The main types of private companies in the Mozambique jurisdiction are respectively:

• a Limitada “Lda” type of company; and
• a Sociedade Anónima or “SA” (public limited company (PLC)) type of company.

In an “Lda” type of company, the share capital is divided into “quotas”.  There is no separate title for a quota. The “quota” holding is evidenced by the document of incorporation of the LDA company/the contract of transfer of company participation duly signed by parties.

In an SA type of company, the share capital is divided into shares and represented by title shares.

The Mozambican jurisdiction also has the following types of public companies as vehicles to develop the business sector of the State.

• A public company – this type of company is defined as an entity exclusively owned by the State (Article 36 of Law No 3/2018 dated 19th June). The public company is created by the Council of Ministers, approves the articles of association, as well as approving the name, which must be comprised of the words “Empresa Pública” or, for short, “E.P.” (Article 37 of the invoked Law).

• A participated company – this type of company is defined in Article 53 of the invoked Law as companies incorporated under the terms of the Commercial Code as either an LDA or an SA, for which the share capital is held by the State, whether it be exclusively held by the State (as the sole shareholder), held by a majority holding by the State (owning more than 50% of the share capital) or a minority holding by the State (owning less than 50% of the share capital).

Under Mozambican law, in general terms there are no restrictions on the nationality of shareholders and no qualification criteria regarding residence and status of the shareholders.

Some determined areas of activity do require local participation. Some investments in areas of activity qualified by the Government as being of public interest also require local participation.

As described in 1.1 Types of Company, only the SA type of companies has shares. The shares can be nominative or bearer (Article 350 of the Commercial Code). In addition, shares can also be ordinary, granting the respective holders full shareholder rights, including the right to vote at general meetings of shareholders and to elect the directors of the company (Article 352 of the Commercial Code) or preferential shares, granting a priority dividend (Article 353 of the Commercial Code) and either granting or suppressing the voting right (Article 354 of the Commercial Code).

Companies are primarily ruled by the Commercial Code of Mozambique, with the legal changes having been introduced in 2009 and 2018.

The Commercial Code is comprised in Decree Law No 1/2005, dated 27 December 2005. The changes were introduced by Decree No 2/2009, dated 24 April 2009 and Decree Law No 1/2018, dated 4 May 2018.

In addition to the Commercial Code, companies are ruled by their respective articles of association.

Shareholders' rights are ruled by both the updated Commercial Code and the articles of association of the company.

The main rights common to all shareholders are defined in Article 104 of the Commercial Code, which identifies the following rights:

• to participate in the profits of the company;
• to participate in general meetings of shareholders;
• to vote in general meetings of shareholders;
• to obtain information on the business activity of the company;
• to be appointed to the bodies of the company (the administration and audit committee, if existing).

Shareholders' rights may vary, as some shareholders may have special rights. Besides the rights inherent to the position of shareholder, shareholders may negotiate special rights, as previewed in Article 105 of the Commercial Code, which comprises examples of special rights as follows:

• the right to elect one or more members to the administration or to take part in the administration;
• the right to preferential profits, according to the percentage held or even in a percentage different from the respective shareholding;
• the right to subscribe but not to pay the capital subscribed, with the other shareholders having to pay the subscribed share capital;
• the right to veto precise and determined company resolutions;
• the right to vote in favour or against the entrance of new shareholders;
• the right to consent specifically to resolutions on a determined subject;
• and other rights specifically provided in the articles of association of the company.

Any shareholder may be granted one or more special rights, irrespective of the amount of capital held (Article 105, No 3 of the Commercial Code).

Special rights of shareholders may only be created by stipulation in the articles of association (Article 105, No 1 of the Commercial Code).

The articles of association are published in the Official Gazette.

The special rights cannot be suppressed, restricted or modified without the consent of the respective holder, to be given in a general meeting of shareholders.

Shareholders' agreements (acordos parassociais) are previewed in Article 98 of the Commercial Code and can be executed between two or more shareholders to adopt a behaviour not prohibited by law.

