Uniform Business Laws in Africa:
OHADA's Contribution to Legal
Predictability
March 28, 2012
10:00 AM – 11:30 AM US EST
Presented by
ABA International Rule of Law Committee:
Jason Matechak · Steven Hendrix · Lelia Mooney · Carol Mates · Matthew Nicely ·
Alexandra Wrage
Africa Committee:
Ricardo A Silva · Nancy Kaymar Stafford · Roland D Abeng · Tiago Martins
Cruz · Christina Theresa Holder · Angelia Wade
Co-Sponsoring International Law Committees:
ABA Young Lawyers Division (International Law Committee) · International
Securities and Capital Markets · Islamic Finance · Task Force on Financial
Engineering for Economic Development
Introduction: Jason Matechak, Rule of Law Officer
Moderator: Ricardo Alves Silva, Africa Committee
Panelists (in order of presentation):
Me. Xavier Zeno: Attorney, Jeantet & Associés (France)
Prof. Claire Dickerson: Tulane University Law School (USA)
Dr. Jean Alain Penda: Fubla & ACP Legal (Cameroon)

Mr. Xavier Forneris: World Bank (USA)
Please email all questions during the
presentation to
introl@americanbar.org
March 28, 2012
OHADA PRESENTATION
Xavier Zeno
Attorney at Law
Paris Bar
1. Origins of OHADA
1.1 Situation after the independence
 Legal insecurity
→ Independence in 1960: heterogeneous regulations.
→ Context of globalization: regulations no more adapted to the economic situation and to the
actual international framework.
 Judicial insecurity
→ Degradation in the way in which justice is returned, either in right or as regards
deontology, in particular because of a lack of material means, an insufficient formation of the
magistrates and auxiliaries of justice.
 Economic stagnation
Legal insecurity + judicial insecurity = Economic stagnation.
Regional economic development, restore the foreign investor’s confidence, make exchanges
between countries easier and develop competitive industries…
6
1. Origins of OHADA
1.2 Main steps leading to the creation of OHADA
 April 1991
→ First summit (Burkina Faso). Finance Ministers of the Franc Zone’s initiative.
Entrusts 7 jurists, led by Mr Kéba Mbaye in charge of the technical feasibility of the
project.
 October 1992
→ Feasibility report approved by all the Finance Ministers of the Franc Zone (summit
held in Libreville).
→ Constitution of a steering committee (3 members) in charge of drafting an
international treaty and identifying areas of law to be harmonized.
 September 1993
→ Meeting in Abidjan: presentation of the draft of the Treaty for signature.
 October 1993
→ Signature in Port-Louis, Mauritius. In force since September 1995.
7
2. Purposes and objectives
 “Ohada is a legal tool conceived and realized by Africa to serve economic
integration and growth”, Kéba Mbaye, Funding Father of OHADA.
 The idea behind the creation of OHADA sprang from a political will to strengthen
the African legal system by enacting a secure legal framework for the conduct of
business in Africa, which is viewed as indispensable for the development of the
continent.
8
3. Member States
3.1 Actual Member States
Benin
Burkina Faso
Cameroon
Central African
Republic
Chad
Congo
Gabon
Niger
Guinea
Mali
Comores
Guinea-Bissau
Equatorial
Guinea
Ivory Coast
Senegal
Togo
= 16 Member States
9
3. Member States
3.2 Entry of the RDC into OHADA
 February 2010
→ Promulgation by the President of the DRC of the Ordinance-Law relating to the
OHADA accession.
 November 2010
→ Expected date for the ratification of the instruments
 January 2011
→ Expected date for entry of the RDC into OHADA.
As to date, still awaiting for the instruments of ratification to be deposited.
