We hereby inform the business community and other interested parties about the new type of company introduced by the New Commercial Code, approved by Decree-Law no. 1/2022, of May 25 (the "New CCom"), the Simplified Share Company (the "SAS").
Originating in France and spreading throughout the world since the 80s and 90s (it currently exists in France, Colombia, Mexico, Argentina, Uruguay, Ecuador and other countries with a civil law tradition), the SAS is a totally new type of company in Mozambique, which incorporates the best features of limited liability quota companies and limited liability share companies, and is characterized by the enormous flexibility it offers to investors as is based predominantly on the concept of a company-contract(sociedade contrato), in which the autonomy of the will of the parties prevails over the mandatory rules of company law.
The philosophy behind this new type of company is to facilitate the creation and operation of companies, thus stimulating innovation and the development of new goods and services.
On the one hand, the predominance of the will of the shareholders, which makes it possible to freely stipulate the conditions under which relations between shareholders should be regulated and dealt with, facilitates, ex ante and with more clarity, the manner in which certain possible conflicts should be resolved. In fact, it is the only type of company in our legal system in which the shareholders' agreement is binding on the company, provided that it is duly deposited with the latter.
On the other hand, SAS may establish in its articles of association an arbitration clause intended to deal with disputes between shareholders, between the company and shareholders, directors or representatives of the company. Thus, matters related to the existence or operation of the company, any abuse of rights, among others, may be submitted to arbitration, conciliation or mediation, which is a faster method of dispute resolution than the judicial route.
One of the main characteristics of the SAS is the fact that its registration and deposit of documents with the Legal Entities Registry Office (CREL) is done entirely electronically. Unfortunately, at this date, CREL does not yet have a system that allows such electronic registration, and therefore, for the time being, the registration of SAS must be done by traditional means of company registration.
Another fundamental characteristic of the SAS is the possibility of having an "undetermined corporate purpose", i.e., it is not compulsory for the company to establish its corporate purpose on the onset in its articles of association. This will be determined by the shareholders according to the needs of the company, thus allowing the company to define the activity it intends to pursue at any time, or to change it, without having to amend its articles of association, thus,avoiding registration and publication costs. It is only required that the activity to be pursued (i) is licit and duly authorized by the shareholders; and (ii) is duly licensed by the competent authorities.
Its governance structure is quite simple and in accordance with the will of the shareholders. The only corporate body required is the General Assembly, and the administration and representation of the company is carried out by whoever the shareholders decide, which may be directors, the shareholders themselves or simply a company representative.
The SAS was not designed to be listed or traded on a stock exchange since its broad contractual freedom, which allows it to define and agree on rules to exclude shareholders, the possibility of multiple voting, restrictions on share trading, among others, makes it incompatible with the guidelines for the protection of investors in the securities market. It is, therefore, designed to be and remain a closed company.
As one can see, the typical configuration of the SAS, is characterized by a much lighter and more flexible regulation than the other types of companies existing in the New CCom, makes it a very useful instrument to do business at all levels, quite advantageous for both familiar and non-familiar companies, with excellent advantages for the so-called "start ups" and micro-companies that may find in this new type of company an expedite mechanism to formalize their activity, due to the reduction of costs deriving from the simplification of the incorporation process, the lightness of the organic structure and the possibility to agree on structures of protection and safeguards for their shareholders.
Considering the legal structure of the SAS, we are of the opinion that with the introduction of this type of company, entrepreneurs have more options to choose the type of company that fits their investment needs and we expect to see great adherence by investors to this new type of company.