Investor's Guide

Labour REGIME

The Cape Verde Labour Code - Decree-law no. 5/2007, of 16 October with the amendments introduced by Decree-law no. 5/2010 of 16 June, and Regulatory Decree no. 1/2016 of 3 February, defines the Labour Relations Legal Framework established for private companies, cooperatives, and mixed entities.

The labour laws are governed by constitutional values and principles, namely: human dignity; the duty to work; equal opportunities and justice, and the international labour instruments in force. In addition, the following objectives are set out: economic internationalisation, ensuring investors will not be defrauded by labour regulations that hinder productivity, and providing greater dynamism to businesses, allowing them to effectively meet the new economic challenges they face in the present global climate of major difficulty and uncertainty.

Types and forms of employment

Employment contracts are not subject to any formalities, except when the law expressly states otherwise.
Written employment contracts must identify the parties and include the employment date, the work location, the professional category, and the amount of remuneration.
The Code provides for the following special types of employment contract:
a) On the basis of time, an open-ended contract and a fixed-term contract;
b) On the basis of people, an apprenticeship or contract for women, minors, or foreigners;
c) On the basis of location, a domestic, staff concession, port employment, maritime employment, temporary, or teleworking contract.

Term

The Code mentions certain situations in which an employment contract may be agreed for a fixed term or indefinite term. In the case of the former, the stipulated term must be mentioned, as well as the reasons justifying it, and it may not exceed 3 or 5 years, depending on the respective basis. However, the Code provides exceptions for new companies and companies or establishments that demonstrably create new jobs.
For open-ended contracts there is a two-month trial period that the parties may gradually extend up to 6 months if the employee has a technically complex role or responsibility that requires an extended trial period to evaluate the necessary aptitude.
For fixed-term contracts this period is 2 months, although it may not be longer than a quarter of the contract term.

Working Hours and Weekly Rest Period

The normal working period may not exceed eight hours per day and forty-four hours per week. This may be extended, namely through the flexible working scheme, the concentrated hours scheme, or the special working hours scheme, provided this is agreed between the employee and the employer.
The mandatory weekly rest period is 24 hours, on a Sunday as a rule, although the day may be changed in accordance with the law or statutes, approved instruments, or internal regulations freely observed by the employee.
The weekly rest may also be on a day other than Sunday in cases envisaged in the Labour Code.

Overtime and Night Work

The Code provides for overtime, which is work outside the employee's normal mandatory working hours. It is subject to a daily limit of 2 hours of overtime per day, up to a maximum of 160 hours per year, which may be extended to 300 hours pending written consent from the employee and remuneration that is at least 35% higher than the normal wage. If the overtime takes place on a bank holiday or a weekly rest day, remuneration must be double the usual wage.
The law considers night work to be between the hours of 10pm-6am, with said work being remunerated at 25% higher than the basic wage.

Exemption from fixed working hours

Exemption from fixed working hours is agreed between the parties and confers the right to remuneration at a minimum of 20% above the usual rate.

Holiday

The holiday allowance is 22 business days, except for contracts with a term of less than one year, in which case the period will be proportional to the term of the contract. As a rule, the holiday allowance expires on 1 January each year. However, in open-ended contracts the initial holiday allowance expires after 6 months of effective service, while for contracts with a term of less than 1 year it expires after half the term.

Public Holidays

The following are considered national holidays in Cape Verde: 1 January, 13 January, 20 January, Good Friday, 1 May, 1 June, 5 July, 15 August, 1 November, 25 December.

Leave

The labour laws of Cape Verde allow the following leaves of absence:
a) Unpaid leave;
b) maternity leave;
c) Paternity licence;
d) Special leave due to pregnancy risk;

Termination of the employment contract

Employment contracts are terminated due to: mutual agreement between the parties; expiry; collective redundancy; individual dismissal with just cause, and resignation by the employee.

Employing foreigners

For a foreign citizen to work in Cape Verde, the following is required: employment contract authorised by the government official responsible for employment; valid visa to remain in the territory.
Performing an employment contract when a visa has been refused means working in national territory without authorisation and constitutes an offence.
If a foreign worker has an accident at work in national territory, their family or dependants have the same compensation rights as national citizens. This right is not dependant on a residence permit.

