Mozambique: Legislation on emerging credit institutions and companies
Law no. 20/2020 of December 31, regarding Credit Institutions and Financial Companies legal regime, will enter into force on March 31, 2021, revoking Law no. 15/99 of November 1 and Law 9/2004 of July 21.
The most important modifications to the legal regime are, among others, the following:
- Banks, microbanks and credit unions are considered the possible types for credit institutions.
- Financial companies include factoring and investment companies, providers of payment services and mutual guarantee companies.
- The companies which provide payment services may be categorized in electronic currency institutions, fund transfer institutions and payment aggregators. Bank of Mozambique may establish other types of payment services companies.
- The proceeding to constitute a Credit Institution or Financial Company turned more rigorous; the applicants need to present information regarding the governance system, exchange operations, technological infrastructure, provisional accounts of the first five years of activity, identification of the true beneficiary of each share and documents regarding the source of the amounts which will be integrated in the share capital.
- Credit Institutions and Financial Companies shall pay two specific taxes, the licensing fee and an annual tax.
- Bank of Mozambique is obliged to decide an authorization request in 180 days (previously, the decision period was of 90 days).
- In case of refusal of the request, Bank of Mozambique must base its negative decision.
- The authorization to operate may be revoked by other reasons than the previously existent, namely by breach of the Anti-Money Laundering rules.
- Credit Institutions and Financial Companies are obliged to evaluate the members proposed to their executive or supervisory boards, producing a report that shall be attached to the special registry request.
- The new law also densifies the aspects which need to be considered regarding reputability, professional qualifications, independence, and availability of the members proposed to the executive and supervisory boards.
- The definition of a remuneration politic is now mandatory.
- It was set a larger number of rules connected with companies’ governance, namely regarding information duties.
- When these entities are in financial unbalance condition or at risk of being in such situation, they are obliged to elaborate and present a recovery plan.
- A new resolution regime is established, which is applicable to banks, microbanks and broker-dealer financial companies.
- Criminal penalties were aggravated for crimes as break of professional secrecy, accounting falsification and false statements; transgressional regime severity was also increased.
- Were added some transgressions to the transgressional regime, as the information duty violation and the non-presentation of the recovery plan; were also introduced specially severe transgressions, as the exercise of operations reserved for Credit Institutions and Financial Companies by other entities, the practice of ruinous management acts harming depositors, investors and other creditors, and the non-compliance of corrective intervention measures.
Concluding, the new legislation regulates with greater density the aspects related with Credit Institutions and Financial Companies, avoiding the lack of rules perceived during the finlast years and adapting the Mozambican Law to new credit/financial mechanisms.
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