Decree No. 56/2004 Approving the Regulations of the Law on Credit Institutions and Financial Companies

Wednesday, 10 December 2004 I SERIES — Number 48 REPUBLIC BULLETIN OFFICIAL PUBLICATION OF THE REPUBLIC OF MOZAMBIQUE 2ND SUPPLEMENT NATIONAL PRESS OF MOZAMBIQUE

NOTICE The matter to be published in the "Boletim da República" must be sent in a duly authenticated copy, one for each subject, which must contain, in addition to the necessary indications for this purpose, the following endorsement, signed and authenticated: For publication in the "Boletim da República."

SUMMARY Council of Ministers: Decree No. 55/2004: Introduces paragraph 38 of Article 9 and letter k) of paragraph 1 of Article 11 and amends paragraphs 1 and 2 of Article 9-A, letter a) and item iv) of letter b) of paragraph 1, both of Article 11, item v) of letter b) of paragraph 1 of Article 18 and paragraph 8 of Article 20, all of the Value Added Tax Code, approved by Decree No. 51/98 of 29 September.

Decree No. 56/2004: Approves the Regulations of the Law on Credit Institutions and Financial Companies and revokes Decrees No. 45/94 of 12 October and No. 11/2001 of 20 March.

Decree No. 57/2004: Approves the Regulations of Microfinance, and revokes Decree No. 47/98 of 22 September.

National Council for Public Service: Resolution No. 6/2004: Creates management, leadership, and trust positions to be in force in local authorities and approves their respective professional qualifications.

COUNCIL OF MINISTERS Decree No. 55/2004 of 10 December

Given the need to introduce amendments to some provisions of the Value Added Tax Code, approved by Decree No. 51/98 of 29 September, the Council of Ministers, in the exercise of the powers attributed by paragraph 1 of Article 72 of Law No. 15/2002 of 26 June, decrees:

Article 1. Paragraph 38 of Article 9 and letter k) of paragraph 1 of Article 11 are introduced, and paragraphs 1 and 2 of Article 9-A, letter a) and item iv) of letter b) of paragraph 1, both of Article 11, item v) of letter b) of paragraph 1 of Article 18 and paragraph 8 of Article 20, all of the Value Added Tax Code, approved by Decree No. 51/98 of 29 September, are amended, to read as follows:

"Article 9 (Exempt transfers of goods and services) Are exempt from tax: ... 38. The transfers of edible oils and soaps."

"Article 9-A (Sugar exemption regime)

1. The following are exempt from tax: a) The transfer of sugar; b) The acquisitions of raw materials, intermediate products, parts, equipment, components, carried out by the national sugar industry.
2. The exemption for the goods indicated in letter b) of the previous paragraph and of paragraph 37 of Article 9 must be proven, according to the cases, through appropriate customs documents or a declaration issued by the purchaser of the goods and services stating that they will be incorporated into the production process."

"Article 11 (Exempt Imports)

1. The following are exempt from tax: a) The definitive importation of goods whose transfer within the national territory benefits from objective exemption, namely those referred to in paragraphs 2, 3, 16, 29, 30, 33, 35 of Article 9 and in Article 9-A, excluding paragraph 38 of Article 9; b) The importation of goods whenever they benefit from exemption from payment of import duties under the following provisions: i) ... ii) ... iii) ... iv) Articles 21, 42, 46 and 48 of the General Rules of Customs Clearance, approved by Decree No. 30/2002 of 2 December. v) ... vi) ... c) ... d) ... e) ... f) ... g) ... h) ... i) ... j) ... k) The importation of equipment goods classified in class "K" of the Customs Tariff intended for investments in ventures authorized under the Investment Law and its respective Regulations. 2 3 4

"ARTICLE 18 (Conditions for exercising the right to deduction)

1. Tax may only be deducted that has been levied on goods or services acquired, imported or used by the taxpayer for the realization of the following operations: a) ... b) Transfers of goods consisting of: i) ... ii) ... iii) ... iv) ... v) Transfer of goods covered by paragraphs 29, 32, 34 and 37 of Article 9. vi) ... 2............. "

"Article 20 (Exercise of the right to deduction) ... 8. Refunds, when due, must be made by the Ministry of Planning and Finance within 30 days from the date of presentation of the respective request, adding to the amount to be refunded and for each month or fraction of delay attributable to the tax administration services, upon request of the taxpayer, interest calculated in accordance with the IRPS or IRPC Codes, approved by Decrees No. 20/2002 and 21/2002, both of 30 July."

Art. 2. The exemptions provided for in paragraphs 34, 35, 36, 37 and 38 of Article 9 and in Article 9-A, both of this Code, remain in force until 31 December 2006. Art. 3. This Decree enters into force on 1 November 2004. Approved by the Council of Ministers, on 26 October 2004. Publish. The Prime Minister, Luísa Dias Diogo.

