THE PARLIAMENT LAW Nº 11/2009 OF MARCH 11

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3 THE PARLIAMENT LAW Nº 11/2009 OF MARCH 11

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5 TECHNICAL FILE COPYRIGHT: Banco de Moçambique EDITED BY: Banco de Moçambique Documentation and Information Center GRAPHIC DESIGN AND PRODUCTION: Banco de Moçambique Documentation and Information Center REVIEW: Banco de Moçambique REGISTRATION NUMBER:???? ISBN:????? PRINTED COPIES: 3000

6 GENERAL INDEX FOREIGN EXCHANGE LAW - Law Nº 11/2009 of March 11 1 FOREIGN EXCHANGE LAW REGULATION - Decree Nº 83/2010 of December NOTICE Nº 04/GBM/2011 of July 8 Sources of provisioning of Bank Accounts in Foreign Curreny held by Resident Corporate Entities 95 NOTICE Nº 05/GBM/2011 of July 8 Opening of Residents Bank Accounts in Foreign Currency 99 II

7 INDEX FOREIGN EXCHANGE LAW LAW Nº 11/2009 OF MARCH 11 1 Article 1 - Subject 1 Article 2 - Scope of Application 2 Article 3 - Foreign Exchange Residence 2 Article 4 - Duty of Verification and Information 3 Article 5 - Foreign Currency 3 Article 6 - Foreign Exchange Operations 4 Article 7 - Entities Authorized to Engage in Foreign Exchange Trading 6 Article 8 - Entry and Exit of Foreign Currency 6 Article 9 - Obligation to Declare and Remit Foreign Exchange Assets 7 Article 10 - Contraventions 7 Article 11 - Particularly Severe Contraventions 9 Article 12 - Accessory Penalty 9 Article 13 - False Declarations 9 Article 14 - Responsibility of Companies, Partnerships and individual Agents 10 Article 15 - Legal Presumption of Responsibility 10 Article 16 - Responsibility of Managers and Employees 10 Article 17 - Active and passive Corruption 11 Article 18 - Statute of Limitation 11 Article 19 - Pre-Sentence Investigation and Decision on Processes under the Competence of the Banco de Moçambique 11 Article 20 - Pre-Sentence Investigation and Decision of other Processes 12 Article 21 - Penality Special Regime 12 Article 22 - Seizure of Monetary Assets 12 Article 23 - Decision under the Competence of the Judicial Tribunals 13 Article 24 - Appeal to Decisions under the Competence of the Banco de Moçambique 13 Article 25 - Coercive Collection, Destination and Fines Updating 13 Article 26 - Subsidiary Penal Regime 14 Article 27 - Foreign Investment 14 Article 28 - Special Cases 14 Article 29 - Regulation 14 Article 30 - Transitory Provisions 15 Article 31 - Revocation 15 Article 32 - Entry into Force 15 III

8 FOREIGN EXCHANGE LAW REGULATION - DECREE N 83/2010 OF DECEMBER CHAPTER I - GENERAL PROVISIONS 20 SECTION I - PURPOSE, SCOPE AND DEFINITIONS 20 Article 1 - Purpose 20 Article 2 - Scope of Subjetive Application 20 Article 3 - Definitions 20 SECTION II - PRINCIPLES AND GENERAL DUTIES 26 SUB-SECTION I - GENERAL PRINCIPLES 26 Article 4 - Liberalization of Current Transactions 26 Article 5 - Subjection to Prior Authorization 26 Article 6 - Obligation to Register Foreign Exchange Operations 26 Article 7 - Obligation to Declare Foreign Exchange Assets 27 Article 8 - Obligation to Remit Foreign Exchange Assets 28 SUB-SECTION II - GENERAL DUTIES 30 Article 9 - Duty of Verification 30 Article 10 - Duty of Information 30 Article 11 - Duty to Preserve Documents 31 Article 12 - Duty of Exclusive use of the Banking system 31 CHAPTER II - FOREIGN EXCHANGE TRADING 31 SECTION I - LICENSING AND REGISTRATION REQUIREMENTS AND PROCEDURES 31 SUB-SECTION I - FOREIGN EXCHANGE TRADING BY BANKS AND BOREAUX OF EXCHANGE 31 Article 13 - Terms and conditions for Foreign Exchange Trading by Banks and Boreaux of Exchange 31 SUB-SECTION II - FOREIGN EXCHANGE TRADING BY OTHER INSTITUTIONS 32 Article 14 - Requirements for Partial Foreign Exchange Trading 32 Article 15 - Licensing of Partial Foreign Exchange Trading 33 Article 16 - Registration and Information on Performed Transactions 33 IV

9 CHAPTER III - CURRENT TRANSACTIONS 33 SECTION I - GENERAL PROVISIONS 33 Article 17 - General Requirements 33 Article 18 - Documentation and Procedures 33 Article 19 - Control Procedures 34 SECTION II - PAYMENTS BY RESIDENTS 34 SUB-SECTION I - PAYMENTS FOR IMPORTATION OF GOODS 34 Article 20 - General Requirements 34 Article 21 - Required Documentation 36 Article 22 - Commercial Invoice Requirements 36 Article 23 - Shipment Document Requirements 37 Article 24 - Single Document for Bank use 37 Article 25 - Control Procedures 38 Article 26 - Methods of Payment 39 Article 27 - Documentary Letter of Credit 39 Article 28 - Documentary Remittance 40 Article 29 - Direct Advance Payment 40 Article 30 - Consigned Importations 41 SUB-SECTION II - PAYMENTS FOR SERVICES IMPORTATION 41 Article 31 - Scope 41 Article 32 - Documentation and Procedures 42 Article 33 - Insurance Payments Abroad 42 Article 34 - Payments for Technical Assistance Services 43 Article 35 - Non-residents Salary Transfers 43 Article 36 - Payment of Costs or Fees Related to other Types of Services 44 SUB-SECTION III - OTHER IMPORTATION PAYMENTS 44 Article 37 - Payments for the Right to use Industrial and Intellectual Property Rights 44 Article 38 - Payments for Philatelic and Numismatic Importation Purposes 45 Article 39 - Payments for Subscription of Publications 45 SUB-SECTION IV - OTHER PAYMENTS BY RESIDENTS 45 Article 40 - Payment of Court Costs Abroad 45 Article 41 - Payment of Penalties, Taxes and Indemnities 46 V

