Shareholders' Rights & Shareholder Activism 2023 Comparisons

The main types of company in Mozambique are:

• the limited liability partnership (“sociedade em nome colectivo de responsabilidade limitada”);
• the quota company (“sociedade por quota”);
• the share company (“sociedade anónima”); and
• the simplified share company (“sociedade por acções simplificada”).

In general, the most commonly used type of company for small to medium-sized businesses is the Quota company and for medium-sized to large ventures is the Share company.

It should be noted that certain regulated activities impose certain requirements in relation to the type of company that must be adopted.

Bearer shares are not allowed following the approval of the New Commercial Code, which entered into force in late 2022. Thus, shares can only be nominative and either ordinary or preferred (the latter of which may be non-voting or otherwise).

The rights attached to shares are defined in commercial and securities legislation and in the company’s bylaws and normally relate to preferred payments.

Shareholders cannot be deprived of their social and economic rights; however, certain special rights can be introduced such as the right to appoint or be elected to a corporate body, disproportionate profit payments, veto in certain matters, etc.

These special rights must be introduced in the company’s bylaws and cannot be amended without the consent of the shareholder concerned.

In general, there is no minimum share capital requirement, with the exception of certain regulated activities.

All types of company can be held by a sole proprietor, with the exception of the limited liability partnership, which must be held at least by two shareholders.

It is not required that any such shareholders are resident in Mozambique, although a resident representative should be indicated for tax purposes. 

Although not mandatory by law, shareholders can opt to execute shareholders’ agreements.

Shareholders’ agreements are private agreements and are only enforceable vis-à-vis the parties; thus, they normally include provisions relating to the exercise of voting rights, election of corporate body members and mechanisms for the sale or transfer of participating interests, such as tag-along and drag-along clauses.

The General Meeting should be held at least once a year ordinarily, ie, within the first four months following each financial year for approval of the yearly accounts, and extraordinarily, whenever duly convened by the person/body with powers to do so.

The notice period for convening a General Meeting varies depending on the type of company or what is established in the company’s bylaws. However, if the bylaws are silent in this respect, 15 days’ notice should be given in the case of limited liability partnerships and Quota companies, and 30 days’ notice in the case of Share companies. It is also possible to waive the convening formalities if all shareholders agree to do so and decide to hold a General Meeting.

The General Meeting agenda is set by the person/body that convenes the meeting from the matters that are within the competence of shareholders – such as approval of the yearly accounts, election of corporate body members, amendments of the bylaws, mergers, demergers, transformations of the company, and transfers of corporate assets that represent more than 50% of the company’s estate, among others.

In terms of notice periods, please see 2.1 Types of Meeting, Notice and Calling a Meeting.

In terms of minimum requirements, the convening notice must contain minimum information such as the details of the company, the place, date and time of the meeting (or access details if held remotely), type of meeting, the agenda and indication of the documents that are available for consultation (if applicable).

Pursuant to the New Commercial Code, General Meetings may be convened by the Chair of the General Meeting (“Presidente da Mesa da Assembleia Geral”), or by the management, Supervisory Board or Sole Statutory Auditor, or by any of the shareholders.

All shareholders have the right to be notified of and to participate in a General Meeting, to discuss and vote when entitled to do so, as this is a fundamental shareholder right provided for in the New Commercial Code.

The shareholder also has the right of information about the company’s life, which includes:

(a) consulting the books of the (i) minutes of the General Meeting, (ii) register of liens, charges and guarantees, and (iii) share register;

(b) consulting the attendance register, where one exists;

(c) consulting documents that legally, or under the terms of the bylaws, must be made available to the shareholder before a General Meeting;

(d) requesting from a director, or from the Sole Statutory Auditor or a member of the Supervisory Board, or from the Company Secretary, any information relating to a matter on the agenda of a General Meeting, before voting takes place, provided that it is reasonably necessary for the clear exercise of voting rights;

(f) requesting, in writing, from the Board of Directors, written information on the management of the company, namely on any particular corporate operation; and

(g) requesting a copy of a resolution or entry in the minute books of the General Meeting and attendance books, as well as other documents mentioned in paragraph (c) above, without the need for authorisation from the management.

