Exchange

Cape Verde Stock Exchange (“BCVC – Bolsa de Valores de Cabo Verde”) began operating in December 2005 – currently, stocks, bonds and treasury bonds are listed and traded by duly authorized financial institutions. The Securities Code (enacted by means of Decree Law No. 1/2012, of 27 March 2012) provides the legal framework applicable to securities and derivative markets, issuing entities, public and private offerings, regulated markets and respective infrastructures and securities and derivate instruments investment activities and services.

Under the Cape Verdean financial laws and regulations, only banks and financial institutions duly licensed may carry out banking and financial activities in the country. In particular, pursuant to the Securities Code and other stock exchange regulations, intermediary institutions which are licensed to perform capital markets activities are allowed to transact on-exchange and perform purchase/sale of securities in accordance with the instructions from their clients. According to the Securities Code, trading in the stock market must always be handled by stockbrokers. Currently there are no stock brokers operating in Cape Verde other than banking institutions.

The Securities Code is applicable to all securities or other financial instruments issued, negotiated or traded in Cape Verde, except that the Securities Code is not applicable to (i) securities of monetary natures, except when the relevant legislation determines otherwise; and (ii) other securities which, by means of special legislation, are totally or partially excluded.

Currently, the stock market and its activity is supervised by the General Audit of the Stock Market (“AGMVM - Auditoria Geral do Mercado de Valores Mobiliários”), approved by Legislative-Decree No. 1/2012, of 27 January of 2012.

Cape Verde is a member of the West African Markets Integration Council - WACMIC, which is the governing body responsible for integrating the West African Capital Market, officially created in 2009, but was only officially established in February 2013, under the guidance of CEDEAO.

Current number of listed companies

4

Regulatory body or bodies

• General Audit of the Stock Market
• Central Bank of Cape Verde

Principal Legislation

• Securities Code (Legislative-Decree No. 1/2012, of 27 January 2012, as republished on 3 April 2012)
• General Audit of the Stock Market (Legislative-Decree No. 1/2012, of 27 January of 2012)
• Financial Institutions Regulations (Law No. 62/VIII/2014, of 23 April 2014)
• Stock Exchange Statutes and Regulations (Law No. 51/V/98, of 11 May 1998, and Decree-Law No. 38/2014, of 1 August 2014)
• Securities Intermediation Regime (Law No. 53/V/98, of 11 May 2013)
• Prudential Supervision (AGMVM Regulation No. 1/2012)

Principal Legislation 

• Decree-Law No. 53/2003, of 24 November 2003, which establishes the Competition Legal Framework
• Decree-Law No. 50/2015, of 23 September 2015, which defines the Legal Regime of the Administrative Contracts
• Law No. 88/VIII/2015, of 14 April 2015, which approved the Public Procurement Code

Scope

Decree-Law No. 53/2003 applies to all the economic activities, whether with a permanent or an occasional nature, in the private, public or cooperative sectors and covers:

• prohibited practices
• concentrations between undertakings
• state aid

The safeguard of sound competition among the operators in the market, the repression of restrictive practices from competition and the promotion of fair competition are the main goals foreseen therein.

Decree-Law No. 50/2015 is applicable on a subsidiary manner to the procedure regarding the control of concentrations between undertakings. Also, core principles of the public procurement regime are transparency, equal treatment, open competition, and sound procedural management. Law no. 88/VIII/2015 was designed to achieve a procurement market that is competitive, open and regulated.

Corruption Perceptions Index rank worldwide for 2017

48 out of 180 countries

Corruption Perceptions Index score for 2017

55 out of 100 countries

Anti-Money Laundering and Counter-Financing of Terrorism

Cape Verde is a member state of the “Groupe Intergouvernemental d'Action contre le Blanchiment d'Argent en Afrique de l'Ouest” (GIABA). This institution of the Economic Community of West African States is responsible for facilitating the adoption and implementation of Anti-Money Laundering and Counter-Financing of Terrorism in West Africa.

Cape Verde has ratified the following conventions on Anti-Money Laundering and Counter-Financing of Terrorism:

• UN Vienna Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
• International Suppression of Financing of Terrorism Convention (1999)
• UN Palermo Convention Against Transnational Organized Crime and protocols thereto (2000)
• UN Merida Convention against Corruption (2003)

Cape Verde is not a member State of the Financial Action Task Force or of the Egmont group. Furthermore, Cape Verde is not on the FATF black list.

The main domestic statutes governing these topics are the Anti-Money Laundering Law (approved by Law No. 38/VII/2009, of 27 April 2009) and the Counter-Financing of Terrorism Law (approved by Law No. 27/VIII/2013, of 21 January 2013). As an example, the Anti-Money Laundering Law sets forth a comprehensive list of the duties applicable to financial and non-financial entities and individuals, which are also subject to the provisions, mechanisms, entities of control and sanctions provided therein.

