International Arbitration and Corporate Law : An OHADA Practice 9789460948664, 9789462360952

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International Arbitration and Corporate Law

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Benoit Le Bars

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International Arbitration and Corporate Law An OHADA Practice

Benoit L e Bars

Foreword by Justice Geoffrey Kiryabwire Justice of the Court of Appeal and Constitutional Court of Uganda Former Head of the Commercial Court Uganda

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Published, sold and distributed by Eleven International Publishing P.O. Box 85576 2508 CG The Hague The Netherlands Tel.: +31 70 33 070 33 Fax: +31 70 33 070 30 e-mail: [email protected] www.elevenpub.com Sold and distributed in USA and Canada International Specialized Book Services 920 NE 58th Avenue, Suite 300 Portland, OR 97213-3786, USA Tel: 1-800-944-6190 (toll-free) Fax: +1-503-280-8832 [email protected] www.isbs.com Eleven International Publishing is an imprint of Boom uitgevers Den Haag.

ISBN: 978-94-6236-095-2 ISBN: 978-94-6094-866-4 (E-book) © 2014 Benoit Le Bars | Eleven International Publishing This publication is protected by international copyright law. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Printed in The Netherlands

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Acknowledgements This book would not have been possible without the help of all those who have joined me on this wonderful adventure. In particular, I would like to thank all my friends, university colleagues and fellow practitioners from Africa, both Francophone and Anglophone, all of whom have helped in supporting the completion of the updated version of this book, until now available only in French. I also thank my partners and associates, all of whom were present when I needed to discuss ideas, and in particular Gretchen Oldham, who assisted me from the inception of this new edition. Of course, my thanks also extend to the interns at Lazareff Le Bars who were involved in this project and in particular to David Califano. I am also grateful to the arbitrators and, more generally, practitioners of arbitration from Africa who trusted me with their projects and ideas for Africa, in addition to further enriching my practical knowledge of the subjects covered in this book. Finally, I would like to extend my sincere appreciation to the members of the OHADA Associations in Europe and Africa as well as my colleagues from the Paris Bar Council (Ordre des Avocats de Paris).

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Foreword I am humbled to have been asked by Mr. Benoit Le Bars to write a foreword to this important English version of his book International Arbitration and Corporate Law: an OHADA Practice. I got to know of Mr. Benoit Le Bars from a mutual friend, Mr. Duncan Bagshaw, of the Mauritius International Arbitration Centre (MIAC), and it quickly became clear that all three of us had a passion for the development of the use of Arbitration in Africa. I also got to meet Mr. Benoit Le Bars in Paris at the beginning of summer 2013 and was impressed by his legal work and that of his law firm M/s Lazareff Le Bars in Africa, which covers the areas of natural resources, TMT (Technology-Media-Telecommunications), public construction, infrastructure, IT technologies and a wide range of other services. His firm also produces a magazine entitled Magazine International Du Droit Des Affaires En Afrique (International African Business Law Magazine [MIDAA]), which has articles in both French and English and tracks legal issues in Africa for his clients and others. It did not take me long to appreciate that Mr. Benoit Le Bars has a deep involvement and understanding of business in Africa. He also does adjunct teaching of law on OHADA in several universities. I am therefore not surprised that he decided to write this book given his legal experience in Africa and African law. Since the mid-1990s, I too have been playing an active role in the development of the use of Arbitration in Uganda and worked on the reform of the Old Arbitration Act 1930 of Uganda, which ultimately led to the enactment of the Arbitration and Conciliation Act 2000, which is based on the UNCITRAL Model Law. The new Ugandan Act also created the Centre for Arbitration and Dispute Resolution (CADER), which has now become a focal point in the country for institutional arbitration. I first got to know of OHADA (translated in English as the Organization for the Harmonization of Business Law in Africa) in 1994, shortly after it was formed in 1993, while attending the London Court of International Arbitration Inaugural Africa conference in Nairobi, Kenya. The OHADA treaty covers 17 African States, mostly from Francophone West and Central Africa, which are mostly former French colonies that followed the French legal model. At the time, most of the countries at the conference, mine inclusive, followed the English common law system and so had little or no experience about the legal systems in these francophone countries. To try and bridge the gap of understanding the different legal systems in Africa relating to Arbitration, several other practitioners and I contributed to a book entitled Arbitration in Africa, edited by Eugene Cotran and Austin Amissah (published by Kluwer Law

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Foreword International). One of the main themes of our book, in addition to providing knowledge of arbitration in Africa, was to champion the need for reform of the laws. I am therefore pleased, as a stronger believer of the efficacy of ADR and arbitration in contemporary African jurisprudence, to write a foreword to this book by Mr. Benoit Le Bars that informs readers about the law and legal reforms in the area of arbitration and corporate law in the OHADA countries. This book is an English translation of Mr. Benoit Le Bars’ already successful book Pratique du droit des societes en droit de l’OHADA, which is written in French. This book will therefore be a welcome addition to the subject of arbitration and corporate law in the OHADA countries to non-French readers. The book will be of particular benefit to readers from the English common law background and who need to understand the legal system in the OHADA countries in a more detailed and practical way. This will go a long way towards bridging the French continental legal system and the English common law. This English version will be of particular interest to legal practitioners, law students and investors as well. It will also come in very handy for researchers interested in comparative legal analysis. The readers will find significant depth in Mr. Benoit Le Bars’ exposition of the Uniform Act relating to the law of Commercial Companies and for Collective Economic Interests (AUSC), which covers the status of the law right from incorporation through corporate governance (management) to dissolution. This relates to both limited liability companies, as they are known in the common law system, and other business organizations like the cooperatives. The corporation remains an important vehicle for investment and business in Africa, and Mr. Benoit Le Bars in his book walks you through the nuts and bolts of establishing and running a corporation under the OHADA law. He ably addresses the rights and liabilities of shareholders and managers. He also discusses corporate finance and how profits and losses are managed under the law. This is critical for those whose legal systems on the same subjects may be different, and thus helps in bridging the information gap. Perhaps most unique about this book is the discussion of how arbitration can be used to resolve corporate governance and other related disputes. Aptly covered under the chapter on crisis management, Mr. Benoit Le Bars raises the case for the use of arbitration in corporate crisis management and how the Uniform Act on Arbitration can be used as a means of speedy resolution of investment disputes, especially those that are international in nature. This is a fresh and different approach from litigation, which the reader will find most instructive. Mr. Benoit Le Bars also introduces to the reader, who is not familiar with

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Foreword the OHADA legal framework, the Common Court of Justice and Arbitration (CCJA), which provides institutional arbitration for parties who wish to benefit from arbitration as a mode of dispute resolution. This is important because Africa is now increasingly looking to arbitration for the resolution of international investment disputes. As a result of this development, in addition to old arbitration centres in Africa such as the AALCC centres in Cairo and Lagos, now other new arbitration centres are coming up, such as the MIAC in Mauritius, KIAC in Rwanda and the Nairobi Arbitration Centre in Kenya. Courts like the East African Court of Justice are also now providing arbitration services. Those who are not familiar with the operations and rules of the CCJA, including the enforcement of awards, will benefit from this book by being able to compare the workings of the CCJA with other arbitration centres that they are more familiar with. The book International Arbitration and Corporate Law: an OHADA Practice is a legal window into business and dispute resolution in Francophone Africa and is enriched by experiences of a solid legal practice in Africa. Mr. Benoit Le Bars, in making available this English version of his already successful book Pratique du droit des societes en droit de l’OHADA, is giving English readers an opportunity to better understand business law and dispute resolution in the OHADA Zone. This will not only benefit those wishing to do business in Africa from outside the continent, but also promote inter-African trade. Justice Geoffrey Kiryabwire Justice of the Court of Appeal and Constitutional Court of Uganda Former Head of the Commercial Court Uganda July 2013

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Table of Contents Introduction 1 I

General Corporate Law 7 Preliminary Chapter: Unique Features of OHADA Uniform Corporate Law 11

1 1.1 1.2

Incorporation of Companies 15 The Agreement to Incorporate 15 Corporations as Legal Entities 25

2 2.1 2.2 2.3

Operation of Companies 49 Actors of Corporate Operations 49 Corporate Profits 62 Evolution of the Corporation 66

3 3.1 3.2 3.3

Crisis Management 77 Crisis in Management 77 Civil Liability 83 The Role of Arbitration in Corporate Crisis Management 87

II 1 1.1 1.2

Specific Corporate Law131 Limited Liability Companies 133 La Société Anonyme (SA) 133 Société à responsabilité limitée (SARL) 199

2 2.1 2.2

Unlimited Groups and Companies 209 Registered Groups and Companies 209 Non-registered Companies 221

III 1 1.1

The Law of Corporate Groups and Restructuring 227 Restructuring: Mergers, Scissions and Partial Asset Transfers 229 Challengers and Incentives of the Different Operations 229

2 Groups, Branches and Subsidiaries 241 2.1 Corporate Groups 241 2.2 Branches 243

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Table of Contents Annexes 247 Annex 1 Uniform Act Relating to Commercial Companies and Economic Interest Group

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Annex 2 Uniform Act on the Arbitration Law Within the Framework of OHADA Treaty

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Annex 3 The Rules of Arbitration of the Common Court of Justice and Arbitration

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Annex 4 Extracts from the Uniform Act relating to General Commercial Law under OHADA

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Bibliography459 Index469

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Introduction

1. OHADA corporate and arbitration laws are unique. They are unique because they apply to all Member States of OHADA, which have a common legal structure and common rules for regulating commercial companies. This system is also unique because the Uniform Act is part of an array of measures adopted by States that are party to OHADA, creating a business law that is truly unified. This legal framework is very different from the framework found in countries in the Franc Zone in Africa1 that share a common legal heritage based on the French Civil Code of 1804, the French Commercial Code of 1806 and the French Law on Commercial Companies of 1807. In the 1990s, this legal legacy was no longer suited to meeting the challenges of the modern world. French company law, not having significantly evolved during the colonial period, resulted in most Member States using French laws from 1867 and 1925. This legislation contained no substantial changes before the Uniform Act entered into force, with the exception of Guinea, Mali and Senegal, which initiated a reform of their corporate law after decolonization. Arbitration law consisted in a nexus of regulations depending on the States, some of them with no specific regulations at all. 2. The birth of the Treaty of the Organization for the Harmonization of Business Law (OHADA) was ushered in with its signing on 17 October 1993 in Port Louis (Mauritius). Signed by fourteen African Franc Zone States,2 the treaty took effect on 18 September 1995, after all seven ratifications needed for its entry into force were obtained. On 17 October 2008, at the Francophone Summit in Quebec, the treaty was revised to address certain shortcomings and inconsistencies. Besides institutional changes, the languages of OHADA are now French, English, Spanish and Portuguese, in an attempt to limit the difficulties for non-French Member States. In addition to corporate law, OHADA is based on business law arising from several uniform acts governing the following subjects: general commercial law, secured transactions, simplified debt recovery and enforcement procedures, arbitration law, corporate accounting and contracts for the transport of goods. Other acts are also planned for the future

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In West Africa: Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal and Togo. In Central Africa: Cameroon, Central African Republic, Congo, Gabon, Equatorial New Guinea and Chad. 2 There are currently seventeen Member States: Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Republic of the Congo, Côte d’Ivoire, Equatorial New Guinea, Gabon, Guinea, GuineaBissau, Mali, Niger, Senegal, Togo and Democratic Republic of Congo. This number is obviously susceptible to grow, as memberships remain open.

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International Arbitration and Corporate Law concerning labour law and contract law. The advantage of this mesh of uniform acts with these projects is to help address issues related to all aspects of the operations of corporations, as well as arbitration, mediation, leasing and banking mechanisms. 3. The Uniform Act relating to the Law of Commercial Companies and for Collective Economic Interests (the ‘Uniform Act’ or ‘AUSC’)3 came into force in all Member States on 1 January 1998.4 With over 900 items, the Uniform Act is certainly the most substantial reform undertaken by OHADA and significantly reorganized company law in all Member States. The provisions of the Uniform Act are public policy, and therefore it is not possible for associates to waive or supplement the provisions of the Uniform Act unless their case is expressly foreseen by the text (Art. 2, AUSC.) Although it is based on French law, OHADA law includes numerous innovations. For example, a société anonyme may be made up of one person and be headed by a general director. Similarly, the right to choose between the dual management structure (Chairman of the Board and CEO) and the single structure with CEO (the President will also serve as chairman of the board of directors) is recognized under OHADA law. The Uniform Act also recognizes the one-person SARL. However, regarding the société anonyme, there is no option for an executive board and supervisory board as a form of management under the Uniform Act. As OHADA law is constantly evolving with the changing needs of the growing African commercial markets, the OHADA legislators are currently in the midst of discussing a new reform of the Uniform Act. This reform was originally expected to be adopted in June 2013, just as this book was being finalized; however, it is now expected to be adopted by the end of 2013. Throughout this book, there are comments regarding certain provisions that will likely be modified by the reform. For example, the reform promises to introduce new corporate structures such as the société par actions simplifié (the SAS). This book does address two new structures that have been introduced since its original French publication in 2011: cooperative organizations and sole proprietorships. 3

The Uniform Act Relating to Commercial Companies and Economic Interest Groups is included in Ann. 1. Relevant excerpts from other Uniform Acts are found in Ann. 4 and 5. 4 Books and articles on the Uniform Act: P.K. Agboyibor, “Nouveau droit uniforme des societies”, Revue de droit des affaires internationales, n 6, 1988, p. 673 et seq.; F. Anouhaka et al., OHADA, Droit des sociétés commerciales et du groupement d’intérêt économique OHADA, coll. Droit uniforme africain, Bruylant, Bruxelles, 2002, p. 589; Ernst & Young, Droit des sociétés commerciales et du GIE-Commentaries, EDICEF/ Editions FFA, 1998, p. 328; A. Dieye, Le régime juridique des sociétés commerciales et du GIE dans l’espace OHADA, ed. Cabinet Aziz Dieye, 2008; Fidafrica-Price Waterhouse Coopers, Mémento, droit des sociétés commerciales et du groupement d’intérêts économiques, 1998, p. 376; P.G. Pougoue et al., Le droit des sociétés commerciales et du groupement d’intérêts économique OHADA, Coll. Uniform law, Presse universitaire d’Afrique, Yaoundé, 1998, p. 630; O. Sambe & M.I. Diallo, Guide pratique des sociétés commerciales et du GIE. OHADA, Editions comptables et juridiques, Dakar, Sénégal, 2nd edn, May 2008, p. 700; D. Tapin, “Droit des sociétés commerciales et du GIE en Afrique”, Penant, n 827, May-August 1998, p. 186 et seq.

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Introduction These two business organizations are very new in OHADA law, and it will be interesting to follow their evolution in the different Member States. 4. As a uniform law, OHADA law is one of the models that most closely matches the comparative work done in this area. It is based on general principles of corporate law that are found in major contemporary legal systems.5 The AUSC relating to companies contains the principle of legal personality of corporations. Indeed, the birth of the company rests on a partnership agreement, which, by legal fiction, endows the company with a legal personality distinct from its partners. The company forms a separate entity with a separate patrimony from that of its associates. This patrimony guarantees that the creditors of the company are not the personal creditors of the associates. The principle of limited liability is also found in the Uniform Act, which distinguishes structures in which the partners’ liability is either limited or unlimited. Indeed, the structure of the company may limit the shareholders’ liability to their contribution. This principle is also important in case of bankruptcy, limiting shareholders’ liability to the amount of their contribution. 5. Another founding principle of OHADA company law that is common to all modern legal systems is the negotiability of securities. This freedom does not preclude associates from including limitation clauses such as a pre-approval clause or a clause prohibiting the assignment within a certain time frame. The principle of management by corporate officers is also present. This is also quite logical in that the exercise of the rights of the company presupposes representation; the company cannot act on its own. Individuals who are its governing body represent the company as an abstract entity. OHADA law also uses the generic term ‘management bodies and administration’ to refer to different company directors. Lastly, as remuneration for their contributions, OHADA law provides that the associates or shareholders have political, financial and property rights. Political rights enable associates or shareholders to exercise their right to control the directors through voting. Financial rights are expressed primarily through the receipt of dividends and again when the corporation is dissolved. 6. The fact that OHADA is based on a set of principles common to all modern systems is not a coincidence. The drafters wanted to provide the geographic area with the tools to reassure investors and to help them understand just how companies are operated. It is important to keep in mind that a company is a technical organization. Through the sharing of risks and representation by a common agent, it facilitates appropriating goods to a project. When this project works, the members may reap the fruits of economic 5 R. Kraakman et al., The Anatomy of Corporate Law, a Comparative and Functional Approach, Oxford University Press, USA, 2nd ed. 2009, p. 321.

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International Arbitration and Corporate Law benefit generated by the creation of this new independent legal entity. The development of the project also allows for optimizing management and when the associates no longer wish to participate in the venture or want to transfer their rights to their heirs, ensuring a smooth transmission. 7. Like any technical organization, the company is not something that can be handled without at least minimal understanding. It has its limits. The company is a contract and, as such, directors who lead it and associates who create it must act within its corporate objective. Without going too far, it may happen that the decisions to be made by shareholders or managers fall short of earning the support of all members of the company. Sometimes conflicts arise that need to be identified in order to find a solution to the situation. In these specific cases of disputes, company law gives shareholders, associates and third parties not only the tools to immediately implement an action but also access to information and flexibility to resolve the crises. These mechanisms include internal operating rules and control of management decisions (vote by the assembly, capacity of the auditor and the role of the board). They allow parties involved in the agreement to avoid problems but, if serious mistakes are made, it will not prevent a potential lawsuit. 8. The uniqueness of the OHADA law in this regard is that it has carved out a special place for arbitration. Arbitration is given preference as a mode of dispute settlement by the uniform law. Recent statistics on the settlement of disputes in the Court of Arbitration6 reveal that over 59% of arbitrations involving African countries involve parties from subSaharan Africa (75 out of 126 exactly). It also appears that half of the Member States of OHADA resorted to ICC arbitration in 2009. In addition to these revealing statistics of the dynamism of arbitration in the OHADA countries, it should be noted that arbitration law interacts with OHADA company law in a very original way. Indeed, the AUSC refers to the Uniform Act on Arbitration. This act organizes a mechanical resolution of disputes organized on two pillars: on the one hand the principles that will apply to any arbitration that is headquartered in one Member State, and on the other hand, their own institutional OHADA arbitration, organized under the guise of the Common Court of Justice and Arbitration.7 This realism of OHADA’s drafters is to be welcomed. Indeed, corporate law is undoubtedly the chosen land of international arbitration. Foreign as well as national investors often prefer to use this method of resolving disputes because it is more flexible, discreet and faster, allowing them to find a solution tailored to their issues. This is one of the key reasons this book places so much emphasis on arbitration as a preferred method of dispute resolution.

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2009 Statistics Report, Bull. Cour Int. Arb. CCI, Vol. 21/1-2010.

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Introduction 9. Whatever the resolution of the dispute, OHADA company law provides a classic framework. It is based on strong principles of corporate and arbitration law (Part I), which are then broken down through specific regulations depending on the different corporate structures (Part II) Finally, like other modern systems of law, OHADA has a specific regime for groups of companies and for restructuring, absolutely essential to the organization of business and the evolution of OHADA company law in an international context (Part III). The updated English version of this book seeks to provide a comprehensive instrument for arbitration practitioners, corporate lawyers and investors in order to achieve a clear understanding of key legal and business concepts under OHADA law, which are essential to know in order to remain at the forefront of business in Member States in the OHADA zone.

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Arbitration law is governed by The Uniform Act on Arbitration of 11 March 1999 (see Ann. 2) and by the Rules of the Cour Commune de Justice et d’Arbitrage of 11 March 1999 (see Ann. 3).

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Part I General Corporate Law

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International Arbitration and Corporate Law 10. The traditional analysis of corporate law distinguishes a common law, based on the general theory of a corporation, and a special law, which strives to regulate in a specific manner the specific functioning of different corporate forms. This dichotomy results as well in the contractual concept of a corporation, which is created ‘by a contract’ (Art. 4, Section 1, AUSC). This reference to a common law results in two references: a reference to the law of obligations, to the ability of individuals or to the essential rules of the theory of invalidity, and on the other hand, a reference to a base of rules shared by all corporate entities, regardless of their specific form. This distinction is particularly useful when one confronts practical situations or technical scenarios, which are not directly mentioned by the uniform acts. It is necessary, in this instance, to return to the general theory to try to determine whether or not a certain situation is compatible with corporate law, or if, to the contrary, it would not be applicable. The attorney during this necessary classification task must also perform the interpretative work of a judge, be mindful of national considerations such as the Communal Court of Justice and Arbitration (CCJA) and apply the logic of the Uniform Corporate Act. 11. A Uniform Common Law. The common law of OHADA recognizes another form of common law deriving from its desire for the uniform application of the applicable law directly by the signatory States.1 This direct effect of uniform acts is one of the unique particularities of OHADA law. In corporate law, this particularity is found in Article 1, Section 1, which states that “each commercial company, including one in which a State or a person of public law is involved, which possesses a corporate headquarters located within the territory of the signatory States of the Treaty relating to the harmonization of the business law in Africa (hereinafter ‘the signatory States’) is bound by the provisions of this Uniform Act.” This is said before clarifying that “commercial corporations and economic interest groups remain bound to the laws not contrary to the present Uniform Act which are applicable in the member state where their corporate headquarters is located.” According to an opinion of the Communal Court of Justice and Arbitration2 (the ‘CCJA’), it is essential to use contradicting laws to understand texts that have the same goal as the uniform law and would neutralize these goals. The common law resulting from these acts is adjoined by a complementary law of national origin that expands the Uniform Act by adding specific clauses within the expansion of the Uniform Act’s rules. On the other hand, each national clause contradicting the Uniform Act could have an impact and would allow for an increased value of these rights before the CCJA. This action would, without a doubt, occur by way of applying national law to the base 1 J. Issa Sayegh, Droit des sociétés commerciales OHADA: droit commun et régimes particuliers, OHADATA D-03-09. 2 OHADATA J-02-04: Bulletin CJCA, n spécial, January 2003, p. 74.

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Part I  General Corporate Law problem, related to the common law, a matter for which the CCJA has jurisdiction. However, more generally speaking, it is helpful to recall that “the dispute related to the application of the uniform acts is regulated at the trial level and at the appeal by the jurisdiction of the member states” (Art. 13, THDAA), then at the court of last resort by the CCJA (Art. 14, THDAA). The Member States and the Council of Ministers can also appeal to the CCJA for consultative opinions, thus the “competency of national jurisdictions by application of Article 13” (Art. 14, Section 2, THDAA). Furthermore, according to the clauses of the Treaties, the interpretation of the compatibility of a national law with the uniform corporate law should fall under the jurisdiction of the CCJA as a last resort or on the demand of an opinion, this would allow for no doubt, creating a greater coherence to the resulting principles of corporate law. 12. A Corporate Law from Public Order. The uniform corporate law is marked by a very strong character of public order.3 This particularity results from Article 2 of the AUSC, which indicates that “the terms of the present Uniform Act are for public order, except in the cases where it expressly authorizes a single associate or associates, to either substitute the terms which are agreed upon by the current Uniform Act, or to complete without their own terms those of the current Uniform Act.” Consequently, it is not truly possible, in OHADA law, to support everything that is not forbidden and that is therefore, by definition, allowed. The logic of this law is to create convergence criteria between several national laws in order to secure the judicial forms and to make these acts understandable for each investor. Consequently, the place of the creative initiative for novel solutions is much more structured than in other systems of law, where the special law is in place only to state the rule when the common law must not be expressed on such a large scale. This analysis is seen as moderate, even outside of OHADA law, because the special law itself may be either imperative or not depending on the classic distinction between the public order of direction and the public order of protection. Therefore, the importance of the rules of the OHADA common law of corporations is particularly affirmed since these common rules are marked by this qualification of public order. It will therefore be necessary to carefully research the clauses of the texts authorizing a departure to appreciate with greater precision the cases in which it is possible to stipulate otherwise than within the texts of the Uniform Act. According to one author, there could be 63 exceptions to the public order,4 which, considering the more than 900 Articles that make up the Uniform Act on Corporations, may seem relatively few. 13. Limits to This Public Order? There is no doubt that it is necessary that the Uniform Act involves an authorization since this deviation from the public order of Article 2 is 3 4

J. Issa Sayegh, Le caractère d'ordre public des dispositions de l’Acte uniforme relatif au droit des sociétés commerciales et du groupement d'intérêt économique, OHADATA D-09-39. J. Issa Sayegh, op. cit., OHADATA D-09-39, p. 2.

