A proper understanding of how security can be taken and how risk can be mitigated is of paramount importance to investors. Mozambican law allows lenders to take security over certain types of assets of a Mozambican borrower. As a general rule, any security created over property located in Mozambique in favour of a foreign entity must be approved by, and upon execution be registered with, the Mozambique Central Bank (Banco Central de Mozambique).
The creation, cancellation or transfer of proprietary interests over movable or immovable property are governed by the law of the jurisdiction where the property is located. This means that all security documents in relation to immoveable property are governed by Mozambican law.
In terms of the legal system, land belongs to the State and cannot be used as security. However, infrastructure, buildings, or improvements built on land can be used as security. The most common form of security over buildings, infrastructure and improvements built on land is a mortgage (hipoteca) which may be registered in favour of a foreign entity. A Promissory Agreement to Mortgage Immovable Assets (Contrato Promessa de Hipoteca de Bens Imoveis) is another unique t3T)e of security available in Mozambique.
Mortgages can also be created over tangible movable assets that are subject to registration such as aircraft, vessels and vehicles. A pledge (penhor) is a tjqae of security created over other movable tangible property that is not subject to registration if possession of the asset is given to the pledgee.
Intellectual property is usually pledged or assigned through an assignment of rights agreement. Shares and quotas can be pledged.
In general, depending on the type of security, execution of a public deed and registration with the relevant registry office might be necessary to perfect security. Security granted over immovable property must be registered with the Real Estate Registry Office (Conservatoria do Registo Predial). Security granted over shares must be registered with the Legal Entities Registry Office (Conservatoria do Registo Comercial).
In the absence of liquidation proceedings, enforcement of mortgages is effected by means of proper judicial proceedings. Enforcement of a pledge may either follow a judicial or extra-judicial procedure.