OHADA: UPDATE ON CORPORATE LAW REFORM
Interview published in March 2014 by Agence Ecofin (www.agenceecofin.com and www.ohada.com)
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“OHADA: A major advance in corporate law.” The OHADA Uniform Act on Commercial Companies of 17 April 1997 has just been revised by the OHADA Council of Ministers, which adopted its last «version» on 30 January 2014 in Ouagadougou."
WHEN WILL THIS NEW VERSION COME INTO FORCE?
Mr François Nouvion: The revised act was published in the OJ OHADA on 04 February 2014 and will enter into force 90 days after this publication, that is on 05 May 2014. Existing companies and groups will have two years from its entry into force to bring their statutes into harmony with the new Uniform Act.
The adaptation of the Articles of Association (and any impacted shareholders' agreements) must therefore be already anticipated, in order to also benefit from the many advances proposed to modernize the company law of the OHADA area.
CAN YOU GIVE US SOME OF THESE ADVANCES?
Mr François Nouvion: First of all the introduction of the Société par Actions Simplifiée (SAS), a new type of joint-stock company (like the SA) but without minimum capital and without necessarily Statutory Auditors below certain thresholds. The SAS does not necessarily include a Board of Directors (unlike the SA of more than three shareholders) and leaves it to the Articles of Association to define the conditions under which the company is managed by its Chairman (who has all the powers to represent it and commit it to third parties) and any Directors General or Deputy Directors General. The Articles of Association may, however, if the members consider it useful, freely establish a collegial management or supervisory body (such as an executive committee or supervisory committee) whose powers and functioning they shall define. Existing SAs that so desire may be converted to SAS by a unanimous vote of shareholders.
An essential step forward is also the creation of new tools to meet the flexibility needs of capital transactions: preference shares, compound securities and the variable capital company are introduced in OHADA law.
In the case of share transfers, arrangements for authorisation and pre-emption have been developed, and possibilities for compulsory disposals have been introduced. It should also be noted that shareholder agreements, whose validity is now expressly recognized in the Uniform Act, are also potentially impacted (for example, the inalienability clauses included in shareholders' agreements are now limited to a maximum of 10 years and must be justified by a serious and legitimate reason). Beyond the statutes, the shareholders' agreements are therefore also worth reviewing.
Mr François Nouvion: Yes, there are some very important practical advances in terms of how shareholders' meetings and boards of directors meet: OHADA company law adapts very clearly to new technologies by authorising videoconferencing (if provided for in the articles of association) and convening by email (with the prior written consent of the partner concerned). This will facilitate timely decision-making.
HAS ADAPTATION TO NEW TECHNOLOGIES, MUCH AWAITED BY PRACTITIONERS, BEEN INTRODUCED?
HAVE ANY NEW CONSTRAINTS BEEN IDENTIFIED?
Mr.François Nouvion: Obviously, the review was an opportunity to strengthen or redefine certain obligations. Examples include extending the scope of regulated agreements to agreements with shareholders holding at least 10% of the capital (even if there are no common managers), and the limitation to a single renewal for 2 years of branches of foreign companies (it should be noted that the status of liaison/representation office, already existing from a tax point of view in several countries, can now be registered in the Trade and Personal Property Credit Register).
Note also that an important constraint is maintained, that practitioners wanted to see evolve: it remains prohibited to distribute deposits on dividends in the OHADA area. Finally, the legal security of the Uniform Act is strengthened, since nullities are now expressly expressed in each relevant article of the Uniform Act.
DOES THE RESULT SEEM POSITIVE…
The adoption of this revised Uniform Act on trading companies is a very important step forward which will clearly contribute to the development of investment in the OHADA area.