Shareholders' agreements do not bind the company and as a consequence it is not possible to challenge acts of the company for acts of shareholders based on any violation of an existing shareholders' agreement.

A shareholders' agreement cannot impose a specific behaviour on directors and/or auditors acting in that capacity. Furthermore, shareholders' agreements can not validly dispose:

• on the vote of a shareholder, mandatorily following the instructions of the company or the instructions of one of the bodies of the company;
• on the permanent approval of the proposals made by one of the bodies of the company;
• on voting rights or abstention from voting against a special benefit, namely, the sale of a vote.

In an SA type of company, the shareholders' agreement is defined in Article 411 of the Commercial Code as:

• the purchase and sale of shares and securities convertible into shares launched by the company;
• the exercise of voting rights to fill a position in the company's management;
• the adoption of common and legitimate initiatives aimed at acquiring or maintaining the control of the company; and
• the adoption of the company's investment and profit-distribution policies.

Some rights of shareholders can only be exercised depending on a certain percentage of the share-capital holding, as follows:

• as referred to in 1.12 Shareholders’ Rights to Appoint/Remove/Challenge Directors, if the company itself does not exercise its right to indemnity, shareholders holding a minimum of 10% of the share capital can trigger the indemnity lawsuit (Article 163 of the Commercial Code);
• the articles of association of a company may require the ownership of a minimum percentage, which may not exceed 5% of the share capital, for a shareholder to request in writing, from the administration, written information on the management of the company, including on any particular corporate transaction (Article 122, No 1 al. g) of the Commercial Code).

Article 122 of the Commercial Code defines the rights of shareholders to access a company's documents/information, as follows:

• to consult the resolutions book of the general meeting of shareholders;
• to consult the book of encumbrances, charges and guarantees;
• to consult the book of share register;
• to consult the attendance registers, if any;
• to consult all other documents that, legally or statutorily, must be made available to shareholders prior to general meetings of shareholders;
• to request from the directors, and/or from the auditor(s), any information pertinent to the matters of the agenda of the general meeting of shareholders prior to voting, as long as this is reasonably necessary for the clarification of the exercise of a voting right;
• to request, in writing, from the administration, written information on the management of the company, including on any particular corporate transaction;
• to request a copy of the resolutions or entries in the minute books of the general meeting of shareholders, and in the list of registration of attendants, if any.

In an Lda type of company, any shareholder who is not a director has, apart from the right to information defined in Article 122 of the Commercial Code, also the right to be informed of the state of business and assets of the company, and the directors must allow the shareholder to inspect the company assets and consult the respective bookkeeping, books and documents at the registered office (Article 258, No 1 of the Commercial Code).

In the case of refusal of the requested information, the shareholder may request the court to order for it to be provided, in accordance with Article 122, No 8 of the Commercial Code.

Article 129 of the Commercial Code provides for the issues that are exclusively approved by a general meeting of shareholders, as follows:

• the balance sheet and accounts for the annual financial year;
• the administration report and the opinion of the auditing body;
• the application of the results of the annual financial year, either the distribution of profits or the treatment to be given to losses;
• election and removal of the Chairman and another member of the Table of the general meeting of shareholders, if any, of the administration and of the auditing body;
• the call for and reimbursement of loans of shareholders;
• the call for and refund of supplementary payments of capital;
• the call for and refund of accessory payments;
• the establishment and removal of special rights of shareholders;
• the redemption of quotas and exclusion of shareholders; 
• the increase and reduction of the share capital;
• the merger, demerger, transformation and dissolution of the company;
• amendments to the articles of association; and
• other matters that, by legal or statutory provision, are not included in the competencies of other corporate bodies.

It is also the responsibility of the general meeting of shareholders, unless otherwise provided for in the articles of association:

• to fix the remuneration of the corporate bodies, even granting the power to do so to a committee of which the members of the corporate bodies are not members;
• allocating and encumbering shareholdings;
• appointing the external auditor.

In general terms, shareholders' meetings are called by the Chairman of the General Meeting of Shareholders, ex vis Article 133, No 1 of the Commercial Code.

