The Organization for the Harmonization of Business Law in Africa (OHADA) revises its corporate law to foster the creation and development of companies and promote local and foreign investments in the region. The group of experts who participated in the reform of the Uniform Act on Commercial Companies and Economic Interest Groups invites you to consult a special feature, which they will soon be publishing in the “Droit & Patrimoine” Review.

The Uniform Act on Commercial Companies and Economic Interest Groups (the Act), originally adopted on 17 April 1997, has been significantly revised. A new Act was adopted on 30 January 2014 by the council of Ministers of the Organization for the Harmonization of Business Law in Africa (OHADA) which met in Ouagadougou. Published in the Journal Officiel of the OHADA on 4 February 2014, the new text will come into effect on 5 May 2014.

Driven by the Permanent Secretary of the OHADA, Professor Dorothé Cossi Sossa, with the technical and financial assistance in particular of the World Bank Group, ICF (Investment Climate Facility for Africa) and the French Development Agency, a group of experts has been assisting the OHADA in the review of this Uniform Act since September 2010. This high level group brought together practitioners, law professors, corporate governance and legislative drafting experts: Barthélemy Faye, Jacques Jonathan Nyemb and Jean-Pierre Vignaud (Attorneys, Cleary Gottlieb) as coordinators, Philippe Merle (Professor Emeritus at the Paris II Panthéon-Assas University), Karim Fadika (Attorney, FDKA), Jean-Jacques Essombè (Attorney, Heenan Blaikie AARPI), Pierre Djédjé (Legal advisor, C2A), Emmanuel du Boullay (Corporate governance expert, IFA), Paul Gérard Pougoué (Professor at the University of Yaoundé), Joseph Issa-Sayegh (Professor at the University of Dakar), Abdoullah Cissé (Professor, attorney and legislative drafting expert) and Karine Gilberg (Legislative drafting expert).

The new Act, which addresses the needs expressed by law practitioners and economic operators of the OHADA region, improves applicable law and introduces significant innovations, fostering the creation and development of companies, strengthening the legal protection of economic activities and financial transactions, and thus encouraging both local and foreign investments. The innovations introduced are designed to make OHADA corporate law more simple, more secure and better adapted to economic realities and the international arena.

The revised Act first introduces a new corporate form : the simplified limited liability company (société par actions simplifiée) without a legally required minimum share capital, which presents obvious benefits both for small and medium-sized entrepreneurs interested in a legal status with few constraints and for companies seeking to organize cooperation without committing to indefinite and joint liability, as well as for corporate groups with regard to their various subsidiaries.

The new Act also offers an indispensable simplification of the rules of creation and functioning of companies in order to overcome the challenges of a highly competitive global environment and enter the digital era. Simplifying the rules pertaining to drafting of by-laws, share capital paying up terms and amount, as well as filing and publications - in anticipation of digitalized registry systems and financial information - is essential in order for companies in the OHADA region to run smoothly. In addition, the new Act offers an improved legal framework for the activities of non-OHADA companies in the region. Finally, taking into account information and communication technologies, the conditions for holding general shareholders meetings and meetings of other corporate bodies of companies in the OHADA region have been reformed.

The new Act accomplishes a major step forward for the OHADA region by establishing new legal provisions concerning securities, making it possible within a clearly defined legal framework to issue hybrid securities giving access to share capital or allowing for the allotment of debt securities, preferred shares or free shares. The lack of these provisions in the previous Act posed a hindrance for economic operators in need of free and creative market conditions and access to instruments to facilitate “tailor-made” financial solutions. The new Act also introduces the possibility, for non-listed public limited liability companies (sociétés anonymes) and simplified limited liability companies (sociétés par actions simplifiées), to provide for variable share capital.

The new Act is also innovative in its reinforcement of rules of corporate governance, bringing the OHADA region up to speed with a major worldwide shift in business law. As a result, both for listed and non-listed companies, the powers of the board of directors have been clarified: directors must play a more active role and, in large public limited liability companies, can be assisted through the creation of specialized committees. Other new provisions have been established to regulate compensation and dismissal of corporate officers.

In addition to these significant innovations, several other awaited improvements have been made, such as the clarification of the notion of nullities (nullités), the formal definition of the provisional administrator's status, as well as the legal framework of his role, and updated regulations regarding initial public offerings and securities for joint stock companies (sociétés par actions).

Find further details on the innovations and reforms of the new Uniform Act in a special feature to be appearing soon in the “Droit & Patrimoine” Review (Lamy)

In the absence of published preparatory works for this revised Act, the group of experts that participated in the elaboration of this new corporate law in the OHADA region has prepared this special feature for economic actors and business law practitioners to provide a better understanding of the nature, trends and implications of this important reform.