10 SECTION III - RECEIPTS FROM RESIDENTS 46 SUB-SECTION I - REVENUES ON GOODS EXPORTATION 46 Article 42 - General Requirements 46 Article 43 - Required Documentation 46 Article 44 - Verification of Documents 47 Article 45 - Constitution of Process and Filing 47 Article 46 - Documentary Letter of Credit 48 Article 47 - Documentary Remittance 48 Article 48 - Control Procedures 49 SUB-SECTION II - REVENUES ON SERVICES EXPORTATION 50 Article 49 - Scope 50 Article 50 - Documentation and procedures 50 SUB-SECTION III - OTHER EXPORTATION REVENUES 51 Article 51 - Revenues on Leasing or Use of Industrial and Intellectual Property Rights 51 Article 52 - Exportation for Philatelic Purposes 51 Article 53 - Exportation of the Metical Banknotes and Coins for Numismatic or Exhibition Purposes 51 SECTION IV - INCOME TRANSFERS 52 Article 54 - General Provisions 52 Article 55 - Transfer of Foreign Direct Investment Income 53 Article 56 - Transfer of Portifolio Investment Income 53 Article 57 - Transfer of Income Deriving from Loans and Shareholder Loans 54 Article 58 - Transfer of Income Deriving from Deposits in the Country by Non-Resident Entities 54 Article 59 - Transfer of Income Deriving from Other forms of Capital Investment 55 SECÇÂO V - CURRENT TRANSFERS 55 Article 60 - Scope 55 Article 61 - Requirements and Procedures for Current Transfers 55 CHAPTER IV - CAPITAL OPERATIONS 56 VI

11 SECTION I - GENERAL PROVISIONS 56 Article 62 - Classification of Operations 56 Article 63 - Application for Authorization 57 Article 64 - Decision 57 Article 65 - Changes 58 Article 66 - Principle of Exclusivity in Capital Investment 58 SECTION II - DIRECT INVESTMENT 58 SUB-SECTION I - FOREIGN DIRECT INVESTMENT 58 Article 67 - Application for Investment Abroad by Resident Entities 58 Article 68 - Loans Granted by Resident Entities to Subsidiaries or Affiliates Abroad 60 SUB-SECTION II - FOREIGN DIRECT INVESTMENT IN MOZAMBIQUE 60 Article 69 - Scope of Aplication 60 Article 70 - Registration of Direct Investment 61 Article 71 - Registration of Direct Investment Through Capital Increase 62 Article 72 - Investment through Loans Received from Subsidiaries or Affiliates 62 Article 73 - Re-exportation of Invested Capital 63 SECÇÂO III - REAL ESTATE INVESTMENT 64 Article 74 - Real Estate Investment 64 SECTION IV - OPERATIONS ON INVESTMENT CERTIFICATES IN COLLECTIVE INVESTMENT UNDERTAKINGS 64 Article 75 - Investment Certificates in Collective Investment Undertakings Abroad 64 SECTION V - OPENING AND OPERATION OF BANK ACCOUNTS 65 Article 76 - Opening and Operation of Bank Accounts in Financial Institutions Abroad 65 SECTION VI - LOANS RELATED TO MERCHANDISE OR SERVICES TRANSACTIONS 66 VII

12 Article 77 - Scope 66 Article 78 - Credit Related to Merchandise Importation 66 Article 79 - Credit Related to Merchandise Exportation 66 Article 80 - Credit Related to Importation of Services 67 Article 81 - Credit Related to Exportation of Services 67 SECTION VII - FINANCIAL LOANS OR CREDIT 68 Article 82 - Scope 68 Article 83 - Financial Loans from Abroad 68 Article 84 - Debt Service 69 Article 85 - Financial Loans Granted Abroad 70 Article 86 - Shareholder Loans 70 SECTION VIII - BANK GUARANTEES 71 Article 87 - Garantees Granted by Residents to Non-residents 71 Article 88 - Guarantees Granted by Non-Residents to Residents 72 SECTION IX - TRANSFERS PURSUANT TO INSURANCE CONTRATS 72 Article 89 - Scope 72 Article 90 - Transfers Pursuant to Insurance Contrats 72 SECTION X - OPERATIONS IN SECURITIES AND OTHER INSTRUMENTS TRADED IN MONEY AND CAPITAL MARKETS 73 Article 91 - Securities and Other Instruments traded in Money and Capital Markets Abroad 73 Article 92 - Declaration and Repatriation 74 Article 93 - Securities and other Instruments traded in Money and Capital Markets in Mozambique 74 SECTION XI - PHYSICAL IMPORTATION AND EXPORTATION OF MONETARY ASSETS 75 Article 94 - Importation and Exportation of Foreign Banknotes or Coins 75 Article 95 - Importation and Exportation of Securities 75 SECTION XII - PERSONAL LOANS 76 VIII