Minimum wage

Employees subject to the Labour Code are guaranteed a minimum monthly salary of 11,000$00 (eleven thousand escudos) - around EUR 99.76, provided they work the normal hours set by the employer. This amount is reduced by 20% for apprentices and interns.

Social Security

The National Institute of Social Security (INPS) manages the social security contribution scheme.
Social security in Cape Verde is based on a permanent mechanism with a three-tier structure: safety net, mandatory social security, and additional social security.

This covers employees and self-employed people and their families, with the contributions being deducted by employers from the respective salaries and paid together with their own contributions.

The overall contribution rate is 24.5% of gross remuneration, with the employee paying 8.5% and the employer 16%.
Additional social security is based on an insurance rationale and is optional, aiming to bolster the cover provided by mandatory social security.

ACCESS TO LAND FOR INVESTMENT

1. Legal framework

The Cape Verdean legal framework on land clearly defines the public domain of the State and local authorities and the private domains of the State, local authorities, and private individuals.

There is legislation that establishes the principles and regulations for land use, by both public and private entities (Decree-Law no. 2/2007 of 19 July, published in Official Bulletin no. 26 of 19 July 2007).

According to this legislation, the right to private ownership over land confers upon the owner powers to use, enjoy, and dispose of the land owned, to the exclusion of any other land, as well as the right of recourse to any legal means to protect it.

2. Access to the land for investments

Tourist investments

The following entities provide land for tourist investments:

• SDTIBM-Tourism Development Society of the islands of Boa Vista and Maio

SDTIBM provides land in the Integrated Tourism Development Areas (ZDTI) on the islands of Boavista and Maio. It has 3 ZDTIs on Boa Vista (Chaves ZDTI, Morro de Areia Chaves ZDTI, and Santa Mónica ZDTI) and 3 on Maio (Sul da Vila de Maio ZDTI, Ribeira D. João ZDTI, and Pau Seco ZDTI).

SDTIBM provides lots with areas ranging from 3,000 square metres to 15 hectares. The prices are established according to the type of application (hotel, property, or services), the location of the land, the project characteristics, the buildable area, and the benefits for the country.

For information, declarations of interest, and negotiations, SDTIBM can be contacted via:

Phone: (238) 2519200

Email: [email protected]

Website: Www.sdtibm.cv

• Office for Special Tourism Areas (GZTE)

The Office for Special Tourism Areas promotes the physical planning, management, and administration of special tourism areas on the islands of Santiago, S. Vicente, and Sal. The island of Santiago has 8 ZTEs (Norte da Praia, Achada Baleia, Mangue Monte Negro, Porto Coqueiro, Achada Lage, Sudoeste da Praia, Achada Rincão, and Alto Mira).

The island of S. Vicente has 7 ZTE's (Palha Carga, Praia Grande, São Pedro, Baía das Gatas, Vale de Flamengos, Salamansa, and Saragaça).

The island of Sal has 4 ZTEs (Santa Maria, Pedra de Lume, Murdeira/Algodoeiro, and Morrinho Branco).

Land is granted following approval of the project idea or project, developed from the approved master plan and preliminary studies. The price of land is set according to the criteria established by the government departments under the supervision of the Ministries of Economy and Finance.

Land may be granted by way of purchase and sale, concession, and surface rights agreements.

For more information, contact the Cabo Verde TradeInvest One-Stop-Shop for Investment:

Phone: (238) 2604110/11

E-mail: [email protected]

• Directorate-General for State Property and Public Bidding (DGPCP)

The DGPCP is a state department, under the supervision of the Ministry of Finance, which grants state land for investments in tourism and agriculture/silviculture.

The value of the concession, type of concession, and form of payment are negotiated on a case-by-case basis with project promoters.

