	Social Enterprise Law Surveys
	Mozambique
	(Africa) Firm Morais Leitão, Galvão Teles, Soares Da Silva & Associados
What jurisdiction(s) do you practice in?	Mozambique
What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ...	The most common for-profit organizational forms in Mozambique are the Limited Liability Joint Stock Company, locally called “Sociedade Anónima” (“S.A.”) and the Limited Liability Company by Quotas, locally called “Sociedade por Quotas” (“LDA”). The Limited Liability Joint Stock Company (“Sociedades Anónimas”) is more commonly adopted by large Enterprises and is essentially characterized by having a more complex organic structure. In fact, they must have a Board of Directors, a Shareholders General Meeting as also a supervisory body (“Conselho Fiscal” ou “Fiscal Único”). The share capital is represented by shares and, in rule, they must have 3 shareholders at least. On the other hand, Limited Liability Company by Quotas (“Sociedades por Quotas”), are the most widely used type of company, because of its less complex administrative and supervisory structure. In fact, they must have a management body (which may be occupied by an individual nominated) and a shareholders meeting (it is not mandatory to have a supervisory body). the capital is divided into quotas and the responsibility of the members is limited to the value of share capital subscribed by them, meaning that only the total share capital is responsible to the society creditors. The shareholders minimum and maximum number is, 2 and 30, respectively, but it is possible to have a “Sociedade Unipessoal por Quotas” in which the share capital is held by an individual entirely. Pursuant Mozambican Commercial Code, the share capital value must always be suitable for the realization of the corporate purpose. The Shareholders' liability to third parties has limited the value of the shares they subscribed. a. In fact, there is no shareholders maximum number (maxime, article 332 no 1 of Commercial Code), instead of Limited Liability Company by Quotas (“Sociedades por Quotas”) in which the maximum shareholders number is 30 (vide, article 288 no 1 of Commercial Code). In addition, in Limited Liability Joint Stock Company (“Sociedades Anónimas”) it is possible to list the shares on the Mozambican Stock Exchange which may represent an important financing alternative (however, there are several requirements that must be filled provided, namely, by the Securities Code and Commercial Code). b. Limited Liability Company by Quotas (“Sociedades por Quotas”), considering the characteristics referred above as well as the inexistence of minimum share capital. There are also the Civil Societies (rectius, articles 980 and following of Civil Code) which does not practice commercial acts.
Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required...	Mozambican Commercial Code contains a main rule according to which the Management body (and its members) are required to act with the diligence of judicious and coordinated directors/managers, in the interest of the company, considering the interests of shareholders and its workers (vide, article 150 no 1 of Commercial Code). In short, they must act to obtain profit for the company, to get dividends to their shareholders and respect the rights of their workers.
Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ...	Yes. a. Social Enterprises can be formed as Foundations, Associations, Non-Governmental Organizations and Cooperatives. b. The Foundation is a legal entity under private law and materially differ from “Sociedades por Quotas” ou “Sociedades Anónimas”. In fact, their scope is not to obtain profit but rather to achieve social, cultural, or recreational purposes (such as education, health, environmental, culture, etc). Its assets must be sufficient and irrevocable to complete these finalities. The special purposes and interests must be identified on the statutes. The foundation is obliged to communicate to the Government or whoever it delegates, the composition of the respective bodies in the 30 days following their designation, modification, or replacement; forward to the Government a copy of the annual accounts and activities, up to 30 days from the date of their approval and submit the accounts to external audit. Foundations can result from a “inter vivos” or “mortis causa” act. The Associations can be formed with social purposes and must be constituted by 10 members at least and they have non-profit scope. Associations may request a declaration of public utility if they pursue purposes of general or community interest, cooperating with the Public Administration in the provision of services at central or local level and present all the necessary evidence for filing their claim. Nonprofit Associations with public utility status benefits from tax and fee exemptions as well as other benefits established by the Council of Ministers. For last, international Associations may be allowed to perform their activity in Mozambique. The Non-Governmental Organizations legal persons under private law, with non-profit nature, which are involved, namely, in emergency, development programs (e.g., health, education, water suppliance, etc). In short, they assist the local authorities in economic and social development. Cooperatives are autonomous legal persons, in which their members apport goods and services in order to get a common benefit from the carried-out activity as well as a return on equity. c. Mozambican legislation does not provide any type of benefits for founders. Regarding the funders, pursuant to article 34 of IRPC Code (Corporate Income Tax Code) are considered losses or costs the donations (up to 5% of taxable income) made in benefit of Associations and other public or private entities which carry out activities under the Patronage Law (“Lei do Mecenato” – Law 4/94, 13 September and Decree 29/98, 8 June). d. No such