CROSS-BORDER HANDBOOKS 19

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1 Directors Duties and Liabilities 2009 Angola Angola Víctor Félix, F Castelo Branco & Associados Corporate entities The most common types of corporate entities used are: Sociedades por quotas (). These are similar to private limited companies. are companies in which the share capital is divided into quotas and the shareholders are jointly and severally liable for their capital investment. The minimum share capital is the equivalent in Angolan Kwanzas to US$1,000 (about EUR781), and each quota must be equivalent to US$100 (about EUR78). Board composition and remuneration of directors 2. What is the management/board structure of a company? In particular: Is there a unitary or two-tiered board structure? Who manages a company and what name is given to these managers? Sociedades anónimas de responsabilidade limitada (). These are similar to joint stock companies. are companies in which the capital is held by its members and divided into shares, and each member owns a number of shares proportionate to his investment. The liability of each partner is limited to the amount of his capital share. The minimum share capital is the equivalent in Angolan Kwanzas to US$20,000 (about EUR15,617), and each share must be equivalent to US$5 (about EUR3.90). must have at least five shareholders. In addition, there are other less frequent forms, including companies where part or all of the shareholders have unlimited liability (sociedades em nome colectivo and sociedades em comandita) although these are very rare. This chapter discusses and, although are more relevant, mainly because their regulation in terms of corporate governance and directors duties is more comprehensive and is, in several cases, applicable to. There are no listed companies in Angola. Legal framework Who sits on the board(s)? Do employees have a right to board representation? Is there a minimum or maximum number of directors or members of the managerial and supervisory bodies? Structure. In there is no board of administration and the directors are called managers. In, directors are called administrators. have a unitary board structure, comprising either an administration board (conselho de administração) or a single administrator (administrador único). When referring to both and, the term directors includes both administrators and managers. Management. must have one or more managers (gerentes), who must undertake all necessary and reasonable acts to fulfil the company s objectives. The managers acts are all subject to the law, the company s bye-laws and the shareholders assembly s deliberations. 1. What is the regulatory framework for corporate governance and directors duties? The following are the principal regulations: The Angolan Constitution. Law No. 1/04, of 18th of February (Partnerships Law). Legislative Act No (General Tax Code). Decree No. 5/95 of 2nd of April. The board of administration manages the company. The board of administration can delegate specific matters of management to one or more administrators (administradores delegados). Board members. This is only applicable for where the board comprises those administrators specified in the company s bye-laws or elected by the shareholders assembly. Employees representation. There is no legal obligation for employees to be represented on the board. CROSS-BORDER HANDBOOKS 19 This chapter was first published in the Cross-border Directors' Duties and Liabilities Handbook 2009 and is reproduced with the permission of the publisher,

2 Angola Directors Duties and Liabilities 2009 Number of directors or members. In both and, the minimum number of directors is one, but there is no maximum. A SARL s board of administration must have an odd number of administrators. 3. Are there any age or nationality restrictions on the identity of directors? Age restrictions Directors of both and must have legal capacity and must therefore be at least 21 years old. Removal of directors The shareholder s assembly decides on the removal of administrators or managers. The exception to this is in where administrators are appointed by the state or public departments. 7. Are there any restrictions on a director s term of appointment? In, there is no statutory time limit for managers appointments. However, company s bye-laws can set a fixed term of office. Nationality restrictions There are no nationality restrictions on directors of and. 4. In relation to non-executive, supervisory or independent directors: Are they recognised? Does a part of the board have to consist of them? If so, what proportion? Do non-executive or supervisory directors have to be independent of the company? If so, what is the test for independence or what makes a director not independent? What is the scope of their duties and potential liability to the company, shareholders and third parties? There is no concept of non-executive, supervisory or independent directors in Angola. 5. Are the roles of individual board members restricted? For example, can one person be the chairman and chief executive? In, administrators can only be appointed for a maximum of four years. 