Decree No. 50/2024, of July 11 - Approves the Regulation of the Law on Credit Institutions and Financial Companies

SUMMARY
NOTICE
The matter to be published in the "Boletim da República" must be submitted as a duly authenticated copy, one for each subject matter, containing the necessary indications for that purpose, along with the following endorsement, signed and authenticated: For publication in the "Boletim da República". NATIONAL PRESS OF MOZAMBIQUE, S.P. Council of Ministers:
Decree No. 50/2024:
Approves the Regulation of the Law on Credit Institutions and Financial Companies and repeals Decree No. 56/2004, of December 10, Decree No. 57/2004, of December 10, Decree No. 31/2006, of August 30, Decree No. 30/2014, of June 5, and Decree No. 99/2019, of December 31. Thursday, July 11, 2024 | SERIES I — NUMBER 134 COUNCIL OF MINISTERS Decree No. 50/2024 of July 11 Given the need to regulate Law No. 20/2020, of December 31, the Law on Credit Institutions and Financial Companies, and exercising the competence conferred by paragraph 1 of Article 230 of Law No. 20/2020, of December 31, the Council of Ministers decrees:
Article 1. The Regulation of the Law on Credit Institutions and Financial Companies, attached hereto, is approved, forming an integral part of this Decree.
Article 2. Decree No. 56/2004, of December 10, Decree No. 57/2004, of December 10, Decree No. 31/2006, of August 30, Decree No. 30/2014, of June 5, and Decree No. 99/2019, of December 31 are hereby repealed, as well as any regulation that contradicts this Decree.
Approved by the Council of Ministers on May 28, 2024.
Let it be published.
The Prime Minister, Adriano Afonso Maleiane.

Regulation of the Law on Credit Institutions and Financial Companies
CHAPTER I
General Provisions
Article 1
Object

1. This Regulation establishes the procedures and rules applicable to credit institutions, financial companies, and microfinance operators in general, and defines the specific legal regimes for each of them.
2. This Regulation also establishes the legal regimes for financial leasing contracts and factoring contracts.
   Article 2
   Applicable Legislation
   Without prejudice to their respective specific legal regimes, credit institutions, financial companies, and microfinance operators are governed by the Law on Credit Institutions and Financial Companies, the provisions of this Regulation, and other applicable legal norms.
   Article 3
   Definitions
   The definitions of the terms used are contained in Annex I to this Regulation, which forms an integral part thereof.

CHAPTER II
Processing of Various Authorization Requests
SECTION I
Authorizations
Subsection I
Processing of authorization requests for the establishment of credit institutions and financial companies
Article 4
Prior Deposit

1. In processing the request for the establishment of a credit institution or financial company, applicants must make an unavailable prior deposit at the Bank of Mozambique corresponding to 5% of the share capital, and the respective proof must be attached to the file.
2. The prior deposit referred to in the preceding paragraph may be replaced by a bank guarantee accepted by the Bank of Mozambique.
3. When made by bank transfer, the prior deposit must originate from the bank accounts of the founding shareholders or partners.
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4. In case of refusal, the Bank of Mozambique refunds the deposited amount to the applicants or releases the provided guarantee.
5. If the request is authorized, the prior deposit amount will be made available to the applicants after the establishment of the credit institution or financial company, and may, however, be considered for the purpose of realizing its share capital.
6. The prior deposit referred to in the preceding paragraphs reverts to the State when the following situations occur:
   a) authorization expires due to failure to observe the deadline set for establishing the credit institution or financial company; and b) before establishment, authorization is revoked due to the fact provided for in paragraph 1(a) of Article 23 of the Law on Credit Institutions and Financial Companies.
   Article 5
   Request Formalities
7. Authorization requests for the establishment of credit institutions and financial companies are processed in duplicate.
8. All documents intended to support the request, when drafted in a foreign language, must be accompanied by their official translation into Portuguese.
   Article 6
   Appointment of a Representative
   Applicants must designate an individual or legal entity, granting them full powers to represent them before the entities responsible for evaluating the request; such person must have, for notification and correspondence purposes, at least one domicile in Mozambique.

