This article aims to give a general overview about the path towards the opening of a company in Angola, bearing in mind the opportunities that Angolan Market currently offers and the challenges that potential investors may have in understanding the basis and ethos of the legal regime.
First, it is fundamental to explain briefly the more common types of companies, before describing more profoundly legal formalities needed to start a business.
Legislation regulating the incorporation of a company in Angola is foreseen in Angolan Commercial Companies Law (CCL), established by Law no. 1/04, of February 13th.
There are three types of unlimited liability companies (partnerships, limited partnerships and partnerships by shares) and two types of limited liability companies (Private Limited Liability Companies and Public Limited Liability Companies). The focus of this analysis will lay on these two types of limited liability companies, the most common in Angola and used by investors.
Limited Liability Companies
This type of companies is the most common in Angola. The option of the investor for a specific type of company depends on several factors, namely, the greater or lesser simplicity of the structure and operation, the amount of capital to invest, as well as confidentiality issues regarding ownership of share capital.
Private Limited Liability Companies (Sociedades por Quotas)
Private Limited Liability Companies are often used for smaller investments, having in many cases a familiar structure. There are several requirements for this type of companies. They must have a minimum of two shareholders, except in the case of a single-shareholder company, necessarily incorporated by a sole natural person.
– Share capital
Share capital is freely determined by shareholders. Nevertheless, must be appropriate to pursue the company’s scope. The share capital is divided into participations called “quotas” (shares), whose par value is expressed in local currency (Kwanzas) and corresponds to their admission value on the company. It is not possible to have a share with a value lower than USD 1,00.
Transfer of shares requires written form with presential recognition of signatures which must be registered and communicated in writing to the company. When the transfer is not made to another shareholder, consort, descendants or ascendants, must be accepted by the company.
Regarding asset liability, shareholders are jointly and severally liable for the whole of the share capital contributions. Claims of credits are limited to the assets of the company.
The law allows for the articles of association to set forth that one or more shareholders may also be liable for the company’s debts up to a certain amount. In this case, this liability may be jointly with the company or subsidiary. Liability of each shareholder may be different. In any case, this liability only obliges the shareholder while he maintains as shareholder and he has a right of recourse against the company.
– Governing bodies
Regarding governing bodies, a general meeting and a management body shall be formed. The supervisory board is optional in this form of company.
Shareholders, without no exceptions, may participate in the general meeting. Furthermore, except otherwise provided by the articles of association, resolutions are taken by simple majority of the votes in general meeting.
Private limited liability companies are managed by one or more directors, who may or not be the shareholders of the company and are appointed in the articles of association or by shareholder’s resolution to hold office for re-eligible terms (if articles of association or shareholder’s resolution establish any term) or until destitution, that can be deliberated by the shareholders at any time. Directors are entitled to receive a remuneration, which shall be set by shareholders’ resolution, except if articles of association establish that directors are not entitled to receive a remuneration.
– Profit distribution
Distributable profits are distributed as determined by the shareholders. If they do not establish in other way, at least 50% of yearly distributable profits are distributed by the shareholders.
Nonetheless, it is mandatory the constitution of a legal reserve that corresponds at least to 30% of share capital. Considering the legal reserve, 5% of liquid yearly profit shall be set aside until the reserve fulfills the demanded percentage of the share capital.
Public Limited Liability Companies (Sociedades Anónimas)
This type of companies is suitable for larger operations, when larger investments are at stake. Although having a more complex structure than a Private Limited Liability Company, allows greater flexibility to its shareholders.
A Public Limited Liability Company must have, at least, five shareholders, except when Angolan State or Public Companies are the major shareholder (in that situation, the company may have only two shareholders) and in the case of a single-shareholder company, necessarily incorporated by a sole natural person.
– Share capital
Regarding share capital structure, Commercial Companies Law sets as minimum capital, a value in Kwanzas that corresponds to USD 20.000,00 and each share must have a value of at least USD 5,00. The amount of share capital must be appropriate to carry out the corporate purposes and must be expressed in local currency. Regarding the payment of share capital, a Public Limited Liability Company may only be integrated, without public subscription, when the entire share capital has been subscribed and at least 30% has been paid up.
Public Limited Liability Company share capital must be divided into shares (acções), which may be nominative or bearer shares.
The transfer of shares is subject to some formalities and depends on the type of shares issued by the company.
