YOU ARE A GROUP OF COMPANIES WISHING TO SET UP A PERMANENT BUSINESS STRUCTURE IN THE OHADA ZONE ?

>> WHAT OHADA LAW MEANS BY "GROUP OF COMPANIES"


The Ohada Uniform Act provides definitions of groups of companies as follows :

A group of companies is " a group formed by companies bound to one another by various relations which allow one of them to control the other".

"H aving control" over a company means to effectively hold decision-making power within the company concerned with the precisions that a natural person or corporate body is deemed to have control over another company when :

(1) he (it) holds, directly or indirectly or through an intermediary, more than half of the company's voting rights;

(2) he (it) has more than half of the company's voting rights by virtue of an agreement or agreements with other partners of the company .

Finally, it must be recalled that holding equity participation in a company refers to the situation where a company holds not less than 10% of the capital of another company.

Additional precisions are included in articles 177 and 178 as follows :

Article 177. A joint stock company or a private limited company shall not hold shares or stocks in a company which holds more than 10% of its capital.

Failing agreement between the companies concerned to regularize the situation, the company with the lower share in the capital of the other shall relinquish its shares or stocks. Where both companies hold equal fractions of each other's capital, each company shall reduce its own interest in the other to not more than 10%.

The shares or stocks to be transferred shall lose their voting rights and payment of dividends attached thereto until they have been effectively transferred.

Article 178. Where a company other than a joint stock company or a private limited company has amongst its partners a joint stock company or private limited company with more than 10% of its capital, the former shall not hold shares and stocks in the latter.

In the event that the holdings of the joint stock company or private limited company in the company is equal to or less than 10%, it shall not hold more than 10% of the capital of the joint stock company or private limited company.

In the two cases provided under this article, where a company other than a joint stock company or a private limited company already holds shares in the said joint stock company or private limited company, it shall relinquish them. The shares or company stocks to be transferred shall lose their voting rights and payment of dividends attached thereto until they are effectively transferred.

>> THE AVAILABLE OPTIONS AS TO THE CHOICE OF A PERMANENT BUSINESS STRUCTURE IN THE OHADA ZONE

> YOU WANT TO SET UP A BRANCH ?

Branches in the meaning of Ohada Uniform Act :

A branch is a commercial, industrial or service-providing establishment which belongs to a company or a natural person and which has been granted a certain degree of autonomy in its management.

It has no separate legal personality from that of the parent company or the natural person who owns it.

The rights and obligations arising from its activities or its existence are part of the estate of the company or the natural person who owns it.

A branch may be the establishment of a foreign company or natural person. It is governed by the law of the Member State in which it is located.

The branch must be registered in the Trade and Personal Property Credit Register in accordance with the provisions organizing the said register.

When a branch is owned by a foreigner, it must be contributed to a company in existence or to be created, governed by the laws of one of the Member States no later than two years after the branch is set up, unless this obligation is waived by order of the minister in charge of trade in the Member State in which the branch is located.

Subject to the provisions governing companies with a special status, the waiver is granted for a period of two (2) years which is not renewable.

In the event of non-compliance with these requirements, the registrar or the competent authority in the member state may cancel the registration of the branch in the trade and personal property register on the basis of the ruling of the competent court on the petition of the latter or of any interested person.

> YOU NEED TO SET UP A SUBSIDIARY ?

A subsidiary in the meaning of Ohada Uniform Act :

A company is the parent company of another where the former holds more than half the capital of the latter.

The latter shall be the subsidiary of the former.

Article 180. A company shall be the joint subsidiary of several parent companies where its capital is owned by the said parent companies which shall:

(1) own separately, directly or indirectly through corporate bodies, a sufficient proportion of the joint subsidiary company's capital to warrant that no extraordinary decision be taken without their approval.;

(2) take part in the management of the joint subsidiary company.

The various types of companies are reminded hereunder.


==>YOU CHOOSE THE PRIVATE LIMITED COMPANY (SARL)

The private limited company : it is a company which may be set up by one or several partners where the partners' liability is limited to their contributions and their rights represented by shares.

Capital : the minimum amount is CFA Francs 1,000,000 unless otherwise provided by the national laws. It is divided into shares with a face value of at least Cfa Francs 5,000.

Management :

A private limited company may be managed by one or several natural persons or corporate bodies appointed in the articles of association or in a subsequent instrument.

In his relations with third parties, the manager is vested with the widest powers to act under all circumstances on behalf of the company, subject to the powers which the Uniform Act expressly confers on partners.

==>YOU CHOOSE THE PUBLIC LIMITED COMPANY (SA )

The public limited company : it is a company where the shareholders' liability is limited to their contributions and their rights represented by shares. The public limited company may comprise only one shareholder (sole holder company).

Capital - The minimum amount for the registered capital is Cfa Francs 10,000,000 (when there is no public call for capital) and 100,000,000 (when there is public call for capital). The registered capital is divided into shares with a face value which minimum amount may be freely decided.

Public limited companies may issue securities as well as other financial instruments.

In the meaning of the Uniform Act, such securities include :equity securities

- equity securities;

- debt securities other than the ones in the monetary market.

Shares are negotiable instruments or registered securities, however, the form of registered securities may be imposed by the provisions of the Uniform Act or the articles of association.

