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Issuance of Bonds under the Commercial Code of 2022

Article compiled by Daisy Nogueira, Lawyer at CGA Associados, Mozambique 

The Decree-Law no. 1/2022, of 25 of May, which approves the new Commercial Code (hereinafter, the “Commercial Code of 2022”), came into force today, the 22nd of September, 2022, thereby repealing the current Commercial Code, approved by Decree-Law no. 2/2005, of 27 of December, as amended from time to time.

Under the terms of article 371 of the Commercial Code of 2022, “Bonds are negotiable securities representing a loan issued in bulk by the company, which in a single issuance confers equal credit rights for the same nominal value”, therefore representing a form of company financing.

On the issuance of bonds, the Commercial Code of 2022 introduces several innovations, one of which is the fact that it expressly provides that companies by quotas may issue bonds and, to that end, they must observe the legal provisions applicable to joint stock limited liability companies (arts. 371-396).

With regard to issuance limits, in addition to establishing that Bonds may not be issued if they exceed the amount of the paid-up and existing share capital, under the terms of the most recently approved balance sheet, the Commercial Code of 2022 now presents an exception, stating that Bonds may be issued in an amount greater than the share capital, provided that the reimbursement is ensured by a special guarantee in favour of the bondholders. Once the issuance of the Bonds is determined, which takes place at a General Assembly, unless the articles of association grant such competence to the management body, the requirements for the issuance of the Bonds shall be reflected in a private issuance document – the issuance of bonds by way of public deed is no longer mandatory – the minimum content set out in article 377 and article 379, both of the Commercial Code, regarding the issuance resolution and the issuance document, respectively, remains unchanged.

The private issuance document is signed by the company and the trustee, and their signatures must be certified by similarity, that is, with special mention regarding the capacity of each of the signatories, the certification being made by simple comparison of the signature of the signatory affixed to the document with the signature in the identification document.

Article 379(4) of the Commercial Code of 2022 establishes that it is the responsibility of the Bank of Mozambique, as the Regulatory and Supervisory Authority of the Securities Market, to establish, through a legal diploma, the mandatory clauses that must be included in the deed of issuance/indenture. However, this diploma has yet to be prepared.

Finally, it should be noted that the Commercial Code of 2022 will place greater regulation on the figure of the Fiduciary Agent, establishing that the Fiduciary Agent must be a lawyer, auditor, or other person with full legal capacity with technical knowledge appropriate to the performance of their duties, as well as independent, and cannot be associated with any specific interest group in the company, nor be in any circumstance that may affect their independence (specific circumstances that would result in conflict of interests are addressed therein.

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