The New Commercial Code introduced the possibility of holding General Meetings using technological means.

To initiate a General Meeting a constitutive quorum is required. Thus, a General Meeting may take place regardless of the number of shareholders present or represented, unless it is intended to resolve on matters such as amendment of the bylaws, merger, demerger, transformation or dissolution of the company, in which case the law requires a qualified majority of at least two-thirds of the share capital to be present or represented on a first call. On a second call, the General Meeting may resolve on any matter regardless of the number of shareholders present or represented.

In terms of approvals (deliberative quorum), the General Meeting may resolve by an absolute majority of votes cast, regardless of the share capital represented and not including votes that are restricted due to conflict of interest or other reasons.

Resolutions are adopted by shareholders in physical meetings, in remote meetings or through round-robin written resolutions.

There is no distinction in terms of thresholds, and shareholders are obliged to resolve the matters within their competence and according to the rules for convening meetings and quorums.

The matters that fall within the competence of the General Meeting include, but are not limited to:

• approval of the company’s balance sheet and financial statements;
• approval of the management report and the opinion of the supervisory body;
• resolution on the application of the results of the annual financial year, and distribution of profits;
• election and dismissal of members of the governing bodies, as well as their remuneration;
• call and reimbursement of additional benefits;
• call and reimbursement of ancillary benefits;
• removal of special rights; and
• exclusion of shareholders.

In terms of percentages of approval, please refer to 2.6 Quorum, Voting Requirements and Proposal of Resolutions.        

The voting mechanism can be freely established by the shareholders, and they may be represented through letters of mandate addressed to the Chair of the General Meeting indicating their vote or by allowing their representatives to vote on their behalf as they see fit.

Shareholders may request the inclusion of a specific issue in the agenda provided that all shareholders agree to it.

The company’s bylaws may also impose specific timeframes, thresholds and other rules for this process.

If a resolution is void or voidable, a judicial proceeding must be initiated within 30 days as of (i) the date on which the resolution was passed; or (ii) the date on which the shareholder became aware of the resolution, if the shareholder was irregularly prevented from attending the meeting or if it was irregularly convened.       

Institutional and other shareholder groups enjoy the same rights as any shareholder and are entitled to receive information from the company.

Mozambican corporate law does not recognise nominees, and only the shareholders that are listed as such in the company’s register enjoy the associated corporate rights.

Round-robin written resolutions are admitted under Mozambican corporate law.

For this purpose, the shareholders must express their vote in writing and address it to the Chair of the General Meeting, who subsequently drafts the resolution and informs the shareholders of the decision adopted.

Existing shareholders have pre-emptive rights over the subscription of new shares in a capital increase scenario, under the terms, timings and conditions established in the New Commercial Code.

The right of pre-emption may be withdrawn or limited by a resolution of the General Meeting adopted by the majority required to amend the bylaws.

The bylaws may impose certain limitations on the transfer of shares, such as:

• making the transfer of shares subject to the consent of the company;
• establishing a pre-emptive right of the other shareholders and the condition of its exercise, in the event of the disposal of shares; or
• making the transfer of shares and the creation of a pledge or usufruct over them subject to the existence of certain requirements in accordance with the corporate interest.

A shareholder is entitled to grant security rights over its shares (please refer to 3.2 Share Transfers).

Depending on the type of company, shareholders must either register and publish or report any change in their shareholding and, where applicable, seek authorisation in certain regulated areas of activities for such change in their shareholding (reduction or increase).

The New Commercial Code also establishes that all legal entities incorporated in Mozambique are required to keep internal information (identification documents) of ultimate beneficial owners and register this information with the Registry of Legal Entities.

Upon their issuance, shares of a Quota company can be cancelled in a limited set of situations which are set forth in the New Commercial Code, notably:

• exclusion of shareholders;
• exit of shareholders; or
• reduction of share capital.

As a rule, the cancellation of shares can only target shares that are fully paid-up, with an exception being allowed in the case of cancellation of shares as part of a share capital reduction. Furthermore, cancellation of shares is only allowed if, at the date of the resolution, the net worth of the company does not become, by virtue of the cancellation, less than the sum of the company’s share capital and the legal reserve. Lastly, it is important to note that, in principle, the cancellation of shares will entail the payment of a compensation to the shareholder that owned the cancelled shares. This compensation will be calculated in accordance with the rules set forth in the law.

