions of work.
- Discipline in the workplace.
- Social security.
Terms and Conditions of Work
Employment contracts
The following types of employment contract are possible:
i) fixed-term employment contract.
ii) non fixed-term employment contract.
iii) permanent employment contract.
The fixed-term contract may only be used for short-term tasks and for the period strictly
necessary for the purpose, such as:
to substitute a worker who is temporarily unable to work;
in response to an unusual increase in production and for seasonal activities;
to carry out a certain or temporary project or other activity.
Fixed-term contracts may only be used for a maximum period of two years and are limited to
a maximum of two renewals.
The non fixed-term contract is allo ill last, particularly in civil construction, public works
and other works contracts.
The permanent contract has no stipulated term and is designed for hiring workers for
permanent positions at the company.
All these contracts must:
Be written and signed by the parties.
State the names of the contracting parties.
Indicate the duties and responsibilities of the parties.
State the date on which the employment contract comes into effect.
State the amount of pay and payment intervals.
The employment contracts must also stipulate:
The place of work.
The length of holiday leave.
The daily and weekly working hours,
Restrictive covenants such as exclusivity and non-competition clauses.
The circumstances and formal requirements for amending the employment contract.
The governing law.
Trial period
The law provides that workers may be required to undergo an initial trial period designed for
the parties to adapt and get to know each other in order to decide whether or not to continue
the employment contract.
The contract can be terminated by either party during the trial period without just cause by
providing 7 days’ written notice.
Hiring Foreign Workers
The employment law has established specific provisions on the hiring of foreign nationals who
come to work for a company in Mozambique, even if on an unpaid basis.
These rules apply to those who enter into employment contracts or provide services, including
directors, and agents of foreign companies who carry out non-subordinate work in a company
in Mozambique.
The following two situations, however, should be considered:
i) Hiring a foreign worker within the quota: the employment law sets quotas for foreign
workers where admission is automatic on the basis of the size of the recruiting company
and must be communicated to the Employment Directorate in the area where the company
is located.
The quotas are as follows:
5% of the entire workforce of large companies (those which employ over 100 employees).
8% of the entire workforce of medium-sized companies (those which employ between 10
and 100 employees).
10% of the entire workforce of small companies (those which employ less than 10
employees).
After the hiring of the foreign national is communicated and the relevant declaration is issued
by the Employment Directorate, the foreign national will obtain a residence visa which is
stamped on his or her passport. The visa is issued by the Mozambican consulates and the
foreign national should have the visa before entering Mozambique.
ii) Authorising work outside the quota: once the company has reached its quota for recruiting
foreign workers automatically, it may apply for authorisation to contract more foreign
workers. However, in this case, admission is at the discretion of the Minister of Labour.
The application must be accompanied with the academic and professional qualifications of
the worker and the contracting company must provide evidence that no national worker has
the same qualifications. This is the only way to justify contracting a foreign national.
Working time
The normal working period may not exceed forty-eight (48) hours a week and eight (8) hours
a day.
Industrial establishments, with the exception of those which work shifts, may use a normal
working time of forty-five (45) hours a week over five (5) days.
Termination of the employment contract
By law, contracts may be terminated on one of the following grounds:
a) Expiry:
i) Once the term of the contract has expired.
ii) If it is impossible to work or receive work.
iii) Retirement.
b) Revocation by agreement
c) Unilateral termination with just cause:
i) On disciplinary grounds.
ii) Due to the worker’s inability to adapt, after the trial period.
iii) Arrest or imprisonment if, due to the nature of the worker’s duties, this would
adversely affect normal operating.
iv) On economic grounds.
d) Unilateral termination with notice
i) Termination by the worker, without needing to plead just cause, provided that the decision
is communicated in writing in accordance with the following periods of notice:
ii) Termination by the employer, provided that it is based on structural, technological or
market grounds.
The worker, the trade union committee and the Employment Directorate must be notified in
writing at least 30 days in advance.
iii) Redundancies: employers who implement a redundancy process (that is to say, terminate
the employment contracts of 10 or more workers at the same time) must inform the trade
unions and the affected workers as well as the Employment Directorate before beginning
the negotiation process. This information must include the grounds for the redundancy, the
number of affected workers and the measures proposed by the employer to mitigate the
consequences of the redundancy for the workers.
Discipline in the workplace
Disciplinary Procedure
No disciplinary sanction can be imposed without the worker having being previously informed of
all the relevant facts and given the opportunity to present his or her defence. The following stages
and time limits apply for the purposes of the disciplinary procedure:
Disciplinary Sanctions
The employer may impose the following disciplinary sanctions:
Verbal warning.
