BRITISH-ANGOLAN SEMINAR How to Invest in Angola (London, 22 September 2004) Alberto Galhardo Simes Susana Fernandes Ramos

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1. 2. 3. 4.

SUMMARY
INTRODUCTION

INVESTMENT VEHICLES

PRIVATE INVESTMENT LAW

LAW ON FISCAL AND CUSTOMS INCENTIVES FOR PRIVATE INVESTMENT

5.

LOCAL CONTENT

1. INTRODUCTION
NEW FOREIGN INVESTMENT LEGAL FRAMEWORK

Fundamental incentive to investment The Angolan Government has designed a legislation package that includes:

1. INTRODUCTION (contd)
Company Law, Law 1/04, of 13 February
Consolidates the rules governing the incorporation of commercial companies in Angola, formerly spread troughout several laws Shareholders agreements Groups of companies Types of commercial companies allowed:
General Partnership Limited Partnership Limited Partnership with share capital Joint Stock Company SA Limited Liability Company by Quotas LDA

Business Cooperation Law, Law 19/03, of 12 August

Regulates the so called Unincorporated Joint Ventures

1. INTRODUCTION (contd)
Voluntary Arbitration Law, Law 16/03, of 25 July
A modern statute Sets forth a private extra-judicial mechanism of resolving disputes over patrimonial rights
Arbitration Agreement Constitution and Composition of the Arbitral tribunal Ratification of the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards

Arbitrations under private investments contracts shall take place in Angola and the contract shall be governed by Angolan laws

1. INTRODUCTION (contd)
Private Investment Law, Law 11/03, of 13 May Law on Fiscal and Customs Incentives, Law 17/03, of 25 July

2. INVESTMENT VEHICLES
Representative Office Branch Local Companies Joint Stock Companies Limited Liability Companies by Quotas

2. INVESTMENT VEHICLES (contd)

Unincorporated Joint Ventures Law 19/03 Associations (Conta em Participao) association of
one party with economic activity of another party attain objective Internal Consortium External Consortium

Consortiums joint activity between two or more parties to

Grouping of Companies joint activity between two or

more parties to improve conditions of economic activities

3. PRIVATE INVESTMENT LAW

Law 11/03, of 13 May Applies to all areas of activity, except: Oil & Gas Diamonds Banking Concept of foreign investment

3. PRIVATE INVESTMENT LAW (contd)

QUALIFYING INVESTMENTS Setting up and expansion of branch offices Incorporation of new companies Acquisition of existing companies or groups of companies/ Purchase of equity in said companies Conclusion of consortium agreements and joint ventures Total or partial takeover of commercial or industrial establishments Provision of supplementary capital contributions and shareholders advances Acquisition of immoveable property Transfer/ Acquisition of technology & know-how Transfer/ Acquisition of equipment

3. PRIVATE INVESTMENT LAW (contd)

INVESTMENT PROCESSES

Government Agency Agncia de Investimento Privado ANIP Minimum Investment USD 50,000 - Angolan Investors USD 100,000 - Foreign Investors
Investments less than USD 100,000 - not subject to Private Investment Law; no right to dividend repatriation

3. PRIVATE INVESTMENT LAW (contd)

Investment Regimes
Pre-Investment declaration
Investments USD 50,000 - Angolan Investors USD 100,000 - Foreign Investors Maximum amount of USD 5,000,000 for both Approved by ANIP (15-day period )

Contract
Investments > 5,000,000 Concessions (regardless of $) Obligatory participation of state-owned companies Reviewed by ANIP Approved by Council of Ministers (60-day period)

CRIP Private Investment Registration Certificate - issued by ANIP

3. PRIVATE INVESTMENT LAW (contd)

RIGHTS OF PRIVATE INVESTORS No discrimination between foreign and Angolan investors Payment (repatriation) of dividends Recourse to Angolan courts Fair compensation in the event of expropriation No nationalization (except in very limited cases) No cancellation of licenses without prior judicial or administrative proceedings Ownership of land Intellectual property rights No government interference in company management Right to seek external finance Direct import of goods from aboard and independent export of output of own companies

3. PRIVATE INVESTMENT LAW (contd)

OBLIGATIONS OF PRIVATE INVESTORS Implement investment project within time period & terms agreed w/ ANIP Employ/ train Angolan citizens Comply w/ applicable HS&E regulations Apply Angolan Accounts Plan Submit annual reports to ANIP Respect generally applicable Angolan law Create funds and reserves and make provisions in accordance with the legislation in force Right of first refusal for domestic investor (transfer of participating interest)

3. PRIVATE INVESTMENT LAW (contd)

DISRESPECT OF TERMS/CONDITIONS AGREED W/ ANIP Fines USD 1,000 - USD 100,000 Loss of incentives or other advantages granted Loss of the investment authorization

4. LAW ON FISCAL AND CUSTOMS INCENTIVES

Law 17/03, of 25 July Governs the procedures, types and forms of granting of fiscal and customs incentives under the Private Investment Law Fiscal and customs incentives are granted depending on whether the investment:
Is within a priority economic sector; or Contributes to the development of disadvantaged regions

4. LAW ON FISCAL INCENTIVES AND BENEFITS (contd)

PRIORITY ECONOMIC SECTORS

Agriculture and livestock farming; Manufacturing industry; Fisheries and derivatives; Civil construction; Health and education; Road, rail, port and airport, telecommunications, energy and water supply infrastructures; Large scale cargo and passenger equipment.

4. LAW ON FISCAL INCENTIVES AND BENEFITS (contd)

INVESTMENT ZONES

Zone A
Luanda Benguela Hula Cabinda Lobito

Zone B
Cuanza Sul Bengo Uge Cuanza Norte Lunda Norte Lunda Sul

Zone C
Huambo Bi Moxico Cuando-Cubango Cunene Namibe Malange Zaire

4. LAW ON FISCAL INCENTIVES AND BENEFITS (contd)

FISCAL AND CUSTOMS INCENTIVES

Customs Duties
Zone A 3 years Zone B 4 years Zone C 6 years

Industrial Tax
Zone A up to 8 years Zone B up to 12 years Zone C up to 15 years

4. LAW ON FISCAL INCENTIVES AND BENEFITS (contd)

FISCAL AND CUSTOMS INCENTIVES

Qualification as Losses Capital Gains Tax

Zone A up to 5 years Zone B up to 10 years Zone C up to 15 years

Conveyance Tax

5. LOCAL CONTENT
Promotion of Angolan Private Entrepreneurs Law 14/03, 18 July Right of first refusal Preferential treatment in tendering for goods, services and public works contracts

NEW LOCAL CONTENT REGULATION FOR THE OIL INDUSTRY

Order 127/03, of 25 November, issued by MNPET Sets out requirements on the procurement of goods and hiring of services by oil companies operating in Angola Competitive tender requirement Services and goods reserved for local contractors Preferencial treatment for Angolan companies

NEW LOCAL CONTENT REGULATION FOR THE OIL INDUSTRY (contd)

Regimes (relationship between Angolan/foreign oil service companies):

Exclusivity regime for Angolan companies
non-specialized know-how lower capital investment foreign companies participation only by initiative of Angolan companies

Semi-competitive regime
reasonable level of capital investment higher level of know-how joint ventures between foreign companies and Angolan companies.

NEW LOCAL CONTENT REGULATION FOR THE OIL INDUSTRY (contd)

Competitive regime
high level of capital investment Specialized know-how Free participation of foreign companies

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Thank You
Alberto.Simoes@mirandalawfirm.com Susana.Ramos@mirandalawfirm.com

www.mirandalawfirm.com