Decree No. 56/2004 of 10 December

The amendments to Law No. 15/99 of 1 November - Law on Credit Institutions and Financial Companies - approved by Law No. 9/2004 of 21 July, brought substantial changes to the regulation of credit institutions and financial companies, making it necessary to adequately accommodate the solutions advocated in the legislative review. Thus, with a view to creating conditions for the execution of the current provisions of the Law on Credit Institutions and Financial Companies, the Council of Ministers, in the exercise of the competence conferred upon it by Article 118 of the same, updated as referred to above, decrees:

Article 1. The Regulations of the Law on Credit Institutions and Financial Companies, attached to this Decree and forming an integral part thereof, are approved. Art. 2. Credit institutions and financial companies operating on the date of approval of this Decree have three months, from the date of its entry into force, to adjust to its provisions. Art. 3. Unless there is an express agreement between the parties, the provisions contained in Articles 37 to 47 of the attached Regulations shall not apply to financial leasing contracts already signed on the date of entry into force of this Decree. Art. 4. Decrees No. 45/94 of 12 October and No. 11/2001 of 20 March are revoked, as well as any other legislation that contradicts the provisions of this Decree. Approved by the Council of Ministers, on 26 October 2004. Publish. The Prime Minister, Luísa Dias Diogo.

Regulations of the Law on Credit Institutions and Financial Companies CHAPTER I Applicable provisions to the generality of institutions SECTION I Object and applicable legislation ARTICLE 1 Object of the Regulations

1. This instrument regulates the Law on Credit Institutions and Financial Companies, establishing procedures and norms applicable to the generality of credit institutions and financial companies and fixing, in concrete terms, the specific legal regimes of each of them, except for the regimes of credit cooperatives and microbanks, which are defined in the Regulations of Microfinance.
2. This instrument also establishes the legal regimes of the financial leasing contract and the "factoring" contract.

ARTICLE 2 Applicable legislation Without prejudice to the provisions in the final part of paragraph 1 of the previous article, credit institutions and financial companies are governed by the Law on Credit Institutions and Financial Companies, by the provisions of these Regulations, by the other norms regulating the activity of credit institutions and financial companies and by other legal norms applicable to them.

SECTION II Authorizations SUBSECTION I Procedure for the authorization application for establishment ARTICLE 3 Prior deposit

1. When processing the application for the establishment of a credit institution or financial company, applicants must make a non-withdrawable 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 previous paragraph may be replaced by a bank guarantee accepted by the Bank of Mozambique.
3. In case of rejection of the application, the Bank of Mozambique will return the deposited value to the applicants or release the guarantee that was provided.
4. If the application is authorized, the value of the prior deposit will be made available to the applicants after the establishment of the institution, but may, however, be considered for the purpose of realizing the share capital of the same.
5. The prior deposit referred to in the previous paragraphs will revert to the State when the following situations occur: a) If the authorization expires due to failure to observe the deadline fixed for the establishment of the institution; b) If, before the establishment of the institution, the authorization is revoked due to the fact provided for in letter a) of paragraph 1 of Article 17 of the Law on Credit Institutions and Financial Companies.

ARTICLE 4 Formalities of the application

1. Applications for authorization for the establishment of credit institutions and financial companies must be processed in duplicate.
2. All documents intended to process the application must, when written in a foreign language, be accompanied by the respective official translation in Portuguese.

ARTICLE 5 Appointment of a representative Applicants must designate a person, individual or corporate, granting them full powers to represent them before the entities responsible for assessing the application, such person must have, at least, a domicile in Mozambique, for the purpose of notification and sending of correspondence.

SUBSECTION II Processing of the authorization procedure ARTICLE 6 Assessment by the Bank of Mozambique

1. Upon receipt of the duly processed application, the decision of the Governor of the Bank of Mozambique must be taken within ninety days.
2. In case of deficient processing of the application, which translates into the lack of certain necessary elements, the Bank of Mozambique will notify the applicants giving them a reasonable deadline to remedy the deficiency, consequently interrupting the counting of the deadline referred to in the previous paragraph.

ARTICLE 7 Inspection Credit institutions and financial companies may only start their activity after being inspected by the Bank of Mozambique, regarding the adequacy of the facilities where the institution will operate to the activity that it intends to develop.