8. Do directors have to be employees of the company? Can shareholders inspect directors service contracts? Directors employed by the company In, the managers do not have to be employees. The managers usually have the right to a salary. In, the administrators do not have to be employees. The shareholders assembly establishes each administrator s salary. In both and, directors who were employees of the company before being appointed as directors can return to their activities as employees when the term of their directorship ends. Shareholders inspection In the manager s activities are subject to the decisions of the shareholders assembly and therefore the shareholders can inspect their service contracts. In, notwithstanding the power to examine the company s annual results, the shareholders cannot inspect the administrators service contracts. The SARL s board of administration can have a president, who has the deciding vote, assigned by the shareholders assembly. However, the roles of individual administrators are not restricted (see Questions 2 and 13). 6. How are directors appointed and removed? Is shareholder approval required? Appointment of directors In both and, the managers and the administrators are either: Specified in the company s bye-laws. Elected by the shareholders assembly. 9. Are directors allowed or required to own shares in the company? In both and, it is allowed but not mandatory for administrators and managers to own the company s shares or quotas. 10. How is directors remuneration determined? Is its disclosure necessary? Is shareholder approval required? Determination of director s remuneration In both and, the shareholders set the remuneration of each administrator or manager and therefore disclosure is a matter of course. 20 CROSS-BORDER HANDBOOKS This chapter was first published in the Cross-border Directors' Duties and Liabilities Handbook 2009 and is reproduced with the permission of the publisher,

3 Directors Duties and Liabilities 2009 Angola In, the company agreement may establish a remuneration committee. These committees are usual in the financial sector. Disclosure This is not applicable in Angola. Shareholder approval In both and the shareholders assembly has the final responsibility for directors remuneration. Management rules and authority 11. How is a company s internal management regulated? For example, what is the length of notice and quorum for board meetings, and the voting requirements to pass resolutions at them? Restrictions Any restrictions resulting from the decisions of the shareholders assembly and the company s bye-laws are not enforceable against third parties, unless it is proved that those third parties knew or should have known of these restrictions (for example, restrictions resulting directly from the law and changes to the company s byelaws, which have been registered in the Commercial Registry Office (Conservatória do Registo Comercial)). 13. Can the board delegate responsibility for specific issues to individual directors or a committee of directors? Is the board required to delegate some responsibilities, for example for audit, appointment or directors remuneration? In, the board of administrators may delegate specific issues to individual administrators, called administradores delegados (see Question 2). In, if there is more than one manager, the company s powers must be jointly exercised by all of them, except if the company s bye-laws provide otherwise. The shareholders assembly has the main responsibility of management in and decides the essential questions of the company s activities. The shareholders must be notified of the shareholders assembly 30 days in advance of the meeting. However, a shareholders assembly can take place without prior notification when all the shareholders are present and unanimously agree to a shareholders assembly. Decisions are made by a simple majority of the votes, without considering the abstentions. There are some exceptions, for example, for the removal of a manager, without just cause, an absolute majority is required. Each US$50 (about EUR39) invested in the share capital equals one vote. In, the administration board must gather at least once a month and whenever the president or two members convene it. The board of administration can only make decisions if the majority of its members are present at the meeting. To have force, decisions must be approved by the absolute majority of the votes of the administrators who are present at the meeting. Duties and liabilities of directors 14. What is the scope of a director s duties and personal liability to the company, shareholders and third parties? Please distinguish between civil and criminal liability under each of the following (if relevant): General duties. Theft and fraud. Securities law. Insolvency law. Health and safety. Environment. Anti-trust. Other. 12. Can directors exercise all the powers of the company or are some powers reserved to the supervisory board (if any) or a general meeting? Can the powers of directors be restricted and are such restrictions enforceable against third parties? Directors powers In the main powers are reserved to the shareholders assembly. The SARL s board of administration has full management powers and, as a consequence, the general meeting can only resolve on management matters on request from the board of administrators. General duties. A company s directors must act with the same diligence as a judicious manager and without prejudice to the shareholders and employees interests. Unless they prove that they have acted without fault, the directors are liable to the company for any damage caused by breaching the law and the company s bye-laws. However, in if a member of the administration board abstains from, or votes against, approving the decision in breach, he is not liable for the damage caused. This limitation of liability does not apply if they were present and did not express their objections to the decision in breach. The liability is excluded if their acts or omissions result from a decision of the shareholders assembly, even an invalid one. CROSS-BORDER HANDBOOKS 21 This chapter was first published in the Cross-border Directors' Duties and Liabilities Handbook 2009 and is reproduced with the permission of the publisher,