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International Arbitration and Corporate Law only possible “in the instances where it [the Uniform Act] expressly authorises” a deviation from its clauses. Concretely, to adopt this type of deviation, it would be helpful if this deviation were stipulated. Here, one must note that the possibility of this deviation principle seems difficult in light of a simple shareholder’s agreement because of the absence of expressly favourable vocabulary to this solution within the uniform acts. Indeed, Article 2 maintains that “the individual associate or associates may either substitute the terms contained within this present Uniform Act, or complete these terms with their terms within the present Uniform Act”; however, an opening to deviate from the public order by the stipulations of a shareholder’s agreement is not forbidden by Article 2. However, when the matter concerns an analysis of the deviation from public order based on a shareholder’s agreement in light of the terms of the Uniform Act itself, the solutions are less simple. Indeed, it seems that each time a deviation from the public order is envisioned, the Uniform Act invokes the application of statutory clauses or terms. And yet, hypothetically, a shareholder’s agreement is not a statutory stipulation, its principal interest being solely to stay outside statutory obligations. Thus the shareholder agreement, practically essential for the practices of commercial companies, does not largely comply with the corporate public order derived from OHADA. Although, in reality it recognizes many agreements in OHADA countries used to facilitate the relationship between shareholders. It is desirable that, by extension, judges authorize a shareholder agreement exemption, or that the Uniform Act itself be amended to this effect to allow for stipulations outside of the statutory scope. An answer could undoubtedly consist of shareholder agreements within certain statutes, indicating which type of agreement is indivisible from a statute (by a clause of indivisibility from a statute and its clauses, for example). In this case, the shareholder agreement, negotiated at a different time than the statutes themselves, would be a valid exception to the Uniform Act because it would be indivisibly linked to the statutes themselves. It is important in this instance to remember to publish all modifications to the agreement so that it may have a formal value equivalent to that of the statutes. However, this solution also loses the confidentiality of the agreement. The decision to use an agreement in the statute’s annexes runs the risk of having to be resolved on a case-by-case basis. In the practice of international conventions, some agreements may also be subject to another applicable law or given over to the analysis of an independent arbitrator (for example in the case of an ICC arbitration). The strong international practice in this area can have repercussions for the relationship between shareholders, notably with investors from outside of the OHADA zone. The use of an international arbitration clause is becoming a common defence mechanism of international business, which will favour parties to the agreement dependent on their respective circumstances. This solution does not have to be neglected when there are shareholders originating from countries outside of the OHADA zone. 10

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Preliminary Unique Features of OHADA Uniform Corporate Law 14. Impacts of the Law’s Uniformity. OHADA Uniform Corporate Law has the unique quality that its terms are identical in each Member State and that it will be applied according to each category by the public officials in a judicial capacity. This process inevitably leads to an application sometimes different from the legal norms in one country to another, notably because of the national legal traditions or the historical origins of local legislation. As an example, the interpretation of these norms will be different in Cameroon, a country that derives its legal system from French law, and Equatorial Guinea, whose legislation is closer to the Spanish legal tradition. Beyond the particularities connected to the interpretation and application of a desired uniform law, the Uniform Act itself contains specific provisions concerning legal entities where the State has a strong presence (State-owned enterprises or publicly held companies) and the application at the same time of the Uniform Act vis-à-vis commercial enterprises. 15. The Particular Status of States. Article 1 of the Uniform Act on corporations indicates that “each commercial enterprise, including those in which a State or a legal entity or public law is associated, whose headquarters is located within the territory of one of the signatories to the Treaty relating to the harmonization of business law in Africa (hereinafter, the ‘Member States’) is subject to the terms of this present Uniform Act.” It follows from this opening and foundational clause of the Uniform Act that the uniform corporate law has a direct impact on a State each time that the State itself or a legal entity of public law is associated with the commercial enterprise. This principle contains a moderating element. Effectively, the States have the ability to build upon, complete or complement the terms of the Uniform Act, provided that the national laws are not contrary to the terms of the Uniform Act of commercial enterprises. 16. As a result, a number of Member States decided to adopt specific legislation for public capital corporation or economically mixed corporations for logical reasons of national interest or defence of the public interest. In this situation, one would apply both the rules of the Uniform Act and those of the national law, except those rules that contradict the Uniform Act. Therefore, if a State or a State-owned enterprise holds an interest

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International Arbitration and Corporate Law in a corporation, some terms of OHADA law can be completed by specific rules of the Member State’s national law.1 17. While coexistence is not always simple, one must note that if a corporation is made under a form recognized by the Uniform Act, for example a société anonyme, regardless in principle whether its shares are held by a State, the uniform corporate law should prevail over national law. This situation contains equal advantages for the State because it will allow the State to put in place its rights as an associate when it wishes to defend its interest or make its position known on specific matters. It is for this reason that a State could demand the benefit of an expert management even though it only held 35% of the company’s social capital, which is not, for this minority shareholder, newly classified in a public corporation.2 18. The Case of Public Entities. This question is slightly different for public entities that are made up of pieces of the States. When the entities do not retain the form of a commercial organization under the terms of the Uniform Act but do under the national public law, they cannot be assimilated into a commercial enterprise and be subject to the provisions of the Uniform Act. 19. Some companies are subject to a particular status, and the CCJA has had occasion to emphasize that the Uniform Act “applies to all commercial enterprises because of their form whatever their purpose”; these companies are subject to a certain regime under the legal definition even if “Article 916, section 1 of the Uniform Act leaves only the legislative clauses to which the aforementioned companies are subject.”3 Such is the case for regulated activities such as insurance companies or banking establishments regulated by national and/or regional laws derived from regulations such as the UEMOA, CIMA4 or the CEMAC and by the Uniform Act, as long as they are created under the form of a société anonyme. In terms of banking, the CCJA has clarified that the Uniform Act being of public order and not considering the possibility to create a vice president for the management of a société anonyme, the creation of such a position for banks and financial establishments made under this form is impossible. Each time the question of a special statute company is presented, it is required to refer to local law as a principal source or to the 1 Côte d’Ivoire, Law 97-519 of 4 September 1997, relating to the organization and the definition of Stateowned enterprises and Law 97-520 of 4 September 1997 relating to publicly financed corporations which contain provisions relating to, for example, the minimum participation of the State in the administrative council of public companies, in Cameroon, Law 99/016 of 22 December 1999 relating to the general nature of public establishments and public sector corporations. 2 Cotonou, n 256/200, 17 August 2000: RG n 314/2000, Bénin, LV, n 10, p. 127, ; for a complete study see B.Y. Meuke, L'information des actionnaires minoritaires dans l’Ohada: réflexion sur l'expertise de gestion, OHADATA D-05-56, . 3 CCJA, Avis n 001/2001/EP 30 April 2001. 4 Code CIMA, Art. 300.

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Preliminary  Unique Features of OHADA Uniform Corporate Law uniform law derived from other treaties, to determine the rights and obligations of the States. 20. Transitional Clauses of the Uniform Corporate Act: Entry into Enforcement and Conformity. The particularity of OHADA law stems also from its uniform characteristics for the signatory countries. This particularity imposes constraints concerning the compliance vis-à-vis the new judicial order to which the different States adhere. It is for this reason that all companies created since 1 January 1998, the date the Uniform Act came into enforcement, are subject to its terms from the moment of their registration. For companies that already existed at the time the Uniform Act came into being, they benefited from a two-year grace period (until 1 January 2000) to bring their operations into compliance with the uniform law (Art. 908, AUSC). If the companies did not comply, the non-complying terms of the company’s charter would be “deemed unwritten” (Art. 915, AUSC).5 In terms of the minimum social capital (Arts. 311 and 387, AUSC), the transitional clauses are slightly more radical since the Uniform Act predicted that the SARL and the SA would be dissolved for failing to come into conformity within the twoyear grace period or would become a company without a minimum fixed social capital (Art. 914, AUSC). For companies that failed to comply, they must ask themselves the difficult question of their continued existence and their implementation of their exit strategy, which will be studied on a case-by-case basis.

5

A. Feneon, “La mise en harmonie des statuts des sociétés anonymes en Côte d’Ivoire”, Penant, September 1999, p. 324 et seq; M. Lecerf, “Comment interpréter les dispositions transitoires de l’Acte Uniforme relatif au droit des sociétés commerciales et du groupement d'intérêt économique?” Cahiers juridiques et fiscaux de l'exportation, CFCE, 1998, n 2, p. 343 et seq.

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1

Incorporation of Companies

21. Each company contains, at its foundation, a willing act classically conceived as a contract (Art. 4, Section 1, AUSC), except in the cases where a company can be formed with only one person (Art. 5, AUSC). But this corporate act is not sufficient. To pass beyond a contract, a company must respect the necessary formalities to acquire the legal personality, which is both related to the formal establishment of the company’s bylaws and the necessary publication of the company’s charter for the benefit of third parties, and for registration, this formality being the obligatory step to acquiring legal personality and thus judicial capacity. It goes without saying that this passage from a contract to a viable company with legal personality does not always occur. There are intermediate situations related to either the waiting period before acquisition of legal personality, also known as the period of a company in formation, or the situation of not appearing judicially and de facto as a company. These intermediary situations can be attained either by a company under formation, a company willingly not visible to third parties, or the option of a company in fact, which has the purpose of protecting third parties and partners (these two scenarios will be discussed in detail, infra § 647). 1.1

The Agreement to Incorporate

22. When a company consists of multiple people, which is the most common scenario, the company is created by the willing act of several partners. However, one sole associate decides to create the legal personality by a unilateral act in the case of a sole proprietorship. Whatever the situation, this essential principle of contract still applies to the by-laws of the company through conditions of common law similar to those specific to corporate law. 1.1.1

Condition of General Law

23. A company is not an original work in terms of its method of creation. It takes its form from the willing act of partners, a judicial act assimilated into a contract or a unilateral act in the presence of a sole associate, who, in principle, is subject to the principle of the common law of obligations. It is for this reason, and for each judicial act, and, notably, such as for a contract, that the common law terms relating to a company’s charter require consent, capacity and object to determine whether the creation of legal personality is legitimately acquired by a valid, willing agreement. 15

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International Arbitration and Corporate Law 1.1.1.1 Consent 24. The Defects of Consent. The study of consent is always a pathological exercise since, by definition, one who signs a contract is supposed to have wanted to enter into the agreement. There are several recognized defects in consent: violence, error and wilful misrepresentation. In terms of violence, it will not be discussed in detail because in the case of a corporate charter, violence is, without a doubt, more anecdotal than in the classical law of obligations. This is why it is more appropriate to concentrate on wilful misrepresentation or error. In terms of wilful misrepresentation, actions or wanton omission (voluntary omission of certain elements of fact or certain essential elements) can lead a person to enter into a company believing falsely, for example, in the fabricated qualities of an associate. If this attitude results in a prejudice to the associate left in ignorance of this faulty quality (capabilities or usurped professional qualifications, for example), the contract theory may allow one to find an issue by finding a defect in consent. Another example would be deceit: this could concern concealing the fact that a company project is based on actions taken by an associate that constitute disloyal competition practices, for example the abusive exploitation of a hidden client list or parasitic behaviour. 25. Simulation. More common is the case of simulated consent and the theory of simulation. A company is a packaging designed to achieve its social object. It can concern a false association, some associates being nothing more than borrowed names to give the appearance of a company to an entity that does not actually exist. A company can also be used to conceal the true nature of a legal action. It can also be used to conceal a donation disguised for the benefit of a person who would not have an inheritance interest or pass outside the quota rules. OHADA law sanctions these instances of fraud in different manners depending on the form of the company. 1.1.1.2 Capacity 26. Minors and Adults Lacking Capacity. “Minors and adults lacking capacity cannot be associated with a company in which they would be liable for debts exceeding their contributions” (Art. 8, AUSC). Minors and adults lacking capacity are likewise protected against the risks resulting from creating a company without limited liability, to ensure that they do not put all of their assets at risk. Minors and adults lacking capacity can therefore not be members in a société en nom collectif, or associate shareholders in a société en commandite simple for lack of ability to hold the status of merchant. 27. A Form of Legal Incapacity of Married Spouses in Certain Companies. To protect the assets of spouses, Article 9 creates a specific incapacity. Thus, two spouses, who can become members together or may join with other co-associates in certain limited liability

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1  Incorporation of Companies companies, such as the SA and the SARL, cannot do so in a company without limited liability such as the SNC or the SCS. It should be noted that OHADA law contains no provision by which the other spouse becomes an associate in the company, as is the case in certain countries. In the case of difficulty determining the ownership of shares, one would consult the specific marriage, estate and family in force in the specific country of the spouses. 28. Corporate Associates. Corporate entities can be partners in a commercial company so long as they are not subject to a ban, incapacity or a conflict as determined by the Uniform Act on general commercial law.1 These limitations on capacity can include a ban on conducting business or those relating to bankruptcy procedures.2 1.1.1.3 Corporate Purpose 29. Purpose and Commercialization. In its most obvious form, the corporate purpose expresses the goal the partners had in mind when they agreed to the contract forming the corporation. This activity must “be determined and written in the charter” (Art. 19, AUSC). This first approach related to corporate activity demonstrates a dual analysis of the corporation as an organization and the communal pooling of assets. In this situation, the corporate purposes denote that dedication by the partners to “an activity of goods in cash or in nature, with the goal of sharing the profit or of gaining from the economic benefits that may result there-from” (Art. 4, AUSC). The corporate purpose also serves to demonstrate the business nature of companies. In fact, the uniform law maintains a conception of business nature determined by form and by object. Business in terms of form is held by four types of companies: SNC, SCS, SARL and SA (Art. 6, Section 2, AUSC). For all the other business organizations, the nature of the business can result from the corporate purpose, insofar as it corresponds to the business criteria set out in the Uniform Act on general commercial law. Thus, the continual performance of commerce3 acts allows one to consider a company as being commercial via its purpose.

1 2 3

Uniform Act of 17 April 1997, Book I, Cap. II, Arts. 6-12. See notably Arts. 68, 69, 194-215 of the Uniform Act on bankruptcy procedures. Art. 3 AUDCG states that “the following possess the quality of commercial acts: buying of goods, movable and immovable, in terms of their resale; banking operations, exchange, brokerage, insurance and transportation; the contracts between merchants for their commercial needs; the industrial use of mines, harvesting and storing of all natural resources; renting movables, manufacturing, transport, and communication business intermediaries, such as commission, brokers, agents, as well as intermediaries for the purchase of goods, subscription, sale or rental of property, commercial funds, shares; acts carried out by commercial enterprises.”

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International Arbitration and Corporate Law 30. Legality of Corporate Purpose. The corporate purpose laid out in the corporate bylaws must be legal (Art. 20, AUSC). Activities against public policy and good morals or contradicting the protection of the States are questionable. These activities that violate public policy must not be confused with those governed by legislative acts or special regulations (called regulated activities) that a company may perfectly well pursue (legality of the purpose), but under the condition that “the activity conforms to the specific rules to which the aforementioned activity is subject” (Art. 21, AUSC).4 In other words, for certain areas of activity that are specifically regulated, the quality of a company will be outside the conditions of common law, contingent on obtaining certain certifications and in compliance with the rules of national or international law regulating the specific activity in terms of its corporate purpose. 31. Particularity of the Corporate Purpose. Apart from the legality of the purpose, the principle of speciality should also be considered. In OHADA law, the corporate purpose cannot be unlimited; the activity must “be decided and written in the bylaws” (Art. 19, AUSC). Therefore, a company is a legal entity with a limited purpose or, in other words, whose corporate purpose consists of a programme that must follow the managing directors. This specificity brings OHADA law closer to French law, but it distinguishes other legal systems that do not reject the possibility of a company having a very general corporate purpose. One may cite English corporate law in which the corporate purpose in the by-laws may simply state that the company’s purpose is to conduct its affairs in a manner generally followed by other commercial enterprises. This technique, which allows for great flexibility, is not possible in OHADA corporate law. This being the case, it is possible to include a special clause, which is general enough, so that the managing directors need not frequently modify the by-laws. 1.1.2

Unique Condition to Corporate Law

32. The charter of a corporation serves, in the long run, to ensure that additional conditions other than those contained in the contract establishing the corporation are respected. There are three of these conditions: the sharing of supplies, the vocation of the economic fruits of the business activity and the heavily debated affectio societatis. 1.1.2.1 The Sharing of Supplies 33. A company cannot operate without supplies. Beyond the basic need for funds for the upkeep of a company, it must be remembered that the sharing of supplies is one of 4

It is also declared void because of the illegality of the purpose, a company created between a pharmacist and a non-pharmacist in violation of Art. 47 of Public Order N 97-002 of 1 January 1997 banning the co-ownership of a pharmacy with a non-pharmacist: CA Niamey Judgment 96, 18 August 2003, OHADATA J-04-83.

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1  Incorporation of Companies the characteristic elements of a corporate contract, which distinguishes it from other situations. 1.1.2.1.1 The Necessity of Contributions 34. The Company Cannot Exist without Contributions. The Uniform Act clearly states that “a commercial company is created by two or more people who are willing, by a contract to enter into an activity of goods in cash or in kind” (Art. 4, AUSC). It is an essential element insofar as “each associate must contribute to the company” and finds himself “a debtor of the company of everything that he has promised to contribute in money or in kind” (Art. 37, AUSC). In addition to demonstrating the participation of the partners in the company, the contribution is also an instrument of appreciating the value of the rights resulting from the creation of a company. A tool of valuation by determining the share capital and the division of rights is, in a commercial enterprise, proportional to one’s contribution. It is for this reason that “in consideration of their contributions, shareholders receive shares issued by the company” (Art. 38, AUSC; see also Art. 15, AUSC). 35. Fictitious Contributions. The absence of contribution is one of the difficulties that creditors must face. In reality, if the partners have questionable intentions or wish to obtain more titles than those equal to the value of their contributions, the question arises as to whether these contributions were partially fabricated because they were, for example, overvalued. The practical situations of partial fictitious contributions are common and can result, for example, from an unrecovered credit, from a commercial fund without any real value, a non-renewable patent or vitiated so its rights are not guaranteed or the covering up of losses of certain goods (land that cannot be built on, geological problems, etc.). The process of sanction in the face of these malevolent attitudes is always a difficult question. In fact, declaring something null and void can seem an ineffective sanction because it places the company in a sort of limbo, even though certain partners could have themselves been victims of fraud but not desiring the dissolution of the company in question. It is for this reason that the Uniform Corporate Act maintains that these behaviours are not sanctioned by being declared directly null and void. In fact, following the process of annulment, annulment in corporate law must result “from an express clause of the Uniform Act or texts regulating the annulment of contracts in general and the corporate contract in particular” (Art. 242, AUSC) (see infra, process of annulment § 88). However, the clauses regulating contributions do not deal with the specific sanction in the case of a contribution that is either partially or completely fictitious. Henceforth, failing to refer directly to the annulment, the possible sanctions for falsifying share capital or criminal sanctions specifically relating to the corporate charter (see infra, § 114 et seq.) are the responsibility of the creators of the corporation (see infra, § 110).

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International Arbitration and Corporate Law 1.1.2.1.2 Categories of Contributions 36. The Uniform Act authorizes three types of contributions: contribution in cash, contribution in kind and contribution in service. Contribution in Cash 37. Origin and Legal Regime. The contribution in cash consists of “a transfer to the company of the ownership of sums of money that the associate has initiated” to be given to the company (Art. 41, AUSC). This type of contribution must, in principle, be completely distinct from the corporate charter, the distinction being best described as a transfer “of funds of which the company has become an owner and that it has definitively and integrally cashed” (Art. 42, AUSC). By special dispensation, partial emancipation is possible in the SA. In this case, the contribution in cash must be independent of at least a quarter of its nominal value in the SA (Art. 389, AUSC). The emancipation of the amount must be done within a maximum period of three months from the date of registry of the company, following the provisions set forth in the by-laws or by a decision of the board of directors or the chief executive. When partners choose this form of emancipation, the shares representing contributions in cash not distinctly liberated remain under a nominative form, and since the capital is not entirely clear, the company can neither increase its capital nor issue notes. In exceptional circumstances, the increase of capital by contribution in kind remains possible (Art. 389, Section 4, AUSC). The partial emancipation can result in specific difficulties. Thus can arise the question of recourse available to the partners whose funds, deposited in the bank in the account of separate share capital, were dispersed too quickly to the partners and diverted. Does the victimized associate have, other than recourse against his partners, a claim against the depositing bank? An example of this is what the CCJA5 could have found in a case where the bank that held funds that were partially emancipated wired these funds to the principal account of the company, following the demand of the managers, although the notarial certificate (see infra, § 69 and 70) had not yet been filed. The bank was ordered to reimburse these sums to the holders of the share capital. 38. Legal Moratory Interests. In all companies, the delay in payment is sanctioned by payment of moratory interest. Thus, the amounts remaining due to a company carry full rights to the legal rate in force in the concerned Member State to be calculated from the date that payment should have been made (Art. 43, AUSC). Contributions in Kind 39. Classifications of Contributions in Kind. An associate or a shareholder can complete a contribution in kind by transferring to the company real or personal rights corresponding 5

CCJA, 29 June 2006: J-07-26; note B. Diallo, Revue Jurisfis info, n 6, p. 16, .

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1  Incorporation of Companies to transferred assets and/or by making these rights available (Art. 45, AUSC). Contributions in kind are completely separated from the charter regardless of the company’s form (Art. 45, Section 2, AUSC). The Uniform Act contains specific provisions relating to the protection of the contributor in view of the company in terms of the categories of contributions. Thus, when he contributes full ownership, he “is responsible towards the company as a seller is towards his buyer” (Art. 46, AUSC) and “as a landlord is towards his tenant,” in the case of contributing enjoyment of a right (Art. 47, AUSC). In exceptional circumstances, contributions of enjoyment of unascertainable goods or renewable goods are returned with an equivalent (similar quantity, quality and value), and the contributor is considered to be a holder of the property. The contribution of an expendable good or of an unascertainable good, according to the contributor, is the same as a transfer of full ownership according to the classical theory of the sale of goods. 40. Valuation of Contributions. In principle, the responsibility of valuation of contributions in kind falls to the partners, except in the case of those business organizations where the Uniform Act imposes such duty on a commissioner of contributions, such as the SARL (Art. 312, AUSC) or the SA (Arts. 400 and 619, AUSC) (see infra, § 557 for the SARL and § 343 for the SA). The by-laws must contain the appropriate provisions for the valuation of contributions in kind (Art. 50, AUSC) and any overevaluation of these contributions is subject to criminal sanctions (Art. 887, AUSC). Contribution of Service 41. A Limit to Contributions of Service. Contributions may also take the form of contribution in service. This type of contribution, defined by OHADA law as “a contribution of labour” (Art. 40, AUSC), can also consist of, in a more general sense, a contribution of a certain skill for the general benefit of the company. These services cannot serve as the guaranty of the credits or be liquidated immediately because they are the result of human work and are the expression of an individual’s work. This explains why these contributions are not allowed for the SARL or the SA. It is a shame, however, that OHADA law gives little credit to contributions in services. In particular, these types of contributions could be especially useful in a service company or in a company that is based on the development of intellectual property rights. For these types of companies and activities, these founding partners typically have the foundational ideas, but lack the necessary capital for the benefit of the company. A valuation of their know-how for the company could be useful in certain situations. Outside of this possibility, disposition of human capital by the adoption of a shareholder’s agreement, there could also be an interest in the options that OHADA law opens up on this particular point.

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International Arbitration and Corporate Law 1.1.2.2 The Dedication to the Fruits of Economic Activity 42. A corporate contract is meant to share the risks when attempting to derive profit from a common activity. This being the case, the activity is not always fruitful. Likewise, the proportional equality of the partners to share the profits has the counter-effect of sharing the losses. 1.1.2.2.1 The Dedication to Earnings and Savings 43. Principle of Proportional Equality. Share capital issued by the company in consideration of the contributions gives the holder an equal right to the company’s profits when a dividend distribution is decided. This right also entails an equal right to the net assets of the corporation at their distribution at the time of dissolution or in connection with a reduction of share capital (Art. 53, AUSC). 44. Clauses Authorizing Unequal Distribution. The rights and obligations of each associate are proportional to his or her respective contributions, whether these contributions were made at the company’s inception or during its normal course. However, this principle of proportional distribution does not always correspond to the associate’s aspirations or the actual corporate life. Some associates can behave more like investors waiting for a return on their contribution, whereas others, being more active, are looking for compensation proportional to the amount of work they put in. This explains why associates are able to temper the theory of proportional distribution by including unequal share clauses. In the SA, whether at its foundation or during its lifetime, it is possible to create preferred shares that possess advantages over ordinary shares. These benefits could consist of a superior share of the profits or the liquidation share, a benefit in receiving profits or cumulative dividends (Art. 755, AUSC). 45. Prohibition of Inequitable Clauses. However, “stipulations granting an associate the totality of profits earned by the company or forgiving him/her the totality of losses, as well as those clauses which bar an associate completely from the sharing of profits or compel to suffer the totality of a loss, are considered void” (Art. 54, AUSC). One should note that the Uniform Act does not refer uniquely to terms within the by-laws; rather, it encompasses all terms. Likewise, a simple contract containing such a clause may be considered an inequitable clause and therefore an impossible act for the corporation. The difficulty is found, in light of this prohibition of ‘all’, in knowing when the inequitable character begins and when it ends. It is entirely a deceptive situation and will depend, principally, on the fact that a conventional clause allows one of the partners to be exonerated from all potential risk or realize all the benefits, without enabling the other partners to benefit from the principle of proportional division.

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1  Incorporation of Companies 1.1.2.2.2 Contributing to Losses 46. An Obligation of Differentiated Contours. Partners are also required to “contribute to the company losses in the predetermined condition for each corporate form” (Art. 53, Section 3, AUSC). This wording is explained by the various positions of partners depending on the form of the organization. In fact, business organizations with limited liability, such as the SARL or the SA, limit the share of losses an associate is responsible for to the amount of his contributions, whereas business models without limited liability, such as the SNC, do not allow for such a limitation. Partners are responsible indefinitely and jointly for the corporate debts. From that moment on, in relation to the sharing of losses, it is useful to refer to the status of the associate of the shareholder in the form of the specific company, to understand precisely the extent of financial obligations for which the partners are responsible. 47. The Moment of Contribution. Loss materializes most often at the cession of business activities. It is at the end of the company’s life that the question of an associate’s share arises, whether the company was subject to liquidation proceedings or whether it has been voluntarily dissolved. Beyond this classic scenario, it is equally possible for the shareholders to respond to a difficult financial situation by contributing financially to bail out the company. Such a scenario may be found in a case where a company’s finances are suffering but where it has not yet ceased payment of its liabilities and whose directors decide to reduce capital and then immediately increase capital (commonly referred to as ‘an accordion’) in order to balance the company losses. Contributing to losses, in this case, is voluntary and results from the desire of the partners to give the company a more stable financial situation. This contribution during the life of the corporation can also be the result of a statutory clause. This will be the case, for example, in a company or an association not having the principal purpose of realizing profits but rather of sharing costs. The case of GIE is, in this matter, particularly interesting. In fact, it is not unimaginable that the GIE contract foresees a clause for the repartition of communal charges at regular intervals, each trimester or at the end of each exercise. 48. Equity Less than Half of the Share Capital. The law can also impose this contribution to company losses during the company’s life. For example, in an SA, the occurrence of losses in the combined financial records of the company’s own capital is inferior to half of its share capital (Art. 664, AUSC). In this case, the administrative council or administrator must, within the four months following the discovery of this loss, call a special meeting to decide whether to dissolve the company or to continue for two more quarters, before announcing a reduction in capital if the capital has not been recovered or to state that the capital has been recovered (Art. 665, AUSC).

