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OHADA BUSINESS LAW


THE UNIFORM ACTS IN BRIEF
THE IMPLICATIONS OF OHADA LAW IN THE UNDERTAKINGS' LEGAL ENVIRONMENT AT LARGE

THE LEGAL RISKS RESULTING FROM THE ENFORCEMENT OF OHADA BUSINESS LAW

THE UNIFORM ACTS IN BRIEF



It was provided for in the Harmonization Treaty that Uniform Acts shall be adopted for the implementation of the common rules.

Thus the following Uniform Acts have been adopted.

Uniform Act concerned
The dates it was adopted and enforced
ITEMS DEALT WITH

Uniform Act relating to General Commercial Law


Adopted on April 17,1997 and enforced by derogation on January 1st, 1998.

Updated on December 10, 2010.


The traders' status, the Trade and Personal Property Credit Register, commercial leases, business, trade middlemen, commercial sales.


Uniform Act relating to Commercial Companies and Economic Group Partnerships Adopted on April 17,1997 and enforced by derogation on January 1st, 1998, updated on January 30, 2014..
- Provisions governing all companies (relating to their incorporation,functionning, civil liability of company executives, legal links between companies, transformation, merger, scission, dissolution, liquidation, nullity, publication formalities).

- Provisions governing each type of company.

- Penal provisions.
Uniform Act organizing Securities

Adopted on April 17,1997 and enforced by derogation on January 1st, 1998.

Updated on December 10, 2010.

 


- Surety-bonds

- Letters of guarantee

- Possessory lien.

- Pledges.

- Pledging without dispossession :

. pledging of partnership rights and transferable securities,
. pledging of business,
. pledging of professional equipment and motor vehicles,
. pledging of stocks of raw materials and goods.

- General liens and special liens.

- Mortgages.

- Distribution and classification of securities.
Uniform Act organizing Sum-mary Debt Col-lection Procedu-res and Measures of Execution Adopted on April 10, 1998 and enforced 90 days after its adoption (art. 9 of the Harmonization Treaty).
- Summary debt collection proceedings, (injunction to pay, injunction to secure the delivery or restitution of a specific personal property).

- Measures of execution (sequestration, seizure for sale, seizure for apprehension of the debtor's debts, attachment and transfer of earnings, seizure of partnership rights and transferable securities, attachment of real property).

- Distribution of the proceeds of sales.
Uniform Act organizing Insolvency and Liquidation Proceedings Adopted on April 4,1998 and enforced by derogation on January 1st,1999.
- Voluntary agreement.
- Administration of insolvent debtors' affairs under the supervision of a court.
- Liquidation of property.
- Personal bankruptcy and discharge of bankruptcy.
- Bankruptcy and other offences.
- International insolvency proceedings.
Uniform Act on Arbitration Law Adopted on June 11,1999 and enforced 90 days after its adoption (art. 9 of the Harmonization Treaty). - Constitution of the arbitration court.
- The arbitral hearing.
- The award.
- Petition against the award.
- Recognition and enforcement of awards.
Uniform Act organizing and harmonizing the undertaking's accounts in Ohada Member Countries











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Adopted on March 23 and 24, 2000.

Enforced :

for the undertakings' personal accounts, as from January 1, 2001 : transactions and accounts related to the financial year under way at this date;

for consolidated and combined accounts, as from January 1, 2002 : transactions and accounts related to the financial year under way at this date


PERSONAL UNDERTAKING'S ACCOUNTS (natural and legal persons)

General provisions
Accounting system
Annual accounts
Rules on the assessment and setting up of the the trading results
Value of documents as evidence, accounts auditing, gathering and publication of accounting information.

CONSOLIDATED AND COMBINED ACCOUNTS

Consolidated accounts
Combined accounts

PENAL PROVISIONS

FINAL PROVISIONS


Uniform Act relating to the transportation of goods by road
Adopted on March 20, 21 et 22, 2003. Enforced in January 2004.



SHIPPING AGREEMENTS AND DOCUMENTS

IMPLEMENTATION OF THE TRANSPORT AGREEMENT

THE CARRIER' S LIABILITY

CONTENTIOUS MATTERS


Uniform Act governing Cooperative credit banks



Adopted on Décember 10, 2010 in Lome, Togo.