13 Article 96 - Personal Loans from Abroad 76 Article 97 - Personal Loans Granted Abroad 76 CHAPTER V - OTHER FOREIGN EXCHANGE OPERATIONS 77 SECTION I - OTHER FOREIGN EXCHANGE OPERATIONS SUBJECT TO AUTHORIZATION 77 SUB-SECTION I - OTHER CAPITAL OPERATIONS 77 Article 98 - Transfers and Receipts not Qualified as Current Transactions 78 SUB-SECTION II - OTHER FOREIGN EXCHANGE OPERATIONS 78 Article 99 - Purchase or Sale of Coined Gold or Silver 78 Article Exportation of Precious Metals 79 Article Opening and Operation of Bank Accounts of Non-residents in Domestic Currency related to Capital Operations 79 Article Opening and Operation of Bank Accounts in Foreign Currency 80 SECTION II - CONTRIBUTIONS TO COMPLEMENTARY SOCIAL SECURITY SCHEMES ABROAD 81 Article Contributions to Complementary Social Security Schemes Abroad 81 SECTION III - OTHER FOREIGN EXCHANGE OPERATIONS NOT SUBJECT TO AUTHORIZATION 82 Article Physical Entry or Exit of Foreign Banknotes and Coins 82 Article Physical Entry and Exit of National Banknotes and Coins 82 CHAPTER VI - FOREIGN EXCHANGE SPECIAL REGIMES 83 SECTION I - TRADING IN BORDER AREAS 83 Article Foreign Exchange Trading under Border Areas Special Regime 83 Article Mínimum Conditions for Foreign Exchange Trading under Border Areas Special Regime 83 Article Application for Authorization 84 Article Duty of Information 85 SECTION II - TRANSFER OF GAMBLING WINNINGS 85 IX

14 Article Scope 85 Article Transferability 85 Article General Requirements for Transferring Gambling Winnings 85 Article Winnings deriving from Gambling in Foreign Currency 86 Article Special Registration 87 Article Authorization to Transfer or for Physical Exit 87 Article Distribution of the Gambling Winnings Certificate 88 Article Conversion of Winnings in Foreign Currency into Domestic Currency 88 Article Transfer Mechanisms 88 Article Partial Foreign Exchange Trading in the Context of Gambling Operations 88 Article Provision of Foreign Exchange Information and Oversight 89 Article Supplementary Regime 89 SECTION III - STOCK EXCHANGE OPERATIONS 89 Article Scope 89 Article Stock Exchange Operations Performed by Non-residents 90 Article Transfer of Invested Funds and Respective income 90 Article Operations Related to Foreign Securities Traded in the Mozambique Stock Exchange 90 Article Operations related to Securities Listed in the Mozambique Stock Exchange Traded Abroad 91 Article Duty of Verification 91 Article Duty of Information 91 SECTION IV - OTHER FOREIGN EXCHANGE SPECIAL REGIMES 92 Article Other Special Cases Governed by Specific Regulation 92 CHAPTER VII - FINAL PROVISIONS 92 Article Sanctions and Instructions 92 X

15 NOTICE Nº 04/GBM/2011 of July 8, Sources of Provisioning of Bank Accounts in Foreign Curreny held by Resident Corporate Entities 97 NOTICE Nº 05/GBM/2011 July 8 - Opening of Residents Bank Accounts in Foreign Currency 102 ANNEX TO NOTICE Nº 05/GBM/ Application Form for Opening Resident`s Bank Account in Foreign Currency 105 XI

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17 FOREIGN EXCHANGE LAW LAW Nº 11/2009 OF MARCH 11

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19 FOREIGN EXCHANGE LAW LAW Nº 11/2009 OF MARCH 11 Taking into account the need to revise the Law Nº 3/96 of January 4, the Foreign Exchange Law, in order to make it suitable to the operation standards of a market of free movement of people, goods and services, and therefore devoid of any restrictions on payments and transfers in international current transactions and other related aspects, the Parliament, pursuant to the paragraph 1 of Article 179 of the Constitution, determines: ARTICLE 1 (Subject) This law aims to regulate actions, business, transactions and the whole kind of operations which: a) Take place between residents and non-residents and which result or may result in payments or receipts abroad; b) provided that they do not fulfill the requirements mentioned in the previous paragraph, are qualified, by law, as foreign exchange transactions. Law nº 11/2009, of March 11, Foreign Exchange Law 1

20 ARTICLE 2 (Scope of Application) 1. This law regulates: a) The performance of foreign exchange transactions by non-resident individuals or companies, when such transactions relate to goods or monetary assets held in the national territory, and rights over such goods or monetary assets, or when they refer to activities held in the aforementioned territory; b) The performance, by residents, of foreign exchange transactions related to goods, monetary assets or acquired, generated rights or located abroad over which there is a legal obligation of repatriation; c) The performance, by residents, of foreign exchange transactions related to goods or monetary assets held in the national territory or rights on such goods or monetary assets. 2. For the purposes of the preceding paragraph, they are regarded as activities performed in the national territory, the services provided, the transfer of rights and charged or alienated goods when located, produced, used or exploited in the country. ARTICLE 3 (Foreign Exchange Residence) 1. For the purposes of this Law, the following entities are considered residents in the national territory: a) National citizens who live in Mozambique or whose stay abroad does not exceed one year; b) National citizens whose stay abroad for a period equal to or greater than a year, is owing to health or study reasons; c) All foreign citizens living in Mozambique for more than a year, except diplomats, consular representatives or equivalent, foreign military personnel on governmental duties in the country, as well as their family members; 2 Law nº 11/2009, of March 11, Foreign Exchange Law

