Legal guide for company directors and CEOs in Angola

No. Under the Angolan Companies Law (“ACL”), which forms the core of corporate governance and corporate liability regimes, directors' duties are limited to a general duty of care. This duty entails the obligation to act in the best interest of the company with the diligence of a careful manager and subject to the interests of the company, its shareholders and employees. ALC provides other specific duties imposed on directors, which are further detailed below but do not specifically relate to ESG matters.

Notwithstanding, there are a number of soft law instruments that have been published in recent years that cover corporate governance issues, such as the Carta de Corporate Governance de Angola (“Angolan Corporate Governance Charter”), an open letter drafted by the Angolan Corporate Governance Centre, a private organisation comprising academic scholars and banking sector private parties, and the Guia Anotado de Boas Práticas de Governação Corporativa (the “Corporate Governance Good Practices Guide”), put out by Comissão do Mercado de Capitais (“CMC”), the Angolan capital markets regulatory body.

Both the Angolan Corporate Governance Charter and the Corporate Governance Good Practices Guide offer a number of recommendations concerning corporate governance issues, such as transparency, board of directors’ remuneration, conflicts of interests, financial and non-financial information reporting and segregation of control and supervisory functions.

However, these provisions remain as mere recommendations and are therefore non-binding, even for entities that have adhered to the Angolan Corporate Governance Charter.

As referenced in the above comment, directors are only bound to a general duty of care, in the terms described therein. However, the Angolan General Labour Law provides a principle of equality and non-discrimination of women in relation to men. It further provides that women must be ensured:

• Access to any job, profession or work post
• Equal opportunities and treatment with regard to training and professional improvement
• Common professional categories and criteria for evaluation and promotion between genders
• Equal pay for equal jobs
• The right to not be directly or indirectly discriminated against on the basis of gender.

As the directors’ general care duties entail the obligation to act in the best interest of the company with the diligence of a careful manager and subject to the interests of the company and its shareholders and employees, they are indirectly bound to these provisions of the Angolan General Labour Law, and it is therefore their duty to ensure compliance with the same.

In parallel, under the Angolan General Labour Law, companies must also adopt and apply all required safety, health and hygiene measures in the workplace, meaning that it will fall on the directors to ensure that these measures are adequately implemented.

During 2021, the financial sector has experienced recent developments with regard to governance of financial institutions, as well as non-financial institutions that fall within the supervision scope of Banco Nacional de Angola (“BNA”), the regulator of the banking sector. With the recent Financial Institutions Regime and the enactment of a new Regulation on Corporate Governance and Internal Control for Financial Institutions (the “Corporate Governance Regulation”), a number of legal provisions have been enacted establishing that financial institutions (and non-financial institutions that fall within the supervision scope of BNA) should implement a corporate governance model that must cover an institution’s:

• Remuneration policy
• Internal control policy
• Compliance policy
• Related parties’ transactions and conflicts of interests policy
• Transparency and information reporting policy
• Code of ethics
• Reporting channel.

In addition, a code of conduct, which must include general conduct and deontological principles and rules for the prevention of criminal activity, must be in place. Directors are bound to the duties established by this code of conduct and must therefore act accordingly.

Also, the board of directors must set up an Internal Control Committee (which should include one or more non-executive directors, i.e. directors who are not part of the executive committee) which shall be in charge of:

• Ensuring formalisation and operationalisation of an effective information disclosure system, including preparation and disclosure of financial statements
• Overseeing formalisation and operationalisation of the institution’s accounting practices and policies
• Reviewing all internally-disclosed financial information
• Oversight of the internal audit department’s independence and effectiveness
• Oversight of the compliance department.

Furthermore, financial and non-financial institutions subject to BNA’s supervision must have at least one independent director. The duties of independent directors are to control and evaluate performance of the executive committee with regard to business strategy, organic and functional structure, disclosure of information and relevant operations. In particular, independent directors are responsible for:

• Ensuring that executive directors carry out their functions in a rational, prudent and effective manner
• Providing independent opinions in decision-making processes
• Taking part in defining and monitoring business strategies
• Analysing and discussing reports from the internal audit, compliance and risk management departments
• Overseeing management and accounting information disclosure proceedings
• Providing a report on their findings to both the board of directors and, on an annual basis, to the BNA.