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International Arbitration and Corporate Law 1.1.2.3 L’Affectio Societatis 49. Following the example of numerous legal systems, the uniform law of OHADA does not directly refer to affectio societatis. This notion, derived from doctrine and case law, is one of the essential requirements of a corporation. It has been used since Roman law to distinguish between associations of willing individuals, such as a company, from those where the association was not voluntary, such as joint ownership. Adding to this, in the case of a work agreement, an enterprise does not lead to a partnership because of the subordination of one person to another. The concept is multifaceted. In classic doctrine, the affectio societatis is a willing collaboration, active, interested and equal. The invested characteristic allows a company to be distinguished from a partnership. This analysis is highly criticized because in many companies there is no real collaboration (for example, simple investors or those who purchase their shares on the stock market). Another concept seen in the affectio societatis is a desire for union or a simple meeting of interests. This idea emphasizes a particularity of a company (different from bilateral contracts, where the interest of one party is generally in opposition to those of another party). This vision is also criticized because there is often a difference in interests between majority and minority shareholders, for example the distribution of dividends. 50. The Uniform Act Makes No Reference to the Affectio Societatis. The concept is implicit in Article 4, which defines the contract forming a corporation, which also directly mentions the idea of a common interest. This confirmation of ‘the interest that motivates the individuals to work together’ is difficult to contest. This being the case, when the interest is a shared one, one assumes that achieving this common interest surpasses one’s individual desires. The concepts of individual interest and shared interest are nevertheless intertwined, in that the individual interest is one of the components of the shared interest, which consists of an entire community’s viewpoints. The Uniform Act also refers to ‘the corporate interest’, notably in its clauses relating to the abuse of rights and vote (Art. 130, AUSC). This concept is further distinct because it is a type of compass guiding the managers in the management of the company so that they may work in the interest of the company itself, which is not necessarily in line with the interest of the associates or of certain creditors. 51. Whatever it may be, the concept of affectio societatis is, in terms of the company’s interest, one of the regulating factors that judges use to determine the existence of a company and, more generally, the extent of a company’s obligations. The concept is useful for identifying a fictitious company created for the profit of a businessman without any real participation from the other shareholders. It also serves to uncover discord and allow liquidation under judicial supervision. In fact, this dissolution, “for just reasons,” is possible “notably in the case of the failure of an associate to execute his obligations or by discord between the partners that prevents the normal functioning of the company” (Art. 200, Section

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1  Incorporation of Companies 5, AUSC). The text refers to itself and aims to not eliminate the distinction between the losses of the affectio societatis subject to the sovereign power of the judge.

1.2

Corporations as Legal Entities

52. The corporation is said to exist after the wilful agreement of the partners to the terms of the articles of association, which is often manifested by the signing of the by-laws. A company’s legal personhood is not, however, acquired the same day as its registry with the RCCM (Art. 98, AUSC). Before its registration, the existence of the corporation cannot be used against third parties, and it only generates rights and obligations for the partners themselves. In order to exist, the corporation must fulfil certain criteria (1.2.1), which, when not respected, voids agreements and imposes other specific sanctions (1.2.2). 1.2.1

Conditions for Becoming a Legal Entity

53. In order to become a legal entity, a corporation must be individualized. In effect, for a corporation, it is through the will of its partners that the boundaries of its legal personality are designated and will then give rise to its registration. The establishment of these elements of individualization (1.2.1.1) allows for the following formalities necessary to becoming a legal entity. 1.2.1.1 Elements of Legal Entities 1.2.1.1.1 Corporate Structure and Purpose 54. The Uniform Act defines the corporate purpose as “the activity (that the corporation) undertakes and which must be determined and described in its bylaws” (Art. 19, AUSC). This corporate purpose and its legal status are analysed below (see supra, § 29). 55. The Freedom to Choose a Name. Each corporation, in order to be identified by third parties, must have a name. In practice, the choice of this name is not restricted to the expectations of the eventual rights of third parties. It is for this reason that a name will not be able to be that of an already registered corporation (Art. 16, AUSC) or the last name of someone who is not associated with the company. If the use of the names of one of several partners is authorized as the trading name (Art. 15, AUSC), the consequences of the eventual departure of one of these partners in terms of the share capital should be considered. In this case, a conflict is possible between the principle of inalienability of a family name and the trade name. 56. Precautions to Take. The Uniform Act clearly indicates that the corporate name must be mentioned in the corporate by-laws (Art. 14, AUSC) and “appear on all the acts and

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International Arbitration and Corporate Law documents emanating from the corporation and sent to third parties” following the relative legal provisions (Art. 17, AUSC). But the Uniform Act says nothing of the fate of the corporate name in the case of the change of an associate. To avoid this difficulty, it would be useful to stipulate in the by-laws or in a separate act that partners will not be able to take back their name if they leave the share capital, except where judges find that the bylaws allow for the use of a name regardless of the future status of the shareholders. A fault of jurisprudence in this regard, for the moment, it is certainly better to be more prudent and prepare for this situation in a precise manner. The same difficulty could arise when one of the associates used one of his names as a brand. In this case, it would be useful to precisely note the terms of use for the brand in order to avoid a conflict or a split between the associates. 1.2.1.1.2 The Corporate Headquarters 57. The Need for a Definitive Address. The address of the corporate headquarters must be mentioned in the by-laws (Art. 23, AUSC). The corporate headquarters can be located, with the associate’s discretion, either in the principal place of business or at the centre of administrative and financial matters (Art. 24, AUSC). This address cannot be a simple postal box, and the seat “must be noted by an address or a sufficiently precise geographic indication” (Art. 25, AUSC), which can create some difficulties in areas where streets are not named. However, at the time of registration of a corporation, the temporary corporate headquarters is allowed to be at an attorney or notary’s office in many Member States. Third parties may claim the headquarters listed in the by-laws, but this cannot be used against third parties if the actual headquarters is located in another location (Art. 26, AUSC). This role is a protection for third parties who will be able to claim, depending on their interests, the real headquarters or the fictional one, which will avoid the use of jurisdictional exceptions by the judge before whom the case has been brought.6 1.2.1.1.3 Share Capital 58. Composite Elements of the Capital. Every corporation must have an authorized capital that is indicated within its bylaws (Art. 61, AUSC), which represents the amount of contributions in capital made by the shareholders increased, depending on the circumstances, by incorporating savings, profits or share premiums (Art 62, AUSC). Its amount is freely determined by the partners or the shareholders (Art. 65, AUSC), but it must be 10 million francs CFA for the SA and 1 million francs CFA for the SARL (Arts. 311 and 387, AUSC).

6 CCJA, file n 009/2002 21 March 2002: Aff. Me Bohoussou Gbazike Juliette v. Société Ovoire Coton, .

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1  Incorporation of Companies 59. Changes in Capital. The Uniform Act does not favour the idea of variable capital; however, its position will likely change once the legislature adopts the reform at the end of 2013.7 It currently maintains a principle of fixed authorized capital (Art. 67, AUSC). Therefore, the authorized capital will be able to be increased or reduced following procedures or increasing or reducing capital outlined by the articles and subject to formalities imposed by the statutes. In this respect, an increase in capital can be accomplished by new contributions made to the corporation or by a transfer of savings, profits or share premiums (Art. 68, AUSC). Although this does not expressly mention the ability to increase capital by compensation, one must acknowledge that this type of increase is possible. In fact, compensation is the only payment method of increasing capital with cash. The SA possesses its own formalities for increasing capital by compensation. On the other hand, a decrease of capital reimbursing partners or shareholders can affect a portion of their contributions or imputing losses to the corporation (Art. 69, AUSC). When the deduction is accomplished by reimbursing the partners a portion of their contributions, this can be performed in cash or by the distribution of assets (Art. 70, AUSC). 60. Corporate Securities. In consideration for their contribution, partners or shareholders receive corporate securities, which grant them, in theory, a right to profits realized and a right to vote (for an analysis of the financial and political rights, see supra, § 141 et seq.). Shares issued by a corporation must have the same nominal value (Art. 56, AUSC). The nominal value of shares can be freely determined for the corporations in which the shareholders have unlimited liability. In an SARL, the nominal value of the corporate shares cannot be inferior to 5,000 francs CFA, whereas in the SA it cannot be inferior to 10,000 francs CFA. 1.2.1.1.4 Duration and Extension 61. Duration and Extension. The duration of a corporation must be indicated in the articles of association and cannot exceed 99 years from the date of registration with the RCCM (Art. 28, AUSC). After the end of this period, the corporation is considered completely dissolved (Art. 30, AUSC). The extension of the corporation can be decided, according to the forms for each type of business organization, by the modification of its by-laws (Art. 33, AUSC). The ordinary procedure of extension is the following: at least one year before the expiration date of the corporation, the shareholders must be consulted to decide whether the corporation should be extended (Art. 35, AUSC); if the extension is decided and voted in accordance with the modification requirements for each type of business organization, 7

The reform will most likely provide the possibility for variable capital to be stipulated in the articles of incorporation of limited liability companies, which are not susceptible to public offers. If the company desires to exercise this option, it will likely have to contain the express wording ‘with variable capital’ on all the deeds and documents of the company (Art. 269-1, et seq., revised AUSC).

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International Arbitration and Corporate Law which will generally require a special meeting of the general assembly, this extension of the corporation does not lead to the creation of a new legal entity (Art. 34, AUSC). It may happen, at this extension proceeding, that certain minority shareholders attempt to block the continuation of the corporate activity, preventing the other shareholders from achieving their activities and yet maintaining the corporate service. To avoid this type of dissolution by discord, a solution consists of putting in place a clause in the by-laws of buying back shares of opposing shareholders, which leads to ceding their shares to those shareholders who wish to continue the corporate activity. It would be useful, simply, to think about including this clause at the moment of incorporating or when there is a modification to the by-laws. 62. Failing to Extend. A difficulty can arise when the associates fail to decide on extension at least a year before the expiration of the corporation. In this case, each associate can still, one year after the expiration of the company but before the dissolution of the company, ask the president of the competent jurisdiction where the corporate headquarters is located, and within a short period appoint an agent of the court to begin a consultation of the associates. But when nothing is done before the end of the statutory period, the Uniform Act says nothing precisely. The Uniform Act is based on, in terms of the extension of a corporation, Article 1844-6 of the French Civil Code. This has allowed certain authors8 to say that if the extension procedure was not strictly respected, the corporation is automatically dissolved from the day of its statutory term and it will not be possible to proceed to an extension a posteriori by calling a general assembly after the end of the statutory term. Indeed, the end of the term would lead to the complete dissolution of the corporation, the legal personality only being maintained for the needs of liquidation and not being able to be used to vote for the continuation of the corporation. This solution would be logical, but it is no longer in compliance with jurisprudence. It is a shame that the OHADA legislator took the French solution of a corporation with a determined lifespan, derived from the prohibition of perpetual engagements9 rather than considering that a corporation could endure within any other limit than the will of the associates to the day of the decision to stop corporate activity. Practitioners of OHADA law will find limited case law that solely deals with the question of the associates who forgot to act within the time limit. In this case, the corporation continues in the form of a corporation in fact (Arts. 864868, AUSC applying the theory of a corporation by participation), and it cannot be recreated in the same form. On the contrary, the associates may create a new type of corporation. The inconvenience of this solution relates to the fact that it requires the creation of a new legal entity. From a practical standpoint, the tax authorities would 8 9

B. Marator et al., Le droit uiforme africain des affaires res issu de l’OHADA, Litec, 2nd ed., § 342, p. 91. R. Libchaber, “Réflexions sur les engagements perpétuels et la durée des sociétés”, Rev. Sociétés, 1995, p. 437.

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1  Incorporation of Companies have to tax the liquidation–creation of this ‘reactivated’ corporation. It is desirable for the tax legislation of the different Member States to develop a favourable mechanism, on the basis of the perception of a fixed right to a reasonable amount, for example, to avoid the penalty for associates who simply forget this formality. The interest of the States is, without doubt, to maintain a corporation that pays its taxes rather than risk penalizing the corporation and risking its dissolution and impacting the lives of the employees and its own tax revenue. 1.2.1.2 Formal Requirements for Becoming a Legal Entity 63. For a corporation, registration is the moment that it becomes a legal entity. If the corporation fails to respect this essential step, it will never become a legal entity and can simply follow the steps of the project, such as a simple pre-contract (corporate promises) or like a corporation in fact (a non-registered corporation). Because of this particularity, the corporate contract is marked by a formality designed to ensure the agreement of the associate’s will and also to clearly identify their choices, notably in terms of the corporate form, which will be important for the future of the corporation in terms of a legal entity and the rights and obligations vis-à-vis third parties. 1.2.1.2.1 The By-laws 64. Form. The corporate by-laws must be established in writing, by an authentic act or by private agreement. This being the case, in order to ensure a coherence of corporate charters in countries where the commercial registry is not always very well organized, and not necessarily computerized, the use of a notary is currently an obligatory formality.10 Therefore, either the notary will prepare the by-laws in an authentic form or it will be recorded within the corporate minutes (Art. 10, AUSC). The number of original copies varies depending on the corporate form and the authentic form, in order to protect the associates against any eventual disagreements concerning the corporate contract (Art. 11, AUSC). One also finds the classic role of proof and security that surround the notary act and that has a tremendous usefulness in countries where the commercial registry is not sufficiently reliable.11 It is therefore necessary to clarify each modification to the by-laws and the intervention of the notary to formalize or record the amended by-laws. 65. Mandatory Clauses. The by-laws must contain certain mandatory clauses clearly listed in Article 13, which imposes the following criteria: the form of the business organization, its trade name, where appropriate, its acronym, the nature and the place of its business 10 The obligation to use a notary is currently being re-examined by the OHADA legislator and could potentially be modified by the reform. 11 A. Dieye, “L’Acte Uniforme relatif au droit des sociétés commerciales et du groupement d’intérêt économique: contenu et appreciation", OHADATA D-04-08.

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International Arbitration and Corporate Law which serves as the basis of its corporate purpose, its corporate headquarters, its duration, the names of its investors who contributed in cash, with, for each of them, the amount of each contribution, the number and the value of the shares issued in consideration for each contribution, the names of the investors in kind, the type and the valuation of each contribution given by them, the number and the values of the shares given in consideration for each contribution, the recipients’ individual profits and the nature of these profits, the amount of corporate capital, the number and the value of corporate shares issued, distinguishing, where appropriate, the different categories of shares created, clauses explaining the partitioning of the profits, the handling of the company reserves and the winding up of the corporation and the method of its operations. 66. Effects of Failing to Satisfy Written Formalities. It is helpful to distinguish between two situations where the written statutes are lacking or where they are simply absent. In the case of an incomplete writing, the Uniform Act outlines a procedure of regularization. In this respect, if the by-laws do not contain all the required criteria provided by Article 13, or if one formality demanded by the Uniform Act for the Articles of Association is omitted or irregular, each interesting party may ask the competent judicial authority, in the place where its corporate headquarters is located, that the Court order the Articles of Association to comply with the Uniform Act. The public minister may also use this method (Art. 75, AUSC). This action has a statute of limitations of three years from the date of the corporation’s registry or from the publication of the act modifying the by-laws (Art. 77, AUSC). The third-party victims of these failures will be able to hold the founding associates as well as the first managing or directing body responsible, according to the terms of the Uniform Act (see infra, § 110). 67. The absence of a written document does not in itself prevent the application of the Uniform Act. Rather, once certain people begin to behave as associates, whether voluntary or not, the quality of a de facto society may be invoked (Art. 864, AUSC; see infra, § 654 et seq.). In fact, the Uniform Act does not consider a de facto corporation as null and void. Instead, it subjects this organization to the same judicial criteria as the SNC, which therefore will apply to all de facto associates (Art. 868, AUSC). 1.2.1.2.2 Making Contributions 68. Necessary Contributions. Contributions are one of the essential elements of the corporate contract. Once an associate has committed to providing a good or service to the corporation, the value of this contribution must be fully realized in order for the corporate contract to have its full legal value. These contributions are noted at a certain date following specific protocols that may vary from one corporation to another. In principle, contributions in cash are held in a trust account in the corporation’s name until the date of registration. Once the corporation becomes a legal entity following registration, the cash becomes available for the needs of the corporation’s daily upkeep

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1  Incorporation of Companies (Art. 314, Section 2, AUSC for the SARL). These general principles are reinforced in capital corporations because these organizations require a greater capitalization at their inception. It is for this reason that the regulations for acquiring a contribution are the subject of many precise clauses within the Uniform Act. 69. The Notary’s Subscription and Deposit Declaration for the SARL. Funds derived from the freeing up of corporate shares must be immediately deposited in the bank (Art. 313, AUSC). The bank therefore opens an account meant for the formalities of incorporation (an account opened in the name of the corporation in formation) and gives a receipt of the deposit of funds to the founder, which he will need to satisfy the requirements of registration and publication. The founder may also fulfil all of the preparatory requirements of registration with a notary. In this case, he may also deposit funds corresponding to the freeing up of corporate shares with a notary, who will also produce a receipt confirming the fund’s deposit. Whatever be the method used for the deposit of funds (at a bank or to a notary), the freeing up and the deposit of funds will have to be sworn to by a notary located within the territory of the corporate headquarters, using a specific act called the notary’s declaration of subscription and deposit. For the SARL, the notary’s description of subscription and deposit indicates “the list of subscribers with the last names, first names, address for physical persons, corporate trading name, form of the business organization and corporate headquarters for legal entities, as well as the banking addresses for the interesting parties and if necessary, the amount of funds deposited by each party” (Art. 314, AUSC). 70. The Notary’s Subscription and Deposit Declaration for the SA. For the SA, the funds originating from the subscriptions of shares in cash are deposited by the people who receive them, for the account of a corporation under formation, either with a notary or at a bank located within the Member State of the corporate headquarters under formation, in a special account opened in the name of the corporation. The person charged with this formality must deposit these funds within eight days from their receipt. Other than the sums or the cash paid that he deposits at the bank, the depositor must also put back, at the moment of the fund’s deposit, a list containing the names of the subscribers and indicating, for each of them, the amount of cash that they contributed. This list is available to each subscriber for the entire duration of the corporation’s formation (Art. 393, AUSC). The recipient of the funds provides the depositor with a certificate of deposit, certifying that the funds have been deposited. Once this preliminary formality is accomplished, upon the presentation of the registration forms and, if required, a certificate of depositing certifying the deposit of the funds, the notary may finalize his certificate of subscription and deposit. In this declaration, the notary confirms that the amount of subscriptions provided is equal to the amount mentioned on the registration forms, and that the amount of the deposit is equal to the amount

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International Arbitration and Corporate Law of sums deposited with him, or at a bank, indicated on the certificate of deposit. The certificate of deposit must be attached to the notary’s declaration of subscription and deposit. The notary is responsible for making this declaration available to the subscribers, who may then make note of these figures (Art. 394, AUSC). 71. Subscription and Deposit Declaration in other Business Organizations. In business organizations that are not subject to providing a notary’s declaration of subscription and deposit of funds (every structure outside of the SARL, see Art. 74, AUSC), the founders and the first members of these management, administrative and directing bodies must submit to the commercial registry a certificate in which they relate all completed operations in pursuit of registering the corporation and where they declare that the articles of association were made in compliance with the Uniform Act (Art. 73, AUSC). This certification, which is called ‘a declaration of regularity and conformity’ will be required, under penalty of rejecting the request, at the moment of the corporation’s registration with the commercial registry (Registre du Commerce et du Crédit Mobilier or RCCM). 72. The Restitution of Funds Where Registration of Capital Corporations Fails: Provisions Specific to the SARL and the SA. When an SARL will not be registered with the RCCM, within six months from the deposit of funds with a notary or the bank, the investors may, either individually or by a collective representative, ask the President of the competent judicial authority to withdraw the amount of their contribution (Art. 314, Section 3, AUSC). This provision created a protection for the associates of an SARL against the eventual withholding of funds by a bank or a notary, believing that they are not authorized to return the deposited funds. The methods of this mechanism are slightly different in the case of the registry of an SA. For this type of business organization, each subscriber, six months after the deposit of funds, may refer to the president of the competent judicial authority for the naming of an administrator charged with withdrawing the funds to compensate the subscribers, with a deduction of the withdrawal fees if, at that date, the corporation is not registered (Art. 398, Section 3, AUSC). The discretion of the judge is stronger in corporations seen as being less founded on intuitu personae than the SA, the intervention of an administrator being there to protect the associates during a time where they may be vulnerable. However, this formality, if it is protective, may become very expensive for the incorporation of corporations with minimum authorized capital. In all other forms of business organizations, which do not necessarily require a minimum authorized capital, the Uniform Act does not mention a mechanism designed to protect the associates in the case of a registration failure. This oversight is regrettable because it forces the associates confronted with this situation to plead to the judge using analogy, based on the theories of contract and property law, which is always more complicated than an express provision.

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1  Incorporation of Companies 1.2.1.2.3 Registration 73. The registration of a corporation by itself is not sufficient. Outside of proper registration with the RCCM, the founding associates, the manager or any agent responsible for registration formalities must also take on the requirements for publication. Formalities of Registering with the Commercial Registry (RCCM) 74. Timing of Registration. All corporations, except for an undeclared partnership, must be registered with the RCCM, meaning with the clerk of the competent commercial jurisdiction in the same location as its corporate headquarters (Art. 97, AUSC). This registration must occur within a month of adopting the articles of association (Art. 46, AUDCG). 75. Request for Registration. In the Member States of OHADA, the forms for registering commercial corporations are available through the RCCM. One should note, however, that the system of RCCM is not yet completely effective in all the Member States, for reasons basically relating to failures of adequate technology. Because of this, the formalities and procedures will be updated as technology in each Member State permits, while at the same time keeping to a uniform baseline throughout all of the Member States. Whatever the method of submission used (computerized or not), the following documents must be attached to the registration demand of a corporation with the RCCM (Arts. 27 and 28, AUSC): two certified copies of the by-laws, two originals of the notary’s declaration of subscription and deposit, two certified examples of the list of first administrators and all other documents required by the laws of the Member States such as a preliminary authorization to practise business when the merchants are foreign or the activity is regulated (banking, insurance, etc.). The request itself must also include the name of the corporation, where appropriate, its initials or emblem, its corporate purpose, the legal form of the business organization, in the case of a société anonyme, the amount of authorized capital or the amount of contributions in kind and where appropriate the contributions in cash, the address of the corporate headquarters, the duration of the corporation, the last names, first names, date and place of birth and residence of the administrators, and the last names, first names, date and place of birth and address of the company’s auditors. 76. Certificate of Registration. A registration certificate providing a corporation’s information is available at the RCCM for all interested third parties. This certificate personifies the legal personality after the formality of registering with the RCCM and allows its holder to release the funds constituting a corporation’s authorized capital that are held by a bank or a notary for a corporation under formation. Other Publication Formalities 77. Tax Registration. In the majority of Member States, the registry of the by-laws with the tax authorities is required and will have to be accomplished during the general formalities

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International Arbitration and Corporate Law of the articles of association and the corporate registration. The tax regimes not being uniform across the Member States, one must apply the tax legislation in force in the Member State of implementation. 78. Publication in a Legal Affairs Journal. Within fifteen days following a corporation’s registration, an announcement must be placed in a legal affairs journal in the Member State where the corporation is registered (Art. 261, AUSC). The legal journal in terms of the Uniform Act is, essentially, the official journal of the Member State involved, or any other journal designed for this purpose by the competent authorities. For simplicity, the publication may also be allowed in daily information publications sold by a subscription, delivered or sold, appearing for more than six months and distributed at the national level (Art. 257, AUSC). The required terms of the announcement are found within the Uniform Act (Art. 262, AUSC). This announcement must be signed by the notary or by the founders of the corporation. 1.2.1.3 Corporate Acts during the Process of Incorporation 79. The concept of a corporation under formation is particularly important for corporate law. Basically, a corporation does not become a legal entity until the day of its registration, and all acts passed by the founding associates before the corporation has acquired the ability to enter into contracts must be ratified by the corporation once it legally exists. Yet in practice, these acts are very numerous (opening a bank account for depositing the authorized capital and a checking account, signing a lease, hiring, buying and ordering materials, contracts for various services, etc.). It is for this reason that the Uniform Act (Arts. 100-113, AUSC) contains a specific regulation that aims to allow a corporation to benefit from acts that were done on its behalf while removing the associate’s responsibility undertaken before the corporation was a legal entity. Overall, the mechanism is very simple – third parties contract with the signatory associates until the adoption of this act by the corporation upon its registration. 1.2.1.3.1 Engagement Principle of Individuals Having Signed the Acts 80. Identifying Individuals Held Responsible by Default. Individuals who act in the name of a corporation under formation participate in a sort of ‘loan’ of their legal personality while waiting for the corporation to acquire its own legal personality after its registration. This mechanism of allowing a capable individual to sign an act aims to allow third parties who agreed to enter into agreements with individuals representing corporations under formation to benefit from the protection of a contracting partner in case the corporation will never be incorporated, which may occur. It is for this reason that the Uniform Act provides that “the acts and engagements which are not ratified by the corporation, in the conditions mentioned by this present Uniform Act, are not imposable against a corporation and the individuals who entered into these agreements are

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1  Incorporation of Companies held firmly and indefinitely responsible for the obligations which they contain” (Art. 110, Section 2, AUSC). It should be noted that the texts do not require that the acts be signed by one of the founders, defined by the Uniform Act as “the individuals who actively participate in the operations leading to the creation of a corporation whose role begins with the first acts or the completion of the first acts undertaken in the interest of incorporation and ends as soon as the bylaws have been signed by all the associates or the sole associate” (Art. 102, AUSC). The founders must also be residents “of the territory of one of the Member States this residency cannot be proven by a postal box, but it may be determined by a physical address or a sufficiently precise geographical location” (Art. 103, AUSC). The Uniform Act only mentions individuals who have undertaken acts on behalf of the corporation, which allows for undertakings by individuals other than the founding members. It is these individuals who will be held liable and, as long as they have not received an express order from the founders or future associates, they will only be responsible for the consequences of the acts that they personally signed. It would be wise to encourage them to act cautiously so as to avoid responsibility for acts in which they hold no personal interest. 81. A Relative Protection. For third-party signatories, this guarantee remains limited because it does not allow one to invoke solidarity with the founder and to hold all the associates responsible along with the signatory. This is why it would be advisable to demand the signature of all associates for acts of a heavy financial weight, so as to be able to improve their chances of recovery in case of an incorporation failure. But such a request is not always possible, and associates do not necessarily consider it, often failing to note this during the procedure of ratification. 1.2.1.3.2 Conditions of Ratification 82. The Uniform Act notes that a regularly registered corporation can ratify acts passed on its behalf, these being considered from the beginning as having been taken by the corporation. This ratification allows the corporation to support the corporation and its patrimony with acts passed before its registration. In order for this ratification to function, conditions of substance and form must be respected. Ratification Formalities 83. Ratification Techniques. There are three formal mechanisms for ratification that correspond to two techniques. The first two mechanisms are appropriately called automatic ratification, which results in a transfer of acts after registration. This first technique is a form of ratification12 a posteriori of acts passed on behalf of a corporation when it legally 12 Some individuals see in this mechanism a consequence of taking on obligations for another, but in so far as it is legally delicate to enter into agreements for a legal entity that does not exist, this explanation is not always very effective.