21 d) Private companies with head-office in the national territory; e) Mozambican public companies as well as public funds endowed with administrative and financial autonomy; f) National diplomatic officials, consular representatives or equivalent, military personnel on government duties abroad, as well as their family members; g) The branches, agencies, subsidiary, or any other forms of representation of non-resident companies legally established in the national territory. 2. Under provisions of the present article, in case of doubt, it is presumed that the concerned person is resident, being the responsibility of such entity to clarify such quality. ARTICLE 4 (Duty of Verification and Information) 1. The entities authorized to conduct foreign exchange trading shall verify, before executing the operations in which they participate, their reality, nature and compliance with the legal provisions and regulations. 2. For the purposes of the preceding paragraph, the parties shall provide the necessary proof for legal and economic justification of the requested operation, namely those relating to the determination of subject, object, amount and date of demand. 3. The entities referred to in paragraph 1 of the present article shall submit the information regarding the foreign exchange transactions held to the Banco the Moçambique, accordingly. ARTICLE 5 (Foreign Currency) For the purposes of provisions established in the present Law, foreign currency is defined, in the respective regulations and complementary legislation, as banknotes and coins with legal tender in the issuing country and any other means of payment abroad, denominated in currency or unit of account used in international clearings or payments. Law nº 11/2009, of March 11, Foreign Exchange Law 3

22 ARTICLE 6 (Foreign Exchange Operations) 1. All foreign exchange transactions are subject to registration, pursuant to the applicable regulations. 2. Without prejudice to the registration obligation set out in the previous paragraph, the execution of foreign exchange operations classified as current transactions is not subject to authorization. 3. Without prejudice to the preceding paragraph, the execution of the following foreign exchange operations requires authorization by the foreign exchange authority under the terms and conditions to be defined in specific regulations: a) The purchase or sale of coined gold or silver; b) The exportation of gold bullion or in ingot or in other non crafted form, silver, platinum and other precious metals; c) The opening and operation of non-residents bank accounts in domestic currency, when related to capital transactions; d) The opening and operation of residents bank accounts in foreign currency or units of account used in international clearings or payments; e) The granting of credit to residents in foreign currency, including through discount on bills of exchange, promissory notes, invoice statements, denominated or payable in foreign currency or in domestic currency, when such securities involve non-residents as withdrawers, acceptors, endorsers, guarantors, either as subscribers or as issuers; f) The purchase or sale of foreign debt securities coupons; g) Transactions denominated in foreign currency, in units of account that involve or may involve total or partial settlement of capital transactions held between residents and non-residents; h) Transactions denominated in domestic currency in units of account that involve or may involve total or partial settlement of transactions of capital held by non-residents; 4 Law nº 11/2009, of March 11, Foreign Exchange Law

23 i) Transfers to and receipts from abroad of any monetary assets or means of payment which do not fit in the situation envisaged in the preceding paragraph; j) The foreign exchange rate arbitration; k) The import and export or re-export, when held by institutions authorized to conduct foreign exchange trading: (i) (ii) foreign banknotes or coins in circulation and other external means of payment; bills of exchange, promissory notes and invoice statements, shares or bonds, whether domestic or foreign, or coupons, as well as government bonds. 4. For the purposes of paragraphs 2 and 3 of the present article, current transactions are payments or receipts in foreign currency that are not for capital transfer purposes, namely due payments related to foreign trade, money remittances for householder expenditures and other current obligations under the terms to be regulated. 5. The capital transactions subject to authorization by the foreign exchange authority under the terms and conditions to be regulated, are as follows: a) Foreign direct investment; b) Real estate investment; c) Operations on investment certificates in collective investment undertakings; d) Opening and operation of bank accounts in financial institutions abroad; e) Credits related to merchandise or provision of services; f) Financial loans and credits; g) Guarantees; h) Transfers pursuant to insurance contract; Law nº 11/2009, of March 11, Foreign Exchange Law 5

24 i) Transactions in securities and other instruments traded in money and capital market; j) Currency import and export; k) Personal loans; l) Other operations qualified as capital transactions which may eventually be defined by Law. ARTICLE 7 (Entities Authorized to Conduct Foreign Exchange Trading) 1. For the purposes of the present Law, foreign exchange trading is defined as the performance on regular basis of foreign exchange operations, on its own or on behalf of others, for profit purposes. 2. The entities authorized to conduct foreign exchange trading are as follows: a) The banks; b) The foreign exchange bureaux; c) Travel and tourism agencies; d) Hotels and similar establishments; e) Other organizations or institutions that may be defined by Law. 3. The Cabinet is responsible for defining the terms and conditions to govern the performance of the activity referred to in paragraph 1 of the present article. ARTICLE 8 (Entry and Exit of Foreign Currency) 1. The entry into the national territory of foreign currency as well as other means of payment abroad is free, however the respective amounts shall be subject to declaration requirement whenever they exceed the limits established in the respective regulation. 6 Law nº 11/2009, of March 11, Foreign Exchange Law