For each area of investment, the DGPCP makes the following types of concession:

-Tourism: Concession, surface rights, and disposal

- Agriculture/silviculture: Concession and surface rights

For more information, contact the One-Stop-Shop for Investment of Cabo Verde TradeInvest:

Phone: (238) 2604110/11

E-mail: [email protected]

• Maritime and Port Agency (AMP)

One of the AMP's missions is the management of Cabo Verde's seafront and coastal areas and the concession of the State's maritime domain. Promoters of projects that are to be located on the coastline must submit their requests to this entity in respect of land applications and project approvals. There is a full procedure to be carried out before the land is granted, from negotiation to ministerial authorisation, and finally publication of the concession agreement in the Official Bulletin. The price is negotiable between the parties. The concession may be for up to 2 years, from 2-10 years, or for more than 10 years.

For more information, contact the One-Stop-Shop of the Cabo Verde TradeInvest:

Phone: (238) 2604110/11

E-mail: [email protected]

• Town Councils

Some town councils have municipal land for tourism investments.

• Industrial investments

For industrial investments, promoters can contact the town councils in the municipalities where they intend to invest in order to request land.

There are industrial parks on the islands of S. Vicente (specifically in Mindelo) and Santiago (specifically in Praia).São Vicente has an industrial park, named the Lazareto Industrial Park, which is an area of approximately 33 hectares with infrastructure, which includes a distribution of industrial plot areas, service (commercial and social) areas, green areas, and parking.

The Lazareto Industrial Park has 53 plots of 5,000 m² and 17 plots of 2,500 m². For more information on the infrastructure available in the park, consult the website:

Http://www.zil.cv/index.php/o-parque/infraestruturas-do-parque

For more information contact A SGZ, the management company for the Lazareto Industrial Park:

Lazareto Industrial Area

Mindelo - São Vicente

Phone: (238) 230 06 39

Fax: (238) 231 94 51

Www.zil.cv

In the municipality of Praia on the island of Santiago there are four industrial areas set out in the city's urban development plans (Tira Chapéu Industrial Area, Achada Grande Trás Industrial Area, Achada S. Filipe Industrial Area, and Palmarejo Grande Industrial Area).

For more information, contact Praia City Council:

Technical Department - Phone: 5347812

Procurement Commission – Phone: 5347813

• Other investments

For investments where the promoter does not require land for construction but intends to set up in their own or a rented property, real estate agencies may be contacted to purchase or rent business facilities.

Browse contacts in the “Cape Verde Yellow Pages” via the link:

Http://www.paginasamarelas.cv/site/index?SearchForm%5Bwhat%5D=Imobili%C3%A1ria&SearchForm;%5Bwhere%5D

Constitution of enterprises

Foreign investors are authorised to create 100% private companies, except in the fisheries sector, where a Cape Verdean partner is required to have a minimum share of 51%, or inter-island sea transport, which requires a share of 25%.

A foreign investor may carry out business activity:

As an individual

By establishing one of the types of trading companies permitted by law:

• Limited companies;
• Single-shareholder limited companies;
• Joint-stock companies.

Creation of a foreign company branch office

• Branch;
• Stable establishment.

CREATION OF COMPANIES IN CAPE VERDE

The main types of trading companies are limited companies and joint-stock companies, and the choice of one of these options is primarily dependent on the size of the business (capital to be invested), with the former being more suitable for generating small and medium-scale business and the latter suitable for large-scale investment.

Potential external investors may establish a company via any of the legally prescribed forms, opting for one of two procedures. The simpler form is swift, as a ‘company in one day’, while the slower option is to apply via the Commercial Registry Office. Both of these options have their advantages and their drawbacks, so the decision should be guided by a careful analysis of the interests of the business and the relationship that needs to be established with partners or shareholders. Limited and joint-stock companies are the most common legal forms of a company, but there is also the framework for cooperatives and single-member companies.

Limited companies

Limited companies (Ltd) must comply with the following requirements:

1. Proceed with the public establishment of the company, indicating the share capital and the number and value of shares;
2. Minimum share capital of 1 escudo (0.01 euros);
3. Split of share capital, underwritten by every shareholder;
4. At least 50% of the underwritten capital should be deposited in cash at a local banking institution. The remainder should be made in the following 3 years in the form stipulated in the articles of association.

