The Mozambique Civil Code governs the various types of collateral and security that are available to creditors. Mortgages and pledges are considered to be preferred securities. If a creditor has a right in rem, they have the right to be repaid from the proceeds of the sale of specific assets, which takes precedence over other creditors of the debtor, except for privileged creditors or where a similar security already exists.
As a general rule, the type of security created is determined by the creditor’s right in rem. Immovable property or real estate and movable assets that are subject to registration, such as vehicles, vessels, and aircraft, are typically mortgaged. In contrast, movable assets that cannot be mortgaged, as well as rights, such as shareholdings, are pledged.
Other available instruments that may be utilized include surety, debt confession, right of retention, novation, cession of receivables, and assignment of rights, such as contractual positions, debts, credits, and insurance.
Under Mozambican legislation, most securities are established and perfected through a written agreement between the debtor and creditor, with their respective signatures being certified by a notary public. However, in the case of mortgages, the debtor and creditor must sign a deed in the presence of a notary public. The deed must then be registered with the appropriate registry, depending on the asset being mortgaged.
In the case of pledges, particularly those pertaining to shareholding rights, the rules governing the creation and perfection of security depend on the method of materialization of the shareholding. Pledging shareholding rights in a joint-stock company or sociedade anónima, where the shareholding is represented by nominative shares, requires the endorsement of the share certificates by the debtor (pledgor), the registration of the pledge in the company’s share register book, and the delivery of the share certificates to the creditor (pledgee). If the shares are warrant-to-bearer, the delivery of the shares to the creditor (pledgee) is sufficient for the creation and perfection of the pledge.
When pledging rights in a private limited liability company or sociedade por quotas, in which the shareholding is represented by quotas, corresponding to percentages of the company’s share capital and not materialized in share certificates, it is necessary to execute a pledge agreement between the debtor and creditor, notify the company of the creation of the pledge (unless the prior consent of the company or shareholders for the creation of the pledge has been obtained), and register the pledge with the legal entities registry.
Creditors in Mozambique can use mortgages and pledges, as well as pledges over quotas, as recordable securities to confirm the existence or absence of liens with priority to their envisaged lien. To do so, they need to obtain updated and recent certificates from the applicable registry, depending on the asset being mortgaged, or from the legal entities registry when pledging quotas. When dealing with nominative shares, verifying the share certificates or the company’s share register book is sufficient to confirm the existence or absence of prior liens.
It is essential to note that if different securities are granted over the same asset, the prior in tempor, potior in iure principle applies, and the first creditor will be paid first, except for the right of retention. In cases where the security is subject to registration, the prior in tempor, potior in iure principle is assessed by reference to the registration date.
The costs and taxes to create and perfect any type of security include notary public and applicable registry charges, as well as stamp duty. Stamp duty is assessed on all documents, contracts, books, papers, and deeds designated in a schedule that is attached and forms an integral part of the Stamp Duty Code. Mortgages and pledges are subject to 0.3% stamp duty, payable by the borrower, and assessed with reference to the amount secured by such securities, unless the transactions are deemed ancillary to another transaction already subject to stamp duty in Mozambique. In such cases, the stamp duty rates are 0.5% over the loan amount when the maturity is equal to or higher than five years, 0.4% when the maturity is between one and five years, and 0.03% when the maturity is less than one year.
Corporate entities can hold collateral or security on behalf of project lenders and act as agents of the security trustee. However, they cannot provide security for third-party debts unless there is a justified self-interest on their part, or the third-party debtor is a company of the same group or is controlled by the entity providing the security. In such cases, the self-interest justification must be contained in a report or resolution approved by the board of directors.