25 2. The exit of foreign currency as well as other means of payment abroad is free for non-residents, up to the limit declared at entry in the country, under the terms of the preceding paragraph. 3. The exit of foreign currency as well as other means of payment abroad is free for residents, though they shall prove retention and legitimate ownership through a document issued by the authorized foreign exchange operator, within the limits set out in the respective regulations. ARTICLE 9 (Obligation to Declare and Remit Foreign Exchange Assets) 1. The resident entities shall be required to declare the monetary assets and rights acquired, generated or held abroad. 2. Without prejudice to the preceding paragraph, the resident entities shall remit to the country the revenues resulting from export of goods, services and foreign investment. 3. The terms and conditions of remittance of export revenues are defined in the respective regulation. ARTICLE 10 (Contraventions) The infractions listed below are regarded as foreign exchange contraventions, punishable by a fine from ten to one hundred thousand Meticais (from 10, MT to 100, MT), if the offender is an individual, or from forty to four hundred thousand Meticais (from 40, MT to 400, MT), if the offender is a corporate entity: a) The execution of any exchange transaction without registration under the terms established in the present Law or in the regulation; b) The execution of capital import, export or re-export operations, as well as their total or partial settlement, without authorization by the competent authority, when legally required; Law nº 11/2009, of March 11, Foreign Exchange Law 7

26 c) The execution of export operations of coined gold or silver, in ingot or bullion or in any other non crafted form, as well as platinum and other precious metals without authorization by the competent authority, when legally required; d) The importation, exportation or re-exportation of foreign banknotes and coins in circulation and other means of payment abroad without authorization by the competent authority, when legally required; e) The opening and operation of non-residents bank accounts in domestic currency, when related to capital transactions, as well as the opening and operation of residents bank accounts in foreign currency or in units of accounts used in international clearings or payments, without observing the provisions under the present Law or in the applicable regulation; f) The granting of credit in foreign currency to residents, including through discount on bills of exchange, promissory notes and invoice statements, denominated or payable in foreign currency or in domestic currency, when such securities involve non-residents, without authorization by the competent authority, when legally required; g) The failure to declare monetary assets and rights acquired, generated or held abroad by resident entities, when legally required; h) The failure to comply with the special duty to remit to the country the revenues deriving from exports of goods, services and foreign investments by resident entities, when legally required; i) Transfers to and receipts from abroad of any monetary assets or means of payment, without observing the provisions provided for under the present Law or in the applicable regulation; j) The violation of mandatory provisions provided for under the present Law and its regulations, not envisaged in the preceding paragraphs. 8 Law nº 11/2009, of March 11, Foreign Exchange Law

27 ARTICLE 11 (Particularly Severe Contraventions) 1. It is a particularly severe contravention, punishable by a fine from twenty thousand to two hundred thousand Meticais (20, MT to 200,000.00MT) if the offender is an individual, or from a hundred thousand to a million Meticais (100, MT to 1,000, MT) if the offender is a corporate entity, to commit simultaneously more than one foreign exchange contravention. 2. The penalty established in the preceding paragraph shall be aggravated for those who commit one foreign exchange contravention as long as it results in payment, receipts or in any other form of property increase in the amount equal or greater than the equivalent to six hundred thousand Meticais (600, MT). ARTICLE 12 (Accessory Penalty) 1. The goods and monetary assets, used or obtained from illegal foreign exchange trading shall be seized by the Government. 2. Depending on the severity of the foreign exchange infraction, the following accessory penalties shall also be applied: a) Total or partial suspension of the authorization for foreign exchange trading, with or without closing the establishment; b) Prohibit the performance of foreign exchange trading activity, with or without suspending the business for a period not exceeding that of the prohibition. 3. The suspension, inhibition, temporary closure or prohibition shall be set between a minimum of six months and a maximum of one year. ARTICLE 13 (False Declarations) False declarations in order to obtain the necessary authorization to perform foreign exchange operations shall be punished with the same penalty that would apply for a consummated infraction. Law nº 11/2009, of March 11, Foreign Exchange Law 9

28 ARTICLE 14 (Responsibility of Companies, Partnerships and Individual Agents) 1. Individuals or companies, even if irregularly established, as well as associations without legal personality may be jointly liable or not for committing the offenses established under the present Law. 2. The company s responsibility shall not exempt the members of the respective bodies that hold management positions, or those acting on its legal or voluntary representation, from individual responsibility, including the criminal one. 3. The fact that the type of legal offense requires certain personal elements, which can only be observed in the represented entity, or requires the agent to commit the act on his/her own interest, whereas the representative acted in the interest of the represented entity, shall not exempt the individual agents in representation of third parties from the responsibility. 4. The companies and partnerships referred to in the preceding paragraph shall be jointly liable for payment of fines for which their representatives or employees have been condemned, unless it is proved that they acted against the order or instruction of the employer or represented entity. ARTICLE 15 (Legal Presumption of Responsibility) It is presumed that those who act on behalf of or for a third party are acting in accordance with received instructions, regardless of any individual responsibility that may exist. ARTICLE 16 (Responsibility of Managers and Employees) The provisions established under articles 313, 314, 317, 318, and 322 of the Penal Code, shall apply, with necessary adaptations, to the managers, employees or servants of the institutions liable for authorizing foreign exchange trading. 10 Law nº 11/2009, of March 11, Foreign Exchange Law

29 ARTICLE 17 (Active and Passive Corruption) Those who, under the present Law, perform acts of active or passive corruption, under the terms of penal legislation, shall be punished with a more severe penalty that applies to the infraction under provisions provided for in the underlying legislation. ARTICLE 18 (Statute of limitation) 1. The criminal proceedings for foreign exchange contravention shall prescribe three years after the infraction. 2. The fines and accessory penalties prescribe within the same time period that shall be counted from the date of the final sentence. ARTICLE 19 (Pre-Sentence Investigation and Decision on Processes under the Competence of the Banco de Moçambique) 1. The Banco de Moçambique shall be responsible for conducting the presentence investigation and deciding on processes related to foreign exchange contraventions committed by institutions under its supervision or through them. 2. After the contravention charges have been filed, the accused shall be notified in order to submit, if he/she wishes, a plea of not guilty in writing within ten days. 3. The notification referred to in the preceding paragraph shall be done through a registered letter with acknowledgement receipt. 4. The police authority and public services shall provide all necessary assistance for a proper inquiry and pre-sentence investigation of cases under the competence of the Banco de Moçambique. 5. Without prejudice to the paragraph 1 of the present article, if the Banco de Moçambique acknowledges the existence of criminal evidence during the presentence investigation, it shall inform the Public Prosecutor in order to initiate the relevant criminal proceedings. Law nº 11/2009, of March 11, Foreign Exchange Law 11