restrictions. However, these organizational forms (Foundations, Associations and NGOs) can´t have profit scope and their assets are necessary allocated to their activity. On the other hand, regarding their capacity, they only entitled to celebrate agreements and/or practice legal acts (in general) if in accordance with their purposes and statutes. e. Yes, it may take more time for forming a social Enterprise than a traditional Enterprise, since the legislation does not stipulate a specific time frame for the registration process of social Enterprises. The procedure to constitute a Social Enterprise (e.g., Foundation, Association or to register a NGO) is more complex and bureaucratic. For instead, it is necessary an authorization or a recognition from a public entity to conclude it (and it can delay the process for a long time). In terms of costs, it is more expensive to form a traditional Enterprise. For example, in the case of a NGO it is necessary an authorization from the Ministry of Foreign Affairs which implies, on its turn, other positive opinions from NGO´s local key partners. Regarding the Foundation, besides de the registration and publication on the National Gazette, it is also necessary a public act of recognition of the Foundation. For last, concerning the Associations, it is also necessary, among others, a recognition act to be issued by the Government. f. Social Enterprise forms are prevalent and well known, since 1966 the Civil Code regulates this form, and in 2018 was published the specific legal framework of Foundations and in 1991 was published the specific legal framework of Associations. Concerning to NGOs, its legal regime is dated of 1998. The Cooperative law is dated from 2009.
Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat...	Yes, the Foundation, Associations and Cooperatives are Nonprofits Enterprises and NGOs are defined as non – profit entities also. So, these organizations must act without any profit proposes. a. A national Nonprofit Foundation can acquire the status of public utility by means of a request addressed to the competent authority for recognition, after three years of effective and relevant operation, and upon a favorable opinion of the governmental entity that oversees the respective area of activity. Nonprofit Foundation with public utility status benefits from tax and customs exemption on the acquisition of goods and services, such as Value Added Tax (VAT); SISA on the acquisition of real estate for the pursuit of statutory objectives; Stamp duty on the various transactions; customs duties on imports of goods and services aimed at pursuing statutory objectives. NGO may also request the income tax exemption (but it should be analyzed on a case-by-case basis). For last, cooperatives may also benefit from tax exemptions, pursuant to their legal regime. b. N/A c. No. d. It is indeed very prevalent for Social Enterprises to form as Nonprofits, especially because the Foundations/Associations and NGOs are the appropriate forms for Social Enterprises.
Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.	Mozambican jurisdiction does not provide any type of restrictions, that is, a worker may also have social participation in a company. This may be applicable, mutatis mutandis, to the Associations or Fundations In the case of Cooperatives, the main benefit is the risk-sharing by their members (without prejudice of tax benefits).
Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.	If a Social Enterprise decides to organize as a Foundation they will be obliged to communicate to the Government or whoever it delegates, the composition of the respective bodies in the 30 days following their designation, modification, or replacement; forward to the Government a copy of the annual accounts and activities, up to 30 days from the date of their approval and submit the accounts to external audit. NGOs must submit an annual report to the Ministry of Foreign Affairs, summarizing the activity developed in the previous year, the execution of their projects, its stage, the execution of their budget. It is also necessary to submit this summary to the local key partners (for instance, if an NGO has a health project, the report must be also submitted to the Ministry of Health. In addition, the NGO authorization must be renewed every 2 years. If an Association has public utility (duly recognized) it must send its accounts to the Administrative Court as well as to the Ministry of Finance.
In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.	N/A
Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.	No.
Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.	No.
Does your jurisdiction have any ESG requirements for investors? If it does, please describe.	No.
Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi...	No. a. No. b. No c. The business climate, existence of natural resources; tax regime; political stability; labor rules; corruption; investment guarantees offered by the State.
What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?	Grants; donations from private sector.
How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?	Over the years profitable investments have been growing in Mozambique, there is an interest from foreign investors in various areas of activity. We have also registered many international and regional branches in the country. The use of community-based funding is very reduced in Mozambique yet. Other alternative instruments, such as investment funds or private equities are in small number in Mozambique. Moreover, informal financing is still being used in Mozambique.
