Companies can finance themselves by the sale of their own shares (Sale Offer) or by issuing new shares (Subscription Offer). This form of financing allows companies to obtain the financial resources they need from investors through the capital market, in exchange for the distribution of their companies' profit in proportion to the shares held. Holders of shares are called shareholders, and the profit of their companies that is distributed to them is called dividend.
The entities that can sell the companies' shares or issue new shares are all the entities whose share capital is represented in the form of shares, namely limited liability companies. A limited liability company that wishes to finance itself via Shares will first have to become a limited liability company.
A company chooses financing through the issuing of Shares, for:
A sale of shares or issue of new shares of a company may be placed with a predetermined range of investors (Private Offering modality) or with an indeterminate range of investors (Public Offering modality).
An operation of sale or issue of new shares may be placed with investors, simultaneously in the Public and Private Offering modalities, in which case the transaction as a whole is considered to be a Public Offering.
The sale of shares or issue of new shares of a company that is done through Private Offering is not subject to authorisation by the Bank of Mozambique, so it is a relationship between the Company and the buyers or subscribers of Shares.
The sale or issue of new shares of a company that is done through Public Offering is subject to prior authorisation by the Bank of Mozambique, in its capacity as the Market Supervisor of Securities. Prior to the launch of a Public Offering trading of Shares, the company must submit to the Bank of Mozambique, through a financial institution, a set of documents consisting of:
If the Public Offering for Sale or Subscription of Shares is accompanied by any advertising campaign, the advertising material must also be authorised by the Bank of Mozambique before it can be disclosed to the public.
Until the date of the Private/Public Offering of Sale / Subscription of Shares, the company registers the issue with the Central Securities Depository, and the financial institutions register the Shareholders.
Shares may be listed on the Mozambique Stock Exchange (BVM), and companies must comply with a set of requirements:
Admission to listing on the stock market of share emissions offers businesses that emit a number of advantages:
Bond issue is a medium / long-term loan (more than 1 year), where companies obtain the financial resources they need from investors in the capital market against the payment of an interest rate and return of the amount invested by end of the loan period.
The entities that may issue Bonds are as follows: The State and Limited Liability Companies.
Companies opt for financing through issuing Bonds for a number of reasons including training and expansion projects of the companies whereby there is a return on investment after 1 year, financial restructuring and diversifying financing alternatives.
The State may issue bonds (called Treasury Bonds) up to the amount stipulated for this purpose in the State Budget, whose conditions of issue are regulated by Ministerial Order of the Ministry of Economy and Finance. Entities that are public limited liability companies may issue bonds (called Corporate Bonds) up to the value of their share capital inscribed in the last Balance Sheet and Income Statement, and their issue is subject to the authorisation by their General Meeting, or their Board of Directors as stipulated in their Articles of Association.
The conditions for bond issue are previously established in its issue, in a document designated as Technical File for Issue, which contains:
Bond issue can be placed for subscription to a predetermined range of investors (Private Offering modality) or to an indeterminate range of investors (Public Offering modality). Bond issue can be placed with investors, simultaneously in the Private and Public Offering modalities, in which case Bond issue as a whole is considered to be a Public Offering.
Bond issue by Private Offering is subject to authorisation by the company itself (General Meeting, Board of Directors as previously mentioned).
With the exception of the State, public offerings by companies or other entities are subject to prior authorisation by the Bank of Mozambique, in its capacity as the Market Supervisor of Securities.
Prior to the launch of a Public Offering of bond issue, the companies must submit to the Bank of Mozambique, through a financial institution, a set of documents consisting of:
If the Public Offering for bond issue is accompanied by any advertising campaign, the advertising material must also be authorised by the Bank of Mozambique before it can be disclosed to the public. Once the Bank of Mozambique grants the authorisation to launch the Public Offering, companies may place bond issue to subscription by the general public, through a financial institution or syndicate of financial institutions.
On the date of bond issue, companies register the issue with the Central Securities Depository, and the financial institutions register the bondholders.
Bond issue may be admitted to listing on the Mozambique Stock Exchange (BVM), and companies must comply with a set of requirements:
Higher visibility of the companies; Share appreciation potential; Greater confidence with investors; More favourable tax regime.
Companies promote the listing on the stock market of its bonds, the advantages that are inherent:
Commercial paper issue is a short-term loan (up to 1 year), where companies obtain the financial resources they need from investors in the capital market against the payment of an interest rate and return of the amount invested by end of the loan period.
The entities that can issue Commercial Paper are as follows:
Companies opt for financing through issuing Commercial Paper for a number of reasons including deficit coverage of companies' cash flow; diversifying financing alternatives and as an easy financing tool for Small and Medium Enterprises.
Companies may issue Commercial Paper up to the value of their share capital inscribed in the last Balance Sheet and Profit and Loss Statement, and its issue is subject to the authorisation by their General Meeting, or Board of Directors as stipulated in their Articles of Association. If the amount of the intended financing exceeds the limit above, companies must obtain an additional guarantee from a financial institution for the amount of financing that exceeds the authorised limit.
The conditions for issuing Commercial Paper are previously established in a document designated as Technical File for Issue, which contains:
Commercial paper issue can be placed for subscription to a predetermined range of investors (Private Offering modality) or to an indeterminate range of investors (Public Offering modality).
A Commercial Paper issue can be placed with investors, simultaneously in the Private and Public Offering modalities, in which case Commercial Paper issue as a whole is considered to be a Public Offering.
Commercial Paper issue through Private Offering is not subject to authorisation by the Bank of Mozambique, so it is a relationship between the Entity and the Holders of Issue.
Public offerings by companies or other entities are subject to prior authorisation by the Bank of Mozambique, in its capacity as the Market Supervisor of Securities.
Prior to the launch of a Public Offering of Commercial Paper issue, companies must submit to the Bank of Mozambique, through a financial institution, a set of documents consisting of:
If the Public Offering for Commercial Paper issue is accompanied by any advertising campaign, the advertising material must also be authorised by the Bank of Mozambique before it can be disclosed to the public.
Once the Bank of Mozambique grants the authorisation to launch the Public Offering, companies may place Commercial Paper issue to subscription by the general public, through a financial institution or syndicate of financial institutions.
On the date of Commercial Paper issue, companies register the issue with the Central Securities Depository, and the financial institutions register the Commercial Paper holders.
Commercial paper issue is compulsorily admitted to listing on the Mozambique Stock Exchange (BVM), and companies must comply with a set of requirements:
The admission to listing on the stock market for issuing Commercial Paper offers to the companies issuing them a set of advantages: