100 Days to Go!
On January 30, the Organization for Harmonization of Business Law in Africa ("OHADA") adopted a revised Uniform Act on Commercial Companies and Economic Interest Groups (the "Revised Act"). The Act will enter into force on June 30 and be directly enforceable in the 17 sub-Saharan OHADA member States.
The Revised Act introduces a number of much-awaited legal innovations, thus enhancing the attractiveness of this region where economic growth has been rapidly increasing over the recent period. The main advantages contemplated under the Revised Act are as follows:
New Corporate Form—The Société Par Actions Simplifiée
The Société Par Actions Simplifiée ("SAS") draws its inspiration from the French corporate form of the same name. It offers a welcome alternative to the rather strict alternative corporate forms available until now by providing a very high degree of flexibility, in particular in terms of corporate governance, that can be widely tailored by the shareholders in the articles of incorporation.
Corporate Governance Practical Improvements
The use of electronic communications (convening notices by
email, meetings by video conferences, etc.) is now permitted and is
a practical innovation of obvious importance for foreign
investors.
Shareholders' ability to delegate powers to the board for share
capital increases will also facilitate the day-to-day governance of
companies in the OHADA region.
New Types of Securities
The validity of preferred shares or hybrid securities such as convertible bonds was unclear before the Revised Act. These sophisticated legal tools are now expressly permitted. The new legal regime for these securities will facilitate private equity investment, which has become a key provider of financing in OHADA member States.
Enforceability of Shareholders' Agreement
The Revised Act expressly confirms the legal validity of
shareholders' agreements. Until now, their validity was
uncertain, and they were governed by the non-harmonized domestic
laws of each of the OHADA member States. This recognition of
shareholders' agreements significantly improves legal certainty
and will promote stability of the investment structuring.
The enhanced legal certainty and greater flexibility provided by
the Revised Act will be more than welcome in the current context
where, in contrast to the rest of the world's sluggish growth
and uncertainty, African economies stand out for their high rates
of growth and the increasing confidence they inspire in new
investors.
For already existing companies, the relatively small bother of
going through the transformation process to adopt this new
corporate form of SAS should, in most instances, be largely
overcome by the advantages it offers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