What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government...	Usually Mozambican Government provide subsidies (e.g., subsidy provided to the Cotton Small Producers Association (AAM). The State guarantees aren´t issued for this purpose. There is also a “indirect” support trough tax regime, considering that some donations may be considered costs of business and, therefore, reduce the income tax to the donors. a. Nowadays, it is particularly difficult considering the serious economic and financial crisis in Mozambique (resulted from various reasons, namely, the metical depreciation, increase of life cost, decrease of commodities value which are exported by Mozambique, a high external debt value, etc). b. N/A
Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?	No.
To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.	N/A
How prevalent, if at all, are impact bonds in your jurisdiction?	N/A
In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?	No.
Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a...	Although it is legal, it is not very common in Mozambique.
Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe...	Yes. In general, in Mozambique, there are specific exemptions available for Social Enterprises. However, these enterprises must comply with certain social obligations in the areas where they will operate. a. Tax exemptions include: Corporate Income Tax (IRPC): Associations and Foundations with Public Utility may be exempted from Corporate Income Tax. Agricultural, Handcraft and Cultural Cooperatives benefit from a 50% on the general corporate income tax rate. Stamp Tax: Public Utility Associations are exempted of Stam Tax. Property Transfer Tax (SISA): Public Utility Associations, duly recognized, are exempted from Property Transfer Tax (regarding buildings allocated to their activity) – the same is valid for other entities duly recognized and without profit scope (e.g., NGOs, Foundations). VAT: there are also some VAT exemptions applicable to entities without profit scope. b. Yes. c. Yes, these enterprises must comply with certain social obligations in the areas where they will operate according to their form and operation area. It also depends on the type of tax (vide comment above). In general, the benefit may be revoked if the entity starts to make an activity with a profit scope.
Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?	No.
Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)	No.
Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?	No.
Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.	No.
What government operational support, resources, training or services, are available for small businesses or Social Enterprises?	We do not have operational support, resources, or services for small businesses. However, there are some initiatives from the private sector (including Associations or NGOs).
Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.	Yes. For example, Nonprofit Social Enterprises are obliged to send to the Government a copy of the annual accounts and activities, up to 30 days from the date of their approval and submit the accounts to external audit. In the case of Associations, they must send their accounts to the Ministry of Finance and Administrative Court to be audited. For-profit Social Enterprises are required to present to tax authorities an annual report related to the current civil year.
Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.	No.
Is there a different bankruptcy system available for Social Enterprises?	No.
What are the average time and filing fees to form an Enterprise in your jurisdiction?	Normally it takes 9 to 12 months to establish a company in Mozambique. As the procedures in Mozambique, are not online and depend on a lot of bureaucracy, the process tends to be less flexible. The above period ranges from the registration phase to the licensing of the enterprise.
What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well...	Social Enterprises must request a declaration of a public utility provided that they pursue purposes of general or community interest, cooperating with the Public Administration in the provision of services at the central or local level and present all the necessary evidence for filing their claim. Social Enterprises with public utility status benefits from tax and fee exemptions as well as other benefits established by the Council of Ministers.
Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.	Yes, there are several factors that contribute to this rapid development, being a growing market and open to different opportunities, anything new in Mozambique will be well received and easily absorbed.
Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.	Yes, this is because social enterprises normally come to the country with a well-structured plan and with a solid background, which makes them less vulnerable. However, as referred, the procedure concerning their legalization is more complex, bureaucratic, and longer by comparison with other enterprises (companies with profit scope).
Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc...	The procedure to their constitution, authorization and/or recognition, is complex, bureaucratic, and long, thus, represents a challenge. Social enterprises are limited in their acting (social purposes).
In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.	At some point, fraud can be detected but governments and the relevant authorities have worked harder to prevent fraud from happening.
What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?	The law must establish the time frame for the registration process of the NGOs. In our understanding, the bureaucracy aspects should be simplified.
What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?	In general, there is a certain deficiency in the legal mechanisms in place in the country to deal with companies in general. We believe that there is no balance between the facilities that are given to social enterprises vs. the social responsibility that they perform. Environmental legislation needs to be amended to address the consequences of non-compliance with the law.
Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?	N/A

