Friday, 24 July 2009 | FIRST SERIES — Number 29

GAZETTE OF THE REPUBLIC

OFFICIAL PUBLICATION OF THE REPUBLIC OF MOZAMBIQUE

2ND SUPPLEMENT

NATIONAL PRESS OF MOZAMBIQUE
NOTICE
The material to be published in the "Gazette of the Republic" must be submitted in duly authenticated copy, one per subject, which must include, in addition to the necessary indications for this purpose, the following endorsement, signed and authenticated: For publication in the "Gazette of the Republic".

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TABLE OF CONTENTS

Council of Ministers:

Decree-Law No. 4/2009:
Approves the Securities Market Code.

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COUNCIL OF MINISTERS

Decree-Law No. 4/2009
of 24 July

Given the need to update and modernize legislation on the securities market, under the provisions of paragraph d) of paragraph 1 of Article 204 of the Constitution of the Republic and Article 1 of Law No. 10/2008 of 25 November, the Council of Ministers determines:

Article 1. The Securities Market Code, attached to this Decree-Law and forming an integral part thereof, is hereby approved.

Article 2. The Securities Market Regulations approved by Decree No. 48/98 of 22 September, Decree No. 34/2000 of 17 October, and any other legislation contrary to the provisions of the Securities Market Code are hereby repealed.

Article 3. This Decree-Law shall enter into force 30 days after its publication.

Approved by the Council of Ministers on 2 June 2009.

Publish.

The President of the Republic, ARMANDO EMÍLIO GUEBUZA.

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Securities Market Code

TITLE I
Subject matter, scope and general objectives

CHAPTER I
General provisions

ARTICLE 1
(Subject matter)

This Code aims to establish the fundamental principles and provisions governing the organization and operation of securities markets, as well as the transactions conducted therein and the activities carried out by all agents participating in these markets.

ARTICLE 2
(Scope)

1. The provisions of this Code apply to all securities issued, traded, or commercialized within national territory.

2. The following are exempt from the preceding paragraph:

a) Monetary securities, unless the legislation governing them provides otherwise; b) Other securities to which the applicability of this Code is expressly excluded, in whole or in part, by special legislation governing them.

3. Monetary securities are considered to be those issued by the Bank of Mozambique or the Mozambican State, whose issuance conditions stipulate their redemption within a maximum period of one year after the end of the subscription period.

ARTICLE 3
(Definitions)

1. For the purposes of this Code, the following are considered:

a) Competent authorities — persons and entities, public or private, entrusted by this Code or special legislation with competences for the organization and operation of securities markets or the control of activities developed therein, as well as their regulation and supervision of compliance with applicable legal and regulatory provisions; b) Firm commitment contract — commitment to purchase, in whole or in part, an issuance of securities by an issuing entity by one or a group of financial institutions, which thereby assume partial or total responsibility for the issuance vis-à-vis the issuer, for subsequent commercialization in the market; c) Issuing entities — companies and other entities, public or private, that issue securities; d) Financial intermediaries — legal entities, public or private, legally authorized to professionally exercise some activity of financial intermediation in securities markets; e) Investors — natural or legal persons, and other entities, public or private, who, themselves or through financial intermediaries or other authorized entities, temporarily or permanently invest the financial means they hold in securities; f) Primary market — the securities market through which issuing entities carry out the issuance of these securities and their distribution to investors; g) Secondary market — the set of organized securities markets established to ensure the purchase and sale of these securities after they have been distributed to investors through the primary market; h) Securities markets — the set of organized or controlled markets where these securities are traded; i) Stock exchange operators — all financial intermediaries legally authorized to carry out stock exchange transactions; j) Prospectus — document containing the necessary information for investors (or participants) to form a well-founded judgment on the proposed investment; k) Underwriting syndicate — set of financial institutions that acquire a specific issuance of securities for subsequent resale in the market, sharing the issuance risk among themselves; l) Public subscription companies — companies whose capital is wholly or partially dispersed among the public, due to having been constituted with a call for public subscription, having resorted to public subscription in a capital increase, or having had or having had their shares admitted to trading on a stock exchange or having been subject to a public offer for sale or exchange; m) Securities — shares, bonds, government funds, units of participation in investment funds, and any other securities, regardless of their nature or form of representation, even if merely book-entry, legally issued by any entities, public or private, in homogeneous sets that confer identical rights to their holders, and which are legally susceptible to trading on an organized market.

2. Rights with legal and economic content detachable from these securities are equated to securities, provided they are susceptible to independent trading on the secondary market.

3. The professional activities covered by the definition in paragraph 1(e) include not only transactions carried out by financial intermediaries on behalf or in the name of third parties, but also those they are legally or statutorily authorized or required to carry out on their own account, within the scope of their functions in the securities market.

4. The general definitions in paragraph 1 of this article are complemented by the definition and characterization of other realities or figures in the appropriate places of this Code or in complementary regulation.

CHAPTER II
Supervision of the securities market

ARTICLE 4
(Supervision)

1. Except where exceptionally and expressly reserved to the Minister overseeing the Finance portfolio, supervision, regulation, and promotion of the Securities Market shall be the responsibility of the Bank of Mozambique.

