Notice No. 7/GBM/2018 of September 19 – Complementary Rules and Procedures for the Special Exchange Regime for Oil and Gas Operations

BOLETIM DA REPÚBLICA PUBLIC OFFICIAL OF THE REPUBLIC OF MOZAMBIQUE SUMMARY Bank of Mozambique: Notice No. 7/GBM/2018: Regarding the complementary rules and procedures for the special exchange regime for oil and gas operations. Wednesday, 19 September 2018 I SERIES — Number 184

BANK OF MOZAMBIQUE NOTICE NO. 7/GBM/2018 of 19 September

Following the establishment, in accordance with Section I of Chapter VI of Notice No. 20/GBM/2017 of 27 December, of a special exchange regime for oil and gas operations, aimed at providing adequate treatment to the specificities of these operations and the volume of investment in this sector, it is necessary to establish complementary rules and procedures for implementing the provisions of said regime, particularly regarding the financing of operations by concessionaires and special purpose entities, and their financing to related non-resident companies.

The Bank of Mozambique, exercising the competence conferred upon it by Article 5 of Decree No. 49/2017 of 11 September, determines:

Article 1 (Subject Matter) This Notice establishes the complementary rules and procedures to be observed in carrying out exchange operations related to financing the activities of concessionaires and special purpose entities, as well as financing related non-resident companies, including through the cash pooling mechanism.

Article 2 (Scope) The provisions of this Notice apply solely to exchange operations carried out by concessionaires and special purpose entities.

NOTICE The matter to be published in the "Boletim da República" must be submitted as a duly authenticated copy, one per subject matter, which shall include, in addition to the necessary indications for this purpose, the following endorsement, signed and authenticated: For publication in the "Boletim da República". NATIONAL PRESS OF MOZAMBIQUE, E.P.

Article 3 (Financing of Operations)

1. The borrowing of external credit by the entities referred to in the preceding article, in accordance with paragraph 1 of Article 116 of Notice No. 20/GBM/2017 of 27 December, which establishes rules and procedures to be observed in carrying out exchange operations, requires prior authorization from the Bank of Mozambique.
2. The authorization request is submitted to the Bank of Mozambique, accompanied by the annual financing plan, which must contain, among others, the following information: a) Identification of the parties; b) Currency and amount; c) Interest rate and its respective margin; d) Amortization schedule.
3. For reference assignment purposes, the borrower must submit the financing contract to the Bank of Mozambique.
4. The registration of fund disbursements related to the credit contracted under paragraph 1 is carried out with the intermediary bank.
5. When disbursement is made through direct payment to a foreign supplier of equipment, machinery, and specialized services from an overseas bank account, the registration is carried out with the Bank of Mozambique, based on certification by a licensed auditor operating in Mozambique.

Article 4 (Financing to Related Non-Resident Companies)

1. Financing operations for related non-resident companies, including through the cash pooling mechanism, assume the nature of credit.
2. The requesting entity must submit to the Bank of Mozambique, by 30 November, the financing plan for related companies for the following year, accompanied at minimum by the following documents and information: a) Forecast of revenues and expenses for the year to which the plan relates; b) Resolution by the competent corporate body of the requesting entity approving the annual financing plan; c) Contracts from the previous year, containing the terms and conditions under which funds were made available abroad; d) Projected value of credits to be granted through the cash pooling mechanism for the following year; e) Report on the execution of the annual financing plan to related non-resident companies for the previous year; f) Tax clearance certificate regarding the previous year's income confirming compliance with tax obligations.
3. The commencement of the use of the cash pooling mechanism by concessionaires and special purpose entities presupposes approval by the Bank of Mozambique of the contract model, which must be submitted in accordance with the preceding paragraph, except for the documents referred to in letters c), e) and f).
4. For reference assignment purposes, the lender must submit the financing contract to the Bank of Mozambique.
5. The registration of fund disbursements related to credit extended to the related non-resident company is carried out with the intermediary bank.
6. The entities covered by this Notice must make payments in accordance with Article 111 of Notice No. 20/GBM/2017 of 27 December, which establishes rules and procedures to be observed in carrying out exchange operations.
7. Entities covered by this Notice are not permitted to keep abroad funds necessary for the following purposes: a) Payment of goods and services supplied by resident and non-resident entities; b) Other obligations not covered by letter b) of paragraph 1 of Article 115 of Notice No. 20/GBM/2017 of 27 December, which establishes rules and procedures to be observed in carrying out exchange operations.
8. Within the scope of the preceding paragraph, the requesting entity must send quarterly statements directly to the Bank of Mozambique.
9. Income resulting from financing granted to related companies is subject to declaration and repatriation obligations.
10. Recurrent violations of exchange rules and procedures may result in suspension, for a minimum period of six months and maximum of one year, of the use of the annual financing plan system for related non-resident companies.

2314 I SERIES — NUMBER 184 Price — 10.00 MT NATIONAL PRESS OF MOZAMBIQUE, E.P.

Article 5 (Foreign Direct Investment in Mozambique)

1. Foreign direct investment in Mozambique is authorized, subject only to registration with the intermediary bank.
2. The exchange registration of foreign direct investment income transfers, in the form of distributed profits or dividends, is carried out upon presentation by the interested party to the intermediary bank of the following elements: a) Identification documents of the parties; b) Proof of registration of foreign direct investment; c) Declaration issued by an independent auditor confirming that the profits result from the relevant financial year or years and arise from operations related to the company's activities; d) Proof of consent by the competent corporate body or, in case of dividend transfers, minutes of the general assembly approving the distribution; e) Proof of compliance with tax obligations related to the transaction.
3. In cases where the auditor's declaration cannot be presented, the audited entity undertakes to submit it within 90 (ninety) days from the closing of the financial year.
4. The transfer of interim or final profits and dividends is made from the national banking system, including from the specific account.

Article 6 (Payment of Goods and Services from Overseas Bank Accounts) Without prejudice to the provisions of item iii) of letter b) of paragraph 1 of Article 115 of Notice No. 20/GBM/2017 of 27 December, which establishes rules and procedures to be observed in carrying out exchange operations, when the payment beneficiary is a resident entity, these payments are made in national currency.

Article 7 (Sanctions Regime) Violation of the provisions set forth in this Notice is punishable in accordance with Articles 10 and following of Law No. 11/2009 of 11 March, which approves the Exchange Law.

Article 8 Doubts arising from the interpretation of this Notice must be submitted to the Licensing and Exchange Control Department of the Bank of Mozambique.

Article 9 This Notice enters into force on the date of its publication.

Bank of Mozambique, in Maputo, 12 September 2018 – The Governor, Rogério Lucas Zandamela.