4 Angola Directors Duties and Liabilities 2009 Theft and fraud. Directors can be criminally liable for offences such as theft, fraud or extortion, among others. Securities law. There are no duties in relation to securities law. Insolvency law. A director can be personally liable for the company s fault or fraud-based insolvency. The insolvency court can treat the action against the director as a criminal case. In these situations, directors are also personally liable to the company s creditors. Health and safety. Directors are only responsible if their actions are criminal. Environment. Directors are only responsible if their actions are criminal. Anti-trust. There are no duties in relation to anti-trust law. Other. Directors can be jointly and severally liable for all tax and social security debts that cannot be collected from the company, which became due while they were in charge, if the company s assets are not enough for the payment of those debts. The controlling shareholders and parent companies are responsible for the debts of the controlled company. The controlled company may demand compensation for its annual losses from the controlling shareholders and parent companies, if they are higher than the created reserves. Transactions with directors and conflicts 18. Are there general rules relating to conflicts of interest between a director and the company? In and, directors cannot compete with the company without the shareholders consent. A director is in competition with the company if he practises any activity that comes within the company s object. In, the administrators, while exercising their administrative role, cannot: Practise any other employment elsewhere while also an employee of: the company; 15. Can a director s liability be restricted or limited? Is it possible for the company to indemnify a director against liabilities? a parent company; or a controlling shareholder. Directors liability cannot be restricted or limited. In, administrators must create a bond to secure their management, except if the bye-laws or the shareholders assembly decides otherwise. This bond can not be less than the equivalent in Angolan Kwanzas of US$20,000 (about EUR15,617). The bond may be claimed by the company through the other administrators, or through decision of the shareholders assembly to cover the company s losses caused by the administrator s management. Form employment contracts for themselves with other companies with terms that will outlast their position at administrator. The shareholders assembly must approve any significant business between directors and either the SARL or the SpQ. 19. Are there restrictions on particular transactions between a company and its directors? 16. Can a director obtain insurance against personal liability? If so, can the company pay the insurance premium? A director can obtain insurance against personal liability and the company may pay the insurance premium, if approved by the shareholders assembly. 17. Can a third party (such as a parent company or controlling shareholder) be liable as a de facto director (even though such person has not been formally appointed as a director)? In the Partnerships Law there is specific liability regulation for controlling shareholders and parent companies for the obligations of the controlled company as de facto directors. The following agreements between and its administrators must receive prior approval from the board of administration (the administrator concerned cannot take part in the meeting): Loans. Credits. Security for their obligations. Advances on their salary (up to their monthly income). This also applies when there is a third person acting as intermediary. There are no similar restrictions for. 22 CROSS-BORDER HANDBOOKS This chapter was first published in the Cross-border Directors' Duties and Liabilities Handbook 2009 and is reproduced with the permission of the publisher,

5 Directors Duties and Liabilities 2009 Angola 20. Are there restrictions on the purchase or sale by a director of the shares and other securities of the company he is a director of? There are no restrictions on the purchase or sale of securities, although the company s bye-laws may include them. Disclosure of information 21. Do directors have to disclose information about the company to shareholders, the public or regulatory bodies? The shareholders of both and can obtain information about the company s activities, including its financial reports. In addition, the managers and administrators must present to the shareholders assembly the management and financial reports with all the supporting documents. The financial reports must also be presented to the Commercial Registry Office. The management and financial reports must be disclosed to tax and social security authorities and, in the case of financial entities, to the Angolan National Bank. Minority shareholder action 24. What action, if any, can a