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International Arbitration and Corporate Law exists. The second technique is the result of representation – associates decide in a special general meeting to ratify determined acts that could not be automatically ratified. 84. Automatic Ratification by Registration. Automatic ratification can be accomplished by two formal methods: the ratification in an annex to the by-laws or by a special declaration. A ratification assembly can also be organized in some specific situations. In relation to the annex technique, it concerns acts and obligations taken by the founders on behalf of the corporation under formation, before its incorporation, which means before the signing of the by-laws by the associates (Art. 101, Section 1, AUSC).13 These acts must be brought to the attention of the associates before the signing of the by-laws, when a corporation does not make a public offering or at the incorporating assembly, as the case may be. In order for the ratification to occur automatically at the corporation’s registration, “the acts must be described in a state entitled ‘state of acts and engagements accomplished for the corporation under formation’ indicating, for each of these, the nature of the importance of the obligations that they contain for the corporation is that they are ratified” (Art. 106, AUSC). If these conditions are respected, the ratification will be automatic upon corporate registration (Art. 107, AUSC). The signing of the bylaws including the “acts and engagements accomplished for the corporation under formation” demonstrates the will of the associates to ratify them. The mechanism of ratification is different when the acts are passed between the signing of the by-laws (the establishment date according to the Uniform Act, Art. 101, Section 1, AUSC) and registration. In this case, it is no longer possible to attach an annex list of acts to the by-laws since they have already been signed and are, generally, being used in the process of necessary publicity for the company’s registration. This is why the commonly employed technique is a special order. For this type of act, occurring after the establishment, ratification is automatic after registration under the conditions that the associates have “in the bylaws or by separate act, granted authority to one or several corporate officers, depending on the case, to undertake obligations on behalf of the company when established but not yet registered” (Art. 111, AUSC). The text emphasizes the forms of the order and also reduces the people who are able to act as agents since it only applies to “corporate officers.” A priori, a mandate in favour of an individual who would not be the first corporate officer would not allow for an automatic ratification. This does not, however, mean that ratification is impossible. In this case, ratification will only be possible by the approval of a group of associates gathered for a special ratification meeting (see infra, § 86). To allow for automatic ratification, the mandate must also be unique, the 13 In case of a freeing up of contributions in kind or a stipulation of particular benefits, the date of incorporation is not firmly set. In this case, the intervention of an auditor is necessary and the incorporation will only be accomplished by a general assembly (Arts. 400-413, AUSC).

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1  Incorporation of Companies engagements mentioned being “determined and their methods clarified in the mandate” (Art. 111, AUSC). The text does not specify whether the mandate given by the associates must occur before the engagement or after. Since the text only mentions registration as the key moment for ratification, it seems possible that the associates using a special mandate after incorporation but before the registration could ratify an engagement undertaken after incorporation but before registration without a special mandate. It seems preferable, in this case, to avoid all ambiguity concerning the desire for ratification that all the associates accept the delivery of this special mandate post-incorporation, creating ratification once registration occurs. The jurisprudence has certainly had occasion to address this common possibility. In practice, associates are often operating on implicit mandates; however, corporate law imposes formal mandates so that ratification may officially occur. 85. Ratification by a Statutory Meeting before Registration. In companies that will appeal to the public for funds or those composed with a stipulation of contributions in kind or granting individual advantages, a general statutory shareholder’s meeting will have to be organized for the ratification of agreements. In this case, the methods of ratification of agreements vary slightly from the annex technique and the special mandate, the mandate not being in any way exclusive to the general shareholder’s meeting. In these two particular scenarios, which are the initial public offering and the issuance of preferred rights, acts and agreements taken on behalf of the company under formation may be adopted by the company, after its establishment, “under the condition that they be approved by the ordinary shareholder’s meeting, under the conditions described in this present uniform act for each type of business organization, except for a contrary clause within the bylaws. The meeting must be completely informed on the nature and the importance of each of the acts and obligations for which ratification is proposed. Individuals having fulfilled said acts and obligations do not participate in the vote and their voices are not counted for determining a quorum or a majority” (Art. 108, AUSC). Ratification by special assembly assumes that the order of the assembly’s day contains “a special resolution” on the ratification of certain acts (Art. 109, AUSC). 86. Ratification by a Special General Assembly after Registration. If the annex technique or the special mandate technique has not been respected, or their formalities not strictly followed, or if the shareholder’s meeting did not allow for automatic adoption, it remains possible for the company to adopt certain obligations by putting in place a method of ‘do-over’, which is undertaken by the special general assembly (Art. 112, AUSC). This assembly will be responsible for all the acts occurring before registration that were not adopted. It is the only possible method after a corporation has been registered because, from this moment on, the will of the associates is expressed through the general assembly.

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International Arbitration and Corporate Law This form of ratification has several advantages. It responds to a practical need to transfer all obligations taken on behalf of a corporation. It also spares the interests of third parties (the corporation will be liable to them as a result of this ratification), without harming the collective interests of the associations, since the ratification expressed the agreement of the majority of associates by holding a general assembly. Except for contrary clauses within the by-laws, the ratification is adopted by the majority of an ordinary general assembly applicable depending on the form of the company in question. The Uniform Act does not impose the specialty of the assembly but leads to specificity on the order of the day before voting on ratification after a company’s registration. In practice, it is useful to clearly identify the resolution relating to the adoption and clearly detail the obligations affected. The courts have not yet ruled on this point; it is truly necessary, nevertheless, to be prudent and to see if the holding of a special general assembly (including only a ratification on the order of the day) will be imposed. For texts that do not expressly go in this direction, such an obligation would be, without a doubt, harmful because it would impose an additional formality on a procedure that is already sufficient. Once the assembly has voted, the “associates having completed the said acts and obligations will not be able to participate in the vote and their voices will not be counted for calculating quorum and majority” (Art. 112, AUSC). This condition relating to the vote serves a dual purpose of protecting the third party and other associates against fraud or abuse by one of the founders. The requirement of an ordinary assembly of ratification also has an implicit but necessary consequence: it does not seem possible to acknowledge the ratification by a simple execution of an underwritten obligation before registration but not undertaken formally. The Uniform Act imposes a formality. If it is not followed, it becomes difficult to acknowledge that a company is responsible towards third parties who wish to hold it responsible for an underwritten act that was not formally ratified. Evolutions in the jurisprudence are followed in this regard. Substantive Requirements of Ratification 87. Constraints Relating to the Act or the Obligation Taken. Other than the fact that the corporation must be effectively registered for a ratification to occur (fault of other mechanisms will have to be used for the society in fact or, more certainly, a direction action against the signatory of the act), the ratification presupposes also that the underwritten act or the obligation fulfils certain conditions. These conditions are imposed because the ratification is an act heavy with consequences for the creditor (because the ratification operates retroactively by substituting the debtor) and for the corporation (because the act of an associate will definitively burden the company’s assets). Ratification is not only possible for acts or obligations, which are considered legal acts, but also for the simple fact of criminal responsibility. Without actual judicial acts or

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1  Incorporation of Companies manifestations of will (undertakings), ratification is not possible.14 Ratification can concern only one legal act concluded in the interest of the corporation and in the name of the corporation under formation. Only an act taken in the interest of a corporation is likely to be ratified; in other words, it must not be an obligation concluded in the personal interest of the associate who signed the act. The act must also be concluded in the name of the corporation under formation. This signifies that the third party must be informed of such a fact. It is for this reason that the obligation must clearly state that the obligation was taken in the name of the corporation under formation: it is, in effect, necessary to avoid the contracting party from a future substitution of the parties to the contract. Without any other information, the contracting party is supported in his belief that the only party to the contract is the person who signed the agreement.15 1.2.2

Modes of Nullities and Other Sanctions of Incorporation

88. OHADA law allows for the choice between modes of nullifying the incorporation, which signifies that the cases where annulment is appropriate are very precisely detailed. The Uniform Act allows for the reduced possibility of cases of annulment by increasing the civil and criminal responsibility of the founders. The basis of the regime of nullities is therefore offset by the increased responsibilities of the founders of the corporation. Another particularity of OHADA law relates to the texts concerning the modes of annulment (Arts. 242-256, AUSC); the totality of the cases of annulment and corporate law are all contained in a single Book 8. These rules will therefore apply to the cases relating to the acts of incorporation as well as those relating to the daily running of a corporation (“all acts, decisions, or deliberations,” Art. 242, AUSC).

14 Two situations may pose a problem. (1) Crimes and semi-crimes (for example, an act of disloyal competition by using a competitor’s client list or dismissal of an employee) will not be able to be placed under the responsibility of the company, but will remain attached to the person or persons who committed these acts. (2) The second hypothesis is that with actions in justice. If a corporation under formation is sued and it is never established, in principle the complaint delivered to a non-existent person is legally null and void. It should be noted in this case, as a precaution, to include in the complaint as well the founding associates and the person having signed the litigious act in question, to assure the validity of the complaint and the efficacy of the judicial action in place. 15 This logical rule is the result of legal mechanisms of obligations in which the substitution of the debtor is not possible without the consent of the creditor. Therefore, for lack of information of the third-party creditor on the true future identity of his co-contracting party, he can assume that this does not concern his debtor directly, knowing the person having signed the agreement. As an example, if an associate comes to sign a financing contract in the name of the corporation under formation, the creditor is able to believe that his debtor is the direct signatory of the act without which the ratification of this act would be opposable against him. This type of reasoning will be particularly useful when the corporation finds itself less soluble than the direct signatory because of financial difficulties that occur statistically often in the case of a new corporation.

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International Arbitration and Corporate Law 1.2.2.1 Annulment of Corporate Acts 89. No Annulment without a Text. The legal regime resulting from the Uniform Act is based, in essence, on the simple idea that there is no annulment without a legal writing. This is why Article 242 of AUSC emphasizes from the beginning of Book 8 that “the annulment of a corporation or all acts, decisions, or deliberations modifying the by-laws can only result from an express clause of the present Uniform Act or from texts detailing the nullity of contracts in general and the corporate contract in particular.” Sanctions vary depending on the conditions of formation of the corporation in question. Outside of this regime of annulment, corporate law contains many important clauses that are not sanctioned by nullity. But this does not mean for many that they can be put back into question without sanctioning the authors of the litigious acts. The Uniform Act very frequently uses the technique of non-opposability. As well, the terms of the by-laws contrary to certain conditions can be deemed null and void. This being so, the various causes of nullity cannot be found within the Uniform Act alone. Outside the general principles of law (notably concerning the fictitious corporation or fraud generally: legal fraud, fraud of creditor’s rights, fraud of the rights of the heirs or any other person), the Uniform Act goes back to contract law and the special corporate contract. The interest of this legislative method is that after a principle restrictive position relating to the recognition of a nullity, the legislator leaves the judge a large margin to determine and regulate the cases of fraud or of hindering the rights of individuals for whom the corporation’s incorporation would mean a criticized act. 90. The Situation of Acts, Decisions or Deliberations of the Corporation. This methodology clearly appears in areas concerning the nullity of ‘acts, decisions or deliberations’ of the corporation. In this case, it is expressly indicated that “the nullity of all acts, decisions, or deliberation not changing the bylaws of a corporation, can only result from an imperative clause of the current Uniform Act, texts regulating the contracts or the bylaws of a corporation” (Art. 244, AUSC). The judge will have to determine whether an imperative clause imposes the respect of a specific rule concerning acts modifying the by-laws. By way of a hierarchical effect, the judge will have to depart from the Uniform Act to determine whether some imperative rules may have been broken in light of these texts concerning contracts of by-laws. For acts “modifying the bylaws” (Art. 242, AUSC), the rule is a little different, because the nullity is not undertaken except in the case of a violation of “an express clause of the Uniform Act, texts regulating contracts of bylaws of a corporation.” The text of Article 242 of AUSC emphasizes that it concerns these “express” rules and not only “imperative” as for the acts not modifying the by-laws. The judge will only be able to rule on the nullity of an act modifying the by-laws if one precise rule is included in the Uniform Act, in the by-laws or in the texts relating to contracts. For acts not modifying the by-laws, the judge seems to have to determine whether or not a norm is in line with the public order and therefore

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1  Incorporation of Companies poses an elevated degree to make nullity a possibility. The evolution of jurisprudence in this regard will be extremely useful. 1.2.2.1.1 Scope of Annulment 91. The conditions of sanctions are variable in terms of a vitiating factor that tarnishes the corporation if it follows from a fundamental principle (the conditions of formation of a corporate contract in general or special law) or form. Substantive Annulment 92. The rules relating to the incorporation of a corporation are distributed between general law and special law. In this case, as in all contracts, each person confronted with an inquiry based on the annulment of a corporate contract must analyse this legal act through the classic prism of rules relating to consent and the validity of legal acts. 93. Influence of the Corporate Form. The annulment tarnishing the consent of a single associate should, in principle, lead to the annulment of the corporate contract. This logical answer in light of the law of contracts is not the same answer for corporate law. The Uniform Act distinguishes between corporations with limited or unlimited liability. In corporations with limited liability and in sociétés anonymes, “the annulment of a corporation can neither result from vitiating consent nor the incapacity of an associate, in so much as these do not affect all the founding associates” (Art. 243, AUSC). It can be deduced from this text that incapacity is only a cause for annulment if the cause of the agreement is the same for all the associates. In all other cases, the corporation will be considered validly formed. This inability to invoke annulment, which is explained by the limited liability of the associate, does not remain the same as the classical causes of annulment. Conversely, in a corporation without limited liability, annulment would result from the loss of consent or the incapacity of an associate. 94. Types of Vitiating Factors. The ways in which to distinguish whether consent is nonexistent or simple vitiated should be noted. In the case of a total absence of consent of one of the associates, which presents itself in practice rather rarely, absolute annulment of a contract occurs, with all the consequences that result from such a radical sanction. In the case of simple vitiated consent, either by error, deception or violence, the normal sanction is the relative annulment of the contract. In terms of capacity, the failure to respect these rules leads to annulment in the same condition as in terms of vitiated consent. 95. Normally, when annulment is decided, it must return the complainant to the state where he would have remained if he had never entered into the contract. The complainant must therefore be able to take back his contribution without contributing to the losses. However, if the corporation made profits before the annulment, the beneficiary of the annulment must be able to retain his share on the basis of the management of the business under the mechanisms of enrichment without cause. However, annulment of a

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International Arbitration and Corporate Law corporation upon the request of an associate creates, for his other co-associates, the effects of a simple dissolution and not of an annulment of the totality of the contract towards all because it is not retroactive. 96. Possible Regularization. Corporate law is a pragmatic law. It seems particularly inapt to allow an annulment for vitiating reasons based on one associate when all the other associates agree to continue the corporation while permitting the other original associate the difficulty of withdrawing or benefiting from a regularization mechanism. This is why it is taken from Article 248 of the Uniform Act that in the case of “annulment of the corporation or its acts,” its decisions or its deliberation based on vitiating consent or incapacity of an associate and when regularization can occur, each person having an interest can enjoin the incapable associate or whose consent was vitiated to regularize or create an annulment within a period of six months or risk debarment. The usefulness of this mechanism to enjoin from seeking an annulment is that it creates the possibility for the other associates to put in place alternative solutions to avoid the legal enforcement of an annulment. This regularization mechanism of annulment from one of the associates results from Article 249 of the Uniform Act, which notes that “the corporation or associate can present itself before a tribunal within the amount of time allowed by the preceding article (six months) each measure likely to erase the interest of the complainant, notably by the buying back of corporate rights. In this case, the tribunal may, either decide to annul, or make the proposed measures obligatory if these measures were previously adopted by the corporation within the requirements for modifying the bylaws (usually by decision of a special general assembly).” When associates decide to offer to buy back the associate’s shares, the associate “whose buyback of rights is asked may not participate in the vote” (Art. 249, Section 3, AUSC). 97. Rules for Opposing Annulment for Lack of Consent or Incapacity of the Associates. The Uniform Act states in Article 225 that neither the corporation nor its associates may use an annulment towards good faith third parties. However, annulment for lack of consent or for incapacity is opposable, even towards good faith third parties, by incapacity or by its legal representative or by the person whose consent was broken. 98. Purpose and Cause of the Corporate Contract. The Uniform Act implicitly leaves an important place for annulments based on the object or the cause of the contract, in a manner, which is found in Article 246 of the Uniform Act. According to this text, “an annulment action fails when the cause of the annulment ceased to exist the day that the trial court rules, except if this annulment is based on the illegal character of the corporate object” (Art. 246, AUSC). It seems self-evident in this text that illegality and immorality of the object, much like for the cause, leads to an absolute annulment of the corporate according to the methods outlined in general law. Additionally, the annulment of a corporation for illegality cannot be covered by an act of regularization because this fault is permanent. This is also why Article 246 of the Uniform Act maintains that an annulment

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1  Incorporation of Companies action based on the illegal character of the corporate purpose does not end when the cause of annulment ceases to exist on the day the competent trial court rules. Annulment of Form 99. A Regime of the Annulment of Form. The corporation is a formal contract in the sense that it assumes to produce the desired effects by the associates and notably the creation of a legal being in which the legal conditions imposed by the law are respected. In this regard, constituent formalism is a part of a more general movement to protect the contracting parties by returning to formalism when the acts in question are considered as leading to financial consequences and particularly important personal consequences. It is without a doubt this idea of the importance of the undertaken engagement that led the Uniform Act to maintain an appreciation for the annulment for lack of form upon the continuation of a corporation. In light of Article 245 only in the sociétés en commandite simple or en nom collectif, “satisfying publicity formalities is required under penalty of annulment of the corporation, the act, the decision or the deliberation, depending on the case, without which the shareholders and the corporation can inform third parties of this cause of annulment.” One must note that, in these two corporate forms, the protection of third parties by the solidarity of associates or their limited liability prevails over annulments of form so that the associates will not be able to use this to protect themselves from an eventual appeal. However, even in these corporate entities, “the court has the ability to not rule upon the annulment if fraud is not proven.” The text mentions the cases of non-fault or involuntary omission. 100. Regularization Principle. For other corporate forms, the Uniform Act goes much further. Article 75 states that “if the bylaws do contain all the requirements by this present Uniform Act or if a formality for the creation of the corporation has been omitted or irregularly implemented, each interested party may go before the competent jurisdiction, where the corporate headquarters is located, asking to order the regularization of the corporate charter. The public minister may take the same action.” 101. Regularization and the loss of the vitiating factor affect the corporation, creating an obstacle to an annulment proceeding. This regularization action has a statute of limitations of three years from the registration of the corporation or the publication of the act modifying the by-laws (Art. 251, AUSC). The annulment of a corporation being a very severe sanction for the corporation’s creditors, as well as the associates themselves, the Uniform Act describes a ruling allowing one to avoid the annulment. 102. Indeed, it is very clear that failing to complete all the required terms of the by-laws does not lead to the annulment of the corporation. An increased possibility of regularization is admitted. Firstly, Article 246 of the AUSC emphasizes that the annulment action is terminated when the cause of the annulment ends. Likewise, the court faced with an

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International Arbitration and Corporate Law annulment action may, even on its own, create a delay in order to cover the annulment. Additionally, the court cannot rule on the annulment less than two months after the date of the summons to appear in court. If, to cover the annulment, an assembly must be gathered and it is justified by a normal calling of this assembly, the court may state, by a judgment, the necessary delay so that the associates may make a decision (Art. 246, AUSC). If, at the end of this period, no decision has been made, the court may rule on the demand of the more diligent party. 103. The Possibility to Anticipate an Annulment Action. When annulment of the acts, decisions or deliberations of the corporation is based on the violation of publicity rules, each person having an interest in the regularization may, by an extrajudicial act, by a registered letter, enjoin the corporation to proceed within thirty days from the enjoinment (Art. 250, AUSC). On default of regularization within this period, each interested party may ask the president of the competent jurisdiction, within a brief period, to appoint an agent charged with carrying out the formality. The spirit of the text is therefore to allow the regularization of the constituent acts rather than attempt to give a basis to the complainants to be able to begin an annulment action based on lack of form. 1.2.2.1.2 Method of Annulment 104. Annulment of the corporate contract is considerably weakened by the Uniform Act, as demonstrated by the mechanisms of ratification or regularization evoked above. But this preference for the creation of the corporation and scaling back the role of annulment is also found within the statute of limitations, appeals and non-retroactivity. Statute of Limitations 105. A Summary of Statute of Limitations. The uniform law maintains a short statute of limitations in order to eliminate as quickly as possible annulment actions. In the goal of achieving annulment of the corporate contract or its effects, the Uniform Act maintains a summary regime of an annulment action of the corporation or its acts (Arts. 251-254, AUSC). Actions for annulment of a corporation are limited to three years from the registration of the corporation unless the annulment is based on the illegality of the corporate object and under the condition of debarment mentioned in Article 248 (specific mechanism of regularization for lack of consent or incapacity, see supra, § 97). 106. The Specific Regime of the Action in Third Party Opposition. An action in thirdparty opposition is open to any person by Article 252 of the Uniform Act, in regard to decisions resulting in the annulment of a corporation. In this way, this action is only allowed during a period of six months from the publication of these decisions in a legal journal of the jurisdiction’s seat. Even in the case where an annulment of a corporation is decided, it is still possible to attempt to regularize the situation by creating a third opposition during

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1  Incorporation of Companies the reduced period being added to that which should constitute the end of any action being able to block regularization mechanisms. Non-retroactivity of the Pronounced Annulment 107. Specificities of Annulment in Corporate Law. If corporate law strictly followed the law of obligations, a corporation that was declared void should not be able to incur any other legal obligations. The decisions announcing the annulment should make the corporate contract disappear, and things should return to the same state as if the corporation has never existed; each associate taking back his contributions, the annulment would be opposable to all third parties. But things are different because the life of a corporation is based on a contract that is considered valid until the annulment judgment. For the past, the effects of the corporate contract are maintained although they will disappear in the future. It is not a mechanism of non-existence that is applied, nor an absolute annulment, but rather a relative form of non-retroactive annulment. It is for this reason that the annulled corporation carries no retroactivity, but produces the effects of a de facto corporation until its liquidation. As well, the factual relation having existed between the associates generates a community of interest until the day the annulment is pronounced. The principle of equity leads one to consider that this community of interests has been maintained because only the corporate charter has been cancelled, although its object and its goal are legal. 108. The underlying idea of this solution to equity is less that of a respect for the appearance formed by the corporate charter of the cancelled corporation than that of a protection of the associates in regard to others. In other words, corporate law adjusts a regulating mechanism allowing for the avoidance of an associate’s enrichment at the suffering of others. As well, if there are profits to share, these will be distributed between all of the associates. The corporation being fundamentally conceived, in its essential mechanisms, like an instrument made for generating profits, it would be absolutely abnormal if one of the associates were better treated than he would have been if the corporation had been normally made. For third parties, the annulment of a corporation would also have disastrous effects such as erasing the contracting party as a legal entity and would make it impossible to exercise his rights directly against the person having entered into the contract. In other words, the loss of the guaranties is related to the existence of a patrimony and corporate capital. 109. Incidences of Non-retroactivity. The Uniform Act adopts this pragmatic solution conforming to the mentioned principles and stating in its Article 253 that once an annulment has been carried out, it ends, without retroactivity, the execution of the contract. It therefore leads to the dissolution of the corporation and, for multiple-person corporations, their liquidation. The Uniform Act adopts as well the theory of a de facto corporation. The annulment of the corporation, in principle, only creates the effects of dissolution.