SUBSECTION III Statutory amendments ARTICLE 8 Amendments subject to authorization

1. The following amendments to the statutes of credit institutions and financial companies are subject to authorization, under Article 23 of the Law on Credit Institutions and Financial Companies: a) Firm name or denomination; b) Object; c) Location of the headquarters; d) Share capital, when it concerns a reduction; e) Creation of categories of shares or alteration of existing categories; f) Structure of administration and supervision; g) Limitation of the powers of the corporate bodies.
2. Applications for amendment must be made by request to be delivered to the Bank of Mozambique, accompanied by a draft containing the statutory provisions that are intended to be amended.
3. The decision must be taken within thirty days from the date of receipt of the application.
4. Amendments to the object that imply a change in the type of credit institution or financial company are equated, with regard to authorization, to the regime of merger, spin-off and dissolution.

ARTICLE 9 Merger, spin-off and dissolution The regime defined in Articles 14 to 18 of the Law on Credit Institutions and Financial Companies is applicable to applications for authorization for merger, spin-off and dissolution.

SUBSECTION IV Opening of branches ARTICLE 10 Application for authorization

1. The opening of branches of credit institutions and financial companies requires authorization from the Bank of Mozambique.
2. For the purpose of the authorization referred to in the previous paragraph, the definition contained in letter a) of paragraph 2 of Article 2 of the Law on Credit Institutions and Financial Companies should be taken into account, however, locations where operations are carried out only with the intervention of automatic means are not considered as branches.
3. The following elements must be indicated in the authorization applications: a) Location where the branch is intended to be installed; b) Type of operations to be carried out; c) Number of workers to be assigned; d) Other information that applicants deem necessary for the assessment of the contribution of the branch to the economic development of the location where it will be installed.
4. The applications must also be accompanied by a declaration signed by at least two members of the respective administration body, attesting that the institution respects all prudential rules applicable to it, or, if this is not the case, indicating the existing non-compliance situations.

ARTICLE 11 Requirements for authorization

1. In the assessment of applications for authorization for the opening of a branch, the following will be taken into account: a) The capacity and solvency of the applicant; b) The interest of the branch for the economy of the location where it will be installed; c) The number and nature of credit institutions and financial companies already established in the location.
2. The conditions for authorization to be granted are: a) That the own funds of the institution in question are adequate to guarantee the operations to be carried out by the branch; b) That the institution can, with the creation of the branch, continue to respect all prudential rules to which it is subject, namely the solvency and fixed asset ratios.

SECTION III Registration ARTICLE 12 Application for registration The registration referred to in Article 40 of the Law on Credit Institutions and Financial Companies must be requested from the Governor of the Bank of Mozambique, accompanied by all elements that justify the facts to be registered.

ARTICLE 13 Registration of Credit Institutions and Financial Companies with headquarters in Mozambique The registration of credit institutions and financial companies with headquarters in Mozambique will cover the following elements: a) Firm name or denomination; b) Object; c) Date of authorization for establishment as a credit institution or financial company; d) Date of establishment; e) Location of the headquarters; f) Subscribed capital; g) Paid-up capital; h) Identification of shareholders or partners holding qualified participations; i) Identification of the members of the corporate bodies, and others equated, under legally established terms; j) Delegations of management powers; k) Date of start of activity; l) Location and date of creation of subsidiaries, branches and agencies and their closure, if applicable; m) Identification of the managers of subsidiaries established abroad; n) Inter-company agreements; o) Changes that occur in the elements contained in the previous letters.

ARTICLE 14 Registration of Credit Institutions and Financial Companies with headquarters abroad The registration of credit institutions and financial companies authorized in a foreign country and which have a branch or representation office in Mozambique will cover the following elements: a) Firm name or denomination; b) Date of authorization for its establishment in Mozambique; c) Date from which it was established in the country; d) Location of the headquarters; e) Location of branches, agencies and representation offices in Mozambique; f) Capital allocated to operations to be carried out in Mozambique, when required; g) Operations that the institution can carry out in the country of origin and operations that it is authorized to exercise in Mozambique; h) Identification of the managers of the branches or representation offices; i) Changes that occur in the elements referred to in the previous letters.

ARTICLE 15 Registration of members of corporate bodies

1. The registration of the members of the corporate bodies of credit institutions and financial companies, or others equated, must be requested, by request of the institution or the interested parties, attaching the informative elements fixed by the Bank of Mozambique, under the law.
2. To prevent the appointment and/or hiring of individuals who do not meet the legally established requirements, the request referred to in the previous paragraph must be submitted prior to the effective appointment and/or hiring.
3. When not refused, the registration carried out under paragraph 2 will be considered provisional until communication, by the institution or interested party in question, of the confirmation of the appointment and/or hiring.
4. In case of reappointment, this will be noted in the register, at the request of the institution or the interested parties.
5. The lack of integrity or experience of the members of the corporate bodies is grounds for refusal of registration.
6. The refusal of registration based on the provisions of the previous paragraph will be communicated to the interested parties and to the credit institution or financial company, which will take the appropriate measures to ensure that they cease functions immediately.
7. The refusal of registration will only affect the persons to whom the aforementioned qualities have not been recognized, unless such circumstance concerns the majority of the members of the body in question, or if they no longer show themselves to meet, in other ways, the legal or statutory requirements for the normal functioning of the body, in which case the Bank of Mozambique will set a deadline for the composition to be altered.
8. The lack of registration does not determine the invalidity of the acts practiced by the person in question in the exercise of their functions.
9. The provisions of the previous paragraphs apply, with the necessary adaptations, to the managers of the branches and representation offices of credit institutions and financial companies with headquarters abroad.