Written reprimand .
Suspension without pay for up to a maximum of 10 (ten) days for each infringement and 30
(thirty) days per calendar year.
Fine of up to 20 (twenty) days’ pay.
Demotion to the job category below for a period of not more than one year.
Dismissal.
Severance Pay
As regards the calculation of severance pay in respect of employment relationships, provision is
made for a transition period between Law 9/98 of 20 July (the old Employment Law) and the new
law and, depending on the level of pay of the worker, the old law will continue to apply for the
purposes of calculating severance pay for the first thirty months, five years, ten years and fifteen
years of the new law being in force.
Social Security
Social security is compulsory and covers employees and the self-employed, nationals or
foreigners resident in national territory and their employers. It also includes part-time workers,
workers on trial period and those on paid traineeships.
The law also considers the following as workers for social security purposes:
a) Directors and members of company bodies with an employment contract, including
unipessoal companies.
b) Individual traders with employees working for them;
c) Stevedores contracted by a stevedore company or private employment agency;
d) Professionals working for transporters;
e) Workers in state or local government institutions and state company workers not covered
by the General Civil Servants Statutes;
f) Seasonal workers;
g) Political party and trade union workers, non-governmental organisation and association
workers.
Except in the case of self-employed workers, the employer is responsible for registering the
workers.
Foreign resident workers are not obliged to register for social security provided that they are
covered by a social security system in another country.
Compulsory social security contributions are divided between the employer and the worker at
4% and 3% respectively of the monthly salary, and the employer is responsible for depositing
the contributions to the order of the National Social Security Institute.
The national social security system covers the following situations:
a) Illness - sick pay and hospitalisation allowance;
b) Maternity – maternity allowance;
c) Disability – disability allowance;
d) Old age – senior citizen’s allowance;
e) Death – death benefit, funeral allowance and survivor’s pension.
General overview of the dispute resolution mechanisms
Arbitration
The possibility of settling disputes by arbitration, subject to the legally prescribed limits, came
into force in Mozambique in the latter half of 1999 with the Arbitration, Conciliation and
Mediation Law (Law 11/99 of 8 July), adding this new modern means of settling disputes to the
usual ways of settling disputes via the judicial or administrative courts under the civil procedure
law in force in Mozambique (1966 Civil Procedure Code and the many amendments it has
undergone over the years).
The disputes that arise from legal commercial relationships in the broad sense, including
those arising from investment can, as a rule, be settled by arbitration. The parties (individual
businesspeople or companies) to these conflicting relationships can opt for arbitration in
accordance with the Arbitration, Conciliation and Mediation Law, either in advance by means
of an arbitration clause in the contract or subsequently by means of an arbitration agreement,
which should be drawn up expressly.
Arbitration in commercial relationships can be either domestic or international. Domestic
arbitration is designed to settle disputes about commercial relationships that fall under
Mozambican jurisdiction. The creation and operation of the arbitration tribunal and the
arbitration award are governed by the Arbitration, Conciliation and Mediation Law.
International arbitration is designed to settle disputes involving international commercial
relationships, in other words, disputes that arise from legal business relationships connected
with more than one national jurisdiction in terms of nationality, residence, registered office or
establishment of the parties, the place of contract or performance of the obligation and the
place where the fact or the damage takes place.
International institutional commercial arbitration may be used particularly in the case of
conflicts in foreign investment relationships. In investment relationships between a foreign
investor and the Mozambican state, if there is no agreement between them or there are
compulsory legislative provisions to the contrary, the Investment Law (Law 3/93, of 24 June)
expressly allows for any disputes arising from this relationship to be settled, based on a prior
agreement, in accordance with the international commercial arbitration rules below:
(a) the Washington Convention, of 15 March 1965, on the Settlement of Investment Disputes
between States and Nationals of Other States and the International Center for the
Settlement of Investment Disputes between States and Nationals of Other States (ICSID),
(b) The Additional Facility Rules approved on 27 September 1978 by the Administrative
Council of the ICSID if the foreign company does not fulfil the nationality conditions set
out in Article 25 of the Washington Convention; or
(c) the International Chamber of Commerce based in Paris.
It is known that very few disputes in investment relationships are resolved by recourse to
international arbitration, and it is likely that many of these disputes have been settled by
negotiations.
It is becoming increasingly frequent to include a national or domestic arbitration clause in
contracts, which will foster the growth and consolidation of arbitration in Mozambique in
the short term.