10
4. OHADA institutions
 The Conference of Heads of State and Government
 The Council of Ministers
 The Permanent Secretary
 The Common Court of justice and arbitration (CCJA)
 The regional training centre for legal officers (ERSUMA)
11
5. OHADA Uniform Acts
5.1 Harmonized legislation – Uniform Acts
Broadly speaking, the Treaty provides for the promulgation of harmonized legislation
(Uniform Acts). 9 Uniform Acts have been adopted:
 Commercial law
 Company law
 Recovery of debts and enforcement measures
 Securities
 Insolvency
→ Total of 9 Uniform Acts
 Arbitration
 Accounting law
 Transport of goods by road
 Cooperative companies
12
5. OHADA Uniform Acts
5.2 Applicability
 Pursuant to Article 10 of the Treaty, Uniform Acts are directly applicable and
binding in the Member States, notwithstanding any conflicting provision of
national law, be it previous or subsequent.
 However, this provision can lead to certain problem of interpretation concerning
the extent to which national laws are abrogated by virtue of the Uniform Acts.
13
March 28, 2012
OHADA AND INVESTMENTS:
EXPECTATIONS OF THE ECONOMIC
OPERATORS
1. Introduction – main issues
 Many expectations of the economic operators as regard investments
 Demand of both stability and transparency of regulations and attractive taxation → requirement
of good governance of the company
 Background on the notion of good governance of the company:
• Notion originally unknown
• First appeared in 1934 in the United States with the creation of the “Securities and Exchange
Commission” (SEC)
• Intervention of American authorities so as to organize a regulation system with subsequent
mechanisms of sanctions (ie. ENRON case law, 2001: bankruptcy of the Central PEN for
which the SEC blamed the administrations incompetency, their passivity and the absence of
discussion within the Board of Directors)
• “Sarbanes Oxley” law, 2002: legal reform tending to better frame and control the companies’
operations.
 Notion of good governance within OHADA: 1997, Uniform Act relating to commercial
companies and economic interest group
15
PART 1
THE BOARD OF DIRECTORS: GUARANTOR
OF THE GOOD GOVERNANCE OF THE
COMPANY
1. Evolution of the modes of administration in Africa
1.1 End of the managing board and supervisory board
 System before the adoption of the Uniform Act of 1997: system of the managing
board (directoire) and supervisory board (conseil de surveillance) → common mode
of administration.
 Article 414 of the Uniform Act of 1997: the shareholders can from now on chose
either a new mode of administration, the board of directors, or the previous common
mode of administration.
Advantage of the system of the board of directors: a clear distinction of who has the
control of the company and manages it.
17
1. Evolution of the modes of administration in Africa
1.2 Institution of a new way of managing the SA: SA with a Board of Directors
 This new way of managing the SA was not surprising as most of the African civil
law countries not entered yet into OHADA were governed by business law provisions
which referred to a system close to the actual board of directors’ system.
 The most widespread method in the countries of the Franc Zone was that of the chief
executive officer (president directeur general) holding concurrently the position of
chairman of the board of directors and executive officer (directeur general) → raised
difficulties of governance of company.
 Idea of independence of the board of directors towards the management:
• Executive officer: administrative duties of managing and representing the
company
• Chairman of the board of directors: decision maker
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2. The Board of Directors: guarantor of a good
governance of the company
2.1 Composition
 3 members at least and 12 at the maximum.
 Members are often stated to be shareholders, however, employees not holding any
shares within the company can become members of the board of directors as far as
they do not together represent more than 1/3 of the total members of the board.
 Freedom in the choice/recruitment of the directors → problem of incompetency of the
directors (solution of creating an Institute of directors, ie. in Senegal).
 Guarantee of the availibility of the directors and limit the risks of conflicts of interests:
rule of prohibition to be director of an anonymous company being registered on the
territory of a same member State for more than five terms (Uniform Act 1997),
however possible when registered in different member States.
19
2. The Board of Directors: guarantor of a good
governance of the company
2.2 Functioning
 Periodicity of meetings:
•
•
Meetings as often as the interest of the company requires it.