However, if the Chairman, having the legal duty to call the meeting, does not call it, the shareholder requesting the meeting can call it directly. The calling of the shareholders' meeting must respect the formalities legally defined for the calling notice as previewed in Article 134 of the Commercial Code.

Although the law (dated 2005) does not provide for virtual meetings, since the COVID-19 pandemic, it has become very common to hold virtual shareholders' meetings, in which case the legally required formalities for the minutes of the resolution must be fulfilled (in an Lda type of company, the signatures of all shareholders present are required, according to Article 317, No 5 of the Commercial Code; in an SA type of company, the signatures of the Chairman and of the Secretary are required, according to Article 147, No 2, g), of the Commercial Code). 

Mozambican law does not provide directly for electronic voting. Thus, this method of expressing a vote is either ruled in the articles of association of the company or, in the case of an omission of the rule as described, it falls under the possible jurisdiction of the general meeting of shareholders.

The agenda of the general meeting of shareholders is one of the mandatory requirements of the notice calling the general meeting of shareholders. The change of the agenda requires the consent of all shareholders and the concrete issues to be added require the approval of all the shareholders.

As referred to in 1.4 Main Shareholders’ Rights, shareholders have the right to be appointed as members of the administration body of the company.

As referred to in 1.8 Shareholder Approval, the appointment of members of the bodies of companies is made exclusively at the general meeting of shareholders. At the general meeting of shareholders, any shareholders can suggest and propose a name, as a member of administration. The appointment of the concrete name proposed will depend, however, on the voting of the shareholders present at the general meeting.

The quorum, whether constitutive or deliberative, is in general fixed in the concrete articles of association. For exceptions relating to changes in the articles of association, mergers, demergers, transformations, dissolution and other matters requiring a qualified majority to be resolved, one third of the share capital must be present (Article 136, No 2 of the Commercial Code).

Shareholders also have rights/powers to propose and require the removal of one or more members of the administration body of a company, even if the respective mandate period is still ongoing. Any such removal must, however, be by reason of the acts of the member to be removed that may configure a just cause for removal, otherwise the company may have to indemnify the member of the administration being removed (in an Lda type of company, by provision of Article 326 of the Commercial Code, and in an SA type of company, by provision of Article 430 of the Commercial Code). 

The members of the administration body of companies are jointly liable to the company for the damages caused by all acts or omissions carried that are not an execution of a resolution of the general meeting of shareholders (Article 160 of the Commercial Code). If the company itself does not exercise its right to indemnity, shareholders holding a minimum of 10% of the share capital can trigger the indemnity lawsuit (Article 163 of the Commercial Code).

As referred to in 1.8 Shareholder Approval, the appointment and removal of members of the bodies of companies – the internal audit committee being one of the bodies - is exclusively made at a general meeting of shareholders.

Mozambican law does not provide directly in relation to external auditors of the company. Thus, the appointment of an auditor is either ruled by the articles of association of the company under the jurisdiction of the administration body of the company or, in the case of omission of the rule as described, it falls under the residual jurisdiction of the general meeting of shareholders (Article 129, No 1 m) of the Commercial Code).

Nothing in Mozambican law provides directly that a shareholder is required to disclose its interests in the company.

However, shareholders with a conflict of interest are prohibited from voting (Article 131 of the Commercial Code).

Mozambican law does not provide directly in relation to the granting of security over shares of shareholders. All of the assets of a shareholder, including shares, are assets of the shareholder and not assets of the company itself.

Any eventual requirement for granting security over shares is contained in provisions of the articles of association of the company or, in the case of omission, is not subject to a specific requirement.

As for disposal of shares, there are legal or regulatory requirements/restrictions. In fact, in the Lda type of company, there is a legal option right in favour of the company and subsequently in favour of the shareholders (Article 298 of the Commercial Code); in the SA type of company, any eventual requirement for disposal of shares is either contained in the rules of the articles of association of the company or it is not subject to any specific restriction, in the case of omission in the articles of association.