These clauses opt for the ad hoc arbitration tribunal (that is to say, expressly created for
the purpose of settling a dispute) and also institutional arbitration, which means creating
arbitration tribunals from a panel of arbitrators run by an arbitration institution whose rules
are applied to the arbitration process. At this time, there is only one commercial arbitration
institution in Mozambique - the Maputo-based Arbitration, Conciliation and Mediation
Centre.
Arbitral awards are final and enforceable and may only be appealed to a court on the
points of form or procedure established by law, which essentially mean a failure to comply
with the formalities, thereby affecting the exercise of the rights of defence, particularly the
right to be heard.
In the event that the losing party does not comply voluntarily with the arbitral award, the
injured party may apply to a court to have the decision enforced under civil procedure law.
It should be noted that an investment is not limited to the investment relationship in the
strict sense of relationships governed by the legislation that applies to national and foreign
investments. Investments form part of a much wider range of relationships, and such
relationships may fall within the different spheres of legal relationships governed by specific
legislation.
This is the case, for example, in relationships between private individuals and the state in
which the latter is vested with state prerogatives or jus imperi or which are governed by
administrative law.
In such cases, particularly as regards administrative contracts, including concession
contracts, the law only allows recourse to the special state form of administrative arbitration,
presided over by an administrative court judge and governed by administrative law.
There are cases where the law allows the state to participate in terms that bring in under the
umbrella of the private law regime, such as in oil contracts for example.
Another example is the case of employment relationships, with regard to alienable
employment rights, where disputes arising from collective agreements and individual
employment contracts can be settled by means of labour arbitration based on the provisions
of the Employment Law.
The innovative though general reference to the tax contract in the 2006 tax legislation (Law
2/2006 of 22 March) must be mentioned, even though it does not express legally the possibility
of recourse to arbitration for settling the disputes arising from such contracts.
Litigation
For disputes where the parties have not agreed to go to arbitration or the law itself requires
otherwise, as is the case with inalienable rights, the procedure stipulated by the procedural
law to apply in state courts is reserved for the use of the state courts.
The courts have the exclusive jurisdiction to settle disputes by judicial means and according
to the principle of the separation of powers are classified as sovereign bodes under the
Constitution of the Republic (Article 133 in conjunction with Articles 70 and 212). The law
differentiates between judicial courts, administrative courts and other special courts set up
by law.
The judicial courts include the Supreme Court, the Supreme Appeal Courts, the Provincial
Courts and the District Courts (Law 24/07 of 20 August – The Judicature Law).
The provincial courts are divided into specialised jurisdiction courts and sections such as the
family court and the civil, commercial, labour or criminal courts, while the district courts have
general jurisdiction.
The administrative court has special jurisdiction since it hears claims arising from disputes
in legal administrative relationships, litigation appeals lodged against the decisions of state
bodies and agents and appeals lodged against tax and customs court decisions.
Efficiency of the Mozambican judicial system
The periods indicated below are only estimates and vary according to the procedural
requirements and complexity of each case. However, experience shows that in the
Mozambican court system disputes are settled on average within the following periods:
At first instance;
(a) Civil cases take around 1 to 3 years for the decision;
(b) Commercial cases, because of the sections that have been created recently, are decided
on average within one year;
(c) Employment cases usually take around one to 3 years for the decision.
At second instance:
If a decision is appealed to the Supreme Court, the ruling takes around 4 to 5 years on average.
Recognition of foreign judgments
In Mozambique, foreign judgments are recognised and confirmed in the Supreme Court,
after which they may be enforced in Mozambique.
The rules of the New York Convention, date of 1956, on the recognition and execution
of foreign arbitral decisions (adopted by Mozambique on 10 July, 1998, with reciprocity
reserve) are fully applicable to the revision and confirmation of Arbitral awards decided by
foreign arbitration courts or arbitrators.
Public Procurement
I. Background
The legal regime on public procurement in Mozambique is currently set out in Decree
54/2005, of 13 December, which enacted the “Regulation on Procurement for Public Works,
Supply of Goods and Provision of Services to the State”(1).
A cursory analysis of this legislation immediately shows an importance in terms of state
procurement which in itself merits discussion, albeit a necessarily brief discussion, in this
Guide.
On a preliminary basis, it should be pointed out that this is a legal instrument which –
successfully – proceeds to provide unitary treatment of the more significant issues involved
in public procurement. In short, it could be said that the decree in question embodies an
extremely useful codification of this very complex theme.
II. Subjective Scope, core Principles and Rules of Public Procurement
The regime in question applies to all state bodies and institutions, including local government
and state-owned companies (2)(3).
The decree enshrines the traditional guiding principles of administrative action, notably the
principles of legality, proportionality, transparency, equality and good faith, all of which are
duly set down and explained.