Right of the third of the members to convene the board in case it has not met for more
than two months.
 Validity of deliberations: when at least half of its members are present →
efficiency of this rule (no representation allowed), good governance of company.
 Validity of decisions: principle of the majority of the present and represented.
 Participating to the meetings:
•
•
•
•
•
•
Directors
Chairman
Statutory auditors
Executive officer
Secretary
And “any person called to take part to the board of directors’ meetings” (ie. in
particular experts, valuers)
20
2. The Board of Directors: guarantor of a good
governance of the company
2.3 The particular case of the Chairman of the Board of Directors
 3 essential prerogatives:
• Convenes and chairs the board meetings and the shareholders general
meetings
• Takes care that the board of directors ensures the control of the management
of the company
• Power of carrying out investigations and right of information.
 Prohibition → not allowed to held concurrently the same functions in more than
3 companies whose registered office is stated to be on the territory of a same
member State, and to be general manager (administrator general) or executive
officer of an anonymous company being registered on the territory of a same
member State for more than 2 terms (note that this prohibition only concerns
companies of a same member State and not those of other OHADA States).
21
2. The Board of Directors: guarantor of a good
governance of the company
2.4 Functions of the Board of Directors
 Functions:
• Define and guide the strategy of the company
• Supervise the practices of the company and carry out the necessary changes
• Recruit the main leaders, determine their remunerations, follow up their
activities
• Supervise and manage the conflicts of interest enter into between the
managing department, the directors and the shareholders
• Supervise the process of circulation of information and communication of the
company, etc.
 Various tools of good governance of the company: ie. internal rules and
regulations or an ethic code.
22
PART 2
TRANSPARENCY OF THE ACCOUNTS: A
REQUIREMENT OF THE INVESTORS
23
1. Countable elements required during the financial
year
1.1 Principles of the countable organization
 Countable organization must ensure:
•
•
•
A day to day exhaustive registration and without any delay of the basic information
A data processing within a convenient time
The availability of the necessary documents for the users within the fixed delivery legal delays.
 Conditions of regularity and security:
•
•
•
•
•
•
•
•
Book-keeping
The use of the technic of the double parts
The justification of the accounts by parts
The respect of the chronological registration of the operations
Identification of each one of these registrations
Control by inventory of the existence and the value of the goods, debts and liabilities of the company
The recourse to a plan of standardized account
Hold the account books and other authorized material as well as the implementation of approved
processing procedures enabling to establish the annual financial statements.
24
1. Countable elements required during the financial
year
1.2 Countable journals and other compulsory materials
 The Day book
 The Big Book
 Journals and accessory books, or similar materials: not compulsory
 The book of inventory
 General balance sheet of the accounts
25
2. Elements required at the end of the financial year
2.1 By the company
 Management report
 Annual summaries of the financial statements
 Statement Appended
 Additional statistical statement
26
2. Elements required at the end of the financial year
2.2 By the statutory auditors
 Report of the CAC mentioning:
• Controls and verifications carried out
• Balance and other accountant documents to which amendments appears to him to
necessary
• Irregularities and inaccuracies
• The conclusions arising from the observations
 Report of the CAC:
• Certifying the regularity of the summaries of the financial statements
• Certifying with reserves or refusing to certify
27
2. Elements required at the end of the financial year
2.3 By the general meeting
 Minutes of the ordinary general meeting ruling on the financial year, deciding of
the assignment of the result, approving the statutory auditor’s report
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OHADA
GENERAL COMMERCIAL LAW
Claire Moore Dickerson
Prof. & Breaux Chair in Business Law
Permanent Visiting Professor
Tulane University Law School, LA, USA
University of Buea, SW, Cameroon
