The New Commercial Code, approved by Decree-Law no. 1/2022 of 25 May, introduced in its wording the figure of the Ultimate Beneficial Owner (UBO). The concept, although new in Mozambican commercial legislation, was already contained in the Money Laundering Law, approved by Law no. 14/2013 of 12 August, which has since been repealed by Law no. 11/2022 of 7 July (hereinafter "New Law on Combating and Preventing Money Laundering and Financing of Terrorism").
The reference of the New Commercial Code to the New Law on Combating and Preventing Money Laundering and Terrorist Financing on this matter generates some doubts of interpretation, considering that the scope of application of both diplomas is different, an issue that we take into consideration in the analysis below on the obligations related to this matter.
1. Definition of UBO
The New Commercial Code does not provide a definition of the concept of UBO, which is included in the Glossary of the New Law on Combating and Preventing Money Laundering and Terrorist Financing, which defines the Ultimate Beneficial Owner as the natural person who ultimately owns or has ultimate control of a customer and/or the person in whose interest a transaction is carried out. The concept of Ultimate Beneficial Owner also includes the people who effectively control a legal person or an entity without legal personality. Specifically, the Ultimate Beneficial Owner of an entity covered by the duty of identification and communication should be considered the UBO:
a) If it is a legal person:
i. natural persons who ultimately have direct or indirect ownership or control of 10% or more of the capital of the company or of the voting rights of the legal person, other than a company listed on a regulated market that is subject to disclosure requirements consistent with international standards;
ii. natural persons who otherwise exercise control over the management of the legal person;
iii. natural persons who have direct or indirect ownership or control of 10% or more of the outstanding units or securitisation in a collective investment undertaking.
b) If it is a legal entity that administers and distributes funds:
i. natural persons who are beneficiaries of at least 10% of their assets, when the future beneficiaries have already been determined;
ii. the category of persons in whose main interest the legal person was incorporated or carries on business, where the future beneficiaries have not yet been determined;
iii. natural persons exercising control equal to or greater than 10% of the assets of the legal person.
2. Duty of identification of the UBO
Under the New Commercial Code, business companies, consortiums, as well as representations of national or foreign entities, must keep updated information regarding the identification of the Ultimate Beneficial Owners, supported by documents confirming their identity. The information referred to must be sufficient, exact and updated.
The law needs to be complemented with regard to the model in which the information must be kept, in particular the official model approved for this purpose.
Regarding the identification of the Ultimate Beneficial Owner , the New Commercial Code refers to the legislation on the prevention of money laundering. In this context, the New Law on Combating and Preventing Money Laundering and Terrorist Financing provides, in its article 20, states that the identification of the Ultimate Beneficial Owner must be performed by collecting at least the elements provided for in the scope of the identification duty and must be done based on documents, data or information from an independent and credible source. The law allows the use of a declaration, signed by the Ultimate Beneficial Owner, in cases of low risk of money laundering, financing of terrorism and proliferation of weapons of mass destruction, under terms to be regulated, and it is not clear whether the reference made in the New Commercial Code will also cover this simplified measure.
According to the law, the duty of identification covers the entity (companies, consortiums, as well as representations of national or foreign entities), its respective representatives and must be performed by means of a valid supporting document and the traceability of the Ultimate Beneficial Owner. In the case of legal persons or a legal arrangement, it covers the understanding of the ownership and control structure (Articles 16 and 19).
3. Duty to update
According to the New Commercial Code, the partner or shareholder is obliged to inform the company of any alteration to the identification elements provided, within 30 days as of the date on which such relevant alteration occurs. The law also states that, without prejudice to the above, the company must notify the partner or shareholder to, within 30 days, update its identification elements. We understand that the obligation is incumbent upon the company when it is aware of the update or potential change of its identification elements, regardless of the notification by the respective partner or shareholder.
4. Duty to communicate
Also according to the New Commercial Code, the information regarding the Ultimate Beneficial Owner must be communicated to the competent entity. This obligation must be substantiated by regulations determining who will be the competent entity and the terms under which the said communication must be made, although it is anticipated that the competent entity will be the Registry of Legal Entities, as provided for in the New Law on Combating and Preventing Money Laundering and Terrorist Financing (Article 19(5)).
5. Entities subject to the New Law on Combating and Preventing Money Laundering and Terrorist Financing
The entities subject to the New Law on Combating and Preventing Money Laundering and Terrorist Financing - i.e. financial institutions (described in Article 4) and certain non-financial entities (described in Article 5 and which include entities linked to the operation of social games and entertainment, entities practicing real estate mediation, lawyers when involved in transactions in the interest of their constituents or in other circumstances regarding certain activities such as the purchase and sale of real estate among others) - are subject to the duty to identify and communicate the Ultimate Beneficial Owner under the respective law, in much broader and more complex terms than those applicable to the duty to identify provided for in the New Commercial Code, which is explained given the nature of the activities carried out by the obliged entities that generate added duties from the point of view of preventing the criminality underlying the legislation.
In fact, the duty of identification unfolds into other duties such as the duty of verification and diligence, to which are added other duties such as the duty of risk assessment, the duty to refuse, to abstain, to keep documents, to report suspicious transactions, to examine, cooperate, train and control.
6. Failure to comply with the duty to identify the beneficial owner
The New Commercial Code does not expressly provide for the regime applicable to non-compliance with the obligations foreseen for the identification of the Ultimate Beneficial Owner , and it is anticipated that the matter will be included in the further regulations to be approved.
The entities obliged under the New Law for Combating and Preventing Money Laundering and Terrorist Financing are subject to the sanctions regime for non-compliance with the duties foreseen therein, which foresees the application of fines up to 10 000 000 MT for financial entities or 5 000 000 MT for non-financial entities which are legal persons.
7. Entry into force of the legal diplomas
The New Commercial Code, approved by Decree-Law no. 1/2022 of May 25, has been in force since September 25, 2022. In turn, the New Law on Combating and Preventing Money Laundering and Financing of Terrorism has been in force since 6 August 2022, awaiting the regulation of both diplomas.