There are currently no general duties for directors with regard to ESG disclosure. However, recent rules applicable to financial and non-financial institutions (detailed in question 3) have already laid down some rules concerning the disclosure of financial information, which may pave the way to regulation on disclosure of non-financial information and, ultimately, ESG reporting.

Notwithstanding, CMC’s Corporate Governance Good Practices Guide (see question 1) already includes recommendations concerning the disclosure of both sustainable management information (nature of annual initiatives and respective implications, sustainable development index comparison and recycling measures implemented) and of implemented social policies.

Despite not binding in nature, these CMC recommendations can certainly act as a point of reference for companies that wish to start disclosing ESG information, providing at least some form of guidance on how to do so.

The board of directors is a collegial body of the company in charge of administrative and management decisions that functions independently from other bodies of the company such as the shareholders’ general assembly. The existence of a board of directors is only provided for in Angolan law in respect of joint stock companies (“SA”), and local authorities have not been consistent in respect of accepting that the provisions on the board of directors set forth for SA companies are applicable to private limited liability companies (“Lda”) by analogy.

Lda companies are managed by one or more directors (“gerente”) appointed by the shareholders. 
SA companies are also managed by directors (“administrador”) appointed by the shareholders and organised in the form of a board of directors. The board of directors may delegate day-to-day management powers to a delegate director (“Administrador Delegado”) or an executive committee (“Comissão Executiva”). It is mandatory that the delegate director and members of the executive committee are directors of the company (i.e. members of the board of directors). 

Angolan law does not expressly recognise the concept of “non-executive or supervisory directors”.

From a practical standpoint, the qualification between executive and non-executive directors is usually made in companies which adopt a corporate governance model comprising a board of directors and an executive committee or a delegate director to which the board of directors has granted general or day-to-day management powers. 

In such a case, the directors who are part of the executive committee are called executive directors, and the other members of the board of directors who are not members of the executive committee are called non-executive directors. 

In what regards the financial sector, financial institutions and non-financial institutions that fall within the supervisory scope of BNA are required to have an executive committee. Non-executive directors carry out the responsibilities of the board of directors, but are also in charge of overseeing the executive committee's performance. In addition, the board of directors must delegate in one or more non-executive directors the power to oversee an Internal Control Committee, and institutions under the supervision of the BNA must have at least 1 (one) independent director (also with a supervisory role). Duties of the Internal Control Committee and of independent directors are detailed above, in question 1 of the ESG Section.

In the case of Lda companies, directors may be chosen among the shareholders or other individual third parties with full legal capacity. Legal entities cannot be appointed to serve as directors.

In SA companies, directors may be chosen among the shareholders or among individual third parties with full legal capacity. Directors may also be legal entities. In this case:

• an individual must be indicated to hold such office in his/her own name, and
• the legal entity and the individual will be severally liable for the acts carried out by the latter.

Angolan law only requires that directors be of age, i.e. 18 years or older. 

From a strictly legal standpoint, there are no nationality or residency requirements with regards to the appointment of directors of a company incorporated in Angola. That said, although without a solid legal basis, the Registry of Companies has been consistently refusing to register non-resident foreign directors who do not hold a work visa, residency permit or equivalent, even in cases where such directors do not need to stay and work in Angola. 

Directors may be appointed in the Articles of Association of the company or through resolution of the general assembly of shareholders. Directors may also be appointed by the court in certain specific cases provided for in the law. 

Directors of Lda companies may be appointed without term, whereas directors of SA companies may be appointed for a maximum of 4-year terms. In both cases, directors can be re-elected.

Directors may be removed by the court or by the shareholders, and those appointed by the state or state entities can only be removed by these entities. 
Directors may also be removed (with or without cause) by the shareholders upon resolution of the general assembly.

