INTRODUCTION

You wish to set up an economic group patnership in the Ohada zone ? Here is some information and advice, because in the economic group partnership, as in any other business structure, there are positive aspects but also limits to be considered in the light of one's own aims as well as many other data.

The main benefits and shortcomings generally recognized in this type of organization may be summarized as follows :

This business organization is generally recommended for its rather flexible nature especially for business/activities to be carried out jointly by several undertakings whishing to remain independent.

<<>> Its features

•  Freedom : there is a great flexibility left to the partners (called «members») to tailor the organization and management of the entity. Thus, it is possible to have a registered capital or to do without it, to determine the purpose of the group etc. There is then a reduced number of unescapable provisions except in two fields :

. for the protection of third parties : the partners are jointly and severally liable for the debts of the group and if the management may either be ensured by natural persons or corporate bodies, in the latter case, the representative appointed shall incur the same civil and criminal liability as if he was a director on his own account (*)

. for the protection of minority partners : right to withdraw from the group, to have general meetings convened at their request, accounts auditing …

•  Efficiency : the economic interest group is an effcient business organization :

. on the strategic point of view : it enables several undertakings willing to operate together to do so without losing their independence,

. on the legal point of view : its enable these partners to rip all the benefits of an autonomous entity with the legal personality, distinct from its members, with an address (the one of the headquarters), the ability to conclude agreements, to buy immovable property, to defend its interest in court;

<<>> Its benefits :

•  as compared to joint ventures : it is as flexible as joint ventures but with in addition the standard benefits of the legal personality,

•  as compared to companies : both have the legal personality but in such groups, the members enjoy a greater freedom to tailor the architecture of their business organization.

In spite of the fact that the economic group partnership is one of the most flexible Ohada business structure, the Uniform Act does not leave you completely free to tailor your agreement as you wish. Hereunder is the relevant information in this regard.

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(*) so as to enable third parties to face a natural person and not an anonymous entity in the event of infringement of Ohada Company provisions .

HOW FREE ARE YOU WITH REGARD TO THE TAILORING OF YOUR AGREEMENT  TO GOVERN THE ECONOMIC GROUP PARTNERSHIP ?

It is to be recalled that it is provided in Article 2 of Ohada Uniform Act on commercial companies that its provisions are mandatory, except in cases where the Act explicitly authorizes a sole partner or the partners of a company to substitute contractual provisions between them for its provisions or to supplement them with their own provisions.

- Green light ! You can freely decide on …

The purpose of the group, its duration, the terms and conditions of its operation, the members‘ rights and obligations may be freely determined, subject to some obligations entailed in the Uniform Act.

- What shall be applicable if there is no provision in your agreement concerning …

. the members' contribution to debts : unless otherwise provided in the agreement, each member shall bear an equal part of the debts (art. 876.1) ;

. collectives decisions : unless otherwise provided in the agreement, these decisions shall be taken by unanimous consent of the members (art. 877.2) ;

. the number of votes for each member : unless otherwise provided in the agreement, each member chall have one vote(art. 877.3) ;

. fate of the group if one member happens to become incapacitated, personally bankrupt or banned from any management or administration functions  : unless otherwise provided in the agreement, the group shall be dissolved (art. 884). The same shall apply in the event of death (natural person) or the dissolution (corporate body) of one of its members (art. 883);

. winding up of the group : unless otherwise provided in the agreement, it shall be handled by a liquidator designated by the members ‘ general meeting, and failing this, by the president of the competent court (art. 885.2) ;

. sharing of the group's assets : unless otherwise provided in the agreement, the surplus of assets remaining after payment of the debts shall be shared among the members under the conditions laid down by the agreement. Failing this, the sharing shall be done in equal parts (art. 885.3).

- The provisions which shall not be demurrable to third parties

.  The amendments of the agreement for which publications formalities were not fulfilled contrary to the original whall not be demurrable to third parties (art. 876.6).

.  The provisions limiting the powers of the director of the group for any act in the scope of its group (art. 879.3).

NB1. The members of the economic group partnership are be jointly and severally liable for payment of the debts of the group, unless otherwise agreed with a contracting third party (art. 873.2).

NB2. The lack of mention of the name of the group followed by the acronym « GIE » in its deeds and documents intended for third parties, in particular letters, invoices, various notices and publications, is punished with penalty for simple offences.