30 ARTICLE 20 (Pre-Sentence Investigation and Decision on Other Cases) 1. The Police shall be responsible for conducting the pre-sentence investigation of cases not included in paragraph 1 of the previous article. 2. When the infraction is detected, the police authority shall raise the competent official statement, which shall be transcribed and processed in accordance with the general terms of the penal processes. ARTICLE 21 (Penalty Special Regime) 1. Without prejudice to articles 19 and 20, whenever the penalty to be applied does not exceed one fifth of the maximum amounts indicated in crime penalties provided for under article 10, the accusing entity may waive the prior deduction of charges against the accused. 2. When exercising the power assigned by the preceding paragraph, the accusing entity shall notify the offender to pay the fine within 10 days, or, if he/she wishes, to claim in writing, upon presentation of deposit proof of the amount or bank guarantee of the fine, within the same time period. 3. In case of complaint, for any legal purposes, it equals to a plea, whereby an appeal against the decision in relation to it may be submitted under the terms of paragraph 2 of the article 23 and article 24 of the present Law and under the general terms of the penal process. ARTICLE 22 (Seizure of Monetary Assets) 1. Banknotes and coins, cheques and other securities, or monetary assets which are the subject of infraction may be seized upon presentation of a proof, when such seizure is deemed necessary or in cases where there are evidences that the infraction results in the seizure of assets by the Government, as an accessory penalty. 12 Law nº 11/2009, of March 11, Foreign Exchange Law

31 2. The seized monetary assets shall be deposited in a bank, nominal to the accusing entity, to guarantee the payment of the fine and court proceeding costs. ARTICLE 23 (Decision under the Competence of the Judicial Tribunals) 1. The Judicial Tribunals shall be responsible for decisions on infractions provided for under the present Law, except those established under paragraph 1 of article 19, which are assined to the Banco de Moçambique. 2. The decisions taken under provisions of the preceding paragraph may be subject to an appeal under provisions of the general penal process. ARTICLE 24 (Appeal to Decisions under the Competence of the Banco de Moçambique) 1. The sentence issued forth by the Banco de Moçambique can be subject to an appeal under general provisions and can be brought to the Judicial Tribunal of the Province where the infraction was committed, within fifteen (15) days after notification of the final sentence. 2. The appeal shall have suspense effect after the accused has previously deposited the fine amount in a bank, nominal to the Banco de Moçambique, unless the seized amounts are enough for that purpose. ARTICLE 25 (Coercive Collection, Destination and Fines Updating) 1. The fines provided for under the present Law, if not paid voluntarily within the legal time limits, shall be subject to coercive collection procedures as Government debts. 2. The Cabinet is assigned power, by decree, to update the amounts of the fines provided for under the present Law. 3. The fines collected under provisions of the present Law shall constitute Government revenues. Law nº 11/2009, of March 11, Foreign Exchange Law 13

32 ARTICLE 26 (Subsidiary Penal Regime) The provisions provided herein and, complementarily by the general penal law, shall apply to infractions provided for under the present Law. ARTICLE 27 (Foreign Investment) In addition to the provisions expressly established in specific legislation, the present Law shall apply to foreign exchange transactions related to foreign investment. ARTICLE 28 (Special Cases) The following cases are under special treatment: a) Remittances from Mozambican emigrants; b) Trading in border areas; c) Transfers of gambling winnings or social entertainment practices by nonresident players, in venues authorized by the relevant entity, in accordance with the terms established by Law; d) Stock exchanges; e) Free trade zones; f) Other situations specified in special legislation. ARTICLE 29 (Regulation) The Cabinet shall be responsible for regulating the matters established in the present Law, within one hundred and eighty (180) days after its publication. 14 Law nº 11/2009, of March 11, Foreign Exchange Law

33 ARTICLE 30 (Transitory Provisions) Unless contrary to the provisions established under the present Law, the regulation currently in force shall remain valid, until the regulation referred to in article 29 of the present Law is adopted. ARTICLE 31 (Revocation) The Law No. 3/96, of January 4, and any legislation contrary to the provisions of this Law, is hereby revoked. ARTICLE 32 (Entry into Force) This Law enters into force on the date of its publication. Approved by the Parliament, on October 31, Eduardo Joaquim Mulémbwè The President of the Parliament Enacted on January 23, To be published. ARMANDO EMÍLIO GUEBUZA, The President of the Republic of Mozambique. Law nº 11/2009, of March 11, Foreign Exchange Law 15

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35 THE CABINET DECREE Nº 83/2010 OF DECEMBER 31

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37 THE CABINET DECREE Nº 83/2010 OF DECEMBER 31 In order to regulate the Law nº 11/2009, of March 11, which establishes the foreign exchange regime in the country, the Cabinet, in the performance of its competences assigned by article 29 of the same Law, determines: Article 1. The Regulation of the Law nº 11/2009, of March 11 - Foreign Exchange Law, is approved and constitutes the integral part of the present Decree. Article 2. All contrary regulatory norms are revoked. Article 3. The present Decree enters into force 90 days after its publication date. Approved by the Cabinet. To be published. The Prime Minister, Aires Bonifácio Baptista Ali 19