Joint-stock companies

Before they begin operation, joint-stock companies must fulfil the following requirements:

1. The company must have a minimum of 2 (two) shareholders;
2. Minimum capital of 1 escudo (0.01 euros);
3. The capital must be fully subscribed;
4. At least 30% of the underwritten capital should be deposited in cash at a local banking institution. The remainder should be made in the following 5 years in the form stipulated in the articles of association.
5. A company may be a single-member company, in which case it is a stock corporation with a single proprietor (Sociedade Anónima, Unipessoal, SA).

Necessary documents

For individual shareholders

1. Photocopy of identification document;
2. Letter of attorney with authenticated signatures if it is necessary to appoint attorneys, along with their identification documents.

For the company

1. Authenticated photocopy of the constitution deed or document;
2. Authenticated photocopy of the certificate of registration;
3. Authenticated photocopy of the company’s tax card;
4. Minutes of the decision to establish a company in Cape Verde, indicating the type of company, the name of the person who will sign on behalf of the company, and the value of the share capital;
5. Attorney’s letter with authenticated signatures conferring power of attorney to represent the company to the competent bodies for the establishment and legalisation of the company in Cape Verde.

Formalities

1. Obtaining an admissibility certificate for the firm from the Conservatory;
2. Preparing company statutes / memorandum of association / contract;
3. Opening a bank account in the company name and depositing the share capital at a commercial bank operating in Cape Verde;
4. The public deeds for the establishment of a company are granted only upon provision of all of the aforementioned documents if a shareholder seeks to underwrite the share capital with property; otherwise the articles of incorporation signed by the shareholders/stockholders are sufficient;
5. Commercial registration with the Commercial Registry and obtaining a final certification;
6. Publication of the company statutes in the Official Journal of Cape Verde;
7. Making a declaration to the General Directorate for Contributions and Taxes and obtaining the number of taxpayers prior to commencing operations;
8. Making a declaration of commencement of operations for taxation purposes within 6 (six) months;
9. Registration with the National Social Security Institute, the General Directorate for Labour and the Labour Office;
10. Registration the Directorate of Commerce for the purposes of carrying out commercial activity.

Subsequent formalities depend on the activities being carried out and may include the necessary licences and authorisations for conducting business or industry.

Company in One Day

Alternatively, as previously mentioned, a ‘Company in One Day’ may be established at Citizen House, where all of the necessary steps for establishing a company can be carried out.

Branch

This is a non-autonomous entity of a parent company that serves as a local extension of that parent company. In other words, the branch is not a legal entity distinct from the parent company, but has full legal capacity to conclude contracts as part of its activities.

The procedure for establishing a branch is very similar to that of the types of company mentioned above, with the following documents required:

1. proof of the company resolution to establish representation;
2. complete and up-to-date text of the contract to establish the represented entity and proof of its legal existence;
3. act on the decision to establish a branch in Cape Verde, indicating the type of company and the name of the person representing the company;
4. Attorney’s letter with authenticated signatures conferring power of attorney to represent the company to the competent bodies for the establishment and legalization of the company in Cape Verde.

Formalities

1. Registration in the Commercial Register at the Conservatory;
2. Publication of the statutes of the parent company in the Official Journal of Cape Verde;
3. Registration with the Social Security Office and the General Directorate for Contributions and Taxes.

To query the context costs of 2017, access the link Context costs

To consult the Fiscal system, access the link Cape Verdean Fiscal System

The largest source of funding in Cabo Verde comes from the trading bank.

The banks in Cabo Verde are supervised by the Central Bank of Cabo Verde (WWW.BCV.CV).

The current list of commercial banks:

Commercial Bank of the Atlantic (WWW.BCA.CV);

Cabo Verde economic Box (WWW.CAIXA.CV);

Banco interatlantic (WWW.BI.CV);

Cabo Verde (www.ecobank.com);

Banco Cape Verdean de business (WWW.BCN.CV);

Banco BAI Cabo Verde (WWW.BANCOBAI.CV);

International Bank of Cabo Verde (WWW.BANCOINTERNACIONAL.CV).

In addition to the commercial banks there is the Cabo Verde Stock Exchange (WWW.BVC.CV).

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