The Law no.3/93 of 24 July, Investment Law, is an extremely important legal instrument in our legal system, insofar as it is through this law that the desires of the government in matters of national and foreign investment are materialized, being this investment responsible for the socio-economic development of the country. Moreover, with national and foreign investment, several companies and projects are conceived and implemented in different sectors of the economy, benefiting not only investors but also all those involved in the process of implementation and execution of projects.
With the current dynamics in the investment panorama in the country, there was a need to update the Investment Law Regulations. The Investment Law Regulations approved by Decree No. 43/2009 of 21 August has undergone some amendments introduced by Decree No. 20/2021 of 13 April.
In the present article, we will focus on some of the changes that we deem pertinent for the continuation of the investment process. Therefore, it is important to highlight the following amendments:
- For the purposes of transferring profits abroad and re-exportable invested capital, the Minimum Investment amount changes from the previous MZN 2.500.000,00 (two million and five hundred thousand meticais) to MZN7.500.000,00 (seven million and five hundred thousand meticais);
- The annual export of capital by the Investor will now be at least equivalent to MZN4.500.000,00, (four million and five hundred thousand meticais) as opposed to the previous MZN1.500.000,00 (one million and five hundred thousand meticais);
- The transfer of the investor's position will now be subject toa prior authorization for the purpose, and a written request, duly founded, must be submitted, and addressed to the entity that authorized the project, which must be submitted to the Agency for Investments Promotion and Exportation, IP (APIEX, IP).
One of the relevant aspects of these amendments, and which we propose to discuss, is regarding the need for prior authorization for the transfer of the investor's position, provided for in Article 18 of Decree no. 20/2021 of 13 April, that approves the Investment Law Regulations.
The wording of Article 18(1) of Decree no. 43/2009 of 21 August which approved the Investment Law Regulations, provided for the following: "The transfer or assignment of shares held by investors in investment projects is free, provided that it takes place within national territory and provided that it is notified to the entity that authorized the project and through the submission of documents proving compliance with their tax obligations".
The new wording of the above mentioned article, presented in Decree no. 20/2021 of 13 April, which amends the Investment Law Regulations, provides for the following: "The investor may assign, in whole or in part, its position or rights over an investment or its participation in the respective capital, by means of an express request, duly founded, addressed to the entity which authorized the project, which must be submitted to APIEX, IP and upon presentation of documents proving compliance with its obligations".
In these terms, it is clear that with the amendment of Article 18 (1) referred to above, the Investment Law Regulations is in conformity with the provisions of the Investment Law, specifically in Article 23 (1).
However, although the new wording of Article 18 (1) is in accordance with the provisions of the Investment Law (Article 23 (1)), this amendment (new wording) raises some questions, since this is a matter relating to the business and commercial life of the company implementing the project and should not be subject to prior authorization by APIEX, IP. Furthermore, if we consider the idea of flexibility and attraction of national and foreign investment, this requirement may not be beneficial to achieve this goal and may be seen as a constraint or factor of retraction of investment, considering that in the past the practice was different, i.e., prior authorization was not required in matters of transfer of the Investor's position.
Not less important (and, in fact, of great relevance) is the issue related to the set of documents which must be included in the application for prior authorization with APIEX for the investor to be able to transfer the shares of the company implementing the project. One of the documents to be attached to the application is the Tax quitclaim Certificate proving the payment of taxes due on the transaction.
However, with the need to present a Tax quitclaim Certificate, a pertinent question arises as to how it will be possible to present a Tax quitclaim Certificate that proves the payment of taxes for a transaction that has not yet been carried out and for which the respective authorization is still awaiting approval.
Furthermore, since it is necessary to submit an express request for authorization of the transaction, the possibility of presenting a Tax quitclaim Certificate for a transaction that may not be authorized in view of what is considered by APIEX, IP is even more controversial, and the investor's claim falls apart. In other words, the submission of an express request for the authorization of the transfer of the investor's position does not guarantee that the intended transaction will be executed, since it is conditional upon a positive assessment by APIEX, a fact that, as referred to above, may (at least theoretically) not occur.
If we consider the impact of a possible negative assessment or simply the non-authorization of the application for the transfer of the investor position by the entity which authorized the project, we can assess that, for the Investor, it would in fact be a frustration not to be able to materialize its intentions, considering all that may be involved and that it could entail.
Finally, from a practical and procedural economy point of view, we understand that, with the need for prior authorization by the entity that authorized the project, the transfer processes of the investor's position may become slow, considering that, in the cases of projects approved by the Council of Ministers or by the Minister of Economy and Finance, the transfer application must be addressed to the competent entity that approved it, a fact that will probably contribute to some delays in these applications, which to a certain extent does not contribute to a more flexible and attractive business environment.