Subsection II
Processing of the authorization procedure
Article 7
Evaluation by the Bank of Mozambique
In case of deficient processing of the request, resulting in missing necessary elements, the Bank of Mozambique notifies the applicants, granting them a reasonable deadline to remedy the deficiency, consequently suspending the counting of the period referred to in paragraph 1 of Article 19 of the Law on Credit Institutions and Financial Companies.
Article 8
Fees

1. The licensing of credit institutions and financial companies is subject to the payment of licensing fees and annual fees, as fixed in Annex II to this Regulation, which forms an integral part thereof.
2. The licensing fee must be paid within sixty days from the date of authorization of the request.
3. The annual fees must be paid by March 31 of the year to which they relate.
4. The fee amounts constitute revenue for the Bank of Mozambique.
5. The fee values are updated by a Diploma from the Minister overseeing the Finance sector.
   Article 9
   Cash Recirculation Activity
6. The exercise of cash recirculation activity depends on specific prior approval by the Bank of Mozambique, which is responsible for supervising and regulating said activity.
7. Credit institutions, financial companies, and other entities that operate or intervene professionally in cash recirculation activity, directly or indirectly, must follow the procedures defined by the Bank of Mozambique, including adaptation deadlines for institutions already in operation.
8. The Bank of Mozambique is responsible for establishing and defining the requirements necessary for other entities referred to in paragraph 2 of this article to access cash recirculation activity.

Subsection III
Statutory alterations
Article 10
Alterations subject to authorization

1. The following alterations to the statutes of credit institutions and financial companies are subject to authorization, in accordance with Article 38 of the Law on Credit Institutions and Financial Companies:
   a) firm or name; b) object/purpose; c) seat location; d) share capital, when involving a reduction, except for credit cooperatives; e) creation of share categories or alteration of existing ones; f) administration and supervision structure; and g) limitation of the powers of governing bodies.
2. Alteration requests are submitted to the Bank of Mozambique, accompanied by a draft containing the statutory provisions intended for alteration.
3. The decision must be taken within sixty days from the date of receipt of the request.
4. Alterations to the object that imply the transformation of a credit institution or financial company are equated, regarding authorization, to the merger and spin-off regime.
   Article 11
   Merger, Spin-off, and Transformation
   The regime defined in Articles 16 to 21 of the Law on Credit Institutions and Financial Companies applies, with necessary adaptations, to requests for authorization regarding merger, spin-off, and transformation.

Subsection IV
Opening, relocation, and closing of branches
Article 12
Authorization request

1. The opening, relocation, and closing of branches by credit institutions and financial companies require authorization from the Bank of Mozambique.
2. For the purpose of the aforementioned authorization, the definition of a branch in the Glossary of the Law on Credit Institutions and Financial Companies must be considered; locations where operations are conducted solely through automated means are not considered branches.
3. Requests must be accompanied by a declaration attesting that the institution complies with all applicable prudential rules, or, if not, indicating existing non-compliance situations.
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4. The Bank of Mozambique may establish by Notice:
   a) the rules, conditions, and criteria, including geographical proportionality, for the expansion of branches by credit institutions and financial companies, as well as eligible locations; and b) the terms and conditions under which credit institutions and financial companies may extend their activity through other forms of representation, including the hiring of agents.
5. Authorization requests for the permanent closing or temporary closing (exceeding 21 days) of branches by credit institutions and financial companies must be processed with the following elements:
   a) reason for branch closing, duly justified, including financial aspects; b) information on the existence or not of other bank branches in the location where closing is intended, mentioning the respective distance; and c) detailed information on how depositors and other clients of the relevant branch will be treated.
6. Temporary closing of branches by credit institutions and financial companies, for periods under 21 days, must be previously communicated to the Bank of Mozambique.
7. The provisions in the preceding paragraphs do not apply to branch closures affected by force majeure cases, and credit institutions and financial companies must communicate such fact to the Bank of Mozambique within a maximum period of 48 hours.
8. For the purpose of the preceding paragraph, force majeure is considered to be human or natural events that, although foreseeable, cannot be prevented, namely natural phenomena, wars, and insurrections.
   Article 13
   Requirements for authorization
9. In evaluating branch opening authorization requests, the following must be considered:
   a) the applicant's capacity and solvency; and b) the number and nature of credit institutions and financial companies already established in the location.
10. Conditions for opening branches by credit institutions and financial companies are:
    a) the institution's own funds must be adequate to guarantee operations conducted by the branch; b) the institution, upon creating the branch, must continue to comply with all applicable prudential rules, namely solvency and immobilization ratios; and c) branch opening must comply with what is established by the Bank of Mozambique in light of paragraph 4(a) of Article 12 of this Regulation.
11. In evaluating branch closing and relocation requests by credit institutions and financial companies, the following must be considered:
    a) guarantee of continuity of financial services in the location where the branch is located; b) adequate treatment for depositors of the relevant branch.
    Article 14
    Inspection
12. Branches of credit institutions and financial companies may only be opened to the public after the Bank of Mozambique conducts an inspection and concludes that adequate conditions exist for this purpose.
13. For the purpose of the preceding paragraph, the Bank of Mozambique considers the technical opinion from competent entities or authorities regarding the adequacy of physical, technological security conditions, as well as fire prevention and other loss prevention.
    Article 15
    Complementary Information
    The Bank of Mozambique may request complementary information from credit institutions and financial companies and carry out investigations it deems necessary for evaluating branch opening, relocation, or closing requests.