minority shareholder take if it believes the company is being mismanaged and what level of shareholding is required to do this? If there is just cause, any shareholder can instigate the removal of a manager by bringing a judicial action against the company. Shareholders representing at least 10% of the share capital can remove an administrator at a shareholders assembly. In both and, one or more shareholders, with at least 10% of the company s share capital, can file a lawsuit against a director for damages caused to the company, if the company itself did not take such action. Internal controls, accounts and audit 25. Are there any formal requirements or guidelines relating to the internal control of business risks? Company meetings 22. Does a company have to hold an annual shareholders meeting? If so, when? What issues must be discussed and approved? There must be an annual shareholders meeting, which approves the yearly management and financial reports. This must occur in the first three months of each calendar year. It is also mandatory to approve the annual profit distribution. There are no formal requirements or guidelines relating to the internal control of business risks, but the company agreement or the shareholders assembly may create them. 26. What are the responsibilities and potential liabilities of directors in relation to the company s accounts? Unless they prove that they have acted without fault, the directors are liable to the company for any damage caused by breaching for the law and the bye-laws. 23. Can shareholders call a meeting or propose a specific resolution for a meeting? If so, what level of shareholding is required to do this? Directors can be jointly and severally liable for all of the company s unpaid taxes that have become due while they were in charge (see Question 14, Insolvency and Other). Any shareholder can request a meeting or a specific resolution on the agenda, by writing to the president of the board. This request must be granted. Shareholders representing at least 5% of capital stock can request a general meeting or resolution on the agenda by writing to the president of the board. This request must be granted. 27. Do a company s accounts have to be audited? do not have to have chartered auditors or a financial counsel. Their accounts are only controlled by the shareholders. The SARL s accounts must be audited, but not necessarily by a third company. may have a supervisory board which CROSS-BORDER HANDBOOKS 23 This chapter was first published in the Cross-border Directors' Duties and Liabilities Handbook 2009 and is reproduced with the permission of the publisher,

6 Angola Directors Duties and Liabilities 2009 is responsible for controlling and inspecting the company s management and its accounts, and analysing and preparing the financial report every year. can have a single chartered auditor if one of the following apply: Their shareholders have been reduced to two. Their share capital is less than the equivalent in Angolan Kwanzas to US$50 (about EUR39). The law allows this in certain specific cases. The chartered auditor can be a firm. Single chartered auditors must also have an assistant auditor. 28. How are the company s auditors appointed? Is there a limit on the length of their appointment? do not have to have chartered auditors or a financial counsel. (that is, the dominant company holds a majority of the dependent company s share capital, holds the majority of votes in the dependent s shareholders assembly, or has the right to nominate more than half of the dependent s administrators or members of the supervisory board). The partner of a company which has a dominant relationship with the company audited. Employees of the company or from companies which have a dominant relationship with the company audited. People who have positions in rival companies. Family members of the persons mentioned above. Persons who are auditors or administrators in five different companies, unless they are chartered accountants. Minors. People that have been declared insolvent. People prohibited from practising: in public office; commercial activities; The company s chartered auditors are appointed by the shareholders assembly. The company s first chartered auditors may be appointed in the company s bye-laws. Unless the bye-laws establish a minimum term, the designation or election of the company s chartered auditors is for a four years, although re-election is admitted (there are no limits on the amount of re-elections). as administrators or auditors. 30. Are there restrictions on non-audit work that auditors can do for the company that they audit accounts for? 29. Are there restrictions on who can be the company s auditors? There are no restrictions on non-audit work. 31. What is the potential liability of auditors to the company, its shareholders and third parties if the audited accounts are inaccurate? Can their liability be limited or excluded? do not have to have auditors or a supervisory board. The members of the supervisory board can all be shareholders, with the exception of one member, who must be a chartered accountant and not a shareholder. The single chartered auditor cannot be a shareholder (see Question 27). The following cannot be elected or designated as single chartered auditors or members of the supervisory board: Any beneficiary of the company. Any of the company s administrators from the last three years. Members of the board of administration