THE OHADA REFORM
The OHADA Uniform Act on commercial companies of 17 April 1997 has been reviewed by the OHADA Council of Ministers, which adopted the latest version on January 30, 2014 in Ouagadougou. Coming into force 90 days after publication in the Official Gazette of OHADA. Existing companies have two years (from the date of entry into force) to harmonize their Statues with the new law.
WHAT IS OHADA?
OHADA means “Organisation pour l’harmonisation du droit des affaires en Afrique”. (Organisation for Harmonisation of Business Law in Africa). It was created on October 17, 1993 in Port-Louis and revised on October 17, 2008 in Canada.
The treaty is opened for any member of the Organization of Africa Unity (OAU) and any state not member can be invited to accede by the mutual agreement of all states parties.
This organization allows the creation of a uniform system of business law in the African area and the normative is directly applicable in the national legal order.
This treaty is applicable in 17 states of West and Central Africa (The Member States). Almost all member states are francophone (except for the Republic of Guinea-Bissau and Equatorial Guinea) and the use the CFA FRANCS currency.
Introduction to the Simplified Joint- Stock Company (SAS):
Book 4-2 Second part of the project:
The new Act has established a new type of Companies, which can be incorporated without minimum capital and without auditors below certain thresholds.
Very flexible way of governance: The new SAS do not necessarily include a Board of Directors (as opposed to the Limited Company (SA) for more than three shareholders) and allows more freedom to the statutes to determine the conditions under which the company should be led by the President (who has all the powers to represent it to third parties) and their potential Managing Directors.
The statutes may presuppose the creation of a management body or a supervisory board (as an executive or supervising committee). The powers and ways of function of these organs are fixed in the statutes.
Another important point to highlight is the flexibility of the legal system such as that the partners are liable only for the debts in proportion to their contributions.
More over, we can notice that most of the regulations relating to the SA are applicable to SAS.
The SAS can be incorporated without a minimum capital share and can have shareholders who are legal entities as well as natural persons.
Existing SA are able to become SAS with the unanimous vote of the shareholders.
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2. The validity of the resolutions of the shareholders: Art 2-1
The Uniform Act provides the possibility of concluding “extra statutory conventions” in order to freely organize the management of the company.
- -The decision-making organization amongst the different shareholders (creating watchdogs of qualified majorities, veto power, prior authorization of the clauses of privileged information)
- The movement of capitals (restriction of securities transfers, insertion of inalienability clauses, granting licenses, anti-dilution clauses, etc..) And the exit of the shareholders (tag-along clauses, clauses of first offer, etc.).
Note: This option is subject to compliance with the mandatory provisions of the Uniform Act.
3. Creation of new securities:
In response to the need for flexibility of operations related to capital: preference shares, hybrid securities, and variable capital companies. OHADA introduced articles 269-1 and ss, this allows shareholders to create collection and subscription fees in the statues.
4. Easy Meetings: Art 133-2
The Company law defined by OHADA is adapted to new technologies and authorizes videoconference meetings (if so mention the Statutes) and calls by email.
5. Branches Limitation:
In the past, the Uniform Companies Act provided that the branches of foreign individuals or corporations had to be incorporated into a local company within the period of two years following its creation unless exemption granted by the Minister of Commerce.
The investors were able to obtain a prorogation of this exemption and in some cases this last can be indefinite.
Now the duration of the exemption would be limited to two years (Article 120) and sanctions are foreseen in case of breach of such obligation as the radiation of the branch (Article 120 § 3 et 4) as well as the imposition of criminal sanctions against the leaders of the foreign company (Article 891-2).
6. Other Changes:
- Arts 120-1 to 120-5: Legal recognition and definition of “office of representation or bond. “
- Arts 143 and 756: possibility of appointing an interim manager through justice when the correct functioning of the company is jeopardized.
- Possibility of pay dividends partially.
- Arts 50-1 to 50-4 and 389: possibility of industry contributions in different types of society except in SA
- Arts 269-1 to 269-7: possibility of incorporation of Companies with variable capital.
- Arts 81: extension of the concept of the public offer, introduction of the concept of investor and creation of new provisions in relation to the public offer of the SA.
- Arts 387: the nominal amount of the shares in an SA can be freely determined by the by laws.
- Art 438: extension of the agreement purview with shareholders holding 10% in the company even in the absence of leaders of society: this applies to the SA
- In many cases, the Uniform Act make reference to national provisions / laws. For instance, to decide statues form, amount of capital of the SARL etc.
- it’s provide to distribute payments of dividends in OHADA area.
- New management of many procedures like the approval clause, inalienability, and clause of first offer in SA and SAS -> that offers a biggest capacity of capital control for the shareholders : idea of freedom and transferability of actions.