ARTICLE 16 Subsequent facts

1. Credit institutions and financial companies must communicate to the Bank of Mozambique, as soon as they become aware of them, the facts referred to in paragraph 4 of Article 19 of the Law on Credit Institutions and Financial Companies, which are subsequent to the registration of the appointment and concern any of the members of their corporate bodies.
2. Subsequent facts are considered both the facts occurring after the completion of the registration, as well as the facts verified previously to this, but of which the institutions only became aware subsequently to the same.
3. The duty established in paragraph 1 is considered fulfilled if the communication is made by the persons themselves to whom the facts concern.

ARTICLE 17 Cancellation of registration

1. The registration will be cancelled when it is verified that it was obtained by means of false declarations or other illicit expedients, without prejudice to the applicable criminal sanctions.
2. In the case of the registration of the members of the corporate bodies, the registration may be cancelled if, subsequently, it is concluded that the requirements of integrity and professional experience required for the exercise of the office are not satisfied.
3. The provisions of paragraphs 6 to 9 of Article 15 of these Regulations are applicable to the cancellation of the registration of the members of the corporate bodies.

ARTICLE 18 Deadlines, complementary information and certificates

1. The deadline to request any registration is ninety days from the date on which the facts to be registered occurred.
2. The deadline for the registration of credit institutions and financial companies begins to count from the date of their definitive establishment or, in the case of entities with headquarters abroad, from the date of obtaining the authorization for their establishment in Mozambique.
3. Certificates of registration will be issued to the respective applicant and to other persons who demonstrate a legitimate interest.

SECTION IV Sanitation measures ARTICLE 19 Cooperation of other institutions in the sanitation of credit institutions and financial companies The Bank of Mozambique may invite other institutions to cooperate in the sanitation referred to in Article 81 and following of the Law on Credit Institutions and Financial Companies, namely with the aim of enabling adequate monetary and financial support, with it being responsible for directing this cooperation.

ARTICLE 20 Powers and duties of provisional administrators Provisional administrators, designated under Article 84 of the Law on Credit Institutions and Financial Companies, in addition to other powers and duties established in the same article, also have the following: a) Convene the general assembly; b) Veto general assembly resolutions, when they are prejudicial to the sanitation process; c) Prepare, as soon as possible, a report on the financial situation of the institution and its causes and submit it to the Bank of Mozambique, accompanied by an opinion from the supervision commission, if one has been appointed.

ARTICLE 21 Term and remuneration of members designated by the Bank of Mozambique

1. Provisional administrators and members of the supervision commission designated under Article 85 of the Law on Credit Institutions and Financial Companies will exercise their functions for the period determined by the Bank of Mozambique.
2. The remuneration of provisional administrators, as well as members of the supervision commission, will be fixed by the Bank of Mozambique and constitutes a charge on the institution in question.

ARTICLE 22 Other measures Along with the designation of provisional administrators, the Bank of Mozambique may determine the following measures: a) Temporary dispensation from the observance of norms on prudential control or monetary policy; b) Temporary closure of counters and other facilities where transactions with the public take place.

SECTION V Offences SUBSECTION I Procedure ARTICLE 23 Preventive suspension

1. If the accused is one of the individuals indicated in paragraph 1 of Article 95 of the Law on Credit Institutions and Financial Companies, the Bank of Mozambique may determine the preventive suspension of their respective functions, whenever this proves necessary for the effective processing of the case or for the safeguarding of the financial system or the interests of depositors, investors or other creditors.
2. The suspension referred to in the previous paragraph must be communicated to the persons and institutions covered.

ARTICLE 24 Requirements of the accusation and defense

1. The note of accusation must indicate the offenders, the facts imputed to them and their respective circumstances of time and place, as well as the law that prohibits and punishes them.
2. The defense must be presented in writing, accompanied by the respective means of proof.

ARTICLE 25 Decision After the realization of the inquiry and processing diligences that prove necessary as a consequence of the defense, the decision will be taken, which must be notified to the accused.

ARTICLE 26 Requirements of the decision applying a sanction The decision applying a sanction must contain the following elements: a) Identification of the accused; b) Description of the fact...