In the case of Share companies, under the New Commercial Code the cancellation of shares appears to be limited to the situation of share capital reduction. In fact, on the one hand, the exclusion of shareholders of Share companies is not contemplated in the New Commercial Code; on the other hand, the New Commercial Code establishes that the exit of a shareholder (when legally admissible) is executed via buyback of the shares of the exiting shareholder, and not via cancellation.

Buybacks – General Rules

The buyback of shares, while being permitted in the New Commercial Code, is only allowed within certain limits and provided certain prerequisites are met, which are aimed at protecting the company’s stakeholders’ interests against the disadvantages of share buybacks.

Buybacks – Quota Companies

As regards Quota companies, the buyback of shares is allowed only if (i) the target shares are fully paid-up and (ii) if the company’s net worth does not become, as a result of the acquisition, less than the sum of the company’s share capital and the legal and statutory reserves. The decision to execute the buyback must be approved by a resolution adopted by a majority vote of the shareholders in a duly convened General Meeting. If the acquisition of the shares is free of charge, then a resolution of the company’s Board of Directors approving the decision to acquire the shares is sufficient. Regardless of the terms of the buyback, all rights inherent to the acquired shares will be suspended with the exception of the right to receive shares in proportion in the event of a share capital increase via incorporation of reserves.

Buybacks – Share Companies

As regards Share companies, similar restrictions are imposed. In fact, while share buybacks are allowed in this type of company, they are only admissible if (i) the target shares are fully paid-up and (ii) the company’s net worth does not become, as a result of the acquisition, less than the sum of the company’s share capital and the legal and statutory reserves.

Furthermore, the law imposes a quantitative limit upon the number of shares that can be bought back, stating that, as a rule, the company cannot buy back shares that represent more than 10% of its share capital. In certain exceptional situations (buybacks required to ensure compliance with legal provisions, free buybacks, acquisition in the context of an enforcement proceeding, provided the debtor has no other sufficient assets, among others), the quantitative limit of 10% can be exceeded.

The decision to execute the buyback must be approved by a resolution adopted by a majority vote of the shareholders in a duly convened General Meeting. This resolution must observe certain content requirements; notably, it must contain specific reference to (i) the shares that will be targeted for buyback, (ii) the price for the buyback and other relevant conditions, (iii) the deadline for the buyback, and (iv) the limits of the fluctuation of the shares’ valuation between which the Board of Directors may execute the buyback.

The buyback of shares in contravention of the limitations referred to in the preceding paragraphs is null and void, and shall render liable the persons who intervene in the acquisition.

Finally, and regardless of the terms of the buyback, all rights inherent to the acquired shares will be suspended with the exception of the right to receive shares in proportion in the event of a share capital increase via incorporation of reserves.

Payment of Dividends – General Rules

As a rule, the payment of dividends occurs once a year, and is always dependent on a resolution adopted by the shareholders. Within the first four months following the end of each financial year, the directors of the company must prepare the management report and the company’s annual accounts, and submit to the shareholders a proposal for the application of the company’s results.

Also within the same timeframe, the annual General Meeting of the company should be summoned so that the shareholders may resolve on:

• the company’s accounts and management report;
• the application of results (including the apportioning of dividends); and
• the appointment of the members of the company’s bodies to fill any vacancies that arise on such bodies.

As regards the application of results (including the apportioning of dividends), the law sets out that a certain percentage of the profit of the financial year must kept as a legal reserve. This percentage and the minimum amount of the legal reserve vary depending on the type of company, being 20% in the case of Quota companies, with a minimum amount of legal reserve of 20% of the company’s share capital, and 5% in the case of Share companies, with a maximum amount of legal reserve of 20% of the company’s share capital. In any case, one can only consider as distributable profit the amount shown in the duly prepared financial year’s accounts which exceeds the sum of the company’s share capital and the amounts already included or to be included in that financial year as reserves that, under the law or the bylaws, cannot be distributed to the shareholders.