THE IMPLICATIONS OF OHADA LAW IN THE UNDERTAKINGS' LEGAL ENVIRONMENT AT LARGE

The implications for the undertakings at large The specific implications for some sectors
The implications for the undertakings at large



In view of the matters where uniform acts have been promulgated, Ohada Law has, up to now, just had implications mainly in some important aspects of the undertakings' life at large, but did not have specific implications in such or such a sector, except where mentioned hereunder. Indeed, the salient modifications introduced in the undertakings' legal environment concerned mainly :

° the business organizations themselves : the new types of companies introduced and the new rules with regard to the operation of some of them,

° the undertakings' activities :

- their basic instruments : business, commercial lease,

- the legal rules governing their debts :

. in the field of commercial sales and trade middlemen contracts,
. and as to the collection of these debts : the securities related thereto and the general rules for debt collection, normally as well as when the debtor has become insolvent,

° and finally the rules governing the settlement of disputes relating to business activities (introduction of arbitration).



The specific implications for some sectors



Besides what is recalled above generally applicable to undertakingsat large, the Ohada business law promulgated has specific implications in some sectors :

- those where commercial leases are an important factor in the undertakings' activities (enterprises involved in land and real estate-related activities and similar sectors),

- those where business management leases are much used,

- those
where securities related to debts are an important piece of the undertakings'activities (the banking sector and others),

- those where trade middlemen contracts are much used (commercial channels and others).

The salient points of the Ohada new the legal environment are summarized hereafter in each sector :


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Sectors where commercial leases are an important factor in the undertakings' activities /
The major points of the new legal environment concerned




The status of commercial leases has been updated by Ohada Uniform Law which : 

- enables the parties to freely chose between leases of specified and unspecified duration, 

- but also includes a certain number of provisions considered as matters of law and order which shall be complied with by the parties, under penalty of seeing the lease being declared nul and void. 

These provisions shall apply :

- to the main and secondary premises of buildings rented for commercial, industrial, handicraft or professional purposes,

- and to non built-on rented estate entailing constructions built for the same purposes either before or after the conclusion of the lease, where such constructions were built or used with the consent and knowledge of the owner. 

These provisions also govern the leases in which one of the signatories (lessor or lessee) is an industrial or commercial entity governed by public law or a public corporation. 

Any trader who may prove that he has been running for two years an activity authorized by the lease, with the owner's consent, is entitled to the renewal of his/her lease under the terms and conditions laid down in the Uniform Act. 




Sectors where business management leases are much used /
The major points of the new legal environment concerned



Businesses may be run :

- directly by a trader or a commercial company, 

- or in the framework of a management lease which is an agreement by which the owner of a business hands it over by contract to a manager, a natural person or a coporate body, for the latter to run the business at his/her own risks (art. 106). The manager must have the status of trader and be registered in the Trade and Personal Property Credit Register (art. 107). 

The owner can grant such a contract only if : 

- he/she is a trader registered in the Trade and Personal Property Credit Register since at least 2 years, or if he/she has performed the duties of manager or of commercial or technical manager in a company for an equivalent duration, or 

- he/she has operated the business leased as trader for at least one year. 


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Sectors where the securities relating to debts are a key factor in the undertakings' activities /
The major points of the new legal environment concerned



Ohada Law thoroughly updated the laws on securities.

<> Modifications of the rules governing concurrence bonds.


-> Among the modifications in the rules governing surety bonds 

-- More stringent rules have been laid down to govern surety bonds, notably to protect the guarantors' consent: 

. as a general requirement (ex: the maximum amount guaranteed, including the accessories of the debt, shall be indicated in figures and letters, under penalty of seeing the surety bond being declared nul and void)

. or as a specific requirement (as the consent of the illiterate guarantors) (article 4).

-- Surety bonds are henceforth joint and several unless otherwise expressly provided for in the parties' agreement (article 10).

-- The creditor in favour of whom a surety bond was issued is henceforth obliged to provide the guarantor with some informations on the debtor under penalty of losing his recourse against thesaid guarantor.