It should, however, be pointed out that along with these basic principles which should guide
the behaviour of the state as set out above, express provision is made for other specific
principles for adjudicatory issues, including, inter alia, the principles of stability, competition
and good financial management.
Further, it should be highlighted that under Article 4 of the Decree(4), there is an express
reference to the “remaining public law principles”, which means that when applying the
decree we should not lose sight of the provisions of Articles 4 to 14 of Decree 30/2001, of 15
October, which establish the “Rules of Functioning for the Public Services”.
The regime that encompasses the public works contracts and the acquisition of goods and
services is the public tender procedure (cf. Article 7).
As opposed to the “general public tender regime”, there is the “special public tender regime”
(which allows for provisions other than those of the decree to be used in specific public
procurement cases for which some treaty or other international agreement has established
distinct procedure rules) and also the “exceptional regime” (which allows the contracting state
body, on public interest grounds, to choose one of the following pre-contractual procedures:
pre-qualification tender, limited tender, two-stage tender, tender by bids and direct adjustment (5)).
Essentially, those who are “eligible” to bid for public works contracts and the supply
of goods and services are national or foreign individuals or companies with the legal,
economic, financial and technical capacity and whose tax affairs are in order as set out in
the decree (cf. Articles 18 to 28).
The bids must be accompanied by the following documents: commercial registry certificate
and current statutes, a declaration stating that none of the many common “impediments”
apply (cf. Article 19) which must be signed by the bidders, the consortium project or
agreement to create a consortium (in the case of company groupings), periodic statement
of income and annual accounting and tax statement, certificate of the registration of
a professional activity compatible with the subject-matter of the contracts in question,
licence or equivalent document issued by the relevant body (for activities that require a
licence).
It is important to highlight here that “foreign bidders” can submit documents that are
“equivalent” to those required of “national bidders”. Similarly, the decree provides
that “foreign bidders” must demonstrate their legal, economic, financial and technical
competence and regular tax affairs in their country of origin. However, they must have
an “attorney” resident and domiciled in Mozambique with special powers for the service
of notices and summons and to respond administratively and judicially for their acts (the
instrument conferring the powers must also be enclosed with the bid for the public tender
or other type of pre-contractual procedure).
In this respect, it should also be noted that the contracting public bodes may restrict the
participation of “foreign bidders” in significant tenders such as those with an estimated
value of under five billion, two hundred and fifty million meticals in the case of public
works contracts and two billion, six hundred and twenty-five million meticals in the case
of the acquisition of goods and services (cf. 24 and 88)(6).
This type of restriction requires the prior reasoned authorisation of the minister in charge
of finance and the minister for the sector in question.
With regard to the assessment criteria, it should be pointed out that the criterion is the
“lowest price”(7). As a result, the bid chosen is generally the lowest and in the event of a
tie, it is determined by means of a tiebreaker lottery (cf. Article 36).
On rare occasions, the adjudication criteria may be a “considered criterion”, which
means a criterion that takes into account the technical assessment of the bid and the
price and naturally in this case reasoned grounds are required. In the case of a tie in the
assessment of the bids, the best technical bid will win but if the tie continues, the matter
will be decided by a public “lottery”(8).
III. Public Works Contracts
The public works contract(9) is an administrative contract (cf. Article 38(1)), which means
that these contracts are subject to an administrative law regime at the substantive level(10)
and come under the jurisdiction of the administrative courts at a procedural level. As regards
this last aspect, it should be pointed out that the decree allows arbitration clauses in such
contracts but the proceedings must be held in Mozambique and in the Portuguese language.
A performance bond must be provided(11) as a written precondition for the public works
contract and the maximum warranty period is five years from completion of the work(12).
In general, the decree is frugal in its regulation of public works contracts and surprising for
the lack of (very common) rules regarding the formalities for the works, the rules for assessing
the works, the causes for suspending the works, chance and force majeure, special burdens,
financial rebalancing and changed circumstances.
That said, the problem can be overcome by recourse to the civil law, but we should point
out the provisions on works inspections, provisional and definitive acceptance of the work,
the prerogatives of the contracting public body, the limited cases in which contracts can be
amended, the grounds for terminating the contract and the consequences thereof.
One last mention must be made of Article 56 of the decree regarding the “register”. Brevitatis
causa, it is important not to dismiss the “single register” of public works contractors and
suppliers of goods and services that are eligible to take part in tenders. This record is open to
entities who want to register and has the very significant advantage of it not being necessary
for companies listed on the register to provide proof of the abovementioned qualification
requirements.
In conclusion, any prospective co-contracting parties of the state of Mozambique would be
well advised to consult this legislation.