Social Enterprise Law Surveys

Back XLS

What jurisdiction(s) do you practice in?

Mozambique

What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ...

The most common for-profit organizational forms in Mozambique are the Limited Liability Joint Stock Company, locally called “Sociedade Anónima” (“S.A.”) and the Limited Liability Company by Quotas, locally called “Sociedade por Quotas” (“LDA”).

The Limited Liability Joint Stock Company (“Sociedades Anónimas”) is more commonly adopted by large Enterprises and is essentially characterized by having a more complex organic structure. In fact, they must have a Board of Directors, a Shareholders General Meeting as also a supervisory body (“Conselho Fiscal” ou “Fiscal Único”). The share capital is represented by shares and, in rule, they must have 3 shareholders at least.

On the other hand, Limited Liability Company by Quotas (“Sociedades por Quotas”), are the most widely used type of company, because of its less complex administrative and supervisory structure. In fact, they must have a management body (which may be occupied by an individual nominated) and a shareholders meeting (it is not mandatory to have a supervisory body). the capital is divided into quotas and the responsibility of the members is limited to the value of share capital subscribed by them, meaning that only the total share capital is responsible to the society creditors. The shareholders minimum and maximum number is, 2 and 30, respectively, but it is possible to have a “Sociedade Unipessoal por Quotas” in which the share capital is held by an individual entirely.

Pursuant Mozambican Commercial Code, the share capital value must always be suitable for the realization of the corporate purpose. The Shareholders' liability to third parties has limited the value of the shares they subscribed.

a. In fact, there is no shareholders maximum number (maxime, article 332 no 1 of Commercial Code), instead of Limited Liability Company by Quotas (“Sociedades por Quotas”) in which the maximum shareholders number is 30 (vide, article 288 no 1 of Commercial Code). In addition, in Limited Liability Joint Stock Company (“Sociedades Anónimas”) it is possible to list the shares on the Mozambican Stock Exchange which may represent an important financing alternative (however, there are several requirements that must be filled provided, namely, by the Securities Code and Commercial Code).

b. Limited Liability Company by Quotas (“Sociedades por Quotas”), considering the characteristics referred above as well as the inexistence of minimum share capital. There are also the Civil Societies (rectius, articles 980 and following of Civil Code) which does not practice commercial acts.

Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required...

Mozambican Commercial Code contains a main rule according to which the Management body (and its members) are required to act with the diligence of judicious and coordinated directors/managers, in the interest of the company, considering the interests of shareholders and its workers (vide, article 150 no 1 of Commercial Code). In short, they must act to obtain profit for the company, to get dividends to their shareholders and respect the rights of their workers.

Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ...

Yes.

a. Social Enterprises can be formed as Foundations, Associations, Non-Governmental Organizations and Cooperatives.

b. The Foundation is a legal entity under private law and materially differ from “Sociedades por Quotas” ou “Sociedades Anónimas”. In fact, their scope is not to obtain profit but rather to achieve social, cultural, or recreational purposes (such as education, health, environmental, culture, etc). Its assets must be sufficient and irrevocable to complete these finalities. The special purposes and interests must be identified on the statutes.

The foundation is obliged to communicate to the Government or whoever it delegates, the composition of the respective bodies in the 30 days following their designation, modification, or replacement; forward to the Government a copy of the annual accounts and activities, up to 30 days from the date of their approval and submit the accounts to external audit. Foundations can result from a “inter vivos” or “mortis causa” act.
The Associations can be formed with social purposes and must be constituted by 10 members at least and they have non-profit scope.
Associations may request a declaration of public utility if they pursue purposes of general or community interest, cooperating with the Public Administration in the provision of services at central or local level and present all the necessary evidence for filing their claim.
Nonprofit Associations with public utility status benefits from tax and fee exemptions as well as other benefits established by the Council of Ministers. For last, international Associations may be allowed to perform their activity in Mozambique.
The Non-Governmental Organizations legal persons under private law, with non-profit nature, which are involved, namely, in emergency, development programs (e.g., health, education, water suppliance, etc). In short, they assist the local authorities in economic and social development.
Cooperatives are autonomous legal persons, in which their members apport goods and services in order to get a common benefit from the carried-out activity as well as a return on equity.