Directors may also resign from office at any time by serving notice to the company. In SA companies, the resignation is effective at the end of the month following that in which the letter of resignation is received, or upon the appointment of the director’s substitute, whichever occurs first. In the case of Lda companies, the resignation becomes effective at the end of the month following that in which the letter of resignation is received, if no shorter period is agreed.

The dismissal, removal and appointment of directors is subject to registration with the relevant Registry of Companies. 

As a general rule, directors have powers to perform all acts required for carrying out the company’s corporate purpose. In any event, directors cannot exercise all the powers of the company as some powers are statutorily reserved to other company bodies such as the general assembly of shareholders. 

The company shall be bound by acts carried out by directors on behalf of the company and in the exercise of the powers granted to them by law, irrespective of any limitations which may be established in the articles of association or shareholders’ resolutions.

Under Angolan law, Lda companies are managed by one or more directors. When there are various directors, they shall act as a collegiate body and, unless the Articles of Association provide differently, the following rules will apply:

• the powers of the directors shall be exercised jointly
• the company will be bound by the legal transactions entered into by a majority of directors or ratified by the same, and
• the directors may delegate to one or more directors powers to enter into specific transactions or types of transactions, but, even in this case, the delegated directors shall only bind the company if expressly permitted by the instrument delegating such powers. 

SA companies are managed by a board of directors that must always have an odd number of members, one of whom should act as Chairman. The board of directors may validly transact business when the majority of its members are present. 

Typically, the members of the board are responsible for certain management areas such as finance, marketing, strategic positioning or commercial activity. Each member will oversee day-to-day activities of these areas, and will be in charge of high-level management, communicating with top level managers, decision-making and resolving disputes. Additionally, committees may be formed to address specific issues or oversee certain activities, albeit these committees are not necessarily comprised entirely of directors. The board may also delegate day-to-day management powers to an executive committee or a delegate director. 

Angolan law determines that the board must convene at least once per month. The quorum for board meetings is 51% of its members and resolutions are approved by a minimum of 51% of the votes cast in the meeting.

Minutes of board meetings must be prepared and signed by the attendees. 

Rules on the remaining aspects of the board’s internal organisation and functioning may be set forth in the company’s articles of association or in internal regulations.

Directors do not have to be employees of the company. They can be independent contractors. However, if they are foreign citizens, they should have an employment contract with the company so that they may obtain a visa and lawfully carry out their work in Angola.

The nature of such contractual relationship is widely qualified as a mandate.

Under the ACL, whenever there is a conflict of interest between the company and a director, the latter shall notify the chairman of the board of directors and refrain from voting on any resolution concerning such conflict. A conflict of interest is deemed to exist when there is a divergence between the interest of the director (objectively ascertained) and the interest of the company (also assessed from an objective perspective). 

Angolan law imposes a general duty of diligence over the company’s directors. This duty entails the obligation to act in the best interest of the company with the diligence of a careful manager and subject to the interests of shareholders and employees. This means that the directors shall act in the best interests of the company and, notably, should not use their position to obtain any personal gain. The law details this general diligence duty, providing that the directors have powers to implement all acts needed to carry out the company’s purpose, albeit being subject to the provisions of the law, the articles of association and the resolutions of shareholders.

There are other specific duties to which directors are bound, such as: (i) the duty to annually present a management report, related accounting documents and other financial statements; (ii) the duty to provide information to shareholders; and (iii) a prohibition of competition.

As a general rule, directors’ duties are owed to the company, meaning that they are liable before the company (as an autonomous legal person) for damages that arise from a breach of directors’ duties. Directors’ duties also extend to other stakeholders of the company such as shareholders, creditors and employees of the company.

Financial difficulties do not entail any change in the duties imposed on directors. However, whenever the company’s annual financial statements show a loss of more than half of the share capital, the directors must propose to the shareholders the adoption of one of the following measures to tackle such financial distress: 

• the dissolution of the company
• the reduction of the company’s share capital, or
• to make cash contributions to maintain equity coverage of at least two thirds of the share capital. 

Bankruptcy proceedings are governed by the Angolan Civil Procedure Code and take place before state courts. Directors of a company should submit a request for a judicial statement of bankruptcy within 2 years as from the verification of the bankruptcy status.

