A Revised Uniform Companies Code For The 17 African Countries Of Ohada

A revised companies code was adopted by Ohada1 on 30 January 2014 (The Uniform Act on Commercial Companies and Economic Interest Groups; the "Revised Code"). The Revised Code adds tailwind to a fast developing market and further incentivizes investors, including private equity investors, to enter the dynamic African markets.

The Revised Code addresses investors' concerns regarding the somewhat dated and inflexible previous code by allowing the formation of "SAS" companies with their simplified and more flexible governance, and the conduct of meetings by video. More sophisticated shares and securities have also been further developed, like share classes with varied dividend, voting and other rights, as well as convertible and subordinated bonds.

Above all, the Revised Code clarifies many important provisions and reduces ambiguities, including a provision that shareholder agreements are now expressly permitted.

The Revised Code should be published in Ohada's official legal journal before April 2014 and become effective by July 2014 at the latest. Existing Ohada companies then have two years to conform their articles of association to the Revised Code.

Major Changes

One main change for investors seeking to establish a vehicle in an Ohada country is the creation of a new corporate entity: the SAS. This type of limited liability company has already been very popular in France due its flexibility and ease of governance. For example, the SAS has few statutory requirements and is thus primarily governed by the articles of incorporation which the shareholders agree upon.

The Revised Code also explicitly provides for the ability of companies or shareholders to:

Make equity contributions to companies through services; Form a company with varied share capital, which offers more flexible options for capitalizing the company; Have a court appoint temporary management for a company experiencing serious management difficulties; Restrict share transfers for up to 10 years for a serious and legitimate reason; Establish foreign representative or sales offices of indefinite duration; Issue varied share classes, share warrants and shares with additional subscription rights; Issue convertible and subordinated bonds; Issue interim dividends; and Issue free shares to the company's personnel. Earlier drafts of the Revised Code eliminated the necessity of using notaries when signing or amending articles of association. Although the final Revised Code maintains this...

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