Payment of Dividends – Special Rules

Regarding Quota companies, the law allows for the shareholders to set out in the company’s bylaws that a percentage between 25% and 75% of the distributable profits must, mandatorily, be distributed to the shareholders as dividends. A shareholder’s claim to its share of the profit is due six months after the date of the resolution deciding the distribution of dividends.

Regarding Share companies, the law allows for the shareholders to set out in the company’s bylaws that a certain percentage of the distributable profits must be distributed as dividends. In the absence of a specific statutory rule, the law sets forth certain minimum thresholds, ensuring that a distribution of a portion of the distributable profits occurs.

Furthermore, as regards Share companies, provided certain prerequisites are met, the law allows the distribution of profits in the second semester of the year, as well as the advance of payments on account of profits to be distributed as dividends.

Appointing and Removing Directors – General Rule

Under the New Commercial Code, the general rule is that the members of the Board of Directors are appointed to and removed from the board by a resolution adopted by a majority vote of the shareholders in a duly convened General Meeting.

Appointing Directors – A Specific Rule for Share Companies

As regards the appointing of directors, it is important to note that the legal regime applicable to Share companies allows for the company’s bylaws to attribute to minority shareholders that, individually or collectively, hold a minimum of 5% of the company’s share capital, the right to nominate at least one director, provided that such minority shareholders voted against the resolution of appointment of directors that was approved by the majority of the shareholders.

Removing Directors – Further Developments

As regards the removal of directors, the general rule is that directors can be removed at any time and regardless of cause by a resolution adopted by a majority vote of the shareholders. However, it is important to note that the removal of a director without cause will, as a rule, give the removed director the right to receive a compensation equal to the amount of the remuneration that such director would have received until the end of his/her term of office if no removal had occurred. Besides removal decided by resolution adopted in a General Meeting, the law also provides certain mechanisms that allow minority shareholders to circumvent the inaction of the General Meeting and obtain the desired removal of directors via a court decision.

In fact, in Quota companies the law grants every shareholder, regardless of its shareholding, a right to apply in court for the suspension and removal of a director when there is cause for removal.

In Share companies, shareholders that, individually or collectively, hold at least 5% of the company’s share capital may apply in court, at any moment, for the removal of a director when there is cause for such removal.

Under the New Commercial Code, shareholders are not entitled to directly challenge decisions taken or actions adopted by the company’s directors.

This being said, it is important to note that the New Commercial Code imposes certain general and specific duties upon directors, with which directors must comply. The breach of these duties may generate liability of the directors towards the company, provided certain conditions are met (see 10.2 Remedies Against the Directors).

Supervisory Bodies of Companies – Composition

The supervisory body is an optional company body in all company types with the exception of Share companies, in which it is always mandatory. Additionally, the supervisory body will be a mandatory body for every company that, regardless of its type, (i) issues securities, or (ii) qualifies as medium-sized or large company. Under the general rule set forth in the New Commercial Code, a company will qualify as a medium-sized company when it has between 31 and 100 employees and an annual turnover between MZN30 million and MZN160 million or, regardless of the number of employees, an annual turnover between MZN30 million and MZN160 million. The same general rule sets out that a company will qualify as a large company when it has 100 or more employees and an annual turnover higher than MZN160 million, or, regardless of the number of employees, an annual turnover higher than MZN160 million.

The supervisory body will, as a rule, comprise:

• a Sole Statutory Auditor (“Fiscal Único”), which must be a registered auditor or an auditing firm; or, alternatively,
• a Supervisory Board (“Conselho Fiscal”), which will comprise three members, one of whom must also be an auditor or audit firm.

As a third alternative, a company may opt to have a different corporate configuration, in which the supervisory function will be attributed to an Audit Committee and an external auditor. The Audit Committee will be integrated into the Board of Directors of the company and will comprise an odd number of members, with a minimum of three, all of whom must be non-executive directors. Regardless of the type of supervisory body adopted by the company, the law sets forth a set of restrictions regarding who can be appointed as a member of such corporate body in order to ensure a minimum degree of independence of these members. In regard to companies that issue securities or that have their shares admitted to trading on a regulated market, additional restrictions to those referred to above are applicable.