The Civil Procedure Code also sets forth a preventive/recovery measure which allows for the company (debtor), prior to filing for bankruptcy, to convene its creditors in an attempt to solve (via agreement) its financial situation without resorting to actual bankruptcy proceedings. For such purpose, the debtor shall submit an application to the relevant court no later than 10 days following the date on which payments to creditors ceased to be made.

The main potential liabilities for directors are as follows:

Liability towards the company, shareholders and third parties

Directors are jointly and severally liable for damages caused for actions or omissions in breach of the law or the company’s bylaws provided they: (i) acted with fault; (ii) were complying with shareholders’ instructions given by a shareholders’ general assembly resolution; and (iii) did not vote against or opposed the resolution passed by the directors approving the act generating the damages.

Liability towards creditors

Directors are jointly and severally liable when they failed with fault to observe legal or contractual obligations aimed at protecting creditors, resulting in the company’s assets becoming insufficient to satisfy the company’s credits, provided they: (i) acted with fault; and (ii) did not vote against or opposed the resolution passed by the directors approving the act generating the damages. However, unlike the liability described in the paragraph above, directors can be held liable for a conduct adopted in implementation of a shareholders’ resolution.

Tax liability

Directors are liable towards the tax authorities for the payment of taxes and penalties (fines and interests): (i) arising and payable during the exercise of their duties; and (ii) when it was their fault that the assets of the company have become insufficient to cover the tax debts (the burden of proof lies with the authorities).

Criminal liability

There are certain actions that may result in criminal liability of directors such as: (i) refusing to provide information concerning shareholder meetings to interested parties; (ii) misrepresentation of company information; and (iii) irregular issuance of share or bond certificates.

In general, liability exclusion clauses for directors are considered null and void by Angolan law. Additionally, the law also establishes that the company may only waive its compensation rights for its directors’ liability if approved by the shareholders’ general assembly by a number of votes equivalent to three quarters of the company’s share capital.

That said, exclusion of liability will apply in the following cases:

• a director shall not be liable for damages caused by a board resolution that he/she either did not vote on or voted against
• a director is not liable for a conduct adopted in implementation of a shareholders’ resolution, even if annullable, and
• a director shall not be liable if he/she is able to prove that he/she acted in an informed manner, free of any personal interest and using the criterion of corporate rationality.

Furthermore, Angolan law does not contain any restriction as to the possibility of a director/manager taking insurance against personal liability. A company could pay the insurance premium as part of the director/manager’s salary.

Solvency

Since a State of Emergency was declared in late March 2020, several measures have been implemented that looked at limiting the circulation of people and assets, both inside and from outside of the country. Initially, all activity considered non-essential was closed down, but there has been a progressive lifting of restrictive measures and a natural adaptation of economic agents to the (extraordinary) circumstances that COVID-19 has brought about: many companies have directed their efforts to remote services such as door-to-door delivery and online sales.

Currently, a State of Emergency is no longer in force, and a (less stringent) State of Public Calamity is now in place. New limitations to general economic activity and to certain specific economic sectors have been imposed, but are far less constraining than the measures implemented under State of Emergency. However, the fact that Angola is heavily dependent on oil-related exports exposes the Country to fluctuations to oil prices and to global economic recession. As a result, a roughly 4% GDP contraction was recorded in 2020. In addition, financial hurdles have been further fuelled by the pre-COVID and ongoing massive depreciation of the Kwanza (a total depreciation of 32% occurred from January 2020 to January 2021) and a shortage of hard currency in the financial market which hinders importations, payments to creditors, distributions of dividends and so on.

Recent estimates anticipate a shy growth prospect for the Angolan economy in 2021 and surely there is still much uncertainty ahead.

In 2020, both the government and the Angolan National Bank (BNA) enacted specific statutes to tackle the shortage of hard currency in the banking system, notably by adopting more flexible foreign exchange rules. At first glance, the impact of such foreign exchange-related measures seem to be positive. The Angolan Government also issued a number of measures that aimed to provide financial support to companies, such as credit facilitation, low interest rates (for certain economic sectors), eased licensing regimes and reduction of bureaucracy, in an attempt to reduce costs for companies operating in Angola. Some of these measures have survived the ending of the State of Emergency.