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International Arbitration and Corporate Law This balanced regime will allow an equitable redistribution of rights and obligation of each in relation to his situation all while guaranteeing the protection of third parties by putting in place liquidation mechanisms or dissolution. 1.2.2.2 The Reinforced Responsibility of the Founder and First Managers 110. To temper a system of balanced annulments and protection of the interests of all the intervening parties to corporate activity in the case of annulment, the Uniform Act puts in place mechanisms of liability, reinforced in regard to those that are originally annulled to assure eventual affected third parties or associates the workings of a reparatory action. This is why the first responsibilities fall to the first associates, the founders and the first corporate managers. The non-respect of information measures and publicity of the corporate charter is also sanctioned by several texts within the Uniform Act. These sanctions are civil and criminal, in order to ensure the dual function of regulating behaviours that could harm the collective public interest. 1.2.2.2.1 Civil Liability 111. Civil Liability of Founders and Original Managers. The direct civil penalties toward original associates is often an indicative tool because it leads to personally recognizing the liability of individuals who generally create a corporation to create the advantages related to the sharing of risks of corporate life. The direct civil sanctions of the founders and first managers are first mentioned in Article 75 and the following articles of the Uniform Act. As well, Article 78 maintains that “the founders, as well as the first members of the managing bodies, direction or administration are firmly responsible for the prejudice caused either by the default of an obligatory term in the bylaws, or by the omission or the irregular accomplishment of a formality for the certificate of incorporation”. The members of the managing, directing or administrative bodies risk the same liabilities in the case of modifying the by-laws (Art. 76, AUSC). In these two cases, it should be noted that the liability risked is accompanied with a longer statute of limitations than that of a corporate contract annulment. In fact, in these two leading cases, “the action for liability is limited to five years to be counted, depending on the case, from the day of the corporation’s registration or the publication of the act modifying the bylaws” (Art. 80, AUSC). 112. Acts Not Adopted by the Formed Corporation. The founders, first managers and any person having signed acts on behalf of the corporation under formation fall under a mechanism of specific responsibility. Therefore, Article 110 of the Uniform Act notes that “the acts and the obligations which were not adopted by the corporation, in the conditions mentioned by the present Uniform Act, are non-opposable against the corporation and people who have underwritten them are held responsible indefinitely by the obligations

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1  Incorporation of Companies they undertook”. This protection mechanism of third parties in the case of the signing of acts on behalf of the corporation under formation continues to produce these effects in the corporation risks annulment. It concerns another useful instrument at the disposition of third parties who would wish to make use of their rights and obtain reparation for the civil plan that it will not be necessary to neglect because it allows one to hold the signatories directly responsible. 113. The Specific Responsibility for Contributions in Kind. Finally, in another area, and concerning contributions in kind, the Uniform Act expects that partners can proceed to an evaluation by themselves, notably when the appointing of an agent for the contributions is not required (on the matter of contributions, see supra, § 39). Additionally, even when the appointment of a commissioner of contributions is required, they can refuse to maintain the value put forth by the expert and proceed themselves to do another valuation. In these two cases, the partners are united and indefinitely responsible in regard to third parties of the value assigned to the contributions and the particular advantages mentioned.16 1.2.2.2.2 Criminal Liability 114. A Specific Criminal Regime. The Uniform Law maintains certain specific criminal sanction mechanisms for the violation of certain behaviours contrary to the Uniform Act. As such, to the extent that criminal repression presumes putting in place instruments of public force of the party States, it is necessary to pass, to open up these sanctions, by the filter of the national law of the different States. Certain infractions are connected to the formation of the corporation. If certain States did not properly transpose these dispositions in their national law, the enforcement of specific criminal sanctions could cause practical problems. As such, in so far as infractions are more generally criminal abuse of confidence or fraud, a victim could have recourse to these mechanisms of general criminal law to sanction a corporate behaviour, by referring to the Uniform Act. 115. Sanctions Related to the Emission or the Negotiation of Corporate Shares. These sanctions specifically involve SA and do not concern in a general manner all forms of business organizations. Also, it “is indicative of a criminal infraction, the fact, for the founders, the CEO, the Chairman, the general administrator of a SA to issue actions before the 16 For the SARL, Art. 312, Section 5 maintains that “for lack of an evaluation made by a contributions commissioner or if it occurred outside this evaluation made of contributions in kind and particular advantages mentioned during a period of five years”; for the SA, Art. 413 states in a more general manner that “the founders of the corporation against which the annulment of the constituent assembly is enforced and the administrators or the general administrators, depending on the case, in function of the moment where it has been risked can be declared fully responsible for the resulting damage to third parties from the annulment of the corporation”.

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International Arbitration and Corporate Law registration or at any other moment when registration is obtained by fraud or that the corporation is irregularly formed” (Art. 886, AUSC). Likewise, risking a criminal sanction, those who have deliberately negotiated: “(1) nominative shares which do not retain the normative form until their liberation; (2) shares of contribution before the expiration of the time period during which they are not negotiable; (3) shares of cash for which the deposit of a quarter of the nominal value has not occurred” (Art. 888, AUSC). These criminal sanctions repress, specifically, the action of selling goods that are not legally in commerce, through the law imposing a limit on their negotiability for a determined amount of time. 116. Sanctions Specific to the Constitution of the Corporate Capital. The creation of a corporation supposes contribution for which it is useful to ensure that they have been truly realized and that the emitted documents that corroborate the effective deposit have been validly established. It is to avoid scams based on the production of false documents or the formalization of documents apart from the affirmations or false information that the Uniform Act contains specific criminal sanctions in terms of creating and realizing contributions. It is those who do the following who are subject to criminal sanction: “(1) knowingly, by the establishment of the notary declaration of subscriptions and deposit or the certificate of deposit having affirmed sincere and true subscriptions which they knew false or will have declared that the funds which were not definitively placed at the disposition of the corporation were effectively deposited; (2) will have given to the notary or the depositor, a list of shares or notes of subscription and deposit mentioning false subscriptions or deposits of funds which were not definitely placed at the disposition of the corporation; (3) knowingly, by simulation of subscription or deposit or by publication of subscription or deposit that there does not exist or by other false facts, will have obtained or tried to obtains subscriptions or deposits; (4) knowingly, to provoke subscriptions or deposits will have published the names of the designated people contrary to the truth as such or attaching to the corporation any title; (5) those who, fraudulently, will have attributed to a contribution in kind a value superior to the true value” (Art. 887, AUSC). The majority of cases of dishonesty in terms of the subscription of a deposit, the evaluation or the liberation of the funds or the replacement of goods constituting contributions are targeted by this specific text, which guarantees a judicial security for the investors and the potential partners.

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2

Operation of Companies

117. Once formed, every corporation begins to move and starts to be used as a legal subject and to enter into the fabric of commercial relations and necessary legal activities for its productive activity. Each corporation, whatever its form, faces certain problems that make up the normal events of a corporation’s life. It is these events that are worthy of study, without necessarily going into the details of each given situation, in order to appreciate the major principles of corporate operations. This chapter will invoke the actors of corporate life – the managers and the shareholders – and the determination of the corporate result within the evolutions of the corporation by transformation, dissolution or liquidation. 2.1

Actors of Corporate Operations

118. The two major actors in corporate daily life are the managers and the shareholders. They are presented, in the classical analysis of the corporation, as principal and agent, one giving power to the other to represent them in making and maintaining the corporation’s operations, under the control of the shareholders gathered in general assembly. The modern theory of corporations often adds to this plan, influenced by concepts from corporate governance, the stakeholders such as the employees, the creditors or the public authorities. This other dimension of the corporation will not be discussed because it makes up, without a doubt, an autonomous subject that could not be addressed without invoking too many questions of special law (labour law, tax or public law) which are not addressed in detail in this chapter. 2.1.1

Corporate Managers

119. There cannot be a corporation without a managing body. The legal entity not having the ability to express itself and the directors not being able to gather each day to handle the daily management questions, the naming of an agent is an essential step in order for the corporation to operate. Applying the mechanism of the mandate, the managers named by the shareholders may be dismissed by these same shareholders. They maintain their powers from these same shareholders and represent them in internal as well as external relations. Under the same theory as the agents, the managers equally hold responsibility if they cause harm during the exercise of their responsibilities. 2.1.1.1 Appointing Corporate Managers 120.  Who Leads? The appointment of corporate managers is one of the shareholders’ powers. The appointment methods vary from one corporation to another. Generally, the

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International Arbitration and Corporate Law smaller the size of the corporation and the fewer the shareholders, the more the manager tends to be the principal director or the leader of the business. Capital and management are very close in this type of configuration. Conversely, in the SA with extensive capital, the appointment of process managers is based more on the know-how of a professional than in a susceptibility of management to be able to assure the optimal operation of a corporation in terms of criteria that vary from one corporation to another (activity sector, type of experience required, languages spoken, education, etc.). It is therefore less about the amount of corporate capital held than the professionalism of the candidate that will allow him to be maintained as a corporate agent. Except in rare instances, the process of revocation deals with a principle of parallelism of forms with that of appointment. This power is stronger than holding shares between different individuals because, in this case, the absence of concentration of capital by the manager leads to the putting in place of other criteria, relating to the performance of the manager, which leads to the exercise of a controlling power by the shareholders. 121. One must also note that as seen in other legal systems, the Uniform Act does not maintain a uniform terminology in relation to the managers. The manager is in fact a multiform being because he can fulfil certain functions. As well, Article 121 of the Uniform Act speaks indifferently of “management bodies, direction and administration” without further clarification. Yet, following the corporate form, the manager can be the head manager (SARL), the general administrator, president of the administrative council, chief executive officer, administrator, general director or co-general director. However, he cannot be the vice president because this function is not recognized in OHADA law.1 This variety of titles conceals a similar variety of powers and a different approach to responsibility. 2.1.1.2 Managers’ Powers 122. The Role of Corporate Interest and Purpose. Corporate direction bodies have, in principle, all of the power to act in the name of the corporation and in its interest. These managers are responsible for ensuring the mission of each corporate leader, to know the management, production management and commercial development, financing, the treasury and auditing, the adherence to regulatory provisions, etc. In other words, the managers are responsible for the corporation not only in legal terms but also economically. They assume these responsibilities on a daily basis under the period control of the shareholders. This increase of managers’ powers does not mean that they hold absolute power. The managers must act with regard to the competences of the different bodies of the corporation, notably the administrative council and the general assembly. In terms of the by-laws and 1

Case CCJA n 02/2000/EP, 26 April 2000, Recueil de jurisprudence de la CCJA, n spécial, January 2003, p. 73; OHADATA J-02-03.

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2  Operation of Companies the certificate of incorporation, the managers must act within the limits of the corporate object and in the corporate interest, under penalty of several types of sanction. A revocation sanction by the shareholders is always a possibility for violating the corporate interest, as well as a civil sanction or criminal fault. 123. Different Degrees of Corporate Engagement with Regard to Third Parties for Ultra Vires Acts. Corporate law maintains a differentiated protection of third parties whether the corporation has limited liability or not. In the internal order, the managers have, theoretically, all the powers to engage the responsibility of the corporation. However, in terms of third parties, the question presents itself of going beyond the corporate purpose. In corporations with limited liability, the principle is that of corporate engagement even in the case of going beyond the corporate purpose set forth by the managers. This rule is very simply explained by the fact that third-party victims of violating the corporate purpose, who in theory should not be able to engage the corporation, will have no recourse against the shareholders themselves because of this limited liability. This is why the corporation assumes the responsibility for acts passed by the managers to ensure a legal security of third-party contractors. However, the publication of the by-laws and the public availability to third parties by the usual means is not sufficient to raise the theory of corporate engagement towards third parties for all of the corporate managers’ acts even if they are outside of the corporate purpose. This principle is very well summarized by the Uniform Act when it clarifies that “the corporation is engaged by the acts of its managing body, its direction and administration which do not comply with the corporate purpose, so long as it proves that third parties knew that the act was outside of the corporate purpose or that it was not possible to ignore this fact given the circumstances, without this, the publication of the bylaws is sufficient to prove this knowledge” (Art. 122, AUSC). This corporate engagement method with respect to third parties applies completely in limited liability companies. This rule is, however, slightly different in terms of the methods used for corporations without limited liability. In this case, the legal protection of third parties varies. The managers can only engage the corporation by acts serving the corporate purpose because the shareholders undertake greater risks, which support protecting them from inopportune decisions of the managers. Since acts passed outside of the corporate purpose do not engage the corporation’s responsibility, third parties must be much more prudent and know the extent of the corporate purpose when they enter into an agreement. Also, in a société en nom collectif, “in relations with third parties, the manager engages the corporation by the acts in agreement with the corporate purpose” but “clauses within the bylaws that limit the powers of managers granted by this article are inoperative against third parties” (Art. 277, AUSC). The rules are therefore slightly different for third parties in a corporation without limited liability.

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International Arbitration and Corporate Law 124.  Absence of Clauses Limiting Powers. The by-laws of the general shareholder’s meeting may add restrictions to the manager’s powers (Art. 123, AUSC). For example, some types of contracts or operations may be subject to preliminary shareholder authorization or by the administrative council, often limited to predetermined, financial engagements. Nevertheless, such restrictions within the by-laws are non-enforceable against third parties contracting with the corporation (Art. 121, AUSC). They will have no effect between managers and shareholders if the third parties act in good faith. In other words, the corporation cannot use these terms to re-examine acts signed with third parties. The good faith condition imposed in order to oppose an act passed outside of the corporate purpose is not emphasized in terms of by-laws limiting powers, and the Uniform Act indicates that “each legal limitation of their powers by the bylaws is inoperable against third parties” (Art. 121, AUSC), without mentioning any condition of good faith. In other words, this demonstrates that the corporation will be engaged even if third parties have knowledge of the by-laws limiting powers and the corporation always has the possibility to incur the civil responsibility of the manager if the act causes it harm. However, even if the texts do not clarify this, it does not seem possible to forbid third parties to use a provision of the by-laws to contest an act. In fact, this rule is meant to protect third parties and does not logically have to bring them harm. This is why third parties must be able to invoke the terms of the by-laws limiting powers to contest an act, if they so wish. 2.1.1.3 Manager’s Liability 125. The direction of corporation is a difficult art for the manager. He must be capable of managing his teams while trusting them, without allowing them to take part in too many dangerous activities that may, in the end, lead to the manager’s eventual liability. The Uniform Act specifically regulates two types of liabilities of managers: a civil liability and a criminal liability.2 In addition to these two classical categories of liability, there is also a tax liability. This type of responsibility is not specifically described within the Uniform Act, due to a lack of clauses relating to this matter within the laws of the individual Member States. It is necessary, therefore, to precisely study the tax legislation of each country involved to see to what extent the manager’s tax liability can be used for faults of the corporation in terms of taxes.

2 The terms applicable to the liability of managers is found mainly in Arts. 161-172, 330-332, 740-743 and 885-905 as well as Arts. 180-215 of the Uniform Act relating to the Bankruptcy Proceedings to Purify Liabilities (AUOPCAP).

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2  Operation of Companies 2.1.1.3.1 Civil Liability 126. Managers can be held responsible for inappropriate behaviours either towards third parties or the corporation itself.3 The Uniform Act contains general principles as well as forms of special liability. The general terms of common law are meant to apply in very diverse situations. It is for this reason that they do not define the particular actions that could give rise to the liability of managers, but are formulated very succinctly, simply making reference to faults committed in the exercise of their jobs or violating the legal or by-law provisions. General Principles of Liability 127.  Managers Who Are Affected. Without discussing the corporation’s eventual liability, the managers can be individually held liable for their responsibilities, or for the violation either of the law applicable to the corporation or the by-laws (Arts. 161, 330 and 740, AUSC). In fact, “each corporate manager is individually liable towards third parties for the faults he commits in the exercise of his responsibilities” (Art. 161, Section 1, AUSC). The terms of the Uniform Act contain a particularly large vocabulary (except in describing the exercise of a job) meant to allow judges to take into consideration factual situations that vary greatly. The terminology maintained by the text is also slightly ambiguous in so far as it creates a comparison between Articles 161 and 162 that the term third party may include corporate shareholders and partners, and therefore these latter suffer a distinct damage from that which the corporation may incur (Art. 162, AUSC). OHADA law seems to have a softer vision of the individual justifying a prejudice as a distinct fault from the common fault of the directors. The reparation of this harm could be individualized as soon as the shareholder demonstrates that he is not in the same situation as the others. The evolution of this jurisprudence will be very important in this matter. It is already possible to consider some examples. Consider the case of embezzlement by a manager of dividends that should have been given to a shareholder. As well, the fraud of minorities under the guise of a real deduction of capital in order to entice them to sell their shares at the lowest cost and make a good financial transaction, in a personal interest or for the account of a third party who would have requested the profit. 128. A Management Error. The texts do not clearly define what would consist of management error. Violating the law or by-laws can cover a large variety of situations. This being so, it is not doubtful that a manager could be held liable who entered his corporation into

3 The major terms concerning the liability of managers applicable to all corporate forms are found in Arts. 161-172. The terms specific to the SA are Arts. 738-742, and for the SARL, Arts. 330-332. For some main commentaries on the liability of managers, see M. Emien Miessan, L’administration et la direction de la société anonyme de type nouveau issue de la réforme du droit des sociétés commerciales applicable dans la zone OHADA, OHADATA D-07-06; W.J. Hgoue, La mise en oeuvre de la responsabilité des dirigeants de sociétés anonymes en droit OHADA, OHADATA D-05-52; B.Y. Meuke, Brèves observations sur le risque juridique du mandataire social dans l’espace OHADA, .

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International Arbitration and Corporate Law costly financing schemes that he knew ahead of time would not be able to be reimbursed; this diversifies too quickly the corporate action causing the corporation to lose its bearings and limiting the traditional capabilities of the corporation, or it would demonstrate a lack of interest in the management of the corporation. It is also possible to invoke the deposit of excessive amounts in terms of the financial capacity of the corporation, negligence by appointing notably incompetent individuals with a lack of experience (too young or family members without any technical knowledge) to jobs with responsibility or failure to respond to a situation, for example, failing to make payments. 129. Liability towards Third Parties or Shareholders. The manager does not necessarily engage his individual liability as the person having ordered the critiqued decision. In fact, when several managers take part in the same damaging facts, they engage their collective responsibility towards third parties. Nevertheless, the contributory relationship, which can be found between them, is set by the court, which may determine a different part for each of the implicated managers in the reparation of the damage, in terms of his level of implication in the present prejudice (Art. 161, Section 2, AUSC). This category of liability is subject to the delay of rescission of general corporate law, either a statute of limitations for the individual action of three years from the date of the damaging facts or, when the fact has been concealed, from the date of its discovery (Art. 164, AUSC). The Uniform Act does not specifically state that the fact must be concealed. This being the case, in its most accepted interpretation, the notion of concealment returns to the idea of an intentional element on the part of the individual who tries to conceal from the knowledge of another that which he would have objectively known. As well, a distinction can be drawn from this type of representative. For a third party, outside of the corporation, the access to information from the beginning of the statute of limitations or the fault is more difficult. It would seem logical that researching an intentional element of concealment imposes too strict a requirement. However, for the shareholders, those who have access to the records of each exercise, annual reports of the managing bodies and have the ability to ask questions or to initiate resolution with the assembly, the principle should be that of object revelation by the authorization of the accounts in general assembly. It is therefore only when the manager intentionally omits information or presents it in a manner that could not garner suspicion that the criteria of concealment would be fulfilled, allowing the alteration of the statute of limitations to three years. 130. Corporate Liability. Each manager may also be held individually responsible to the corporation itself. This liability is likely to occur for faults committed in the exercise of his responsibilities, for violating the terms of the Uniform Act relating to the corporation or provisions in the by-laws (Arts. 165, 330 and 740, AUSC). The statute of limitations for the liability action and the division of responsibility between the managers will be the same as for an action initiated by a third party or a shareholder as an individual prejudice (Art. 165, Section 2; Arts. 170, 330, 332, 740 and 743, AUSC).

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2  Operation of Companies 131. Exercising Corporate Action: Ut universi and Ut singuli Actions. In principle, the managers initiate the corporate action themselves (Art. 166, AUSC). According to the well-known formula, this is the corporate action ut universi. However, it is very often the case that the managers do not begin the action themselves, in so far as this could lead to their personal liability for questionable management acts. This is why, when the action is initiated ut universi, new managers who wish to question the decisions of their predecessors often bring forth the action. However, even in this case, initiating the action is not invariable because new managers may have their own reasons not to bring forth such an action. As such, if a manager should fail to meet this obligation, the shareholders may themselves initiate this action, under certain conditions. The corporate action is therefore brought ut singuli and the fees related to this action “are paid by the corporation” (Art. 171, AUSC). It is a very good thing that the corporation takes responsibility for these charges because it prevents less fortunate shareholders from becoming victims of other shareholders who wish to abuse their economic and management power. Article 167 states that this action may be filed by one of several shareholders “after the competent bodies have been notified within thirty days”. Indicting the competent bodies is a preliminary condition that judges strictly apply and highly respect.4 In certain corporation forms, the law clearly qualifies the initiation of this action by several shareholders. As well, in an SA, shareholders representing at least 5% of the corporate capital, individually or collectively, may initiate the corporate action in the corporation’s name against one of several administrators or the general administrator (Arts. 167 and 741, AUSC). In an SARL, shareholders representing at least 25% of the shareholders or holding at least 25% of the corporate shares may initiate, individually or collectively, a corporate liability action against a manager (Arts. 167 and 331, AUSC). 132. Ban on Limiting Corporate Action. Articles 168, 331 and 742 of the Uniform Act declare void any clause in the by-laws that subordinates the use of corporate action to the opinion or the preliminary authorization of the assembly or that declares the renunciation of this act. Additionally, Articles 169, 331 and 742 of the Uniform Act forbid any decision of the general assembly or the managers that would quash any such action. 133. The Individual Action. The use of corporate action does not prevent a shareholder bringing an individual claim for damages against the corporation. In this case, the shareholder will simply have to prove that his individual damages are distinct from the collective damages of the shareholders, as explained above (see supra, § 129).

4

CA Ouagadougou, n 40, 2 May 2003, Jacques Firmin Truchet c/ Jean Pascal Kinda Sté Jeux J.P. Sarl, OHADATA J-04-365.

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International Arbitration and Corporate Law Specific Rules on Certain Infractions 134. Breach of the Corporate Articles. There are many specific cases where the liability of the managers may be found under special breaches clearly mentioned within the law. There are notably specific rules in terms of the corporate charter that concern the liability of the manager for: annulment of constituent assemblies (Arts. 256 and 413, AUSC); over-evaluation of a contribution in kind that creates a false view for third parties of the corporation’s assets, allowing third parties to hold the managers liable for five years (Arts. 312 and 409, AUSC) or failing to include an obligatory clause within the by-laws, either omission or irregularly accomplishing the required formalities for creating a corporation (Art. 78, AUSC) or modifying the by-laws (Art. 79, AUSC), which also has a statute of limitations of five years from the date of the corporation’s registration or the publication of the act modifying the by-laws (Art. 80, AUSC). 135. Regulated Agreements. The board of directors and the general assembly of shareholders must preliminarily approve any agreement between a corporation and one of its administrators or managers, unless it is shown that this agreement was made within the normal operations of the corporation and under normal conditions, meaning within the corporation’s usual activity. The same provisions apply to conventions to which the corporation is a party and where an administrator has a direct interest, which could also result from the fact that the manager is also an administrator of another corporation party to the agreement. When such an agreement enters into force without the preliminary authorization of the administrative council or when the general assembly refuses to accept it, the concerned administrator, and eventually the other members of the administrative council, may be held liable for all harmful consequences for the corporation (Arts. 443 and 444, AUSC). The same clauses are equally applicable to an SARL (Art. 350, AUSC) and concern its shareholders also. 136. Management Breaches That Lead to Liquidation. Outside of specific, criminal infractions, the liability of managers can be increased if a fault leads to a corporation’s liquidation. The Uniform Act of Bankruptcy Proceedings discusses this type of liability, which states that one or several corporate managers may be required to pay all or a part of the corporate debts or may be declared in personal bankruptcy. This specific liability has an autonomous system.5 The bankruptcy of a corporation may incur three large categories of liability for the managers: payment of liabilities, extension of the procedure or personal bankruptcy. First, when assets are not sufficient to pay a corporation’s liabilities and poor management of the corporation resulted in this insufficiency of assets, the competent jurisdiction may, either at the request of the trustee or sui generis, decide that all the corporation’s debts will 5

For a specific summary, see B. Martor et al., Le droit uniforme africain des affaires issu de l’OHADA, Litec, 2nd ed., 2009, § 917-938.

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2  Operation of Companies be supported in whole or in part by all the managers or only a few (Art. 183, AUOPCAP). Secondly, in the case of extending the procedure, the court will apply bankruptcy proceedings or liquidation of assets of a legal entity to the managers declared personally in bankruptcy or liquidation of assets in specific cases (Art. 189, AUOPCAP).6 If the managers do not settle the debts of the legal entity for which they are responsible, in the case of being sentenced to payment of liabilities the competent authority may also order the bankruptcy of liquidation of assets of these managers. Thirdly, managers may also enter into personal bankruptcy (Art. 194 et seq., AUOPCAP). This sanction occurs only in particularly grave matters included in the Uniform Act relating to a manager’s culpable behaviour (Art. 196, AUOPCAP). 2.1.1.3.2 Criminal Liabilities 137. A Specific System. Article 889 and the following of the Uniform Act define infractions that give rise to a manager’s criminal liability. It must be noted that determining the sanctions attached to these infractions belongs to the national legislature of each Member State, which seems logical since this concerns a matter relevant to the States’ regulatory powers. It must also be emphasized that all the Member States did not legislate after the Uniform Act entered into force and that certain punishments may also not be specifically defined within the national legislation of each Member State. Using analogy, the victim will be able to, using OHADA law, include one infraction or another in a large frame, notably abuse of confidence or fraud. 138. Infractions Sanctioned for Misuse of Corporate Assets. There are several criminally sanctioned infractions, namely distribution of fictitious dividends (Art. 889, AUSC); publishing or presenting the shareholders with an unfaithful image of the exercise’s operations, the corporation’s holdings or financial situation (Art. 890, AUSC); the misuse of the corporation’s assets or debts; going against the corporation’s interests for personal gain or to favour another legal entity where the manager has a direct or indirect interest, also called abuse of corporate assets in other legislation (Art. 891, AUSC) and deliberately preventing a shareholder from participating in a general assembly.7 139.  Infractions Relating to Capital Operations. In terms of increasing capital, infractions can be committed only when issuing shares or cutting shares; before the establishment of the deposit certificate; failing to respect the preliminary requirements of increasing capital; failing to free the formerly underwritten corporate capital; before

6

7

The extension is enforced by Art. 189, AUOPCAP, if they exercised a personal, commercial activity under the guise of a legal entity; if they used credit or corporate assets as if this credit or these goods had been their own or if they abusively pursued their personal interests, a deficit policy that could only lead to the legal entity’s inability to make payments. Art. 891-3, in the revised AUSC.