Anti-bribery and Corruption

Cape Verde is a signatory of the UN Convention Against Corruption.

As regards domestic law, the most relevant anti-corruption rules are set out in the Criminal Code (approved by Legislative Decree No. 4/2003, of 18 November 2003), the Disciplinary Statute of Public Administration Officials (approved by Law No. 31/III/87, of 31 December 1987), the Law on Crimes Committed by Holders of Political Office (Law No. 85/VI/2005, of 26 December 2005) and the Public Procurement Code (approved by Law No. 88/VIII/2015, of 14 April 2015).

The Criminal Code addresses, amongst others, the criminal offences of active corruption and passive corruption. In turn, the Disciplinary Statute of Public Administration Officials sets forth that, as a result of their public activity, public officials should not request, accept or benefit from any offers or advantages and should always act in an independent manner.

In Cape Verde, both individuals and companies can be held criminally liable. A company may be prosecuted for acts/crimes committed by individuals acting in their capacity as representatives of the company and for the latter’s benefit, except if the individuals have acted against the instructions of the company.

Structure of the court system

The judiciary system of Cape Verde is based on civil law.

The courts are organized by hierarchy allowing a more effectively system in which the higher courts’ judgments bind the courts further down the hierarchy as follows:

1. Constitutional Court
2. Supreme Court of Appeal
3. High Court
4. Court of First Instance

In addition, Cape Verde has specialized courts (which have their focus in specific areas) notably: labor; family law; tax; and customs law.

Effectiveness of the court system

Cape Verde is governed by an advanced and relatively new set of legislation, which is very similar to the Portuguese’s legal framework.

The mainstay of the Cape Verdean’s legislation is the right of access to justice, the right of a fair trial and that justice shall not be denied to anyone due to a lack of financial means.

The Cape Verdean system is generally effective with some scope for development. The duration of court proceedings depends on the complexity of the case.

Perception of local courts

The judicial system in Cape Verde is not as effective and efficient as it could. Despite significant improvements in recent years, such as the implementation of the High Courts and the increasing computerization of the courts, there is still significant room for improvement.

The court fees are relatively high compared with the Cape Verdean’s cost of living.

Enforcement of arbitral awards

Arbitration

Through Resolution No. 26/IX/2017, of 17 February 2017, Cape Verde has approved the accession of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“NY Convention”), having declared that the Convention shall apply only to the recognition and enforcement of awards made in the territory of another contracting State. There is no information available as to the deposit by Cape Verde of the instrument of ratification of the NY Convention.

Whilst the NY Convention is not yet incorporated into Cape Verdean law, all foreign arbitral awards must undergo a process of judicial review and confirmation before they can be enforced in Cape Verde according to the regime set forth in Cape Verde Arbitration law (Law No. 76/VI/2005, 16 August 2005).

The recognition and enforcement of a foreign arbitral awards may be refused by the Cape Verdean courts (at the request of the losing party) if that party provides evidence that:

• the arbitration agreement is not valid under its governing law or under the law of the seat of the arbitration;
• the party was not given proper notice on the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
• the award deals with matters falling outside the scope of the arbitration agreement. In this case, the judicial court shall refuse recognition or enforcement only of the parts of the award dealing with matters not included in the arbitration agreement;
• the arbitral tribunal was not set up in accordance with the agreement of the parties or, failing such agreement, with the law of the seat of the arbitration; or
• the award has not yet become binding or has been set aside or suspended by a competent court of the country of the seat of arbitration (or where the award was rendered).

Further to this, recognition and enforcement of a foreign arbitral award may equally be refused if the Cape Verde courts conclude that:

• the subject matter of the dispute is nor arbitrable under Cape Verde Law;
• the recognition or enforcement of the arbitral award is contrary to the Cape Verde’s public policy; or
• the country in which the arbitral award was rendered would not recognize and enforce an arbitral award rendered in Cape Verde.

If one party has requested the annulment or suspension of the arbitral award before the competent court of the country of the seat of the arbitration, the Cape Verdean courts may postpone the recognition or enforcement of award (until a final decision is rendered on the request for annulment and/or suspension) or order the other party to submit appropriate guarantees.