Under this context, one of the main challenge for directors in the foreseeable future is to secure short and medium-term access to financing, while also ensuring sustainability for their enterprises.

Health

Although the State of Emergency has been lifted, a State of Public Calamity is still in effect in Angola (at least until 30 September 2021), which means that a number of restrictions and COVID-19 prevention rules are still in place. Some restrictions are currently being partially lifted and economic activity (such as transportation, restaurants and sports) has steadily and progressively opened to the general public. Regardless, the Angolan population is still required to abide with general COVID-19 prevention rules, such as mandatory wearing of masks in public and in-doors.

From the perspective of Directors, one of the most relevant measures imposed by COVID-19 restrictions is the mandatory recourse to remote work, whenever possible. When remote work is not possible, an employee rotation regime must be put in place, so as to prevent employees from sharing the same workspace for extended periods of time.

Specific economic sectors are required to abide to further limitations, such as the restaurant, hotel, leisure and entertainment industries, which must ensure that only a specified percentage of employees is physically present at each establishment at any given time. Establishments must also provide adequate sanitization means to their clients prior to entry, and provide on-site biosecurity measures for their employees.

Industry-related activities are permitted (and mandatory in the case of the production/manufacture of essential goods), but the use of face masks and distancing between employees is mandatory.

Directors will need to implement and enforce these measures, as well as abide by them themselves, avoiding physical meetings and working from home whenever possible. It is also advisable that directors ensure that employees authorised to be present at companies’ facilities have documentary proof of authorisation (for example, the specific form provided by the government), to avoid fines in case of an inspection by the authorities.

While the COVID-19 outbreak is active and governmental restrictions apply to everyday economic activity, companies (and, consequently, directors) have to ensure the safety of their employees – which is a duty of companies towards their employees that has now also become a duty of companies towards society in general, meaning that liability may arise on both fronts.

Information

During the pandemic, it is vital that directors ensure a steady flow of up-to-date information at all times, so as to  properly follow all recommendations from health authorities and ensure that the company adapts to an ever- changing scenario as soon as possible.

Logistics

The industrial and manufacturing sectors are and have been constantly required to adapt their production processes to the restrictions imposed, meaning that directors have to reorganise human resources on a relatively regular basis in order to ensure continued production. Additionally, even in companies that are not so (or at all) reliant on production processes, fulfilment of certain obligations that normally involve the joint effort of several employees will be particularly challenging, and directors need to articulate these processes in advance, so as to ensure the fulfilment of these obligations. However, it is likely that an easement to these restrictions continue to occur and that these measures will no longer be a real limitation to directors and companies.

Meetings

In relation to meetings of boards of directors, Angolan law does not allow that such meetings are formally held by telematics means. Pursuant to the Company Law, the majority of directors need to be “in attendance” in order for resolutions to be validly passed. “In attendance” means being physically present at a meeting in one location.

However, directors are allowed to adopt unanimous written resolutions. This means that a board of directors may informally hold meetings by telephone or other telematic means (these meetings would be “unofficial”), which would be followed by a unanimous written resolution with the decisions of such meeting. Such resolution would be circulated among all directors for signature.

Currently, there are no relief measures in place in the country, and only restrictions aimed at preventing the spread of the COVID-19 virus remain in force.

The Angolan Government has not enacted new specific duties for directors as a consequence of the COVID-19 crisis, but existing duties have been extended to new aspects of management that have arisen with the implementation of restrictive measures aimed at controlling the spread of the virus. Companies are obliged to comply with these restrictive measures and to cooperate with governmental authorities in ensuring that all recommendations from health authorities are followed, which means that these responsibilities ultimately fall on their directors. 

They are subject to specific duties regarding biosecurity and must ensure that all adequate measures are put in place in order to protect their company’s employees and prevent the spread of the virus, as well as to draft contingency plans that establish a clear course of action in case of infection and allow for the containment and adequate processing of the situation.