38 FOREIGN EXCHANGE LAW REGULATION CHAPTER I GENERAL PROVISIONS SECTION I PURPOSE, SCOPE AND DEFINITIONS Article 1 (Purpose) The present Regulation establishes the rules and procedures to be observed in foreign exchange acts, businesses, transactions and operations, in the context of the Law nº 11/2009 of March 11 The Foreign Exchange Law, in accordance with its principles and norms. Article 2 (Scope of Subjective Application) The present Regulation applies to all intervening parties in acts, business, transactions and operations governed by the Foreign Exchange Law, as well as to the entities identified below responsible for ensuring the compliance with the applicable norms: 1. Individual or corporate entities assigned rights and obligations in the performance of such acts, businesses, transactions and operations; 2. Entities authorized to perform foreign exchange operations; 3. Regulatory, supervisory and legal administration entities, in the scope of competences duly assigned by Law. Article 3 (Definitions) For the purposes of the present Regulation, the following shall be understood as: a) Exchange rate arbitrage, the faculty of setting the rate in domestic currency to be paid or received in purchasing or selling foreign currency; 20

39 b) Foreign Exchange Authority, the Banco de Moçambique, in accordance with the terms of the respective Organic Act; c) Bank, the type of financial institution, as qualified by the Law that regulates the constitution and activities of financial and non-financial institutions; d) Goods, everything that, being tangible or not, can be subject to international trade; e) Foreign Exchange Authorization bulletin, the hardcopy or electronic document through which the Banco de Moçambique authorizes the applicant to perform a foreign exchange operation; f) Foreign Exchange Registration Bulletin, the hardcopy or electronic document through which the Banco de Moçambique formalizes and certifies the registration of a specific foreign exchange operation; g) Investment Certificates in Collective Investment Undertakings, shares and other investment securities, bonds and several securities and instruments normally traded in financial markets; h) Partial foreign exchange trading, the performance, on professional basis, of foreign currency sale and purchase operations, strictly related to a nonfinancial primary activity, in accordance with the terms authorized by the Banco de Moçambique; i) Consignment, the act of delivering goods or merchandise by the consignor to the consignee; j) Consignor, the individual or company, or its agent supplier of goods or merchandise; k) Consignee, the individual or company duly indicated in the shipment document that is entitled to claim the goods or merchandise from the transporter at the destination, assuming, for legal effects, that he/she is the owner of the cargo; l) Documentary letter of credit, an irrevocable commitment assumed by a bank (Issuing Bank), on request and instructions by one of its Importer client, to make a payment to an Exporter (Beneficiary), through an intermediary 21

40 bank, against presentation of specific documents, provided that all terms and conditions have been fulfilled; m) Identification documents, the valid document accepted under applicable legislation for identification of individual and corporate entities participating in transactions and operations, through financial and non-financial institutions; n) Single document, the customs declaration form confirming entry or exit of goods or merchandise in the national customs territory; o) Personal loans, lending operations in which the lender does not perform credit functions on professional basis for profit purposes or not; p) Financial credit and loans, lending operations involving financial institutions intervening in such operations professionally for profit purposes; q) Exportation, the exit of goods or merchandise and services from the national customs territory; r) Commercial Invoice, the document issued by the exporter, importer or supplier that formalizes the transaction; s) Pro-forma Invoice, the preliminary document issued by the exporter, upon request by the importer, to initiate procedures for the importation, which contains final invoice elements, but without binding payment to the buyer; t) Quota, the deductible part foreseen in the insurance policy as the direct charge of the insured entity, in case of incident, beyond which the insurer covers the indemnity amount, within the agreed limits; u) Chartering, the contract in which one of the parties, owner or manager of ships, aircraft, railway and road transports the freighter is compelled to concede to the other party the charterer or shipper - the use of the whole or part of the ship, aircraft, railway and road transport for maritime, air, railway and road navigation purposes, upon payment of a freight amount; v) Bank guarantee, the document issued by a bank upon request by its client, in favor of another entity, under which the bank undertakes to compensate the beneficiary, in case the client fails to meet its obligations agreed with the other party; 22

41 w) Identification (of subjects, stakeholders or parties), the name or denomination, residence, as well as other relevant data stated in the identification document; x) Importation, the entry of goods or merchandise and services in the national customs territory; y) Consigned importation, the operation in which a resident entity, designated as the consignee, receives goods or merchandise from other non-resident entity abroad, designated as the consignor, to sell in its own account and name, within a certain time period or return them without any benefit, in case of failure in selling them; z) Physical importation and exportation of monetary assets, the entry and exit from the national customs territyory of foreign or domestic currencies, means of payment abroad, bills of exchange, promissory notes and invoice statements, shares, bonds, coupons, public debt securities, whether national or foreign, executed by institutions authorized to conduct foreign exchange trading; aa) Portfolio investment, investment in shares or any other forms of acquiring capital stakes, as well as in bonds and other securities and financial instruments; bb) Foreign direct investment, investment made to acquire a sustained interest in enterprises operating outside the investor s economy; any form of foreign capital contribution liable of pecuniary valuation, which constitutes capital or own resource or on the foreign investor s risk and account, coming from abroad and to be incorporated in the investment aimed to operationalize an economic activity project through a registered company and operating from the country; cc) Real Estate Investment, the purchasing, selling operations or renting of real estates between resident and non-resident entities, in the country or abroad; dd) Transaction settlement, the payment or other form of settling an obligation; ee) Merchandise, the goods subject of commercial transaction; ff) Foreign currency, the banknotes and coins with legal tender in the issuing countries and, any other payment means valid abroad denominated in currency or units of account used in international payments or clearing operations; 23

