The Mozambican commercial code provides that a loan with a maturity of 1 year or more, made by a third party who later becomes a shareholder of the borrower via equity subscription, becomes a shareholder loan. This has enforcement consequences for the lender, subordinates the loan and affects set-off because of the connection between the loan granted and the subsequent acquisition of equity.

The implications of the shareholder loan regime now applying to the lender are:

  • the shareholder holding the credit cannot demand the insolvency of the company on the grounds of that debt being unpaid;
  • in case of insolvency or dissolution of the company, the shareholder loan will only be repaid to the shareholder after full discharge of the company’s debts towards third parties;
  • it is not possible to set off the company’s credits against the shareholder loan;
  • any security over property (such as mortgage or pledge) created by the company to secure repayment of the loan to the shareholder is void; and
  • any assignment over contractual rights (such as receivables) would remain valid despite the subscription for shares by the secured lender.