Enforcement of foreign judgments

Pursuant to relevant provisions of the Cape Verdean Code of Civil Procedure (“CCP”), for a foreign judgment to be enforced in Cape Verde it must first be subject to a process of review and confirmation. Review and confirmation will not be granted to a foreign judgment if it does not meet all of the following statutory requirements:

• the authenticity of the document containing the judgment having been established;
• the judgment being final under the law of the country in which it was rendered;
• the judgment not having been rendered by a foreign court whose jurisdiction has been caused in fraud to the law, and the judgment not dealing with matters submitted to the exclusive jurisdiction of Cape Verdean courts;
• the same dispute not being pending in Cape Verdean courts, nor having a final decision on the same dispute been rendered by Cape Verdean courts, unless the foreign court has secured the jurisdiction;
• the defendant having been duly summoned to the proceedings in accordance with the laws of the country where the judgment was rendered, and the parties having had the opportunity to present their case and having been equally treated; or
• the recognition of the judgment not leading to a situation incompatible with Cape Verde international public policy;

Recognition of a foreign judgment may also be refused by Cape Verdean courts if:

• a party is able to evidence, through a res judicata decision, that the judgment was rendered by the judge(s) in violation of its(their) professional duties;
• a party submits a document whose existence that party was unaware of or that could not have been used in the proceedings where the judgment was rendered, and which is deemed sufficient to alter the decision in the judgment whose recognition is sought.

Cape Verdean courts have exclusive jurisdiction on the following matters:

• claims related to real estate property located in Cape Verde;
• insolvency declaration of corporate entities with registered office in Cape Verde;
• claims related to the validity of the incorporation or the winding-up of corporate entities with registered office in Cape Verde, as well as claims related to general meeting and board resolutions of such entities; and
• claims related to the validity of the inscription in a public registry of any right subject to registration in Cape Verde.

Listing Companies

The most common corporate structures in Cape Verde are the limited liability company by quotas (Sociedade por Quotas – “LDA”) and the joint stock company (Sociedade Anónima – “SA”). Both are limited liability companies, where each of its shareholders are liable to third parties up to the amount of its participating interest thereon. The LDA is usually adopted for the purposes of operating a small or medium-sized business which does not require public capital participation. It is a commonly used company type in Cape Verde mostly due to its simpler internal structure. A SA is usually formed by, at least two shareholders (individuals and/or companies). Sole Liability Companies by Shares (Sociedades Anónima Unipessoais) are also admissible, provided that the sole shareholder is a company. As to corporate bodies and internal organization, the board of directors in SA companies have more comprehensive powers and the assignment of shares is more flexible.

The minimum share capital for either LDA and SA companies is ECV 1,00 (one Cape Verdean Escudo).

Working contributions are not allowable in LDA companies; furthermore, contributions in cash cannot be postponed beyond 3 years as from company’s incorporation and the amount of such deferral cannot be higher than 50% of the total contribution. In turn, in the case of SA companies, contributions in cash cannot be postponed beyond 5 years as from the company’s incorporation and the amount of such deferral cannot be higher than 70% of the total contribution.

Currently, the process of incorporating a company is a straightforward process and can be concluded in 1 or 2 weeks. Companies may be registered at the Commercial Registry Office and public deed is not usually required (unless real estate is involved). There is also a fast track procedure for the incorporation of companies to be handled at the one-stop shop (Citizens’ House “Casa do Cidadão”). However, in these cases, partners must adopt a pre-selected By-laws’ model, appoint a chartered accountant and deliver a statement issued by the chartered accountant at the time of incorporation. Online incorporation of companies is also foreseen by law but is not operational yet.

Foreign Investment Guarantees, Restricted Areas and Foreign Exchange Regime

Pursuant to Law No. 13/VIII/2012 of 11 July 2012 (as amended by Decree-Law No. 34/2013 of 24 September 2013) which approved the Cape Verdean Investment Law, investors shall have the right to be treated well and fairly irrespective of their nationality and be granted protection against any measures which might affect their private ownership, as well as the right to convert into another currency and transfer the profits of their investments abroad. Investments made in the amount equal to or higher than ECV 5.000.000,00 (five million Cape Verdean Escudos) are subject to Decree-Law No. 42/2015, of 27 August 2015, which provides for several benefits in favour of the concerned foreign investors.

In general, there are no restrictions on equity participation and on the control of a local company by a foreign investor. However, there are some business sectors that require such local content, which must, in any event, be assessed on a case-by-case basis.

As regards the applicable foreign exchange regime, there are no relevant restrictions, notably relating to the transfer of dividends abroad, which might affect the profitability of the foreign investment.

Cape Verde has taxation on income (Individual Income Tax and Corporate Income Tax), property (Immovable Property Tax) and consumption (Value Added Tax (VAT) and excise tax). Furthermore, Cape Verde has also a Stamp Duty Code and several tax benefits applicable to several types of national and foreign investments. Cape Verde has also entered into Double Tax Agreements with Portugal, Macau, Mauritius and Guinea Bissau, and allows arbitration in tax matters, under certain circumstances.

Individual Income Tax (in Portuguese “Imposto sobre o Rendimento das Pessoas Singulares” (IRPS)) is due by individuals residing in Cape Verde, on a worldwide income basis, and non-residents, in regard to income obtained in Cape Verde. Cape Verde has recently created a non-habitual tax regime that offers a special tax regime for non-residents that become resident in such country.