2. In addition to other matters legally assigned to it, the Bank of Mozambique shall in particular:

a) Monitor the evolution of securities markets; b) Monitor and, whenever deemed necessary, supervise or inspect the activity of the stock exchange, stock exchange operators, and financial intermediaries in general, as well as issuing entities and investors within the framework of their intervention in the securities market; c) Verify compliance with public information obligations incumbent on securities issuing entities, and with information obligations incumbent on investors or other entities legally required to provide information; d) Determine the official admission to quotation of securities; e) Register public subscription offers and public offers for sale or exchange of securities; f) Authorize or prohibit the carrying out of public acquisition offers; g) Carry out all necessary steps to establish liabilities and initiate disciplinary proceedings within its competence, as well as report to competent judicial authorities any irregularities capable of constituting criminal offenses in the operation of the securities market; h) Apply the fines referred to in this Code and complementary legislation; i) Exercise other competences assigned by legislation or regulation applicable to the securities market, as well as those necessary for the effective performance of its functions.

3. The Bank of Mozambique shall, within the framework of its organizational competences and those specifically attributed by this instrument, exercise regulatory activity, notably by issuing regulations that contribute to the security, efficiency, competitiveness, modernization, and development of the securities market.

CHAPTER III
Financial intermediaries

ARTICLE 5
(General duties)

1. In carrying out any transactions and providing other securities intermediation services for which they are responsible, financial intermediaries shall serve their clients with the utmost diligence, loyalty, neutrality, and discretion, and with absolute respect for their interests, and shall in particular:

a) Execute transactions under the best market conditions possible, without prejudice to the strict observance of instructions received from the client; b) Fulfill orders received from clients for the purchase or sale of securities with the greatest speed, or, if the order is discretionary regarding its execution timing, at the time they deem most appropriate for the purposes of the preceding paragraph; c) Refrain from carrying out and inciting clients to carry out repeated purchase and sale transactions of securities when these transactions are unjustified and have as their sole or main purpose the collection of corresponding commissions or any other objective unrelated to the client's interests; d) Refrain from allocating to themselves any securities when they have clients who have requested them at the same or higher price; e) Refrain from selling securities they hold instead of identical securities whose sale has been ordered by their clients at an equal or lower price.

2. Financial intermediaries have a duty to reinforce investor confidence in the securities market, conducting themselves with the highest commercial probity, strictly observing both applicable legal and regulatory provisions for the intermediation activities they exercise and the professional ethics standards to which they are subject, and refraining from participating in or engaging in any transactions or actions that could jeopardize the regular operation, transparency, and credibility of the market.

3. In fulfilling the foregoing, financial intermediaries must take into account, on the one hand, the level of knowledge, experience, and professionalism of clients in the securities market, and on the other hand, their financial situation and the potential impact on it, depending on the risk level of the ordered transactions or services to be provided.

4. Financial intermediaries who become aware of any maneuvers tending to manipulate supply, demand, or prices in securities markets, practices constituting insider abuse, acts through which a financial intermediary illicitly exploits a dominant market position, or any other serious irregularities contrary to the ethical content of this provision, must take appropriate and available measures to thwart them, immediately informing the Bank of Mozambique and, in the case of stock exchange transactions, the stock exchange.

ARTICLE 6
(Professional secrecy)

1. Financial intermediaries, members of their governing bodies, as well as their employees, agents, delegates, and any other persons providing them services on a permanent or occasional basis, are subject to professional secrecy regarding all matters concerning transactions carried out and services provided to their clients, as well as regarding any facts or information relating to the same clients or third parties whose knowledge arises from the exercise of the aforementioned activities.

2. The duty established in the preceding paragraph ceases when:

a) The intermediary or persons indicated in paragraph 1 of this article must provide information or supply other elements to the Bank of Mozambique, the stock exchange, or the judicial authority, within their respective competences and in cases and terms expressly provided for in this Code or special legislation governing them; b) Any legal provision excludes this duty; c) The disclosure of the information or provision of the elements in question has been authorized in writing by the person or persons to whom it relates, if applicable, provided it does not interfere with any other public or private interest beyond that of said person or persons.

3. Violation of the duty of professional secrecy is punishable under the law.

CHAPTER IV
Securities

SECTION I
General provisions

ARTICLE 7
(Forms of representation)

1. Shares, bonds, government funds, units of participation in investment funds, and other securities issued, traded, or commercialized within national territory may be represented by certificates, in which case they are called certificated securities, or may take a purely book-entry form, in which case they are called book-entry securities.

2. The bylaws of issuing companies must establish which of the forms of representation provided for in the preceding paragraph shall apply to each type of securities they issue.

ARTICLE 8
(Bearer and registered securities)

1. Certificated securities shall be represented by bearer or registered certificates, convertible into one another or not, as established in applicable legal provisions, the bylaws governing the issuing entity, or, if such legislation or provisions permit, in the conditions fixed for each issuance.

... [The document continues with Articles 9 to 157, covering Titles II to V, including rules on the primary and secondary markets, public offers, offenses, and sanctions.]

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Price — 14.00 MT
NATIONAL PRESS OF MOZAMBIQUE

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