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The Mozambican commercial code provides that a loan with a maturity of 1 year or more, made by a third party who later becomes a shareholder of the borrower via equity subscription, becomes a shareholder loan. This has enforcement consequences for the lender, subordinates the loan and affects set-off because of the connection between the loan granted and the subsequent acquisition of equity. The implications of the shareholder loan regime now applying to the lender…
Restructuring of companies in financial distress is on the increase globally. In line with this trend, Mozambican Insolvency Law (Decree law No 1/2013) provides greater protection to debtor companies in financial distress and gives them an opportunity to reorganise and restructure while continuing to operate their businesses. The law covers three procedures namely judicial reorganisation (Recuperação Judicial), extrajudicial reorganisation (Recuperação Extrajudicial) and liquidation. These procedures provide protection for both debtors and creditors, and increase the…
Restructuring of companies in financial distress is on the increase globally. In line with this trend, Mozambican Insolvency Law (Decree law No 1/2013) provides greater protection to debtor companies in financial distress and gives them an opportunity to reorganise and restructure while continuing to operate their businesses. The law covers three procedures namely judicial reorganisation (Recuperação Judicial), extrajudicial reorganisation (Recuperação Extrajudicial) and liquidation. These procedures provide protection for both debtors and creditors, and increase the…
Direito do Uso e Aproveitamento da Terra (DUAT) There is no private ownership of land in Mozambique. Land and its associated resources are the property of the State. The Land Law, however, grants private persons the right to use and benefit from the land known as Direito do Uso e Aproveitamento da Terra (DUAT). Although the land itself cannot be sold, mortgaged or alienated in any way, buildings, infrastructure and improvements built on land may…
As a general rule, the hiring of expatriates for petroleum and mining operations may follow one of the following regimes: Communication (or Quota) regime With reference to the total number of employees hired for fixed term or an indeterminate period (with reference to the previous calendar year), the following percentage of foreigners may be hired by means of notice to the Ministry of Labour: 5% for companies having more than 100 employees; 8% for companies…
Mozambique’s New Mining Law (20/2014) came into force on 18 August 2014 and is subject to further regulation by the government within 90 days of its publication. The law provides that mineral resources found in the soil and subsoil, in interior waters, in the territorial sea, on the continental shelf and in the exclusive economic zone is the property of the State. Mining permits (Títulos Mineiros): The rights to undertake mining activities are acquired in…
The Mozambique New Petroleum Law (21/2014) came into force on 18 August 2014 and is subject to further regulation by the government within 60 days of its publication. The law provides that all petroleum resources existing as natural resources in the soil and the subsoil, in interior waters, in the territorial sea, on the continental shelf and in the exclusive economic zone are the property of the State. Concession contracts Petroleum operations are carried out…
A proper understanding of how security can be taken and how risk can be mitigated is of paramount importance to investors. Mozambican law allows lenders to take security over certain types of assets of a Mozambican borrower. As a general rule, any security created over property located in Mozambique in favour of a foreign entity must be approved by, and upon execution be registered with, the Mozambique Central Bank (Banco Central de Moçambique). The creation,…
As a general rule, the hiring of expatriates for petroleum and mining operations may follow one of the following regimes: Communication (or Quota) regime With reference to the total number of employees hired for fixed term or an indeterminate period (with reference to the previous calendar year), the following percentage of foreigners may be hired by means of notice to the Ministry of Labour: 5% for companies having more than 100 employees; 8% for companies…
Direito do Uso e Aproveitamento da Terra (DUAT) There is no private ownership of land in Mozambique. Land and its associated resources are the property of the State. The Land Law, however, grants private persons the right to use and benefit from the land known as Direito do Uso e Aproveitamento da Terra (DUAT). Although the land itself cannot be sold, mortgaged or alienated in any way, buildings, infrastructure and improvements built on land may…