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International Arbitration and Corporate Law the issuance of new shares corresponding to contributions in kind have been compensated for at least a quarter of their nominal value or, where necessary, the entirety of the emission premium having been paid at the time of underwriting (Art.  893 and 896, AUSC). Not allowing shareholders to take advantage of their preferential rights proportional to the amount of their shares is also sanctioned. This will be the case when: this law has not been erased by the general assembly or the shareholders have not renounced it; the shareholders do not receive twenty days to respond, which is considered a breach committed in issuing the non-underwritten shares to existing shareholders, as well as communicating erroneous information in the reports presented to the general assembly called in order to approve the renunciation of preferential rights. These acts are considered criminal infractions (Arts. 894 and 895, AUSC). Managers may also incur criminal sanctions for cancelling a reduction of capital while knowing that the equality between the shareholders was not respected or without having communicated the capital reduction plan to the auditors 45 days before the convocation of the general assembly to authorize this operation (Art. 896, AUSC). 140.  Disruption of the Statutory Auditor’s Work. Auditors carry out necessary responsibilities in the corporate governance and regularization in OHADA law. It is one of the elements that protect the quality of information given to the shareholders and the trustworthiness of accounts presented to third parties and shareholders. This is why the following are also considered criminal infractions: fraud relating to the appointment of auditors, when this is required by the law, or by the general assembly of shareholders (Art. 897, AUSC); obstructing the auditor’s verification of accounts and withholding useful information from the exercise of their responsibilities (Art.  900, AUSC). 2.1.2 Shareholders 141. By definition, the quality of shareholder changes depending on the personal situation of the shareholders and the corporations in which they have chosen to invest. This being the case, whatever the form of corporation, shareholders have a certain number of fundamental attributes that do not change. These rights, which are inherent to the quality of a shareholder, split up differently when titles are broken up. 2.1.2.1 Shareholders’ Rights 142. Shareholders have two fundamental rights in the corporate from which they acquire shares. First, the so-called political rights, or extra-pecuniary rights, which principally relate to the manner in which shareholders may express their opinion in the context of the corporation’s daily life and, also, financial and patrimonial rights.

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2  Operation of Companies 2.1.2.1.1 Political Rights 143. The Extent of Political Rights. Authors often use the metaphor of political science to compare a corporation to a democracy, where the general assembly would be the speaker or exercise the voice of the shareholder’s citizenship. These political rights cannot be taken from the shareholder against his will. The quality of shareholder remains because it derives from the property right the shareholder acquires from the shares he possesses. Also “each shareholder has the right to participate in collective decision. Any clause in the bylaws contrary to this is deemed null and void” (Art. 125, AUSC). This right to participate in the collective decisions of the corporation originates from two distinct rights. Before the assembly, the shareholder has a right to be informed vis-à-vis the corporation’s accounts and politics. During the assembly, the shareholder has the right to participate in strategic decisions that include the right to attend assemblies and also the right to vote. This active phase of the assembly allows the shareholder to share his point of view and exercise his role in the management that may extend, in the most delicate cases, to the dismissal of the corporate managers. 144. Principle of Proportional Equality and its Developments. The principle of equality in commercial corporations is different from that found in a democratic system. In corporate law, the extent of rights and obligations of each shareholder, such as the relationship of equality between all shareholders, may vary from one shareholder to another. As well, in the sociétés par actions and the SARL, the right to vote is attached to corporate shares (corporate shares or assets). This is why the shareholder maintains, in principle, as many votes as shares. It is therefore a qualified method based on the volume of shares held within the same category. In sociétés par actions, the rule “one share/one vote” (Art. 751, AUSC) is not always absolute. In the SA, the law allows the corporation to issue certain shares with particular advantages or shares with a double vote (Art. 752, AUSC). In the SNC (see infra, § 609) or the GIE (see infra, § 629), the principle of voting by each head may be adjusted by the by-laws if they contain different rules. 2.1.2.1.2 Pecuniary Rights 145. Description of Financial Rights. According to Article 4 of the Uniform Act, shareholders invest in a corporation’s capital in order to share a benefit or take advantage of savings, this aim being the cause of the reason for their engagement. Financial rights of the shareholder are principally seen by receiving dividends, voting in general assemblies and resulting either from a distribution of profits from the exercise or a distribution of reserves of other available funds (carry over to a new profit, for example). If the corporation has just been dissolved, voluntarily or judicially (see infra, § 180), the value shared between the shareholders after paying other creditors, called liquidation profits, will be allocated to the shareholders in proportion to the share of corporate capital.

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International Arbitration and Corporate Law 146. Patrimonial Rights.8 Regardless of the title held, corporate rights (corporate shares or stock) have a venal value and belong to the shareholder’s holdings. The shareholder can use the value of his shares, as with any other good, for any operation he needs in the operation of his personal assets. Also, the shareholder can cash in his shares by selling them. Such a cession is more or less simple depending on the type of corporation and the negotiability. If the by-laws have a pre-emption or authorization clause, it will often be more complicated and take longer to sell shares to third parties. The titles may also, if applicable, be used as a guarantee. They can be wealth for the creditor’s benefit. 2.1.2.2 Distribution of Associates’ Rights Regarding Stripped and Undivided Shares 147. Since a good may be the subject of shared rights, it is important to know the person who will be able to exercise the rights of a shareholder. There are two distinct situations: a sole title has unique rights (stripped shares) or they share common rights (undivided shares). These two situations must be clearly distinguished in case a sole owner of a corporate share decides to confer his voting right to an agent. In this situation, which comes from agency law, the rules are different. In fact any “shareholder can allow an agent to represent him” (Art. 126, AUSC), under the terms of the Uniform Act or the by-laws. This mandate may only be given, in theory, to another shareholder, subject to a contrary clause within the Uniform Act itself. The agent may also be limited in his representative capacity, the Uniform Act or the by-laws being able to “limit the number of shareholders and the number of voices that an agent may represent” (Art. 125, Section 2, AUSC). 2.1.2.2.1 Stripped Stocks 148. Stripping property often results in stripped stock, notably for transfer reasons from an estate to its heirs or when a surviving spouse receives a usufruct of the share of a predeceased spouse. Bare Ownership Status 149. Pre-eminence of Bare Ownership. Bare ownership, in principle, confers the quality of a shareholder. It is why Article 128 of the Uniform Act indicates that “unless contrary to the bylaws, if a share or a stock is burdened with a usufruct, the voting right belongs to the bare owner, except for decisions concerning the treatment of profits which is reserved to the usufructuary.” This text highlights also that the by-laws may break with this combination, which raises the question of freedom to create one’s own by-laws.

8

The reform will also likely provide companies with the possibility to issue stock dividends or bonus shares in place of cash dividends, upon authorization of the board and the corporate auditor’s annual report. However, shares representing more than 10% of the total capital cannot be assigned to employees and executives. Listed companies, however, can grant the issuance of a higher percentage, still not exceeding 20% of the total capital and only if allowed by the company’s articles of association (Art. 626-1, Section 1-2, revised AUSC).

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2  Operation of Companies 150.  The Right to Participate in Collective Decisions. In OHADA law, following the example of French law, the principle is that each shareholder has the right to participate in collective decisions (Art. 125, AUSC). Yet, participation does not necessarily mean voting. Also, it is possible to remove the voting right from bare ownership, under the condition that it does infringe his right to participate in collective decisions, being called to the meeting, receiving the preliminary information, attending and having the opportunity to express a consultative opinion at this meeting. If one clearly analyses what the Uniform Act says, it seems that the by-laws may only deviate in so far as it concerns the right to vote in the assembly. Consequently, it seems possible that as soon as a shareholder’s patrimonial rights are involved, notably his right to dispose of his shares, the principles of the general law of goods applies. Further, suppressing the right to vote of the bare owner should not be possible when the substance of the thing is in question (for example, an important modification of the by-laws or a decision to dissolve the corporation). Conversely, a by-law provision, which allows the usufruct owner to represent the bare owner for all corporate decisions, regardless of the subject, should not be valid because it prohibits the bare owner from accessing the assembly on a subject that could affect the substance of his own shares. Usufruct Status 151. Qualities of the Usufruct. The usufruct’s rights are known: he has the right to dividends and he votes in the assemblies when a question is presented regarding the allocation of profits (Art. 128, AUSC). In OHADA law, this is not a public policy rule since the exemption from the by-laws is authorized. It is uncertain whether a by-law provision that prevents the usufruct from all voting rights, which would not allow the usufruct to vote on decisions concerning the allocation of profits, would be considered void. This mechanism demonstrates a limit to abuse by the majority, or more simply, an abuse of right. One could say, for example, that the shareholder who votes in place of the usufruct could be held liable for an abuse of right if he establishes a systematic policy designed to deprive the usufruct of all the fruits the title may bear, which would be, pure and simple, a negation of his essential rights on the corporate title held in usufruct. Following the example of French law, OHADA law does not say whether the bare owner or the usufruct is a corporate shareholder. One could say, uncertainly, that both maintain this quality. This solution may seem logical, but it inconveniently complicates the legal exercise of the rights given to the shareholder, such as the right to be informed before an assembly, for example. Practical incidences are not unheard of, and it would be wise to study each specific situation to guarantee the exercise of the shareholder’s rights. 2.1.2.2.2 Undivided Shareholders’ Rights 152. Managing the Co-ownership of a Share’s Distinctive Rights. When a corporate share is jointly owned, following the example of an inheritance or dissolution of a common regime, 61

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International Arbitration and Corporate Law each joint owner is a co-owner of the corporate share. But this situation creates difficulties every time one attempts to exercise his or her rights as a shareholder. It would be useful to distinguish the rights that must be exercised collectively and those exercised individually. In being a co-owner of a single share, each co-owner is a shareholder, but the unity of the share implies the indivisibility of the rights and therefore their collective exercise. The joint ownerships cannot exercise their rights individually without committing an abuse of right. In terms of voting, the joint owners must be represented by a single agent, either one of them or a third party. If disagreement arises, the agent is judicially appointed by the more active party (Art. 127, AUSC). The Uniform Act does not precisely name the majority conditions that the joint owners must apply in order to name a joint agent. To determine the response, one must refer to the law of goods applicable in each Member State. In terms of information rights, the Uniform Act mentions nothing specific. One can logically deduce that each co-owner of joint titles holds an individual right to information vis-à-vis the corporation. The same solution seems to be applicable for the exercise of conservation rights since each has an interest in preserving the co-owned title. This is notably the case in the use of the corporate share ut singuli (see supra, § 131) or requesting the appointment of a management expert (see supra, § 196). 2.2

Corporate Profits

153. In all corporate forms, regardless of the purpose and the desire to generate profits or cut costs, it is useful each year to make note of the corporation’s finances. Determining the annual result is fundamental because it allows for the use of essential information for running the corporation that has a double impact: for past actions, the annual statement of accounts provides a means of appreciating the company’s success and management such as the impact of the activity on the economic environment; for the future, it provides an invaluable decision tool in order to determine which works will be a corporate priority and which will be less so. To find this result and use its trustworthy information, the corporation must go through a phase to determine the result and its appropriation. 2.2.1

Determining the Bottom Line

154. Uniform Accounting Rules. OHADA law possesses a specific accounting Uniform Act, which provides a common ground for all corporations created in the Member states.9 9 Accounting rules only apply to commercial corporations. They apply to all companies in terms of uniform accounting law, which demonstrates that “companies subject to commercial law, public companies, parapubliques, mixed economy, cooperatives, and more generally, entities providing goods and merchant or non-merchant services, in so far as they accomplish, whether non-profit or profit, economic activities principally or as an accessory which is based upon repetitive acts, excepting those subject to the rules of public accounting” (Art. 2, AUOHCE).

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2  Operation of Companies These accounting rules serve “external information with a purpose” for the corporation (Art. 1, AUOHCE). These accounting rules usefully complete the terms of the Uniform Act concerning commercial corporations by extending the work necessary for the creation of the corporation by using a common legal frame for accounting information for all types of corporations. This structure is an obvious tool because it facilitates the comparison of accounting results and allows for a more homogenous appreciation of corporate financial situations for an entrepreneur entering into the OHADA zone. 155. The Exercise’s Result and the Annual Financial States. Determining the result simply requires adding up the products the corporation’s activity produces and then subtracting the exercise’s charges. Naturally, this operation is very sophisticated when it concerns corporations with large productions, yet it may be simple in more modest-sized corporations. The result’s determination occurs at the closure of each exercise, normally the end of the calendar year. The exercise may be shorter for an exercise that begins during the first semester of the calendar year and longer for those that begin during the second semester (Art. 7, AUOHCE). Whatever the corporation’s form, the annual accounts, annual financial statements in OHADA law, must be approved and, for some corporations, published. These statements contain, typically, the balance sheet, the profit and loss statement, cash flow statement as well as an annex (Art. 8, AUOHCE). This annex contains (1) the state of securities, agreements and guarantees the corporation has given and (2) a statement of real securities the corporation has taken on (Art. 139, AUSC). For corporations in the ‘normal’ system, presenting annual financial statements adds a supplementary statistic (Art. 12, AUOHCE), which corporations in the ‘light system’ do not use. This classification applies when revenues do not exceed 100,000,000 francs CFA. Corporations using the ‘minimal treasury system’10 do not need to provide annual financial statements, unless they willingly choose to and use a simplified treasury system to facilitate micro-enterprise organization without removing all the sharing rules for the presenting of accounts (Arts. 13 and 21, AUOHCE). 156. Management Report. The corporation’s synthesized financial reports are closed and documented at the end of each exercise by the “manager or the administrative council or the general administrator” (Art. 137, AUSC) depending on the circumstances. The same bodies must provide “a management report which explains the corporation’s position during the past exercise, its foreseeable future, and, in particular, the perceptions of the corporation’s continued activity, the future of the treasury and the financing plan” (Art. 138, AUSC). OHADA Uniform Law also maintains the principle of continuous accounting methods. This means that if the corporation decides to modify its accounting methods

10 This applies to corporations whose revenues do not exceed 30 million francs CFA for negotiating companies, 20 million francs CFA for artisans and combined companies and 10 million francs CFA for service companies (Art. 13, AUOHCE).

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International Arbitration and Corporate Law for the annual financial statements, this modification must be brought to the shareholder’s attention. This is why “any modification concerning the presentation of the financial statements or its evaluation methods, depreciation or dispositions conforming to accounting law must be included in the management report and, where appropriate, in the auditor’s report” (Art. 141, AUSC). 157. The Auditor’s Role. For corporations with an auditor, these documents must be sent to him at least 45 days before the general assembly, which must occur to approve the annual accounts (Art. 140, AUSC). Appointing an auditor is mandatory in an SA and optional in an SARL unless the corporation exceeds certain amounts relating to capital, revenue or number of employees. In this case, appointing an auditor becomes mandatory (see infra, § 593 for SARL and § 383 for SA). The auditor creates his report for the general assembly using these documents. This information will be available to the shareholders before the general assembly within different time frames depending on the type of corporation. This corporate general assembly concerning the complete financial reports “must be held within six months of closing the exercise” (Art. 140, Section 2, AUSC). If the general assembly will likely be held later, the appropriate action is to ask the competent judge to authorize holding the annual meeting within a specific delay. One should ask for this authorization before the delay expires rather than afterwards to avoid possible objections to the corporation’s management. Not all corporations must publish their closed accounts. Only sociétés anonymes “must provide the court’s clerk, as an annex to the commercial registry, within a month following the general assembly, the annual financial reports, including the balance sheet, the profit and loss statement, the cash flow statement, and the state of the closed exercise. If the assembly refuses to adopt these documents, the corporations must provide a copy of the assembly’s deliberation within the same delay” (Art. 269, AUSC). 2.2.2

Profit Appropriation

158. At the general assembly, the shareholders deal with both the corporate accounts themselves, and it is when the corporation establishes its profits from the past exercise based on the manager’s propositions concerning resolved projects that associates may decide either to concern the profits, which increases the corporation’s own funds and improves the corporation’s self-financing, or to distribute it through dividends to the shareholders (Art. 142, AUSC). 2.2.2.1 Retained Earnings 159.  Mandatory Retention. There are two categories of mandatory retention that can originate from law or the by-laws. The law imposes the creation of a legal reserve only in SAs and SARLs. One calculates this reserve on the basis of the exercise’s net profit in so

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2  Operation of Companies far as it impacts the profits before determining the exercise’s distributable profit, as long as the legal reserve has not reached the Uniform Act’s imposed level. The rule is identical in SA and SARL. Moreover, under penalty of annulling any contrary deliberation, “the practice is to reduce the exercise’s profits, where appropriate, by prior losses, an allocation equal to one tenth to create a reserve account called ‘legal reserve’.” This allocation is no longer obligatory when the reserve reaches one-fifth of the total corporate capital (Art. 346, AUSC and the almost identical text for the SA, see Art. 546, Section 2, AUSC). The by-laws may also impose beyond the legal reserve a complementary reserve meant to complete the legal reserve. This reserve, which also takes the form of a percentage of profits within a limit the by-laws freely establish, is rather rare in practice. 160. Optional Reserves. Once the legal reserve and, eventually, the by-law’s reserve are funded, the shareholders may freely decide that all or part of the available profits from the exercise be placed in an optional reserve, also called the ordinary reserves. These reserves, contrary to legal reserves, are not unavailable. The shareholders may later decide to distribute this reserve through dividends or to incorporate it into the corporate capital by using compensation to increase the free capital. Distributing optional reserves to shareholders is only possible “when the actual capital is or would become, following a distribution, less than the amount of increased capital by reserves that the law or bylaws would not allow to be distributed,” except when this distribution occurs during an operation meant to reduce corporate capital (Art. 143, § 3, AUSC). The optional reserves are determined using the distributable profits, also called available profits, which equal “the exercise’s result, plus reported profits and minus previous losses, as well as amounts placed in reserve when applying the law or the bylaws” (Art. 143, Section 1, AUSC). 161. Carry-over. It is possible for a portion of the exercise’s result to neither be put in reserve nor distributed. This concern amount, generally rather large, is left appropriated until the following ordinary general assembly. This sum will be normally added to the following exercise’s available profit after declaring the legal reserve and the assembly’s approval of the total results in such form. The carry-over’s legal nature is often discussed. We wonder whether it must be considered to be an available reserve, therefore available for a distribution or a capital reduction, even as a dividend advance, or whether it should only be a simple result of the current distribution and therefore not a possible decision subject during the current exercise. The majority opinion sees it rather as a profit in the current distribution, which prevents it from directly affecting a capital operation. This suddenly presents the question of whether the general assembly is competent to rule on the carry-over. Logically, the general assembly is the body dedicated to allocating profits and therefore competent to rule on the carry-over’s use. Yet nothing seems to prevent another ordinary general assembly, theoretically competent to rule on everything that does not fall within the jurisdiction of the special general assembly, from deciding on the carry-over’s fate. Without being able to directly carry-over capital, only a decision by the

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International Arbitration and Corporate Law general assembly to place the retained earnings in reserve, followed by an allocation to a capital operation would make sense. This carry-over could also be a deficit in the case of a losing exercise. In this case, the loss appears simply on the corporation’s balance sheet as a negative carry-over, accompanied by a negative sign, and this amount will reduce the profits of the following exercise if it is profitable. 2.2.2.2 Profit Distribution 162. Determining Dividends. After the annual general assembly has closed the exercise’s accounts and approved the existence of distributable funds (Art. 143, Section 1, AUSC defines the distributable profit), it determines the proportion applied to shares or corporate portions under the guise of dividends (Art. 144, AUSC). Sometimes shareholders cannot choose between granting a dividend or not. This will be the case when “the bylaws provide for issuing a first dividend which is given to corporate shareholders in so far as the assembly acknowledges the existence of distributable earning and provided that these earnings are sufficient for the payment. When a corporation has this type of dividend, “it is calculated as an interest on the amount freed from the shares” (Art. 145, AUSC). When the general assembly decides to grant dividends to the shareholders, these sums must be used as payment in a maximum delay of nine months after the exercise’s closure. If it is impossible to respect this delay, for example for treasury reasons, only the president of the competent jurisdiction may grant such an extension (Art. 146, Section 2, AUSC). In terms of methods for paying dividends, the general assembly determines them, which may grant this right, depending on the case, to the manager, to the CEO, to the general director or to the general administrator (Art. 146, Section 1, AUSC). 163. Fictitious Dividend. The Uniform Act considers that “any dividend distributed in violation of the relative provisions (to allocating the distributable profits) is a fictitious dividend” (Art. 144, Section 3, AUSC). This concerns issued sums when the company does not have the profits, or issued sums when the legal reserve or the by-law’s reserve were not properly designed. In all of these cases, the payment the corporation gives the shareholder is undone. Therefore, the sanction is logical and almost immediate. The sanction requires the shareholders who unduly received these funds to return the dividends, which do not correspond to actually acquired profits. General corporate law assigns a statute of limitations of three years to this action, beginning on the date of the dividend’s distribution (see for example, Art. 346, Sections 3 and 4, AUSC for the SARL). 2.3

Evolution of the Corporation

164. A commercial company is not a fixed entity. In order to adapt to its activity’s evolution or its needs, it is possible to change the corporate form by transformation, or, when things go badly, notably, to decide to liquidate or dissolve the corporation. These types of 66

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2  Operation of Companies transformations must be distinguished from mergers, division and partial asset contribution, which lead to closer unity. These operations, which mainly concern share exchanges or asset contributions, are not truly transformation, even if the corporate form can in certain cases evolve in these instances. This book discusses these situations later on in Part III. 2.3.1 Transformation 165. Definitions. The Uniform Act defines corporate transformation as “the operation by which a corporation changes its legal form by its shareholder’s decision” (Art. 181, AUSC). The shareholders make a simple modification to the corporate pact at a general assembly. This type of modification requires a qualified majority that may vary depending on the type of transformation, the theory being that the majority is more stringent when passed from a form with limited liability to a form without limited liability. Publicity measures inform third parties of this transformation because the corporate form may impact their rights as a creditor vis-à-vis the legal entity. It is useful, nevertheless, to understand the transformation process before one fully appreciates its effects. 2.3.1.1 Transformation Procedure 166. Formalities. The transformation is subject to legal formalities outlined in the Uniform Act for any modification to the by-laws. However, the transformation of a corporation whose shareholders have limited liability into a corporation without limited liability must be subject to a unanimous vote of the shareholders (Art. 181, Section 3, AUSC), because of the increased engagements that result from such a decision. Any contrary clause is deemed void. The management bodies of the corporation will issue a management report in the context of the transformation. The former bodies will issue this report for the period preceding the transformation date, and the new ones will take over after this date (Art. 185, AUSC). Mainly, a corporate transformation does not require a closing of accounts as this transformation “occurs during the course of an exercise, unless the shareholders decide otherwise” (Art. 183, AUSC). The continuation of the legal personality and of the corporation’s holdings explains the closing’s absence. The next essential formality is the vote of the shareholders in a general assembly and voting on the new by-laws of the transformed structure. 167. Specific Formalities for the SA and the SARL. An SA or an SARL may be transformed into another corporation form as long as, at the moment of the transformation decision, (1) the corporation has existed for at least two years and the partners or shareholders have approved the balance sheets for these first two exercises and (2) its own capital is an amount at least equal to its corporate capital (Arts. 374, 690 and 691, AUSC). Shareholders decide on the transformation after the presentation of the auditor’s report specifically designed for this operation (Arts. 375 and 691, AUSC). This report must certify that the share capital is at least equal to the corporation’s capital. 67

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International Arbitration and Corporate Law 168. Effective Date and Publication. The decision to transform a corporation cannot be retroactive and only takes effect from the date the decision to transform is made (Art. 182, AUSC). Yet the transformation decision will only be enforceable against third parties after the completion of all publication formalities in Article 265 of the Uniform Act. The Uniform Act carefully organizes these formalities, which are (1) an announcement in a legal announcement journal of the Member State containing the corporate headquarters, and when necessary, the Member States whose public would be notified in the event of an IPO, (2) providing two examples of assembly’s minutes that voted on the transformation and the assembly’s minutes that chose the members of the new corporate bodies to the clerk of the commercial court in the Member State containing the corporate headquarters and (3) a modifying statement given to the register du commerce et du crédit mobilier. Additionally, the company must give the clerk a copy of the new by-laws, a declaration of good standing and, when necessary, two copies of the auditor’s report establishing the value of the corporation’s assets. If the company owns one or several buildings subject to public announcements of land transactions, the corporation must inform the mortgage bureau of its transformation. 2.3.1.2 Transformation Effects 169. The Survival of the Legal Personality. OHADA law positively regards a corporation’s transformation in so far as it concerns a corporation’s positive and logical evolution. This is why corporate law facilitates these operations by preventing the transformation from questioning the existence of the legal personality. This transformation does also not lead to the creation of a new legal personality. It is simply a by-law modification and is subject to the same form and delay (Art. 181, Section 2, AUSC). The rules required the closure and approval of the combined financial statements for the exercise where the transformation occurs. The same applies to the division of profits. The consequences of maintaining the same legal personality continue all of the corporation’s prior engagements and allow others to bring legal action against the transformed corporation. This is why “the rights and obligations undertaken by the corporation under its former form continue under its new form” (Art. 186, Section 1, AUSC). In case of a concurrent legal proceeding during the transformation, for want of information, one should nevertheless inform the magistrates responsible for the docket in order to avoid confusion and erroneous decisions. Maintaining engagements also raises questions of security law, “except where a contradictory clause exists in the security’s act” (Art. 186, Section 1, AUSC). There is, however, a limit to the legal personality’s continuity. Basically, “when the corporation, following its transformation, no longer possesses a corporate form recognized by the Uniform Act, it loses its legal personality if it exercises a commercial activity” (Art. 188, AUSC). This article’s purpose is understandable. This sanction is logical because

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2  Operation of Companies the Uniform Act only allows recognized corporate forms to pursue a commercial activity. This requirement poses a problem, notably in terms of special corporate forms within the laws of the Member States, such as public law corporations or corporation in a specifically, regulated sector. Strictly applying this article would mean that even if a corporation of this nature must pursue a commercial activity, transforming into this type of corporation would not allow the continuity of the legal personality. The judge must, without a doubt, either adopt a soft interpretation of this text, or the Uniform Act evolves slowly on this matter. 170. Consequences for Associates, Managers and Auditors. On the date of the corporation’s transformation, shareholders inherit the qualities specific to the newly chosen corporate form. Further, a named shareholder automatically becomes a shareholder and gains limited liability in case of transforming into an SA. All the new corporate form’s laws will apply to him, including majority rules for assemblies, and rules for information and ceding shares. The managers’ situation is the exact opposite. Their appointment was to represent a legal entity; therefore, they lose their position as managers if this legal entity transforms into another corporate form. The transformation decision ends the corporation’s administrative and management bodies’ powers (Art. 184, Section 1, AUSC). In theory, the former managers will maintain their responsibilities in the new structure and, if it is necessary to appoint other representatives because of insufficient numbers in the former form, it will be necessary to comply with the appropriate regulations. Losing the quality of manager may sometimes offend some individuals, which may question their personal qualities. To avoid useless litigation, the Uniform Act provides, for this purpose, that members of the corporation’s administrative or management bodies “cannot request damages because of a transformation or a transformation’s annulment unless they were decided with the sole purpose of damaging their rights” (Art. 184, Section 2, AUSC). The manager has the burden of proof in this matter. Logically, losing the quality of managers following the transformation also extends to the delegates. The delegate is an agency relationship, which partially transfers a manager’s power to a person who may act in his name. If the manager loses his agent, the delegation also disappears as a consequence. If the delegate must continue, the act granting the power must be renewed. 171.  Consequences for the Auditors. According to Article 187 of the Uniform Act, “a corporation’s transformation does not end the auditor’s responsibility if the new corporate form requires the appointment of an auditor.” In this case, when the appointment is not required, the transformation ends the auditor’s responsibility, unless the shareholders decide otherwise. The auditor whose responsibility ends must continue his responsibilities for the period between the beginning of the exercise and the end of his term, considered the opinion of the accounts for the exercise where the transformation occurred. This normally entails a report to the next corporation’s annual, general assembly for the new form.

