Differences Between the New Commercial Code and the Private Investment Law in Mozambique
The New Commercial Code (approved by Decree-Law No. 1/2022 of 25 May 2022) and the Private Investment Law (Law No. 8/2023 of 9 June 2023) are not the same. They are distinct pieces of legislation that complement each other within Mozambique's business and investment framework but serve different primary purposes. The Commercial Code is a broad, general regulation for all commercial activities, while the Private Investment Law is a specialized statute focused on attracting and regulating foreign and domestic investments, particularly those eligible for incentives. Both came into force in 2022 and 2023, respectively, as part of Mozambique's ongoing reforms to modernize its economy, which is projected to grow at 2.5% GDP in 2025, driven by FDI in sectors like natural gas and agriculture.
Below, I'll outline the key differences, including their scope, objectives, and practical implications for investors. This is based on official sources and analyses from legal experts like DLA Piper and Chambers and Partners.
Purpose and Objectives
New Commercial Code:
Aims to modernize and streamline the formation, operation, and governance of all commercial entities in Mozambique, regardless of whether they involve investment incentives. It repeals and updates the outdated 2005 Commercial Code (Decree-Law No. 2/2005), reducing bureaucracy, introducing flexible company structures (e.g., Simplified Joint Stock Company - SAS), and aligning with international standards for corporate transparency. The focus is on everyday business operations, such as contracts, company classification (micro, small, medium, large based on turnover and employees), and digitalization of corporate acts (e.g., online publication instead of just the Boletim da República).
Private Investment Law:
Specifically designed to promote and regulate private investments (both foreign and domestic) that qualify for government incentives. It repeals the 30-year-old 1993 Investment Law (Law No. 3/93) and establishes rules for eligibility, guarantees, and benefits to attract FDI. The goal is to channel capital into priority sectors (e.g., energy, agriculture, tourism) and less-developed regions, with a tiered system based on investment size and location.
Key Difference:
The Commercial Code is a "general playbook" for running any business, while the Investment Law is an "incentives toolkit" for larger, strategic projects. All investments must comply with the Commercial Code, but only qualifying ones tap into the Investment Law's perks.
Scope of Application
New Commercial Code:
Applies universally to all commercial acts and entities, including sole proprietorships, partnerships, limited liability companies (LDAs), public limited companies (SAs), branches, and representative offices. It covers incorporation, registration at the Conservatória do Registo das Entidades Legais (CREL), beneficial ownership disclosure (under Decree-Law No. 1/2024), governance (e.g., reduced notice periods for general assemblies from 30 to 15 days), and liquidation processes. Foreign investors can use it for 100% ownership in most sectors (exceptions: mining, defense).
Private Investment Law
Targetsspecific private investment projects valued over MZN 2.7 million (~US$42,000), submitted to the Agency for Promotion of Investments and Exports (APIEX) for approval. It excludes public investments, social projects, or those under public-private partnerships (governed by separate laws). Scope includes both local and foreign direct investment (FDI), with emphasis on "mega-projects" in extractives.
Key Difference:
The Commercial Code governs the "how" of setting up and running any company (e.g., 10-30 day registration via E-BAU or CREL). The Investment Law governs the "what" for incentivized projects, requiring pre-approval from APIEX before Commercial Code registration.