In the case of bearer shares, the transfer involves simple delivery of the certificates to the transferee or to the depositary named by the transferee. If the certificates are already deposited with the depositary, the transfer is made by registry in his account .
In the case of nominative shares, the transfer takes effect by means of a declaration of assignment in the nominative share in favor of the new shareholder and the registration of the transfer with the issuer.
Articles of association may provide for pre-emptive rights of the shareholders, as well as require company’s consent for the transfer of shares.
Regarding asset liability, the liability of each shareholder is limited to the value of the shares he subscribed.
– Governing bodies
Concerning governing bodies, the company shall be composed by a general meeting (deliberative body), a board of directors (management body) and a supervisory board or statutory auditor (supervisory body).
The general meeting involves the participation of all the shareholders, and resolutions are passed by 50% of the votes in general meeting, not counting abstentions, except where law requires qualified majorities and/or where articles of association provide otherwise. Each share represents one vote, unless the articles of association determine in other way.
The board of directors comprises an odd number of directors established in the articles of association, who may be or not company’s shareholders, appointed in the articles of association or by shareholder’s resolution to hold office for re-eligible maximum terms of four years (the articles of association can foresee shorter terms). General meeting may establish a remuneration for directors.
Supervision of a Public Limited Liability Company shall be entrusted to a board of auditors (comprising three or five members) or to a statutory auditor.
– Profit distribution
Regarding mandatory profit distribution, shareholders are entitled to receive, as a mandatory dividend and on each fiscal year, the share of profits established in the articles of association or agreed by shareholder’s resolution. If these are omitted, at least 50% of distributable profits must be distributed.
Regarding legal reserve funds, of the net profit for the year, 5% shall be set aside as a fund for the legal reserve, until that reserve corresponds to 20% of share capital.
No matter the type of company chosen, the process of registering a company in Angola must obey several formalities. There are around eleven steps in the path towards the incorporation of the company:
- Obtaining documentation regarding company`s shareholders representative, that requires for individuals a photocopy of valid passport and tax number (in case of foreigners’ non-residents) and power of attorney with notarized signatures. For Legal Persons it is needed a photocopy of the articles of association, a photocopy of the Commercial registry certificate, photocopy of tax card and minutes containing the deliberation of the competent organ of the company approving the incorporation of Angolan company. This deliberation shall include: (i) the type of company to be incorporated, (ii) the name of the person who will sign on behalf of the company, (iii) the value of the share capital.
- Obtaining the certificate of availability for company’s name at the One-Stop Shop (an office that covers Legal Entities Registration, Bank, Tax Office, National Press, Social Security Institute and other services related with companies) that requires the form and a photocopy of identification document of the applicant, stating company’s proposed name and requesting the issuance of a certificate confirming that such name is acceptable and is not similar to other company’s name.
- Paying the registration fee.
- Obtaining company’s articles of association, to be prepared by lawyers adapted to the specific scope and operation of the company or filling a standard document offered by One-Stop Shop (standard articles of association is less complete and may have important omissions regarding company’s operation/relations between shareholders).
- Obtaining company’s tax ID.
- Notarizing company’s documents and registering the company. Public Notary will review all the documents and send them to the agencies involved for approval and filling, which does not impede/delay the process of registration.
- Registering in Social Security. Company and employees must be registered, and the required forms are downloaded, completed and presented at One-Stop Shop.
- Obtaining Commercial Operations Permit from Ministry of Commerce. The Applicant must file Commercial Registration Certificate, enrolling company’s directors, directors’ ID documents (copy of residence permit or passport with updated work permit for non-Angolan citizens), email and phone contacts.
- Legalizing company’s minutes book.
- Opening a bank account in the name of the Company to be incorporated and depositing its share capital, at any commercial bank authorized to operate in Angola, that generally requires: a copy of identification documents of the shareholders and members of the Board of Directors, certificate of company’s name reservation and filling forms.
- Delivering the declaration of commencement of activity at Tax Office, which requires the respective form, license and Commercial Registry Certificate.
The average duration of incorporation process is around 5 days but is possible to conclude it in 1 day, with the right assistance.
The average total cost of the incorporation depends on the type of company. Private Limited Liability Companies have a cost of 12.000,00 KZ (USD 24,00) and Public Limited Liability Companies a cost of 42.000,00 KZ (USD 81,00).