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International Arbitration and Corporate Law 172. Position of Corporate Creditors. Transformation does not affect creditors’ rights, since the legal personality remains and the holdings survive. The only problem may arise if the corporation transforms from a form with unlimited liability to one with limited liability. In this case, the creditors’ protection will not be the same, which justifies a derogation meant to create specific protection for the creditors. This is why “if a corporation, without limited liability, transforms into a form that limits the shareholder’s liability to their contributions, the creditors whose debts preceded the transformation maintain their rights against the corporation and its shareholders” (Art. 186, Section 2, AUSC). However, this protection will not apply to debts that follow the transformation, which will follow the new corporate form’s rules. 2.3.2

Dissolution and Liquidation

173. Corporate dissolution demonstrates a return to the theory of mutuus dissensus. Associates may undo their actions and return to a state of non-grouped individuals. The freedom to choose dissolution and the loss of the legal entity the shareholders created is not completely free. Specific circumstances impose dissolution on the shareholders in some instances. Once dissolution has begun, when the corporation is made up of more than one person, liquidation follows, which triggers dissolution’s effects. 2.3.2.1 Causes of Dissolution 174. Causes of Dissolution. The Uniform Act outlines several causes of corporate dissolution (Art. 200, AUSC). There are two possible categories that cause dissolution. Some are objective, such as completion or extinction of the corporate purpose, expiration of a corporate term (99 years maximum, unless its term has been renewed) or annulment of the corporate contract. It may also concern the objective effect of by-law provisions when they relate to specific causes of corporate dissolution. Other cases are more subjective. These concern the decision of shareholders or partners or the judicial decision ordering corporate dissolution or the liquidation of its assets. 2.3.2.1.1 Objective Causes of Dissolution 175. Completion of the Term. Corporations must be created with a duration included in the by-laws, which may not exceed 99 years from the date of its registration with the RCCM (Art. 28, AUSC), and upon the end of this period, the corporation is considered dissolved as a matter of law (Art. 30, AUSC), except for extensions decided in conformity with legal procedures (Arts. 33-35, AUSC and see supra, § 61 and 62, duration and extension). Some shareholders may mean to take advantage of the corporate extension procedure in order to abuse their voting right and profit from their approval. This attitude, which could certainly not always be considered an action by minority abuse (see infra, § 215), may put

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2  Operation of Companies an end to the corporate adventure. This is why it is wise to include in the by-laws a way out in case of disagreement on the day of the extension decision. In this case, the by-laws may allow the corporation to continue between the shareholders who wish to continue by buying back the shares from those who oppose it. 176. The Accomplishing or the Extinction of the Corporate Purpose. Accomplishing the corporate purpose is rather rare because it implies that the shareholders chose a precise purpose and a programme from which they could not diverge, which seems rather unlikely in practice. This could, however, occur in the case of a corporation established for a specific project, such as a housing project or a civil engineering project. The project’s success marks the end of the corporate purpose and thus the end of the legal entity. The case of extinction is found in situations where the corporate purpose can no longer be accomplished for reasons independent from the will of the shareholders. In general, the corporate purpose allows that the corporation will not dissolve automatically. In fact, this has little effect if the activity diminishes because one part of the purpose has disappeared. As long as an activity remains, however minimal, the corporation still exists and only the will of shareholders may lead to dissolution. It should be noted, however, that some shareholders voluntarily leave a corporation in place without enough activity. This is called ‘sleeping corporations’, made for accomplishing future projects or whose activity has slowed but that are maintained for eventual future needs. 177. Cancelling the Corporate Contract. Cancelling the corporate contract very rarely occurs. If it does, the dissolution of the corporation occurs without retroactivity. Attaching cancellation to the cases of dissolution is not surprising because liquidation is identical. For a discussion of annulment, see supra, § 88 and following. 178. By-law Provisions. Associates are able to include in the by-laws any cause for dissolution they deem appropriate. These may include a change in nationality or qualities of one of them (for example, a legal entity shareholder whose capital is bought back by a competitive group); a continuous decline in profits during a determined number of corporate exercises, changing nationality, etc. This solution imposes rather heavy tax consequences. Consequently, if the shareholders would rather be able to exclude a shareholder who does not fulfil certain criteria, it is better to include a buy-back provision. 2.3.2.1.2 Subjective Causes of Dissolution 179. Shareholder’s Anticipated Decision to Dissolve. This is the most conventional cause of dissolution. It simply causes an anticipated rupture of the corporate contract under conditions for modifying the by-laws by the general assembly’s decision. However, taking this decision must be consensual; without this, the majority shareholder would fear an action for majority abuse by the minority shareholders in disagreement (see infra, § 211 for abuse of the majority). Generally, this type of dissolution is rather rare, except when it anticipates an accumulation of corporate losses. In fact, a voluntary dissolution, even if it

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International Arbitration and Corporate Law is expensive in terms of taxes, is always less expensive than a strict corporate liquidation and its possible extensions to the managers and shareholders if there were mistakes. It can also be a realistic solution to avoid a crisis for a corporation that is unable to function properly. The manager cannot solely make this decision because it ends the corporate contract. It is advisable to keep in mind the manager’s decisions that are able to indirectly lead to an extinction of the corporate purpose. This would be the case for the manager selling the assets without which a corporation can no longer function (a business foundation, for example, when it makes up the main assets). In this case, the will of the manager to give up the assets leads to depriving the corporation of its purpose and may lead to an action in annulment, aside from the eventual actions in responsibility against the manager himself. 180. Dissolution for Just Reasons. An anticipated, corporate dissolution may be ordered by “the competent jurisdiction, upon the demand of one of the shareholders for just reasons, notably in case of a failure of a shareholder to fulfil his obligations or disagreement between shareholders, preventing the normal functioning of the corporation” (Art. 200, Section 5, AUSC). The first case takes us back to the corporate contract. The shareholder who refuses to execute his obligations under the corporate charter demonstrates his failure of affectio societatis. This allows the judge to consider imposing dissolution. Discord between the shareholders is a more common reason. The Uniform Act allows this type of dissolution when discord prevents the corporation’s normal functioning. Requests for dissolution for discord are rather common and are part of contentious techniques sometimes used to try and obtain a specific result by a group of shareholders. These strategies do not fool judges who are often hesitant to impose a term on a corporate practice when the balance sheet is positive. In this type of situation, the judge will be more likely to appoint a provisionary administrator to manage the crisis and solve the problem with the shareholders who create the problem. Since this presents a matter with potential grievous consequences, only concerned shareholders may initiate it, not any interested party. The shareholder must prove an additional element, the existence of a just motive. Although judges have not had occasion to rule on this matter, it is likely that the shareholder must also demonstrate a legitimate interest, which means that he must not be the cause of this discord. The just motif is found from a factual situation that prevents the corporation’s normal functioning. It cannot simply concern punctual difficulties; it requires circumstances that truly halt the corporation. This would be the case if corporate bodies were no longer able to make decisions because of opposition between two equal groups or the inability to appoint a manager. These cases normally occur in smaller corporations where it is more common for two equal groups to hold equal force in terms of power and opposition. 181.  Judicial Liquidation. Judicially liquidating corporate assets leads to its dissolution (Art. 200, Section 6, AUSC) and the debtor relinquishing the administration and

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2  Operation of Companies availability of its goods (Art. 53, AUOPCAP). For the acts necessary for liquidation, the debtor must go before the trustee. Any correspondence meant for the debtor, other than those of a personal nature, is given to the trustee.11 2.3.2.2 Effects of Dissolution 182. The corporation undergoing dissolution is a suspended legal entity. In order to allow the corporation to be represented, the continuance of the legal personality and for its publicity, certain acts must be approved. In multiple-person corporations, liquidation must follow dissolution. 2.3.2.2.1 Principal Effects of Dissolution 183. Maintaining Legal Personality. According to Article 201 (Section 3), “the corporation’s legal personality continues for the liquidation’s needs until its closure” (the same wording is found in Art. 205, AUSC). Thanks to these mechanisms, the corporation dissolves, but it always maintains distinct holdings from its shareholders, which allows the shareholders to avoid being forced to divide their shares in payment. The debt remains corporate, and the corporation remains the debtor, all the while protecting corporate creditors against actions by the shareholder’s personal creditors. Corporate shares maintain their value and may always be given up or be used as the object of a lawsuit. However, the survival phase of legal personality is not indefinite; it ends with the corporation’s liquidation. Since the corporation enters liquidation after the decision to dissolve, it is no longer possible to pursue new activities or to continue operations; the liquidator simply manages the liquidation options, the corporation’s legal capabilities being limited for the purposes of these operations. 184. Opposability. The corporation’s dissolution is not enforceable against third parties until after its publication in the RCCM (Art. 201, Section 1, AUSC). This publication occurs as a notice published in a legal announcement journal in the place of the corporate headquarters, presenting the clerk with the acts or the minutes that decides upon the dissolution and the modification of the inscription in the RCCM (Art. 202, AUSC). In certain OHADA countries, this publication may appear as an announcement in certain widely circulated national newspapers, in order to ensure visible information for the largest possible number. 185.  The Case of a Single Shareholder. Dissolving a corporation where one shareholder holds all shares leads to a universal transmission of the corporate holdings to this

11 For a detailed study of liquidation mechanisms see B. Martor et al., Le droit univofmr africain des affaires issu de l’OHADA, Litec, 2nd ed., ch. 6, p. 79 et seq.

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International Arbitration and Corporate Law shareholder without the need for liquidation (Art.201, Section 4, AUSC). This solution is not necessarily advantageous for creditors, because they find themselves in a battle with the shareholder’s personal creditors. Moreover, this solution may have dire consequences for the shareholder’s personal holding. This is why creditors may oppose dissolution, before the competent court, within 30 days from the dissolution’s publication. Beyond this delay, corporate creditors are barred from opposing the dissolution. The court has three possible options: reject the opposition, order the reimbursement of the credits or provide guarantees, if the corporation offers them and if they are deemed sufficient. In case of opposing creditors, the universal transmission of the holdings does not occur, and the corporation does not disappear as long as the opposition delay has not expired or, when there is reason to ask a creditor for opposition, as long as the opposition was not rejected, or the reimbursement of the credits was not accomplished and the guarantees issued. 2.3.2.2.2 Liquidation of Companies with Multiple Partners 186. Appointing the Liquidator. The Uniform Act states that “dissolving a corporation with multiple partners leads to its liquidation as a matter of law” (Art.201, Section 1, AUSC). This procedure very clearly defines its rules. This precision is present because the legislature sought to avoid fraud and tried to establish a balance between the rights of the corporate creditors and the shareholders. This is why the term ‘corporation under liquidation’ as well as the name of the liquidator(s) must appear on all the acts and documents coming from the corporation to third parties, notably all letters, bills, announcements and various publications (Art. 204, AUSC). These rules apply only to an amicably decided liquidation or a court-ordered liquidation, excluding cases of liquidation that fall under terms of the Uniform Act relating to organization of bankruptcy proceedings to eliminate liability, which are specifically governed by this act for causes related to the corporation’s failure to make payments (Art. 203, AUSC). When the shareholders decide to liquidate, one of several liquidators is appointed. Appointment methods vary from one corporation to another. In SNC, unanimity is required to appoint a liquidator, unanimity for general partnerships and majority for silent partners, for SCS, majority for shareholders in SARL and finally, according to the quorum and majority conditions determined for special, general assemblies, in the SA (Art. 206, AUSC). Associates freely choose to appoint a liquidator chosen from among the shareholders or a third party. This liquidator could easily be a legal entity (Art. 207, AUSC). When the shareholders cannot agree on a liquidator’s appointment, he is appointed by judicial decision brought by any interested party (Art. 207, AUSC). The judge who orders the liquidation appoints one or several liquidators (Art. 226, AUSC) whose term may not exceed three years, renewable by judicial order upon the request of the liquidator (Art. 227, Section 1, AUSC). In case of renewal, the liquidator must indicate in his

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2  Operation of Companies renewal request the reasons why the liquidation could not be completed, the measures he intends to take and the amount of time necessary for the liquidation (Art. 227, Section 2, AUSC). The liquidator may be revoked under the same methods as his appointment, and any shareholder may also request this revocation for legitimate reasons (Art. 211, AUSC). The shareholders or the appointing tribunal determine the liquidator’s compensation (Art. 210, AUSC). The act of appointing liquidators, whatever the form, is published within one month from the appointment, in a legal announcement journal of the Member State where the corporate headquarters is located. Several obligatory clauses must be respected (Art. 266, AUSC). This publication allows third parties to oppose the appointment (Art. 212, Section 2, AUSC). 187.  The Liquidator’s Mission. Upon his appointment, the liquidator(s) replaces the directing bodies, which lose their management and representation powers. The liquidator becomes the corporation’s sole representative to third parties. Similar to the former managers, he acts under the shareholder’s control, which he must regularly gather to explain the state of his work. He is equally liable for faults committed during the course of his mission (Art. 221, AUSC). The liquidation must be completed within three years from the corporation’s dissolution. If this is not the case, the public minister or any interested party may go before the competent jurisdiction where the corporate headquarters is located in order to demand the corporation’s liquidation, or if it has begun, to demand its completion (Art. 216, AUSC). Before paying creditors, the liquidator must establish an inventory for assets and liabilities. Next, he continues to proper liquidation operations by selling corporate assets to pay off the creditors. Since the liquidator does not participate in a bankruptcy proceeding, there are no rules for classifying the creditors. They are paid by a due date. This being the case, when the liquidation is done by a professional, he takes care to classify the preferred creditors and chirographaires in order to pay the credits passed on their privileges. If funds are insufficient, the liquidator will have to begin a bankruptcy proceeding. Some rules must be respected in terms of the sale of goods. In addition, giving up all or part of the corporation in liquidation’s assets to a person who was a shareholder, a partner, a manager, an administrative council member, a general administrator or an auditor cannot occur without authorization from the competent judicial authority, the liquidator and the auditor as well, unless the shareholders decide so unanimously (Art. 213, AUSC). However, ceding all or part of the corporation in liquidation’s assets to the liquidator, his employees or his spouse, relatives or issue is completely forbidden (Art. 214, AUSC). The complete abandonment of the asset is another possibility. Selling as block generally produces a less interesting profit than selling piecemeal. This is why the shareholders must authorize this action by a majority depending on the corporation’s form (Art. 215, AUSC). The voting conditions will be the same when the liquidator proposes giving the assets to another corporation or a merger.

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International Arbitration and Corporate Law 188.  Closing the Liquidation. All the shareholders must gather at the end of the liquidation to look over the final accounts, and the liquidator’s final discharge, ending his mandate and certifying the liquidation’s closure. If this formality is not respected, any shareholder may ask the president of the competent jurisdiction, within a short delay, to appoint an agent to carry out the convocation. When the shareholders do not arrive to deliberate, the competent judge replaces the closing vote upon the request of the liquidator or any interested party (Art. 218, AUSC). The definitive accounts are then given to the commercial court’s clerk with the shareholder’s assembly decision concerning the liquidation accounts, the management’s final dismissal and the end of his mandate, or, as a default, the judicial decision mentioned in the previous article (Art. 219, AUSC). Once these formalities are carried out, the liquidator requests the removal of the corporation from the RCCM within one month of the publication of the liquidation’s closure (Art. 220, AUSC).

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3

Crisis Management

189. Companies do not always run smoothly. Sometimes the company’s governing bodies do not perform their assigned roles, certain shareholders or officers abuse their rights or make mistakes and the company suffers. It is thus necessary to have appropriate mechanisms implemented in order to address these problems as they arise. The first way to address these issues is through internal crisis management, i.e. without the intervention of a judge. This consists of establishing pre-litigation crisis recovery mechanisms. If these mechanisms fail, it could lead to the automatic annulment of corporate acts and eventually litigation. However, under OHADA law, conflicts among shareholders can be handled through the use of alternative dispute resolution mechanisms. This is one of the main advantages of OHADA law: a structure in place allowing parties to arbitrate their dispute in order to avoid the costs and uncertainties of litigation before a state court. 3.1

Crisis in Management

190. When there is a crisis in management, there are three possible solutions provided by OHADA law to avoid a dispute: (1) implementing a warning system, (2) appointing an outside expert or (3) appointing a provisional administrator. 3.1.1

The Warning

191. Implementing a Warning System. This procedure encourages companies to implement proper decision-making and to help them take appropriate measures when the efficient operation of the corporation becomes compromised; this procedure constitutes an innovation in most Member States.1 3.1.1.1 Warning Procedure Initiated by the Statutory Auditor 192. Statutory Auditor’s Warning. A statutory auditor must be informed of every situation where the day-to-day operation of a corporation comes under the threat of being compromised. He has the ability to request explanations from managers (Arts. 150 and 153, AUSC2). When a statutory auditor exercises this right, managers have a month to 1 M. Lecerf, “La procédure d’alerte – Un nouveau moyen de prévention des difficultés de l’entreprise”, Cahiers juridiques et fiscaux de l’exportation, CFCE, 1998, n 2, p. 325 et seq. 2 Uniform Act Relating to Commercial Companies and Economic Interest Groups. 17 April 1997. Organization for the Harmonization of Business Law in Africa.

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International Arbitration and Corporate Law submit a ‘situation analysis’ and, if needed, the ‘envisioned measures’ (Arts. 151 and 154, AUSC). 193. Particularities of an SA. When managers do not answer the request for an explanation or the answer is unsatisfactory, a statutory auditor can call a meeting with the board of directors to deliberate over the crisis situation (Art. 155, AUSC). If the board of directors has not convened or if a statutory auditor notes that the company’s operations remain compromised, he must prepare a special report to present in the next general meeting or in case of urgency, summon a special general meeting when managers have not already done so (Art. 156, Section 1, AUSC). When a statutory auditor proceeds to summon a general board meeting, he will determine the board meeting’s agenda and, if needed, may choose a different location from the place already established in the company’s statutes for the board meeting. He will present the purpose for the board meeting in his special report, which will be read in the board meeting (Art. 156, Section 2, AUSC). 194.  Procedure in SARL. When a manager fails to answer the request for an explanation or his answer is unsatisfactory, the statutory auditor must prepare a special report (Art. 152, Section 1, AUSC). The statutory auditor may make the request for an explanation to management by registered letter with an acknowledgement of receipt or to be delivered by hand against receipt, in order to have management’s reply in a special report that is to be sent to the shareholders or to have this special report available in the next board meeting. In this case, the manager must prepare and send the special report within the eight days that follow the receipt of the request (Art. 152, Section 2, AUCC). 3.1.1.2 Warning Procedure Initiated by Shareholders or Associates 195. The Right to Ask Questions. For shareholders, the Uniform Act is, in the first place, a pre-warning mechanism. Any shareholder or associate, as long as he is not a member of the board of directors, has the right to put questions to the managers in writing twice a year over any concern with the day-to-day operations of the company. The management must submit their answers within one month’s time following receipt of the questions, and a statutory auditor, if there is one, must receive a copy of the answers as well (Arts. 157 and 158, AUCC). 3.1.2

Outside Experts

196. In OHADA law, requesting outside experts is not reserved for listed companies. All shareholders and associates of all types of corporations that are regulated by the Uniform Act have access to a unified mechanism to request outside experts to intervene, which allows them to question managers over different aspects of the company’s operation. OHADA law practitioners often use this tool when facing an eventual litigation because it opens the dialogue among shareholders and managers.

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3  Crisis Management 3.1.2.1 Conditions for Appointment 197. Shareholder Appointment. In order to avoid someone with bad intentions harassing managers for reasons that are completely unrelated to management operations, shareholders should not abuse their rights to call in an outside expert, and that is why, according to Article 159, the conditions to invoke this mechanism are limited. It is necessary that “one or more associates representing at least one fifth of the issued share capital […], whether individually, whether in a group however it is formed, (requesting) the president of the competent jurisdiction of the company’ registered office, the appointment of one or more experts responsible to present a report about one or more management operations.” The first condition concerns the representation of shares actually held by the shareholders. It is necessary to find one or more persons (‘whether individually, whether in a group’) who represent a capital share volume of at least equal to 5%. The text does not specify the possible ways of grouping shareholders; however, we can assume that such a grouping would consist of minority shareholders, an association of representatives or a group defending shareholders’ interests. Article 159 does not specify in what type of corporations shareholders can request outside experts. In fact, in the simplest case, shareholders of a company will request outside experts when they purchase stock. But the issue becomes more delicate when there are outside experts carrying out an investigation in a corporate group. The text of the Uniform Act does not clarify whether a legal entity barrier blocks an outside expert or whether it is possible to take into consideration the interest of the corporate group when implementing an intra-group investigation. This mechanism can be extremely useful because decisions are often made in the corporate group at headquarter level, but the effects are felt in subsidiary companies. It may seem logical that for reasons regarding the group’s best interests, shareholders of the subsidiary may request outside experts to intervene to evaluate managers of the head office company and, inversely, shareholders of the head office can request outside experts to evaluate managers of the subsidiary. But owing to the absence of guidance that the law provides on this issue, judges might hesitate in ordering outside experts only on the grounds of the corporate group’s best interest, which can also be a good argument in favour of invoking outside experts since the text does not forbid it. It is convenient to keep in mind that outside experts in OHADA law are not available to other institutions that serve as corporate surveillance bodies such as the State Prosecutor or trade union’s representatives. But in the future, with the evolution of the Uniform Act, these corporate surveillance bodies might be authorized to request corporate experts. 198.  A Management Act. For the request of outside experts to be admissible, it must ensure compliance with the conditions required for the appointment of experts regarding the objective of the investigation. In fact, Article 159 evokes “one or more management

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International Arbitration and Corporate Law operations.”3 This precision has two consequences. In the first place, an outside expert’s scope of investigation must be requested on specific management operations. The text of the article clearly states one or more management practices and not a “fishing expedition,” which entails asking questions concerning every aspect of management operations in the company. The request for outside experts ought to be precise. It is not possible to use the outside experts as a way to audit management operations in the company. Secondly, an outside expert’s scope of investigation must be limited to one aspect of management operations in the company. The text does not specify what exactly this means. However, there is no doubt that it concerns, above everything else, decisions made by management regarding the operation of a company and not what can be directly controlled by shareholders, like the acts that are sole competence of the general assembly of shareholders. Indeed, at the general assembly level, the shareholders are expected to have the right to directly access information that should not trigger the request for an outside expert, because by definition, the decisions made by the general assembly are not management acts, but acts that control management. Also, there are acts that can be qualified as hybrid, because they are necessary for the joint performance of management and regulation bodies, for example regarding decisions agreeing to regulate certain contracts or management bodies’ decisions in the framework of a company restructuring. In this case, even if the board of directors is summoned to make a ruling, there is no doubt that during the proceedings, the managing bodies must inform the shareholders about their rights or determined acts that justify their exclusive powers. Without a doubt, it is necessary that in this particular case, the board will authorize outside experts to step in to allow shareholders to better understand what is going on concerning the board of directors’ decisions. Case law evolution is to be watched carefully on this point. 3.1.2.2 Procedure for Appointment 199. Content and Scope of a Competent Judge’s Powers to Assess the Claim. The claim must be raised to the president of the tribunal with relevant jurisdiction (Art. 159, AUCC). Then, it is best to look into the local procedure rules to know which tribunal is competent and to examine whether it is best to submit a summary proceeding. When the claim is raised, the judge must verify the standing of the plaintiff and whether the conditions of appointment of the expert are met. A judge will determine the admissibility and appropriateness of the claim. In order for the claim to be admitted, it is necessary that it reveals a presumption of irregularities or at least that the claim establishes that the operation in question could possibly pose a threat to the company’s interest. 3 On the notion of operating management, see B. Meuke, La notion d’opération de gestion au sens de l’article 159 de l’AUSC de l’OHADA, OHADATA D-05-57; De l’expertise en droit des sociétés OHADA, OHADATA D-09-42, p. 3.