SECTION II
Registration
SUBSECTION I
Elements subject to registration
Article 16
Registration request
The registration referred to in Article 35 of the Law on Credit Institutions and Financial Companies must be requested from the Governor of the Bank of Mozambique, accompanied by all elements supporting the facts to be registered.
Article 17
Registration of credit institutions and financial companies with headquarters in Mozambique The registration of credit institutions and financial companies with headquarters in Mozambique covers the following elements:
a) firm or name; b) object/purpose; c) date of authorization for establishment; d) date of establishment; e) date of authorization for transformation; f) date of transformation; g) date of authorization for merger or spin-off; h) date of spin-off or merger; i) location of registered office; j) subscribed capital; k) paid-up capital; l) identification of shareholders or partners holding qualified participations; m) identification of members of governing bodies, and other equivalent positions, as legally established; n) delegation of management powers; o) date of commencement of activity; p) location and date of creation of subsidiaries, branches, and agencies, and their closing, if applicable; q) identification of managers of foreign-established subsidiaries; r) paracorporate agreements; and s) alterations occurring in the elements referred to in the preceding subparagraphs.

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Article 18
Registration of credit institutions and financial companies with headquarters abroad The registration of credit institutions and financial companies authorized in a foreign country that have a subsidiary or representation office in Mozambique covers the following elements:
a) firm or name; b) date of authorization for their establishment in Mozambique; c) date from which they were established in the country; d) location of registered office; e) location of subsidiaries, branches, and representation offices in Mozambique; f) capital allocated to operations conducted in Mozambique, when required; g) operations the institution may conduct in its home country and operations it is authorized to exercise in Mozambique; h) identification of managers of subsidiaries or representation offices; and i) alterations occurring in the elements referred to in the preceding subparagraphs.

SUBSECTION II
Identification of members of governing bodies
Article 19
Registration of members of governing bodies

1. The registration of members of governing bodies or other equivalent positions in credit institutions and financial companies must be requested by the institution, attaching the informational elements fixed by the Bank of Mozambique.
2. To prevent the appointment or hiring of individuals who do not meet legally established requirements, the aforementioned request must be submitted prior to actual appointment or hiring by the General Assembly or competent body.
3. When not refused, registration performed according to paragraph 1 is considered provisional until communication by the institution or interested party confirming the appointment and/or hiring.
4. In case of reappointment, an endorsement is made in the registry upon request by the institution.
5. Lack of integrity, professional qualification, independence, or availability of governing body members constitute grounds for registration refusal.
6. Registration refusal based on the preceding paragraph is communicated to interested parties and the credit institution or financial company, which takes adequate measures to ensure they cease functions immediately.
7. Registration refusal applies only to persons who have not been recognized with the aforementioned qualities, unless such circumstance affects the majority of members of the relevant body or if legal or statutory requirements for normal functioning are otherwise unmet, in which case the Bank of Mozambique sets a deadline to alter its composition.
8. Lack of registration does not determine the invalidity of acts performed by the concerned person in the exercise of their functions.
9. The provisions in the preceding paragraphs apply, with necessary adaptations, to managers of subsidiaries and representation offices of credit institutions and financial companies with headquarters abroad.
   Article 20
   Availability
10. The provisions of paragraph 1 of Article 31 of the Law on Credit Institutions and Financial Companies do not prevent, considering concrete case circumstances, specific position requirements, and the nature, scale, and complexity of a credit institution or financial company's activity, the Bank of Mozambique from authorizing the accumulation of functions in credit institutions or financial companies with headquarters abroad.
11. Authorization is granted if the Bank of Mozambique determines that accumulation does not prejudice the exercise of functions already performed by the interested party, namely due to no serious risk of conflicts of interest or lack of availability for exercising the position in Mozambique.
12. The authorization provided in paragraph 1 of this article does not prejudice compliance with Article 31, paragraph 5 of the Law on Credit Institutions and Financial Companies.