c. Mozambican legislation does not provide any type of benefits for founders. Regarding the funders, pursuant to article 34 of IRPC Code (Corporate Income Tax Code) are considered losses or costs the donations (up to 5% of taxable income) made in benefit of Associations and other public or private entities which carry out activities under the Patronage Law (“Lei do Mecenato” – Law 4/94, 13 September and Decree 29/98, 8 June).

d. No such restrictions. However, these organizational forms (Foundations, Associations and NGOs) can´t have profit scope and their assets are necessary allocated to their activity. On the other hand, regarding their capacity, they only entitled to celebrate agreements and/or practice legal acts (in general) if in accordance with their purposes and statutes.

e. Yes, it may take more time for forming a social Enterprise than a traditional Enterprise, since the legislation does not stipulate a specific time frame for the registration process of social Enterprises. The procedure to constitute a Social Enterprise (e.g., Foundation, Association or to register a NGO) is more complex and bureaucratic. For instead, it is necessary an authorization or a recognition from a public entity to conclude it (and it can delay the process for a long time).

In terms of costs, it is more expensive to form a traditional Enterprise. For example, in the case of a NGO it is necessary an authorization from the Ministry of Foreign Affairs which implies, on its turn, other positive opinions from NGO´s local key partners. Regarding the Foundation, besides de the registration and publication on the National Gazette, it is also necessary a public act of recognition of the Foundation. For last, concerning the Associations, it is also necessary, among others, a recognition act to be issued by the Government.

f. Social Enterprise forms are prevalent and well known, since 1966 the Civil Code regulates this form, and in 2018 was published the specific legal framework of Foundations and in 1991 was published the specific legal framework of Associations. Concerning to NGOs, its legal regime is dated of 1998. The Cooperative law is dated from 2009.

Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat...

Yes, the Foundation, Associations and Cooperatives are Nonprofits Enterprises and NGOs are defined as non – profit entities also. So, these organizations must act without any profit proposes.

a. A national Nonprofit Foundation can acquire the status of public utility by means of a request addressed to the competent authority for recognition, after three years of effective and relevant operation, and upon a favorable opinion of the governmental entity that oversees the respective area of activity.

Nonprofit Foundation with public utility status benefits from tax and customs exemption on the acquisition of goods and services, such as Value Added Tax (VAT); SISA on the acquisition of real estate for the pursuit of statutory objectives; Stamp duty on the various transactions; customs duties on imports of goods and services aimed at pursuing statutory objectives.
NGO may also request the income tax exemption (but it should be analyzed on a case-by-case basis). For last, cooperatives may also benefit from tax exemptions, pursuant to their legal regime.

b. N/A

c. No.

d. It is indeed very prevalent for Social Enterprises to form as Nonprofits, especially because the Foundations/Associations and NGOs are the appropriate forms for Social Enterprises.

Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.

Mozambican jurisdiction does not provide any type of restrictions, that is, a worker may also have social participation in a company. This may be applicable, mutatis mutandis, to the Associations or Fundations

In the case of Cooperatives, the main benefit is the risk-sharing by their members (without prejudice of tax benefits).

Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.

If a Social Enterprise decides to organize as a Foundation they will be obliged to communicate to the Government or whoever it delegates, the composition of the respective bodies in the 30 days following their designation, modification, or replacement; forward to the Government a copy of the annual accounts and activities, up to 30 days from the date of their approval and submit the accounts to external audit.

NGOs must submit an annual report to the Ministry of Foreign Affairs, summarizing the activity developed in the previous year, the execution of their projects, its stage, the execution of their budget. It is also necessary to submit this summary to the local key partners (for instance, if an NGO has a health project, the report must be also submitted to the Ministry of Health. In addition, the NGO authorization must be renewed every 2 years.

If an Association has public utility (duly recognized) it must send its accounts to the Administrative Court as well as to the Ministry of Finance.

In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.

N/A

Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.

No.

Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.

No.

Does your jurisdiction have any ESG requirements for investors? If it does, please describe.

No.

Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi...

No.

a. No.

b. No

c. The business climate, existence of natural resources; tax regime; political stability; labor rules; corruption; investment guarantees offered by the State.

What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?

Grants; donations from private sector.

How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?

Over the years profitable investments have been growing in Mozambique, there is an interest from foreign investors in various areas of activity. We have also registered many international and regional branches in the country. The use of community-based funding is very reduced in Mozambique yet. Other alternative instruments, such as investment funds or private equities are in small number in Mozambique. Moreover, informal financing is still being used in Mozambique.