42 gg) Foreign currency book money, the monetary asset devoid of physical support in banknote or coin; hh) Physical foreign currency, the foreign banknotes and coins in circulation; ii) jj) kk) ll) Foreign exchange operation, any act, business or transaction performed between a resident and a non-resident, which results or may result in payment or receipt from abroad, or which may simply be qualified, by law, as foreign exchange; Stock exchange operations, those performed within a national or foreign stock exchange or related to them; Capital operations, those referred to in paragraph 5 of the article 6 of the Foreign Exchange Law; Merchandise operations, the acts or business among residents and non-residents involving transfer of property rights on movable goods intended for trade; mm) Partial foreign exchange operator, the entity authorized by the Banco de Moçambique to conduct foreign exchange trading, on professional basis, strictly related to a non-financial primary trading activity; nn) Direct payment, the payment method in which the importer receives the documents related to the transaction directly from the exporter, undertakes the clearance of goods at the customs and then sends the respective amount to the exporter, through its bank agent; oo) Advance payment, total or partial payment made by a resident to a nonresident and vice-verse, for importation or exportation of goods or services, before the actual delivery of goods or provision of services; pp) Post-payment, total or partial payment made by a resident to a non-resident and vice-verse for importation or exportation of goods or services, after the effective delivery of goods or provision of services; qq) Revenue, positive returns on an investment undertaken by individuals or corporate entities; 24

43 rr) ss) tt) Foreign exchange registration, the collection and maintenance of essential information related to a foreign exchange operation, including its manual or electronic processing, as well as the filing of the supporting documentation; Documentary Remittance or Collection, payment method used in goods and merchandise importation and exportation operations, which consists of the remittance of documents, namely commercial invoice, bills of lading, drafts or other documents designated in accordance with the international trade norms and practices, when charging the importer s bank, for delivery upon draft acceptance confirming the debt (forward settlement) or immediate payment (on-site payment); Remittance of revenues to the country, the remittance of income generated abroad by resident entities to Mozambique through the banking system; uu) Remittance by Mozambican emigrants, all transactions under which funds from abroad, ordered by Mozambican emigrants, are received in the country; vv) Re-insurance, the contract by which an insurance or re-insurance company arranges, in turn, insurance for part of the risks it takes; ww) Services, the delivery of an economic activity by a non-resident to a resident or vice-verse, in any of the following areas of economic activity: transportation, insurance, computer services, information, trade related services, royalties and licenses, government services and financing (excluding income, such as interests); xx) yy) zz) Spread, differential between the purchase and sale rates of foreign banknotes and coins; Current transactions, any payments or receipts in foreign currency that are not for capital transfer purposes, namely payments or receipts in connection with external trade, unilateral transfers or other transfers not subject to prior authorization by the Banco de Moçambique, in accordance with the law and the present Regulation; Transport through pipeline, transportation undertaken through oil or gas pipelines or electrical transmission channel, among others. 25

44 SECTION II PRINCIPLES AND GENERAL DUTIES SUB-SECTION GENERAL PRINCIPLES Article 4 (Liberalization of current transactions) 1. Without prejudice to its registration requirement in accordance with the terms of the article 6 of the present Regulation, the current transactions shall not require authorization by the Banco de Moçambique,. 2. For operational purposes, the Banco de Moçambique shall establish the table of classification of foreign exchange operations, indicating the respective computerized codes and the definitions of classification categories and subcategories, which shall contain detailed classification of current transactions. Article 5 (Subjection to prior authorization) 1. The capital operations, qualified as such under the terms of paragraph 5 of the article 6 of the Foreign Exchange Law, shall be subject to prior authorization by the Banco de Moçambique. 2. The execution of acts, businesses, transactions and operations, though are not capital operations, shall also require prior authorization by the Banco de Moçambique, in accordance with the terms of paragraph 3 of the article 6 of the Foreign exchange Law. Article 6 (Obligation to register foreign exchange operations) 1. The foreign exchange operations shall be subject to registration as provided for 26 under the following terms: a) At the Banco de Moçambique, in relation to operations that it has authorized;

45 b) At the Financial and non-financial institutions, in relation to operations they perform and which do not require authorization by the Banco de Moçambique. 2. The foreign exchange registration shall include the following, on cumulative basis: a) Gathering of all information regarding foreign exchange operations, namely identification of intervening parties, the nature of operation, amount, purpose and legitimacy. b) Electronic or manual processing of information, in the latter case when the former is not possible; c) File keeping of copies of support documentation; and d) Issuing of the relevant Foreign Exchange Registration Bulletin in hardcopy or electronic form. 3. The foreign exchange registration shall be done in accordance with the procedures established by the Banco de Moçambique. Article 7 (Obligation to declare foreign exchange assets) 1. Resident entities shall be required to declare all their monetary assets and the rights acquired, generated or held abroad to the Banco de Moçambique. 2. The declaration referred to in the above number shall be provided using the form instituted by the Banco de Moçambique, through one of the following options: a) Electronic form to be accessed as indicated by the Banco de Moçambique; b) Delivery of the hardcopy format to the Banco de Moçambique branches or other representations of the Banco de Moçambique; c) Postal courier with acknowledgement receipt to the Banco de Moçambique; d) Other channels indicated by the Banco de Moçambique for that purpose, when the above alternatives are not feasible. 27