The issue of partnership or founder's shares is forbidden.

Administration/management : in this regard, a choice has to be made between a board of directors (compulsory in the event of public call for capital) and a managing director. This choice may be modified afterwards by decision of an extraordinary general meeting.

>>In a PLC with a board of directors and a chairman and managing director

- The chairman and managing director chairs the meetings of the board of directors and the general meetings of shareholders. He is also in charge of the general management of the company and represents it in its relations with third parties. For the performance of his duties, he is given the widest possible powers to be exercised within the limits of the objects of the company and subject to the powers expressly conferred on the general meetings or specially reserved for the board of directors by law or the articles of association.

- The chairman and managing director may be assisted by one or several assistant managers appointed by the board on his proposal. In their relations with third parties, they have the same powers as the chairman and managing director.

>>In PLC with a board of directors and a chairman of the board

- The meetings of the board of directors and the shareholders' general meetings are chaired by the chairman of the board whereas the general manager is in charge of the general management of the company and represents it in its relations with third parties. For the performance of his duties, he is given the widest possible powers which he must exercise within the limits of the objects of the company and subject to the powers expressly conferred on the general meetings or specially reserved for the board of directors by law or the articles of association.

- The general manager may be assisted by an assistant general manager as indicated here-above for the chairman and managing director.

>>In a PLC with a managing director

The managing director is in charge of the administration and the general management of the company and represents it in its relations with third parties. For the performance of his duties, he is given the widest possible powers which he must exercise within the limits of the objects of the company and subject to the powers expressly conferred on the general meetings by law or the articles of association.

- The managing director may be assisted by an assistant managing director in the same conditions as the assistant general manager mentioned here above.

==> YOU WISH TO SET UP A SIMPLIFIED CORPORATION (SAS)

The simplified corporation : this type of company may be set up by one or several partners whose liability will be limited to their contributions. Their rights are represented by shares.

Capital : The amount of the capital as well as the one of the face value of shares may be freely decided in the articles of association.

Administration / Management : it is organized freely in the articles of association.

==> YOU CHOOSE THE PRIVATE COMPANY (SNC)

The private company : it is a company where all the partners are traders and have indefinite liability for the company's debts.

Capital : it is divided into shares of the same face value. There is no requirement with regard to the amount of the registered capital.

Management :

The articles of association may freely organize the management of the company. One or several managers may be appointed who may be partners or not, natural or legal persons, or such appointments may be provided for in a subsequent instrument. When the management is not organized by the articles of association, all the partners are deemed to be managers.

In his relations with third parties, the manager commits the company by acts falling within the company's objects.

==> YOU CHOOSE THE SLEEPING PARTNERSHIP (SCS)

The sleeping partnership : it is a partnership in which some partners indefinitely, jointly and severally liable for the company's debts, referred to as " active partners ", coexist with others only liable for the company's debts up to the limit of their shares, referred to as " sleeping partners ".

Capital : it is divided into shares. There is no requirement with regard to the amount of the registered capital

Management :

A sleeping partnership may be managed by all the active partners unless otherwise provided by the articles of association which may appoint one or more managers from among the active partners, or provide for the appointment of such manager(s) by a subsequent instrument, under the same conditions and with the same powers as in a partnership.

A sleeping partner may not perform any act of external management, even by virtue of a power of attorney.

==> YOU CHOOSE THE JOINT VENTURE (JV)

The joint venture : it is a company which the partners have agreed to keep undisclosed. It is not registered in the Trade and Personnel Property Credit Register and does not have the legal personality. It is also not subject to any publicity.

Capital : it is not compulsory.

The partners' liability as to the debts of the company : since the company is not disclosed to third parties, each partner is personally committed while entering into agreement with third parties. It is otherwise when the existence of the company is disclosed.

Management :

Each partner may enter into agreements in his personal name and is then solely liable to third parties. However, when the partners act expressly in their capacity as partners towards third parties, each of those who acted will be liable for the commitments of the others. They will be indefinitely, jointly and severally liable as to any bond subscribed to under these conditions.

The same applies to a partner who, by interference, has made the contracting partner believe that he intended to commit himself and it is proved that he derived some profit from the transaction.

==> YOU WISH TO SET UP AN ECONOMIC INTEREST GROUP (GIE)

The economic interest group : it is a business organization aiming exclusively at gathering, for a specified duration, the adequate means necessary to facilitate or develop the economic activity of its members and to improve or increase income from the said activity. Its activity must be related to the economic activity of its members and be of an auxiliary nature in respect of this activity.

Capital : it is not compulsory.
The rights of members of the group may not be represented by negotiable instruments.

The members' liability as to the debts of the group : the members of the economic interest group are liable for the debts of the group on their assets proper. They are jointly and severally liable for the payment of the debts of the group, unless otherwise agreed with the contracting party.

Administration : the economic interest group is administered by one or more natural persons or corporate bodies, provided that in the case of a corporate body, a permanent representative is appointed, who shall incur the same civil and criminal liabilities as if he was a director in his own name. With this reserve, the agreement or, failing that, the general meeting of members of the economic group, may freely organize the administration of the group and appoint directors whose duties, powers and conditions of dismissal shall be determined.