What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government...

Usually Mozambican Government provide subsidies (e.g., subsidy provided to the Cotton Small Producers Association (AAM). The State guarantees aren´t issued for this purpose. There is also a “indirect” support trough tax regime, considering that some donations may be considered costs of business and, therefore, reduce the income tax to the donors.

a. Nowadays, it is particularly difficult considering the serious economic and financial crisis in Mozambique (resulted from various reasons, namely, the metical depreciation, increase of life cost, decrease of commodities value which are exported by Mozambique, a high external debt value, etc).

b. N/A

Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?

No.

To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.

N/A

How prevalent, if at all, are impact bonds in your jurisdiction?

N/A

In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?

No.

Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a...

Although it is legal, it is not very common in Mozambique.

Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe...

Yes. In general, in Mozambique, there are specific exemptions available for Social Enterprises. However, these enterprises must comply with certain social obligations in the areas where they will operate.

a. Tax exemptions include:

Corporate Income Tax (IRPC): Associations and Foundations with Public Utility may be exempted from Corporate Income Tax. Agricultural, Handcraft and Cultural Cooperatives benefit from a 50% on the general corporate income tax rate.
Stamp Tax: Public Utility Associations are exempted of Stam Tax.
Property Transfer Tax (SISA): Public Utility Associations, duly recognized, are exempted from Property Transfer Tax (regarding buildings allocated to their activity) – the same is valid for other entities duly recognized and without profit scope (e.g., NGOs, Foundations).
VAT: there are also some VAT exemptions applicable to entities without profit scope.

b. Yes.

c. Yes, these enterprises must comply with certain social obligations in the areas where they will operate according to their form and operation area. It also depends on the type of tax (vide comment above). In general, the benefit may be revoked if the entity starts to make an activity with a profit scope.

Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?

No.

Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)

No.

Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?

No.

Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.

No.

What government operational support, resources, training or services, are available for small businesses or Social Enterprises?

We do not have operational support, resources, or services for small businesses. However, there are some initiatives from the private sector (including Associations or NGOs).

Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.

Yes. For example, Nonprofit Social Enterprises are obliged to send to the Government a copy of the annual accounts and activities, up to 30 days from the date of their approval and submit the accounts to external audit. In the case of Associations, they must send their accounts to the Ministry of Finance and Administrative Court to be audited.

For-profit Social Enterprises are required to present to tax authorities an annual report related to the current civil year.

Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.

No.

Is there a different bankruptcy system available for Social Enterprises?

No.

What are the average time and filing fees to form an Enterprise in your jurisdiction?

Normally it takes 9 to 12 months to establish a company in Mozambique. As the procedures in Mozambique, are not online and depend on a lot of bureaucracy, the process tends to be less flexible. The above period ranges from the registration phase to the licensing of the enterprise.

What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well...

Social Enterprises must request a declaration of a public utility provided that they pursue purposes of general or community interest, cooperating with the Public Administration in the provision of services at the central or local level and present all the necessary evidence for filing their claim.

Social Enterprises with public utility status benefits from tax and fee exemptions as well as other benefits established by the Council of Ministers.

Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.

Yes, there are several factors that contribute to this rapid development, being a growing market and open to different opportunities, anything new in Mozambique will be well received and easily absorbed.

Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.

Yes, this is because social enterprises normally come to the country with a well-structured plan and with a solid background, which makes them less vulnerable. However, as referred, the procedure concerning their legalization is more complex, bureaucratic, and longer by comparison with other enterprises (companies with profit scope).

Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc...

The procedure to their constitution, authorization and/or recognition, is complex, bureaucratic, and long, thus, represents a challenge. Social enterprises are limited in their acting (social purposes).

In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.

At some point, fraud can be detected but governments and the relevant authorities have worked harder to prevent fraud from happening.

What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?

The law must establish the time frame for the registration process of the NGOs.
In our understanding, the bureaucracy aspects should be simplified.

What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?

In general, there is a certain deficiency in the legal mechanisms in place in the country to deal with companies in general. We believe that there is no balance between the facilities that are given to social enterprises vs. the social responsibility that they perform. Environmental legislation needs to be amended to address the consequences of non-compliance with the law.

Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?

N/A

Social Enterprise Law Surveys

Mozambique

Social Enterprise Law Surveys

Mozambique

Members