Introduction
• OHADA’s Uniform Acts’ Uniform Goals
– Favor investment, foreign & domestic
– Favor rules over standards
• The General Commercial Law
– At the heart of business operations
– Breadth & clarity
•
•
•
•
The GCL’s Four Goals
Disseminates business information
Facilitates raising capital
Formalizes professional agency
Reinforces contracts of sale
Making Information Available
• Trade and Personal Property Credit Register
– Registre de Commerce et Crédit Mobilier (RCCM)
• Commerçant (economic operator)
• Entreprenant (enterpriser)
Raising Capital with the Register
•
•
•
•
“Business” (Fonds de commerce)
Professional lease
Security interests
Trade payables
AGENCY
• Professional Intermediaries
Sales Contracts
•
•
•
•
•
•
•
Influence of CISG
Scope: economic operators, enterprisers
Formation
Performance & warranties
Delivery & Risk of loss
Breach & Remedies
Statute of limitations
OHADA
General Commercial Law
OHADA’s Impact on the Rule of Law
Dr. Jean Alain Penda
 Laws’
sophistication, laws’ accessibility
 Confidence in the justice system
 Certainty in a contract & assurance on contract
enforcement
OHADA’s Evidence of success
 Practical
and easy to
use rules
 Fast setting-up of
business
 Facilitate access to
credit
 Secured lending
 Simple and quick
access to justice
 Confidence
in the
judicial system
 Protection of
companies’ assets and
their staff
 Assurance on contract
enforcement and
 Efficient dispute
resolution
How OHADA Shaped Businesses
 From
informal to formal entrepreneurs
 Fast growing private sector
 Reliability on the banking system
Findings in the World Bank’s Doing
Business report on OHADA



Global Doing Business
2012: Average ranking of
the OHADA member states
is 166 out of the 183
Mali is 146, the easiest
place among OHADA
member states
The average cost of
starting a business
decreased from 338
percent to 110 percent of
the average per capita
income.


average time required to
register property also
decreased by 28 percent
Construction permits in
Burkina Faso takes only 98
days, 3 months faster than
the EU countries
OHADA Registry’s Computerization,
a Revolutionary Improvement

The security of existing
and future national
TPPCR


Accessibility of data to
different user groups


Reliability of data
consolidated from
different national
TPPCR


The distribution and
availability in real-time
data recorded

The production of
regular statistics to
monitor developments
of TPPCR
Compliance with the
commitment of
member states vis-à-vis
OHADA
The legal validity of
electronic data and
The recovery of data
existing in paper
format
OHADA Business Law
Reform Program
Xavier Forneris
Investment Climate Advisory Services for Africa
March 2012
OHADA: Organization for the Harmonization of
Business Law in Africa (created 1993)
Burkina Faso
Niger
Mali
Chad
Senegal
Central African Republic
Congo
Guinée Bissau
Guinea
Comoros
Côte d'Ivoire
Togo
Benin
+ DRC
Cameroon
Equatorial Guinea
Gabon
World Bank Group
Multilateral Investment
Guarantee Agency
THE WORLD BANK
OHADA BUSINESS LAW REFORM PROGRAM
Objectives:
• Facilitate creation and operation of businesses
• Facilitate Access to Finance
 For SMEs (secured transactions, leasing…)
 For Infrastructure development (secured transactions, PPP, BOT)
 Developing regional financial markets through creation of new financial
products (securitization, IPOs…)
• Strengthen confidence and improve access to reliable business
information
 Modernization of registries for companies and secured transactions
44
World Bank Group
Multilateral Investment
Guarantee Agency
THE WORLD BANK
OHADA BUSINESS LAW REFORM PROGRAM
• Complex, Rigorous and Participatory process:
 Diagnostic: analysis of the Law by independent/reputed experts;
consultation of regional stakeholders (public and private); report
with recommendations to OHADA Secretariat
 Drafting: OHADA commissions a group of independent lawyers to
prepare amendments based on diagnostic
 Consensus-Building: informal presentation of draft amendments in
the region, comments, and re-drafting
 Official Review by National OHADA Commissions, comments by
Member States sent to OHADA Secretariat
45
World Bank Group
Multilateral Investment
Guarantee Agency
THE WORLD BANK
OHADA BUSINESS LAW REFORM PROGRAM
• Complex, Rigorous and Participatory process:
 Re-drafting or finalization of the draft
 Review by OHADA Court of Justice  Legal Opinion
 Submission to OHADA Council of Ministers for
review/adoption
 Publication in Official Journal
 Training of Lawyers, Judges, Law Professors, etc.
