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The “De Facto Director” under the New Commercial Code

The new Commercial Code, approved by Decree-Law No. 1/2022 of the 25th of May (the "New ComC"), introduced the figure of the “De Facto Director”, thus making liable those who, not being appointed directors, acts as such.

In fact, under the New ComC, the “De Facto Director” is the person (natural or legal) who, not having been appointed as a director of a company, regularly interferes in the administration, management or direction of the company. The person who acts in this manner shall now be held liable and subject to sanctions in the same way that the company's directors are.

It happens quite often in the corporate practice that the directors that are in fact appointed, have small or no power in the administration, management or direction of the company, this being performed by others who "hide" in their shadow, thus avoiding any responsibility for their acts.

The “De Facto Director” has, in practice, great influence in the life of the company, imposing, in some cases, conduct and decisions that would not necessarily be adopted by the actual directors of the company. However, since prior to the entry into force of the New ComC, this figure was not legally recognized, it was not possible to hold the “De Facto Director” responsible and to sanction him/her for the damages that his/her actions could cause to the company or to third parties, falling such liability on the nominated directors, even if they were only following the instructions of the “De Facto Director”.

On the other hand, the Mozambican Commercial Code imposes certain rules of conduct on directors, making them liable for damages caused by non-compliance with such rules. Not recognizing the figure of the “De Facto Director” (as was the case in the Commercial Code revoked by the New ComC) also meant that such rules of conduct and good governance could not be imposed on the “De Facto Director”.

Thus, the fact that the figure of the “De Facto Director” was introduced in our legal system, has merit. We believe that the recognition of the existence of the “De Facto Director” and respective liability will contribute, to a large extent, to greater corporate transparency and improvement of corporate governance practices.