or of the supervisory board of companies which belong to the same group or have a dominant relationship with the company audited do not have to have auditors or a supervisory board. Unless the auditor or the member of the supervisory board prove that they have acted without fault, they are liable to the company for any damage caused by a breach of the law and the company s bye-laws. Auditors have no specific responsibility as to the accuracy of the company s accounts, however, they have the same general responsibilities to the company as administrators (see Question 14). Therefore, if a member of the supervisory board abstains or votes against the approval of an account he is not liable for its damages. This limitation of liability does not apply if the auditors were in a position to vote and did not. The liability is excluded if the inaccuracy of the accounts results from a decision of the shareholders assembly, even an invalid one. 24 CROSS-BORDER HANDBOOKS This chapter was first published in the Cross-border Directors' Duties and Liabilities Handbook 2009 and is reproduced with the permission of the publisher,

7 Directors Duties and Liabilities 2009 Angola Corporate social responsibility 32. Is it common for companies to report on social, environmental and ethical issues? Please highlight, where relevant, any legal requirements or non-binding guidance/best practice on corporate social responsibility. Companies may have to employ a certain percentage of qualified Angolan workers (that is, workers with jobs requiring a specific level of education or professional instruction) to strengthen the relationship between public bodies and Angolan society. This is mandatory when the company has more than five qualified workers (Decree No. 5/95, of 2nd of April). Role of company secretary promoted by security exchange committee (NY) and Council of European Energy Regulators and Security Committee). Whistleblowing 35. Is there statutory protection for whistleblowers (persons who disclose criminal activity or other serious malpractice within a company)? If the people involved in the criminal activity or other serious malpractice present themselves to the authorities, they may have their sentence reduced. However, there is no statutory protection for whistleblowers who are not involved in the criminal activity. 33. What is the role of the company secretary in corporate governance? Angolan companies do not have company secretaries. Reform 36. Please summarise any impending developments or proposals for reform. Role of institutional investors and shareholder groups 34. How influential are institutional investors and other shareholder groups in monitoring and enforcing good corporate governance? Please list any such groups with significant influence in this area. Angola does not have developed rules regarding corporate governance, except for the the financial sector, which is supervised by the Angolan National Bank (Banco Nacional de Angola (BNA)). With the creation of the stock exchange, it is expected that corporate governance rules will be quickly implemented. Although Angola has seen strong economic growth, the implementation of the stock exchange is not due to occur until the first half of Angola does not have a competition regulator. However, institutional investors such as financial entities or companies controlled by multinationals contribute to the growth of corporate governance rules. The big multinational companies in the oil sector usually enforce international corporate governance rules (that is, those The implementation of a stock exchange is expected in the first half of 2009, which will have a strong impact on the corporate governance rules of the future listed companies (see Question 34). There are also plans to reform the tax legislation, which necessitates modifications in corporate governance and directors duties rules (that is, through the change of the accounting rules, the regime for non-payment of taxes, or crimes for companies and for directors and chartered accountants). However, the implementation of these plans is not certain as there has been no further discussion since the election of the new government in November contributor details Victor Félix F Castelo Branco & Associados T F E vmf@fcb-legal.com W We have found the package provided by to be a complete solution. Darren Dale, Principal, European Legal Solutions LLP. Corporate is the essential know-how service for corporate lawyers. Never miss an important development and confidently advise your clients on law and its practical implications. CROSS-BORDER HANDBOOKS 25 This chapter was first published in the Cross-border Directors' Duties and Liabilities Handbook 2009 and is reproduced with the permission of the publisher,

8 innovation through experience Corporate, Commercial and M&A Public/Administrative Law & Public Tenders/ Environmental Law Real Estate/Property/Construction Dispute Resolution Intellectual Property / Advertisement Employment, Benefits and Pensions Banking and Capital Markets Energy Tax LISBON Avenida da Liberdade, 249, 1º Lisboa Tel: (+351) Fax: (+351) fcbranco@fcb-legal.com PORTO Rua Domingos Sequeira, Porto Tel: (+351) Fax: (+351) porto@fcb-legal.com ANGOLA (in association with Vítor Félix Advogados) Rua Major Kanhangulo, 502-A Luanda, Angola Tel: (+244) Fax: (+244) victorfelix.advogados@snet.co.ao Offices in partnership: Rio de Janeiro, São Paulo and Macau Contact: Miguel F. Castelo Branco Website: