Reforms To OHADA Commercial Law: Towards A More Attractive Legal Framework For Private Equity

Introduction

The Organisation pour l'Harmonisation en Afrique du Droit des Affaires ("OHADA"), which translates into English as the "Organisation for the Harmonization of Business Law in Africa" is an exclusively business-related legal framework that was created on 17 October 1993 in Port Louis, Mauritius.

Initially established pursuant to a treaty adopted among 14 Member States (the "OHADA Treaty"), OHADA membership has grown to 17 since 1993.1 OHADA enacts, among other provisions, Uniform Acts that have direct effect and supersede contradictory national laws, subject to any transitional provisions stipulated by the Uniform Acts. The OHADA Treaty also created a supranational supreme court with jurisdiction over the areas of law covered by the Uniform Acts (the Cour Commune de Justice et d'Arbitrage or CCJA), in English the Common Court of Justice and Arbitration, to ensure uniformity and consistency of legal interpretation across the Member States.

The substance of the nine Uniform Acts relates to General Commercial Law; Commercial Companies and Economic Interest Groups; organizing Security Interests; organizing Simplified Recovery Procedures and Measures of Execution; organizing Collective Proceedings for Clearing Debts; Arbitration; and organizing and harmonizing Undertakings Accountings Systems; Contracts for the Carriage of Goods by Road; and Cooperative Companies.

Today, OHADA continues to extend the scope of its legal reforms to better suit the needs of its Member States and their investors. Having previously reformed the Uniform Acts for Security Interests, Cooperative Companies and General Commercial Law in December 2010, OHADA adopted on 30 January 2014 substantial amendments to its core corporations law, the Uniform Act relating to Commercial Companies and Economic Interest Groups (known as the "AUSCGIE"), with almost two hundred new articles and some four hundred revised provisions.

The new AUSCGIE will come into force on 5 May 2014. Commercial companies and economic interest groups formed prior to the entry into force of the revised AUSCGIE are required to harmonize their articles of association with the new provisions within a two-year period following its entry into force. After that period, any non-harmonized provisions contained within the articles of association of a company established within a Member State will be deemed void.

The reform of AUSCGIE improves upon the previous legal framework and introduces a number of significant developments: promoting the creation and development of enterprises; enhancing legal certainty for economic and financial activities and transactions; and, consequently, encouraging both local and foreign investment. These innovations contribute to a simpler, more secure legal framework for investors and companies involved in cross-border transactions in Member States, and make the OHADA laws better suited to private equity investment in Member States.

AUSCGIE has been reformed with the following four aims in mind: (1) creating a new, more attractive legal entity; (2) strengthening legal certainty while enhancing flexibility in the functioning of Member State incorporated companies; (3) imposing certain...

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