Appointing Auditors – General Rules

Under the New Commercial Code, the general rule is that the Sole Statutory Auditor or the members of the Supervisory Board of a company are appointed to the supervisory body by a resolution adopted by a majority vote of the shareholders in the annual General Meeting of the company. In the case of a Supervisory Board, the shareholders will also nominate the President of the Supervisory Board from among the appointed members at the annual General Meeting. The appointed Sole Statutory Auditor or members of the Supervisory Board will, as a rule, remain in office until the following annual General Meeting of the company, in which the shareholders will decide once again on the composition of these company bodies. If the shareholders fail to appoint the Sole Statutory Auditor or the members of the Supervisory Board (as applicable), the Board of Directors or any shareholder may file a claim in court requesting the judicial appointment of the Sole Statutory Auditor or the members of the Supervisory Board (as applicable).

In the specific case of the Audit Committee, the members of this body are nominated together with the remaining members of the Board of Directors by a resolution adopted by a majority vote of the shareholders in a duly convened General Meeting. The President of the Audit Committee may be nominated by the shareholders from among the appointed members. In the absence of a nomination from the shareholders, the members of the Audit Committee must nominate the President of the body from among themselves.

Removing Auditors – General Rules

Under the New Commercial Code, removal of members of the supervisory body is only possible with cause, and always subject to prior hearing of the to-be-removed member of the supervisory body.

As a rule, the removal of members of the supervisory body is decided by majority vote of the shareholders in a duly convened General Meeting. In the case of a judicially nominated Sole Statutory Auditor or members of the Supervisory Board (as applicable), the removal must be requested to the court either by the board of directors or by the shareholders that requested the nomination in the first place. In any event, cause for the removal is required, and if the court decides to remove the member of the supervisory body, it must appoint a replacement.

The member of the supervisory body of a company who is removed without cause will be granted a right to compensation in the amount of the remuneration that he/she would have received during his/her term of office.

The duty to present annual management reports and accounts is one of the specific duties of directors set forth in the New Commercial Code. This duty, however, is focused more on compliance with accounting standards and the financial performance of the company and does not encompass other matters such as aspects of corporate governance. In fact, the law only requires that the management report describes the status and evolution of the company’s activity, with special references to the company’s expenses, the market conditions and the company’s investments, all with a view to allowing an easy and clear understanding of the company’s financial situation and profitability. Coverage of, for example, corporate governance arrangements with explanations of the choices of the company on such matters is not required, and directors do not have a specific duty to report to shareholders on the company’s corporate governance arrangements.

The New Commercial Code has dedicated a whole new Chapter to the regulation of groups of companies, thus steering away from the previous Commercial Code, which, despite recognising the existence of groups of companies, opted not to regulate the group relationship directly, notably in what concerns the duties and rights of the controlling and controlled companies. In this new Chapter dedicated to groups of companies, the controlling relationship (“relação de domínio”) is defined as a relationship between two companies where one of them (the so-called controlling company) finds itself in a position where it can, either directly or via other companies, natural persons or shareholders’ agreements, exercise a dominant influence over the other (the so-called controlled company). The law further determines that a dominant influence will be considered to exist when the controlling company:

• holds the majority of the controlled company’s share capital;
• may exercise more than 50% of the voting rights of the controlled company; or
• has the right to nominate more than half of the members of the controlled company’s Board of Directors.

The existence of a controlling relationship entails important legal consequences, from both the controlled company’s and the controlling company’s perspectives.

From the perspective of the controlling company, the existence of a controlling relationship entails, first and foremost, a right to issue mandatory instructions to the controlled company (even if disadvantageous to the controlled company, provided certain limits are observed). This right to issue mandatory instructions is, however, counterbalanced by the provision of certain duties of the controlling company.

Firstly, the controlling company has a duty to promote the controlled company’s corporate object (“objecto social”). The beneficiaries of this duty are not only the controlled company, but also its other shareholders, as well as its workers. The law sets forth an illustrative set of examples of situations where it is considered that this duty has been breached and grants the shareholders of the controlled company not only a right to challenge the act or decision that breaches the controlling company’s duty, but also a right to claim for compensation for the damages they suffered against the controlling company.

Secondly, the controlling company is also liable towards the controlled company’s creditors for the debts (both prior and subsequent to the formation of the controlling relationship) of the controlled company. This liability will exist for the duration of the controlling relationship.