SUBSECTION III
Cancellation and deadlines
Article 21
Registration cancellation

1. Registration is cancelled when it is found to have been obtained through false declarations or other unlawful means, without prejudice to applicable sanctions.
2. The provisions of paragraphs 6 to 9 of Article 19 of this Regulation apply to the cancellation of registration of governing body members.
   Article 22
   Deadlines, complementary information, and certificates
3. The deadline to request any registration is sixty days from the date on which the facts to be registered occurred.
4. The aforementioned deadline does not apply to the registration of subscribed and paid-up capital by credit cooperatives, which request their respective registration within forty-five days after the close of the economic year to which increases or reductions relate.
5. The deadline for registering credit institutions and financial companies begins from the date of their definitive establishment or, for entities with headquarters abroad, from the date of obtaining authorization for their establishment in Mozambique.
6. Certificates are issued from the registry to the respective applicant and other persons demonstrating legitimate interest.

SECTION III
Qualified participations
Article 23
Qualified participations in companies with headquarters abroad Credit institutions and financial companies with headquarters in Mozambique that intend to acquire, directly or indirectly, participations in credit institutions or financial companies with headquarters abroad or in financial institutions, representing 5% or more of the share capital of the participated entity or 2% or more of the share capital of the participating institution, must previously communicate their projects to the Bank of Mozambique, under terms to be defined by Notice.
Article 24
Imputation of voting rights

1. For the purpose of calculating a qualified participation, in addition to those inherent to shares owned or usufructed by the participant and equivalent rights under the Law on Credit Institutions and Financial Companies, voting rights are also considered:
   a) held by third parties in their own name but on behalf of the participant; b) held by voting right holders with whom the participant has concluded an agreement for their exercise, unless bound by the same agreement to follow third-party instructions; c) held, if the participant is a company, by members of its administration and supervision bodies; d) that the participant may acquire pursuant to an agreement with respective holders; e) inherent to shares held in guarantee by the participant or administered/deposited with them, if voting rights have been attributed to them; f) held by voting right holders who have granted the participant discretionary powers for their exercise; g) held by persons who have concluded an agreement with the participant aiming to acquire control of the company or frustrate change of control, or otherwise constituting an instrument for concerted exercise of influence over the participated company; and h) imputable to any persons referred to in the preceding subparagraphs by applying, with due adaptations, criteria from other subparagraphs.
2. For the purpose of paragraph 1(g) of this article, agreements regarding the transferability of shares representing the share capital of the participated company are presumed to be instruments for concerted exercise of influence.
3. The aforementioned presumption may be rebutted before the Bank of Mozambique, by proving that the relationship established with the participant is independent of actual or potential influence over the participated company.
4. For the purpose of paragraph 1 of this article, voting rights are calculated based on all shares with voting rights; suspension of their exercise is irrelevant for calculation.
5. Regarding rights held by entities dominated by the participant or in a group relationship, as provided in the Glossary of the Law on Credit Institutions and Financial Companies, voting rights inherent to shares included in funds or portfolios managed are not imputable to the company exercising control over investment fund managers, pension fund managers, venture capital fund managers, or authorized financial intermediaries providing portfolio management services on behalf of others, and to associated pension fund companies, provided the managing entity or financial intermediary exercises voting rights independently of the dominant company or associated companies.
6. For calculating qualified participations, the following are not considered:
   a) voting rights held by credit institutions or financial companies resulting from firm takeovers or placements with guarantee of financial instruments, provided voting rights are not exercised or otherwise used to intervene in company management and are transferred within one year;