-> The inclusion of autonomous guarantees (letters of guaranty). Letters of guaranty of international standards have been introduced. The requirements as to their issuing are rather strict (natural persons are prohibited to issue such guaranties).

<> Modification of the rules relating to corporeal securities 

The rules governing corporeal securities, whether relating to personalty or immovable property, have been thoroughly updated. 

-> Among the modifications in corporeal securities relating to personalty are :

- the inclusion of the possessory lien (before provided for in specific, scattered laws), as a security of general scope which is to be enforced pursuant to similar rules as the ones governing pledges ;

- the updating of the terms and conditions relating to the pledging of some intangible properties (example : the pledging of claims governed by precise rules enabling the pledgee to enforce the pledge in the best interests of all the parties concerned) ;

- the inclusion of additional pledges (such as, on the one hand the ones relating to shares, on the other hand pledges of stocks), to standard pledges without dispossession (pledges of professional equipment and motor vehicles, of business). It is to be emphasized that the numerous warrants existing previously (farm produce warrants, petroleum warrants etc.) have been replace by a single warrantage scheme in the framework of which pledging is facilitated by the issuing of an endorsable note recording the claim and the security. 

Moreover, there has been an important streamlining and updating of the liens, thus : 

- the list of general liens existing in the Civil Code has been streamlined and their number reduced, and general liens securing very important amounts (Treasury, Customs, Social Security institutions) must henceforth be registered in the Trade and Personal Property Credit Register if they are to be demurrable to third parties;

- the list of special liens has also been streamlined (those no longer in use have been eliminated) and in the event of conflict between these special liens over the same personalty, preference is given to the first to levy a distress.

-> Among the modifications in the coporeal securities relating to immovable property : the repeal of the rule according to which there was not time-limit for the validity of mortage registration. 

-> Among the modifications in the distribution and classification of securities : the classification of securities have been rationalized with on the one hand securities related to immovable property and on the other hand those relating to personalty. 



Sectors where trade middlemen contracts are much used /
The major points of the new legal environment concerned




Are concerned the agreements with comission agents, brokers and commercial agents.


The scope of Ohada Law on trade middlemen contracts is rather large since it includes not only the conclusion of contracts by middlemen, but also any transaction carried out by the latter in view of concluding or performing thesaid contract , as long as:

- the middleman is registered in the Trade and Personal Property Credit Register of one of Ohada member State or
- he acts in the territory of one of these States, or

- rules of private international law allow for the implementation of the Uniform Act.. 

With regard to the rules to govern trade middlemen's contracts, the Ohada Uniform Act has an extensive approach taking into account at the same time its provisions, the standard rules of agency entailed in domestic laws (which were maintained in force in this regard) and the professional practises in the field concerned. 


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THE LEGAL RISKS RESULTING FROM THE ENFORCEMENT OF OHADA BUSINESS LAW


Before the enforcement of the Uniform Acts :
national laws were implemented.




After the enforcement of the Uniform Acts
: implementation of Ohada Law with few exceptions (some parts of the national laws remained untouched, while others were partially maintained, as recalled hereabove), with two types of potential legal risks :

- those in connection with the companies' operation and activities,
- external risks.

<> The potential risks in connection with companies' operation and activities

Are concerned the risks in connection with the legal value :

- of companies' articles of association
- of the documents used in the framework of the companies' activities..

° Articles of association :

Harmonization with Ohada Law necessary => existing companies or
Drafting of articles of association complying with Ohada standards => new companies.

° Leases :

Harmonization with Ohada Law when renewed and/or
Drafting of new leases complying with Ohada standards.

° Securities :

Harmonization with Ohada Law when renewed and/or
Drafting of new instruments complying with Ohada standards.

° Sales :

Harmonization with Ohada Law when renewed and/or
Drafting of new sales agreements complying with Ohada standards.

° Trade middlemen contracts :

Harmonization with Ohada Law when renewed and/or
Drafting of new trade middlemen contracts complying with Ohada standards.

<>External risks

Risks of starting business relations with business organisations not incorporated in compliance with Ohada Law with subsequent implications with regard to their comitments.


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