Thirdly, the controlling company will have an obligation towards the controlled company to compensate this company for the annual losses that it suffers, regardless of the reason why such losses have occurred, provided that such losses have not been compensated during the duration of the controlling relationship. Although this right of the controlled company can only be exercised, as a rule, upon the termination of the controlling relationship, it is also a mechanism that provides a certain level of protection to the controlled company’s shareholders and creditors.

Shareholders are competent to authorise the management to request the insolvency or judicial recovery of the company.

However, shareholders are not entitled to initiate an insolvency proceeding as a company’s creditor, but are entitled to recover their credits which are deemed subordinated in an insolvency scenario.

Under the New Commercial Code, shareholders have no legal remedy allowing them to act directly against the company.

The protection of the shareholders’ interests is mainly achieved via either:

• remedies against directors (please refer to 10.2 Remedies Against the Directors) or members of other company bodies; or
• challenge of shareholders’ resolutions (please refer to 2.11 Challenging a Resolution).

In addition, the law also provides for other mechanisms that allow shareholders to protect their interests, notably:

• attribution of information rights that may be exercised against the company;
• provision of a mechanism for judicial examination of the company; and
• judicial mechanisms for replacing members of the corporate bodies.

The scope of the above-mentioned rights will vary depending on the company type, but, as a rule, those remedies are available to minority shareholders.

Remedies Against the Directors – General Rules

The New Commercial Code sets forth a set of general duties (including duty of care and duty of loyalty) towards the company, as well as an array of specific fiduciary duties towards the company, its shareholders and other significant stakeholders, that must be observed by the directors of companies. Additionally, directors are under a duty to respect the company’s bylaws and the directors’ duties that may be set out therein.

The breach of legal or contractual duties by directors may give rise to:

• removal with cause of the breaching directors;
• compensation claims against the breaching directors in order to compensate for damages resulting from the breach of their duties.

With the exception of the special regime of the Simplified Share companies, any clause that excludes or limits the liability of the directors towards the company for breach of their duties is considered null and void. However, it is possible for the company to waive its right to compensation in virtue of a specific breach of directors’ duties provided that (i) such waiver is decided by a resolution adopted by a vote of the shareholders in a duly convened General Meeting with no more than 5% of the votes against it, and (ii) the damages suffered by the company do not represent a significant depreciation of the company’s assets.

Remedies Against the Directors – Removal of Directors

Regarding the procedure and rules for the removal of directors, please refer to 6.1 Rights to Appoint and Remove Directors.

Remedies Against the Directors – Compensation Claims

As regards compensation claims, the law distinguishes between compensation claims in favour of the company and compensation claims in favour of the shareholders themselves. In fact, and as a general rule, the breach of directors’ duties will cause a direct damage to the company and will only indirectly impact the shareholders, notably via the depreciation of the value of their shares.

As such, the rule is that the right to seek compensation is attributed to the company, and only when a director, acting in such capacity, breaches either shareholders’ rights, or legal provisions aimed at the protection of the shareholders or certain specific legal duties, may the shareholders, regardless of the shareholding, directly seek the directors’ liability in court.

The exercise of the company’s right to seek compensation against the shareholders in court must, as a rule, be decided by a resolution adopted by a majority vote of the shareholders in a duly convened General Meeting. The adoption of such a resolution automatically entails the removal of the director concerned. Finally, the claim must be presented in court by the company within three months of the adoption of the shareholders’ resolution.

In case of inaction from the company, any shareholder holding at least 5% of the company’s share capital is entitled to present the claim in court.

Please refer to 10.2 Remedies Against the Directors.

In Mozambique there are no laws or regulations that govern shareholder activism.

The New Commercial Code enables the introduction into the bylaws of special rights for shareholders and also the liability and accountability of dominant shareholders, which can be used for activism purposes.

There is no track record of shareholder activism in Mozambique.

There is no track record of shareholder activism in Mozambique.

There is no track record of shareholder activism in Mozambique.

There is no track record of shareholder activism in Mozambique.

There is no track record of shareholder activism in Mozambique.

There is no track record of shareholder activism in Mozambique.