Corporate Income Tax (in Portuguese “Imposto sobre o Rendimento das Pessoas Colectivas” (IRPC)) is due by entities/companies residing in Cape Verde, non-resident with permanent establishments and non-resident without permanent establishment. Resident entities are taxed on the totality of their income (after deducting the relevant costs), while permanent establishments are only taxed in regard to income attributed to such establishment (permanent establishment may also deduct their costs). Non-resident entities without permanent establishment in Cape Verde are only taxed in regard to income obtained therein. The IRPC general tax rate is 25%.

Immovable Property Tax (in Portuguese “Imposto Único sobre o Património” (IUP)) is applicable on the value of real estate and on the transfer of immovable property. IUP general rate is 1.5%.

Cape Verde’s VAT is very similar to the European VAT and is applicable to the sale of assets and provision of services by individuals and entities that develop an economic activity. VAT may be due by resident and non-resident entities. The VAT tax rate is 15%.

Stamp Duty is also due in regard to different types of acts, contracts, documents and operations. For example:

• credit operations – 0,5%
• interest – 3,5%
• guarantees and security interest – 0,5%

In relation to investment tax benefits, same may correspond to:

• IRPC credit
• IUP exemption
• Stamp Duty exemption
• custom duties exemption
• other exceptional tax benefits that may be granted by the Government thought a contractual instrument

Advertising

In Cape Verde, advertising is regulated by Decree-Law No. 46/2007, of 10 December 2007 (the “Advertising Act”). The Advertising Act defines:

• “advertising” as any form of communication performed by public or private entities, directly or indirectly, in connection with a commercial, industrial, manufacturing or independent activity in order to:
  • promote goods or services to market or sell them; or
  • promote ideas, principles, initiatives or institutions (apart from political advertising and journalism); and defines
• “advertising activities” as any series of actions related with creating an advertisement and bringing it to its intended audience, including the processes of conceiving, creating, planning, and distributing advertisements. The Advertising Act also expressly widens the scope of the statute to any type of advertisement activity to be brought to the Cape Verdean public, regardless of its country of origin.

Under this statute, all advertising must be lawful, truthful, clearly identified as advertising and respect the rights of consumers. Further, the use of a language other than Portuguese or Creole in advertising is only permitted in Cape Verde when the main or exclusive targets are foreign. Exceptional use of English words or expressions is also permitted insofar as the same are necessary for an advertising to have a specific effect. Therefore, as a rule, should any advertising content be displayed, the same should be translated into Portuguese or Creole languages.

Advertising is unlawful whenever:

• it offends national or religious symbols or private institutions;
• endorse violence or any illegal activities;
• offend human dignity or other fundamental rights;
• is discriminatory;
• uses offensive or improper language; or
• uses the voice or likeness of third parties without their prior consent.

Moreover, any advertising must be unequivocally identified as such to the public and, therefore, subliminal advertising (defined as all concealed or disguised advertising) is prohibited.

Also, advertisements cannot distort the facts related to the origin, nature, production or conditions of purchase of the goods or services advertised. As such, untruthful or misleading indications of the nature and characteristics of the goods or services advertised, including the price and methods of payment, ownership rights, etc., is expressly prohibited.

Finally, the Advertising Act contains special rules on comparative advertisement (i.e. implicit or express comparisons between competitors or goods/services offered by a competitor) and testimonial advertising.

Alcohol

Matters relating to alcohol advertising are regulated by the Advertising Act.

Pursuant to the Advertising Act, alcohol advertising shall be permitted insofar as the same does not:

• specifically target minors, and, in particular, does not show them consuming alcohol;
• encourage excessive consumption;
• undervalue non-consumers;
• suggest accomplishment, social success or special skills as a result of consumption of alcohol;
• suggest the existence of therapeutic properties or sedative or stimulating effects;
• associate the consumption of alcohol to physical exercise or to driving; and/or
• suggest alcohol consumption is a positive quality.

This statute also foresees restrictions on alcohol advertising broadcasted on television or radio.

Advertisements relating to events involving minors, such as sporting, cultural and entertaining events, shall not display or contain any reference to trademarks of alcoholic beverages. Also, it is prohibited to display alcohol advertisements in the aforementioned events.

Tobacco

According to the Advertising Act, any form of advertising, promotion and sponsorship of tobacco products is prohibited.

Pharmaceuticals

The advertising of medical treatments and medicines is subject to the provisions of the Advertising Act. Pursuant to this statute, it is prohibited to advertise medical treatments and/or medicines unless the advertisements are displayed in brochures or technical publications that specifically target doctors or other health professionals (i.e. direct advertising of medical treatments and/or medicines to the public is prohibited).

The advertising of medicines is further regulated by the Decree-Law No. 59/2006, of 26 December 2006. Among other provisions, this statute lays down the minimum necessary information that must be included in the advertisings.