June 07 2004
The new Company Law (1/2004), which entered into force earlier this year, is a milestone in the ongoing reform of the Angolan legal system. It modernizes the legal framework for corporate structures and ensures a high degree of stability and credibility, expected to be an important factor in attracting private investment.
The new law regulates in a systematic and organized manner the most important aspects and steps in a company's operations, ranging from incorporation to liquidation and dissolution. It also contains provisions on transformations, mergers and demergers.
The new law clearly defines five different types of company; of these, the company limited by quotas and the joint stock company naturally stand out, as they represent the overwhelming majority of corporate structures in Angola.
The company limited by quotas is a form of corporate structure usually adopted for smaller enterprises which involves a reduced number of quota holders. It requires a minimum paid-up capital of an amount equivalent in local currency to $1,000 and at least two quota holders. The company structure features (i) the general assembly, which represents all quota holders, and (ii) the management, which is responsible for the company's day-to-day affairs. The existence of a supervisory body is optional.
Typically tailored for large investments, the joint stock company usually has a significant number of shareholders and its shareholding structure normally serves as an important way to obtain financing. The joint stock company requires a minimum paid-up share capital of an amount equivalent in local currency to $20,000 and at least five shareholders. The mandatory bodies of the joint stock company are:
In certain special circumstances the auditing committee may be replaced by a sole auditor.
Of particular importance to the business community is the regulation of shareholders agreements for the first time under the new law. Although shareholders agreements are an important legal instrument through which to regulate the interests of company shareholders, and have been widely used in Angola for some years, hitherto they have not been regulated or even expressly mentioned in any statute. The new Company Law clarifies that such agreements are valid, among other things. However, as they only bind the signatory shareholders, any eventual default will not affect the company.
Liabilities arising from the exercise of the company's management and auditing duties are also regulated. As a general rule, both the directors and the members of the auditing committee are held liable for any damages caused to the company, to other shareholders or to creditors, unless they can prove that they acted without fault.
The new law has a whole chapter dedicated to groups of companies, distinguishing between companies under participation and those in a group relationship. 'Control' is defined as one company's ability to exercise a dominating influence on another. Control is obtained when one company holds the majority of the share capital or the relevant voting rights of another, or has the right to appoint more than half of the members of the management and monitoring bodies.
Companies incorporated before the new law's entry into force should increase their share capital in accordance with the new minimum statutory requirements. Any clauses of existing articles of incorporation which are not in compliance with the new law will be deemed to have been automatically replaced by the new mandatory rules. The new Company Law seems to be a clear indicator of the commitment of the Angolan authorities to ensuring that the legal system keeps pace with the development of the economy.
For further information on this topic please contact Alberto Galhardo Simões at Miranda, Correia, Amendoeira & Associados' Lisbon office by telephone (+351 21 781 4800) or by fax (+351 21 781 4802) or by email (Alberto.GalhardoSimoes@mirandalawfirm.com).
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Alberto Galhardo Simões