The contractual rules are based on freedom of disposition. Thus, requirements or restrictions can be created by way of agreement between the buyer and the seller (and not necessarily the company and its shareholders) and that agreement is enforceable between the signing parties.

If a company is judicially declared insolvent, the application is to be made by any creditor or by the administration of the company itself, and the shareholders' loans granted are classified as subordinated credits (and respective shareholders' credit over the company).

However, the credits' classification as determined by Article 77 of the Insolvency Law (Decree No 1/2013, dated 4 July 2013) classifies the subordinated credits as the last credits listed.

Shareholders' credits are subordinated credits, since those credits cannot be reimbursed before all debts of the company are paid (Article 119 C, No 3 a) of the Commercial Code). Furthermore, it should be noted that the credit's priority as listed in Article 77 of the Insolvency Law (in the aforementioned Decree) determines that each priority credit (and respective creditor) is paid in full before the next priority credit (and creditor) is paid.

Mozambican law does not provide directly in relation to shareholder activism.

Mozambican law does not prohibit free participation, including speaking, at a general meeting of shareholders, even in the case of restrictions on voting. Mozambican culture listens to anyone who has something to say.

There is a growing activism on environmental matters and on social matters, most probably due to the increase of awareness of the importance of the environment and due to the impact of the pandemic on the economy and subsequent impact on the social fabric.

General meetings of shareholders are not public events, so it is difficult to give examples of shareholder activism.

As stated in 2.2 Level of Shareholder Activism, general meetings of shareholders are not public events, so it is difficult to assess the prevalence of shareholder activism or whether levels of shareholder activism have increased or decreased.

It is assumed that the usual environmental industry sectors, such as mining and oil and gas, will begin to be targeted by social activism. For the time being, in general, Mozambique does not have any particular industries/sectors that are affected, since the shareholding is still closed and known and has not yet spread through the Stock Exchange.

It is becoming very common that groups challenge the resettlement of populations carried out in relation to new mining investments.

Meetings in public and private institutions are authorised for a maximum of 15 and 30 people in closed and open spaces, respectively, not exceeding 20% of the venue capacity, in strict observance of the prevention measures of the COVID-19 pandemic (Article 19 of Decree No 50/2021 of July 16th that reviews measures to contain the spread of the COVID-19 pandemic for the duration of the situation of public calamity).

The company may choose to negotiate or resort to litigation if the activist shareholder is prioritising its individual interests over the interests of the company.

Mozambique recognises that a company has a separate legal personality and respective assets totally distinct from its shareholder.

In Lda types of companies, this is covered by Articles 283 and 286, both of the Commercial Code, and in SA types of companies, it is covered by Article 331 of the Commercial Code. 

Mozambican law provides the right of shareholders to challenge resolutions of general meetings of shareholders (Article 144 of the Commercial Code). 

The rights of the aforementioned shareholders depend only on the capacity of being a shareholder.

Mozambican law also provides for the liability of members of the administration body of the company to shareholders (Article 165 of the Commercial Code).

The rights of the aforementioned shareholders depend only on the capacity of being a shareholder.

Mozambican law does not provide for any legal remedies by one shareholder against another shareholder, other than that referred to in 1.8 Shareholder Approval  (the redemption of quota and the exclusion of a shareholder).

Mozambican law reiterates the aforementioned rights applicable to the members of the Audit Committee of the company (Article 166 of Commercial Code).

The rights of the aforementioned shareholders depend only on the capacity of being a shareholder.

As described in 1.12 Shareholders’ Rights to Appoint/Remove/Challenge Directors, shareholders holding a minimum of 10% of the share capital can trigger, on behalf of the company, the lawsuit for liability and inherent indemnity of the members of the administration body of the company (Article 163 of the Commercial Code).

The limitation/prescription period is an extremely relevant factor.

For a shareholder to apply for nullity or annulment of resolutions of a general meeting of shareholders, the limitation period is five years from the date of registration of the company resolution (Article 142, No 2 of the Commercial Code).

A five-year limitation/prescription period also applies to the rights of shareholders against the company, against members of the company bodies and against other shareholders.