• First Reforms adopted December 2010: General
Commercial Law and Secured Transactions Law.
46
World Bank Group
Multilateral Investment
Guarantee Agency
THE WORLD BANK
OHADA – Legislation Modernization Process
Uniform Company Law (AUDSCGIE)
DForms, Creation and Organization of corporate
entities
Examples of measures proposed:
Setting-up the company: Make recourse to notary (notaire) optional
and not mandatory for the founder(s).
SARL (LLC): reduce the amount of mininum capital to be actually
deposited in a bank account
New form of joint-stock company: the Societe par Action Simplifiee
(SAS)
World Bank Group
47
Multilateral Investment
Guarantee Agency
THE WORLD BANK
OHADA – Uniform Company Law (AUDSCGIE)
Changes In Corporate Governance
Objectives: bring the OHADA Company Law up to best international
practices in the area of Corporate governance through :
Clearer definition of the stakeholders and their roles
Improved functioning of the Board of Directors
Reduced risk of conflicts of interest
Enhanced transparency and accountability
Strengthened Shareholders’ Rights
Higher standards for public (=listed) companies
World Bank Group
48
Multilateral Investment
Guarantee Agency
THE WORLD BANK
Examples of changes proposed :
a. Clarification of the roles of the various organs/stakeholders
Art.435. Role of the Board of Directors: responsible for strategy and control
of the Management.
b. Improved functioning of the Board of Directors
Art.435. Access to information : Chairman is required to ensure that
members of the Board (Directors) receive complete information.
Art.437. Allow establishment of committees, made of directors, acting
under supervision of the Board and issuing recommendations.
Art.454-1. Participation in Board of Directors via VC or teleconference
Art.459-1. Obligation to give written minutes of each Board to each Director
(for more effective monitoring of decision implementation)
World Bank Group
49
Multilateral Investment
Guarantee Agency
THE WORLD BANK
c. Reducing risks of conflict of interest
Art.465,
474, 482, 490: The compensation of all top executives
(Chairman/CEO, Managing Director, Deputy General Manager)
must be approved by the Board of Directors. The executive whose
compensation is under review by the Board does not take part in the
vote.
d. Increased Transparency and Accountability
Art.523: All candidates to the Board of Directors have to disclose to the
shareholders’ meeting all directorships they have (with other
companies)
Art.546 : The CEO informs the shareholder’s meeting of the discussions
held and decisions taken at the Board of Directors.
World Bank Group
50
Multilateral Investment
Guarantee Agency
THE WORLD BANK
e. Strengthened Rights / Protection of Shareholders
Art.133-1, 518 et 531-1 : Clearer rules for vote through proxy or by mail.
Art.130 :
Liability of the Board members who have voted in favor of a decision that
is not in the best interest of the company or detrimental to minority
shareholders.
f. Higher Standards for Public (listed) Companies
Art.829-1:
Makes the Audit Committee mandatory, comprised of non-executive
directors. Stricter rules for financial information.
Art.831-1 : CEO reports to the Shareholder’s Meeting of the internal control and risk
management procedures.
Art. 832-2: Detailed report on the compensation for top executives and directors.
World Bank Group
51
Multilateral Investment
Guarantee Agency
THE WORLD BANK
Q&A
Please email all questions to
introl@americanbar.org
For previous panels or additional
information, please visit
http://ambar.org/introl
World Bank Group
Multilateral Investment
Guarantee Agency
THE WORLD BANK