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3  Crisis Management The Uniform Act does not show that requesting outside experts is a dependent procedure. It seems that shareholders can use it as a first resort, without exercising other information rights provided in the texts. In this case, it will be necessary that stockholders demonstrate that there is a genuine interest for them and for the company. Then, a judge must play the role of guardian against the claims, because these claims will likely disrupt the operations of the company. 200. Scope of an Expert’s Duty. If a judge admits the claim, he must define an expert’s duty and clarify the tasks his duties entail. Specifically, the text states that “if the claim is admitted, the judge determines the scope of an expert’s duties and powers” (Art. 160, AUCC). As with any judge-appointed experts, the judge must set up the expert’s fees, although the text only states, “[the expert’s fees] are paid by the company.” Towards the end of an expert’s work, he drafts a report, which is addressed “to the plaintiff and the governing bodies of management or administration.” Surprisingly, Article 160 does not clearly state whether this report is also sent to a statutory auditor in companies that have this position. In light of this report, if the revelations are compromising, hostilities sometimes arise: liability claims against managers, claims for dismissal and claims requesting the annulment of abusive decisions. It is for the outside experts to produce evidence that would allow shareholders to protect their rights and the company’s rights, as the case may be. 3.1.3

Provisional Administration and Ad Hoc Proxy

201. The mere fact that a company might be facing a crisis that requires the intervention of a third party does not signify that the company’s demise is imminent. Very often, the intervention of a third party appointed by a judge leads to a significant reduction of tension and assures the eventual return to the smooth operation of the company. Assigning a provisional administrator, who is a temporary substitute for the managing bodies, embodies one of the most radical measures shareholders can invoke. Sometimes, appointing an expert assigned to make a report on certain conflicted points is enough. For example, a simple ad hoc mandate destined to oversee the successful completion of a specific project. 3.1.3.1 Provisional Administrator 202. Crisis Management. The appointing of a provisional administrator by a judge, who will substitute in whole or in part for the governing bodies of a company during a crisis, is an exceptional measure that is not currently foreseen by the law.4 This is a manifestation

4 Although this procedure existed before in practice, it will likely be codified in the reform of the Uniform Act. The court will have the power to define the scope of the mission of the administrator, his remuneration as well as the duration of his mission, which should not exceed six months, except when the court grants an extension. Any shareholder will be able to request the revocation of the administrator, but such a request will be accepted only if it is based on legitimate reasons, to be determined by the judge.

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International Arbitration and Corporate Law of the judge’s legitimate power to oversee a company’s management when its survival, the shareholder’s rights or a third party’s rights are under threat. To date, the procedure of appointing provisional administrators is not codified in OHADA corporate law.5 Yet, provisional administrators intervene in many serious crisis situations, as an alternative instrument for dismissal or allocating liabilities. The notion of a serious crisis is inherent to implementing provisional management. A party must prove exceptional circumstances that justify altering the normal management of a company. Those circumstances are paralysis of the managing bodies, recurring crisis, systematic violation of regulatory statutes or chronic impossibility to execute the voting process on the accounts in assembly meetings, or any other situation that can justify the need for a provisional administrator. Also, we can cite, for example, the collective resignation of governing bodies; the fact that a management team is in exile abroad; a company where all its documents were stolen by a manager who is keeping these documents to harm associates or a person with whom there is an ongoing dispute. A judge must take into account all these elements, keeping in mind the company’s best interest when deciding to admit or reject the request. It is necessary to have a situation of imminent peril, and not simply an eventual peril, so the judge can rule on the admissibility of the claim. 203. Appointing Procedure. Pursuant to the law of the concerned Member State, the claim will be raised in court, most often by way of an interim application, because of the urgent nature of the claim. This type of claim is not reserved to shareholders, and can be used by any interested party, and the appointing procedure is open to any person with a legitimate interest and legal capacity to invoke it. The most common plaintiffs are minority shareholders. The directors, notably when they have just been dismissed, can equally raise the claim, and the same goes for managers of a company if they consider that the information that they have is insufficient. In exceptional cases, an initiative can be taken, under the reservation that a statutory auditor demonstrates a legitimate interest to creditors. 204. Provisional Administrator’s Duty. The person appointed as provisional administrator must have all the qualities required for effectively managing a company in a crisis. For the Member States that have such lists, a provisional administrator may be chosen from a list of judicial representatives, who intervene in court-ordered restructuring procedures and judicial liquidations. It is a new body of management, and although temporary, it is preferable that the appointment be published in the Register of Commerce and Company and in the legal notices section of a newspaper to make it effective against third parties and to inform the general public. A provisional administrator will temporarily substitute the company’s managers in whole or in part. A judge’s ruling will determine the scope of the provisional manager’s duties. It is the 5

Id. The role and the method of appointing the provisional administrator will likely become part of the law in the reform of the Uniform Act.

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3  Crisis Management provisional administrator’s prerogative to take measures against any of the threats to the company. He must also oversee the day-to-day operations of the company, which evidently include interim acts. Concerning the disposition acts, it is necessary to act by mandate ordered by a judge and appreciate this mandate from the company’s best interest point of view. For security’s sake, the provisional manager can have his decisions validated by the appointing judge. For example, we can think of a manager leasing the company’s main business in order to lower debt and meet credit maturities. It is most convenient that the judge clearly defines the scope of the duties in order to avoid later dissenting views of the provisional manager’s decisions. 3.1.3.2 Ad Hoc Proxy 205.  Anticipatory Deadlock Technique. It may happen that a summary proceedings judge uses a special purpose trustee, which is set out in the texts of the civil procedure codes regarding urgency measures, to face particularly delicate circumstances where the misunderstanding among the shareholders and the existence of strong conflicts of interests raises concerns over decisions that might trigger judiciary disputes. Thereby, a judge can decide to appoint a trustee with the mission to preside over the general stockholders meeting in place of the chair holder of the company, whose recent behaviour might lead some to think that he will block procedures or try to adopt a measure against the company’s interest. Also, a judge can give a trustee the duty to participate in the meeting proceedings with the goal of establishing reliable minutes (court usher duties) or assign a trustee to act for the shareholders in the case that shareholders cannot or will not appear in the shareholders meetings and in the case that the shareholders fail to choose a trustee worthy of their trust. In any case of urgency, a judge cannot be too intrusive with the managing bodies, which should function exceptionally. 206.  Interest and Entitlement to Act. Just as in the provisional management request, the plaintiff must demonstrate urgency and a legitimate interest when invoking a special purpose trustee. But regarding the performance of his duties, the trustee may be better suited to less severe deadlock situations and employ techniques to anticipate a crisis. So normally, for the trustee, the conditions are calmer. In the case of an internal crisis, it seems more logical not to widen a trustee’s capacity of acting for third parties. This is why it seems preferable to reserve these types of initiatives for managers, shareholders and, eventually, the statutory auditor. However, it is without a doubt necessary that judges have a more restrictive vision concerning creditors. 3.2

Civil Liability

207. In the course of a company’s life and in a company’s management, civil liability may be found in three different circumstances. It can be the civil liability of managers, already undertaken in this book (see supra, § 126 et seq.), of a company itself or its shareholders, 83

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International Arbitration and Corporate Law most notably in the case of the abuse of the voting rights of the latter. In conjunction with liability claims, there is the implementation of other types of actions such as annulments. The system of annulments is specific in OHADA law. The legal texts do not distinguish incorporation annulments and annulments of acts during the management of the company, because the annulment system is uniform (see supra, § 89 et seq., for the system of annulments). But in a strict sense, these are the different legal remedies used to claim damages. 3.2.1

Civil Liability of a Legal Entity

208. A System Created by Reference of Common Law. The Uniform Act establishes that shareholders or managers of the governing bodies may seek damages from individual or corporate liability, by exercising “without prejudice the eventual liability of the company” (Art. 161, AUSC). This type of formulation may seem particularly brief. It constitutes a reminder of sorts that a corporation is a legal person, a moral entity, and like all legal persons it must assume the consequences of its actions. 209. Identifying the Liability. When somebody considers himself a victim of the actions of a company, they can raise claims in reparation. Claims of reparation can have contractual grounds, when the company has failed to carry out a contract by which it is to perform or, extra-contractually, when the company is responsible for damaging actions and these actions do not derive from a contract (for example, corporal damage to a person, pollution or nuisance etc.). When the company is, by definition, represented by its governing bodies and is responsible for the people it employs on the grounds of vicarious liability, it is not necessary to seek out the person who directly intervened in the events that resulted in damages, be it an employee or a corporate officer, the company may be pursued directly. The employee or corporate officer will be pursued only when they have engaged their own personal liability, making it prudent to sometimes pursue both the company and the employee or corporate officer in order to avoid having to raise a new claim if the judge dismisses the claim against the company. Likewise, it will not be necessary to prove the legal person’s liability, because it is through the company’s representatives that the company interacts with the environment. 3.2.2

Partners’ Liability for Abusing the Right to Vote

210. OHADA law is unique in the sense that it contains specific provisions in what concerns shareholders abusing their voting rights.6 The Uniform Act has not made a choice of 6 For the legal regime of voting rights abuse, see also F. Anoukaha & A. Cisse work: OHADA: Corporate Entities and GIE, op cit., § 122.

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3  Crisis Management building case law on the basis of the theory of abuse of law. It has directly stipulated a legal regime of a majority and minority shareholder abuse where sanctions vary depending on the nature of the breach. 3.2.2.1 Majority Abuse of the Right to Vote 211. Implications of Abuse of the Majority Shareholders. In a company, the majority makes decisions and the minority must accept them. This mechanism ensures the efficiency of the company’s operation and avoids the situation where a minority shareholder could block a decision wanted almost unanimously by the shareholders. The majority vote, in a way, is a mechanism of corporate peace conceived as an instrument of crisis anticipation, where all shareholders already accept the rules of the game in advance. Minority shareholders are not without power when facing the majority shareholders – they can control abusive behaviour. A company’s organization that reinforces a balance of power, managers’ liabilities and the eventual presence of a statutory auditor are not always efficient guarantees. Minority shareholders, in addition to their own prerogative, must be able to act when the majority shareholders use the general assembly meeting for a personal mission and abuse their voting rights. Therefore, it is quite a delicate matter to set in motion because the judge must take into account whether the shareholders have abused their voting rights, where if they indeed abused their rights, which can lead to a sanction. 212. Elements of Abuse of the Right to Vote. In order to be classified as an abuse, there must be an element of misuse when exercising voting powers, as in the case where a decision proves only to serve selfish interests contrary to the interest of the company as a whole and to the detriment of legitimate interests of minority shareholders. According to the formula used in the Uniform Act, majority shareholders commit an abuse “when the majority shareholders have voted in a decision that serves only their interests, contrary to the interests of minority shareholders, and that this decision cannot be justified as in the company’s best interests” (Art. 130, Section 2, AUSC). The main elements of the abuse must be proven case by case. One of the most frequent hypotheses consists of automatically blocking benefits such as withholding dividend payout for years without justifying the need for it or when the economic climate does not call for this type of precaution. However, case law shows that this type of violation must be recurrent in order to be considered an abuse; a one-time scenario is not enough to constitute a violation.7 213.  The Majority Shareholders’ Abuse of the Right to Vote. The Uniform Act states that “collective decisions may be annulled for majority shareholder abuse and engage the liability of shareholders that voted in the detriment of minority shareholders” (Art. 130, Section 1, AUSC). The quantification of damages will be made according to the classic

7

Niamey Regional Tribunal, Civil n 96, 26 March 2003, Abass Hammond v. Jacques Claude Lacour, OHADATA J-04-78.

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International Arbitration and Corporate Law appreciation of damages by a judge in regard to how the consequences of the abuse affected the victims. Annulment leads to reparation. A judge will try to reverse whatever has harmed the balance among shareholders, allowing the company to continue with its normal operations. For example, a judge will declare null and void the legal effect of setting aside profits when the company has enough funds on hand to carry out a dividend payout or a decision that organizes a handover of management in favour of a group of shareholders, to the detriment of another group. 214. Bringing the Claim. The same person cannot invoke both sanctions. In cases concerning pecuniary damages, Article 130 clearly states that majority shareholders engage their liability when they vote against minority shareholders. They are the only party with the capacity to raise a claim. However, the text does not provide any provisions regarding the annulment. It is neither an oversight nor an omission. In fact, all interested parties that are victims of the majority shareholders’ abuse of voting rights should raise the claim requesting the annulment from the moment they can prove a legitimate interest. It is easy to imagine a manager raising this claim if he considers that the decision made by the majority of shareholders should be declared null because it violates express provisions of the law or if the decision violates the company’s best interest. Raising the reparation claim must be made against majority shareholders, because they are the party in fault who should pay. However, the claim requesting the annulment of the decision producing the abuse must be raised against a company, because it involves one of the governing bodies of a company. Although it is not forbidden to raise a claim against a company and its majority shareholders, requesting both the annulment and damages is not possible since they are not mutually exclusive. 3.2.2.2 Minority Abuse of the Right to Vote 215. Combating the Tyranny of the ‘Weak’. Developed by Nietzsche’s theory, corporate law also has protection schemes against the tyranny of the weak, which is a way to fight against the problem of abuse of minority shareholders. Certain corporate decisions, most notably those that involve changing a corporation’s statutes, may not be taken without the majority’s approval, for example two-thirds of the company’s shareholders. A shareholder that has a minority amount of shares, but enough to obstruct the approval of a decision, wields a very efficient weapon in inertia. He can block the prorogation of a company near its term or block an increase of the authorized capital that is essential to the survival of a company where a change in the corporate structure is highly desirable. In the rare cases where a decision has to be made unanimously, every shareholder has a right to veto. The mechanism against the abuse of minority shareholder abuse includes fighting against the inertia instead of a positive act. 216. Abuse of Minority Shareholders. According to Article 131 (Section 2) of the Uniform Act, “there is abuse of minority shareholders when, by exercising their vote, the shareholders

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3  Crisis Management oppose some decisions that are needed for the company’s best interest and when they cannot justify a legitimate interest for opposing these decisions.” In order to avoid questioning their legitimate interest, it is best to avoid a conflict with the minority except in the cases where their approval is necessary for the company’s best interest. Evidently, such a formulation shows the exceptional character of minority abuse. It implies the conjunction of a series of objective elements (an essential operation and conforming to the company’s best interest) and subjective elements (the selfish behaviour of the minority shareholders). A capital share increase in a company can provide a good illustration. A prosperous company wanting to increase capital shares might justify a minority opposition in order to retain their political strength in the company (and avoid the dilution of their shares). Judicial control must be very strict, because cases where the opposition’s rights must bow to the company’s best interest are very rare. We must imagine a situation where the recapitalization of the company is necessary because of the precariousness of a company’s financial health. But again, it is important to confirm that minority shareholders have not proposed a serious and credible alternative, because minority shareholders can easily justify a legitimate interest. 217.  Sanctions for Minority Shareholders Abusing the Right to Vote. In virtue of Article 131 (Section 1) of the Uniform Act, “the minority shareholders can engage their liability in case they abuse their voting rights.” It seems logical that the only possible sanction is reparation because, by definition, a decision has not been made because minority shareholders have impeded its approval. The law does not clarify who has standing to raise this claim. But it seems logical that majority shareholders may raise it. Also, it is equally conceivable that a manager can raise the claim if the minority shareholder’s actions have caused a prejudice against a company. The Uniform Act does not specify whether a plaintiff can request that the decision that was not approved because of the minority shareholder’s illegitimate blocking. It is difficult for a judge to make a ruling that can substitute for a general assembly resolution, because such a ruling would be interference in the affairs of the company’s governing bodies. However, appointing a trustee to vote in the minority shareholder’s name for the company’s best interests is indeed possible. Case law will clarify whether a judicial ruling may eventually substitute for shareholders’ decisions.

3.3

The Role of Arbitration in Corporate Crisis Management

Parties seeking to arbitrate under OHADA have the choice between the predictability and structure of institutional arbitration on the one hand and the flexibility and freedom of ad hoc arbitration on the other – all under the aegis of the OHADA system. This presents parties with an important opportunity for arbitration in West and Central Africa (and soon,

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International Arbitration and Corporate Law perhaps, other African regions as well), which is certain to play an ever-increasing role in global dispute resolution as foreign investment in Africa accelerates. Indeed, despite OHADA’s relative youth, a marked increase in foreign investment has already been witnessed in West and Central Africa, particularly from Chinese investors.8 Considering the region’s substantial capacity for growth and the investor confidence engendered by the CCJA, this trend is likely to continue. 218. The Privileged Place of Arbitration in Disputes among Shareholders. The Uniform Act states that “all disputes among shareholders or one or many shareholders against the company fall under the jurisdiction of the state” (Art. 147, Section 1, AUSC). Thus, an ordinary judge is the natural judge of corporate disputes.9 The role of arbitration in the resolution of corporate disputes is pre-eminent. Notably, the Uniform Act does not require that those who wish to settle the dispute by arbitration be professionals. An interested party may opt for arbitration by virtue of their shareholder status, regardless of whether they are a professional, a non-professional or a corporate entity. This is the result of the legal background of French-speaking African countries and the French legal tradition of preferring arbitration as a means of settling commercial disputes. For investors, who come from different countries, arbitration is undeniably useful because it allows for overcoming eventual jurisdictional issues in favour of a modern and efficient dispute resolution mechanism. An arbitration proceeding will be “ruled by the application of the Uniform Act provisions of arbitration” (Art. 149, AUSC) when a shareholder agreement contains an arbitration clause. Also, the arbitral procedure framework is uniform,10 which makes this solution a very organized mechanism, which will in turn be examined below in detail. 219. Innovative Pre-eminence. The place of arbitration in the corporate law of OHADA is even more important than the adoption of the Uniform Act; few Member States have developed this mode of dispute resolution in their internal legislation, often because of outdated legislation.11 This legislation becomes even more important when shareholders are from

See W. Zhu, “OHADA: As a Base for Further Chinese Investment in Africa”, Penant, n 869, 2009; C.M. Dickerson, “Harmonizing Business Law in Africa: OHADA Calls the Tune”, Journal of Transnational Law, Vol. 44, n 1, 2005. 9 However, the proposed reform will likely provide that if included in the company’s by-laws or by a contract, a dispute between shareholders – or even a derivative dispute – may be submitted to arbitration or other means of amicable dispute resolution. 10 See Ann. 2, Uniform Act on Arbitration, adopted 11 March 1999. 11 N. Aka, “Le pratique arbitrale des institutions d’arbitrage en Afrique: le cas de la Côte d’Ivoire”, in L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 155 et seq.; R. Amoussou-Guenou, “Le droit et la pratique de l’arbitrage commercial international en Afrique Subsaharienne”, Thesis under the dir. of P. Fouchard, Université Panthéon-Assas, Droit, Economie et Sciences Sociales, 1995; R. Amoussou-Guenou, “L’état du droit de l’arbitrage interne et international en Afrique avant l’adoption des instruments OHADA”, in L’OHADA et les perspectives de l’arbitrage en Afrique, op. cit., p. 163 et seq.; G. Kenfack-Douajni, “Le cadre juridique au Cameroun”, Revue camerounaise de l’arbitrage, 1999, n 4, p. 3 et seq.; H.-J. Tagum Fombeno, Regarde critique sur le droit de l’arbitrage OHADA, . 8

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3  Crisis Management different countries and when each shareholder prefers that a neutral organization settle the eventual disputes, even to the jurisdiction of a registered corporate office, which are not always well perceived.12 Arbitration is interesting because it allows parties to resolve their disputes by a private jurisdiction, composed of a sole arbitrator or an arbitral tribunal, which may be partyappointed. The procedure is confidential and it can be faster because of the absence of an appellate court for the award. Indeed, the arbitral award is often definitive and obligatory, except certain reserves of limited legal remedies.13 Arbitration appears to be a dispute resolution mechanism that is both contractual and jurisdictional: contractual because its source is the parties’ agreement, and jurisdictional because the arbitral tribunal is a real tribunal that will render an award and resolve the dispute. From this point of view, arbitration clearly distinguishes itself from mediation or conciliation, which are nonjurisdictional mechanisms to resolve disputes. 220. Duality of OHADA Arbitration Procedures.14 One of the unique features of OHADA law is that it favours arbitration as a method for resolving commercial disputes. OHADA law foresees a group of rules that have the advantage of being applied to all types of arbitration where a registered office location of an entity is a Member State, and even more novel, a mechanism of institutional arbitration organized under the CCJA.15 The CCJA is an institutional arbitration system with its own set of rules, organized under OHADA law (see infra, § 222 et seq.). The Uniform Act also establishes certain fundamental rules, which, under Article 1, have the “vocation to be applied to any arbitration when the seat of

12 For the main studies on the subject: P-G. Pougoue et al., Droit de l’arbitrage dans l’espace OHADA, coll. droit Uniforme, Presses universitaires d’Afrique, Yaoundé, 2000, p. 506; P. Mayer, OHADA-Droit de l’arbitrage, Bruylant, Bruxelles, 2002, p. 248. 13 On legal remedies, see infra, § 246 et seq. 14 The Uniform Act on Arbitration was signed on 11 March 2009 and came into force ninety days later. It is applicable only to arbitrations born after its entry into force (Art. 35, UAA). For a bibliography on articles and books published under the Uniform Act, see: P.K. Agboyibor, “Présentation du Règlement et de l’Acte Uniforme rélatif à l’arbitrage”, Revue de droit des affaires internationals, 1999, n 3, p. 340 et seq.; R. Amoussou-Guenou, “L’Acte Uniforme et son environnement juridique”, Revue camerounaise de l’arbitrage, n spécial, October 2001, p. 11 et seq.; A. Feneon, “Un nouveau droit de l’arbitrage en Afrique (De l’apport de l’Acte Uniforme relatif au droit de l’arbitrage dans l’espace OHADA)” Penant, n spécial 833 OHADA, May-August 2000, p. 126.; A. Fenon, “Le droit de l’arbitrage, Commentaire de l’Acte Uniforme de l’OHADA”, EDICEF, 2000; G. Kenfack-Douajni & C. Imhoos, “L’Acte Uniforme relatif au droit de l’arbitrage dans le cadre du traité OHADA”, Revue camerounaise de l’arbitrage, 1999, n 5, p. 3; T. Lauriol, “La naissance d’un nouveau droit de l’arbitrage en Afrique”, Revue camerounaise de l’arbitrage, n spécial, October 2001, p. 7; P. Mayer, “L’Acte Uniforme OHADA sur le droit d’arbitrage”, Revue de droit des affaires internationales, n 6, 1999, p. 629. 15 For a critique on OHADA arbitration, see P. Mayer, “Le droit de l’arbitrage dans l’espace OHADA dix ans après l’Acte Uniforme”, Revue de l’arbitrage, 2010, n 3, p. 467.

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International Arbitration and Corporate Law the arbitral tribunal is located in one of the Member States.”16 Consequently, if an arbitration clause simply provides that the arbitration proceedings must follow the Uniform Act or that the seat of arbitration must be in one of the Member States, the Uniform Act will determine certain aspects of the procedure without the arbitration being institutional.17 On the other hand, if the clause states that the parties agree to arbitration according to the OHADA treaty or according to the CCJA arbitration rules, the arbitration will take place in the institutional framework of the CCJA. The CCJA functions quite similarly to the International Chamber of Commerce (ICC). Lastly, the arbitration clause may provide for the fact that the arbitration will take place in one of the Member States pursuant to institutional rules other than the CCJA rules (such as the ICC or LCIA). None of the three hypotheses mentioned above should pose a problem for the validity of an arbitration clause, ignoring the possibility that the parties were not fully aware of all of the consequences that inserting the clause could have at the conclusion of the contract. A more delicate situation might occur, however, if an arbitration clause contains “ICC arbitration pursuant to the OHADA treaty.” In this case, there will be a conflict of institutional jurisdictions between the ICC and the CCJA that may lead to a situation where the clause might be declared inoperable or, at least, lead to a dispute over jurisdiction. 221.  Two Distinct Arbitration Proceedings and Corporate Law Features. There are many differences between arbitration under the Uniform Act (§ 1) and arbitration under the treaty and the CCJA rules (§ 2), which will be described below. Among these differences are, most notably, the appointment procedure for arbitrators, as well as the available remedies and award enforcement procedures. Therefore, before signing a contract or the statutes of incorporation of a company, the parties ought to verify the terms of the arbitration clause with the goal of ensuring that it foresees a solution. Furthermore, the prevalence of other types of institutional arbitration, such as investment arbitration in Africa, cannot be ignored when discussing dispute settlement in the OHADA zone. As the mechanisms can be slightly different, the procedures are distinct

16 This formulation is unfortunate where it leaves a doubt regarding whether the parties can disregard the application of the Uniform Act when the seat of arbitration is located in a Member State, or if the parties choose the Uniform Act as the applicable law, but the seat of arbitration is not located in a Member State. It would be, however, hazardous to presume an extensive interpretation of Art. 1, before the CCJA issues an explanation. It is our opinion that it is best to look at the totality of rules, such as Art. 1442 and the following articles of the CPC for arbitrations in France, governing all arbitrations when the seat of the tribunal is fixed in a Member State of the OHADA. 17 An arbitration can be institutional – meaning that the proceedings can take place under the wing of the arbitration centre, which will manage the procedure according to its own rules – or it can be ad hoc, which means that arbitration proceedings will take place without the support of an arbitration centre, and pursuant to the rules that the parties or the arbitral tribunal choose themselves, with the reserve of respecting the imperative rules of the applicable law. In this aspect, OHADA law, like French law, considers these two possibilities.

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3  Crisis Management from those followed under the Uniform Act and under the CCJA, however substantively; OHADA law can still be applied to the merits of the dispute (§ 3). This preliminary analysis of the existing remedies of arbitration law of OHADA sheds some light on the specificities of arbitral litigation in corporate law, which should be studied autonomously (§ 4). 3.3.1

Arbitration Pursuant to the Uniform Act on Arbitration

222. The Uniform Act on arbitration applies to a wide range of commercial disputes, which could raise the question of its coexistence with national judicial and legislative systems. However, since the Uniform Act on arbitration has few mandatory provisions, parties are free to derogate from the act by reference to rules of their choosing or by reference to institutional rules.18 3.3.1.1 Scope of the Uniform Act on Arbitration 223. Eligible Individuals. Every person – be they physical or corporate – has the right to opt for arbitration (Art. 2, AUA). This means, in practice, that any dispute can be submitted to arbitration, assuming that it does not affect rights that would require the intervention of an outside authority. The scope of these rights depends on the national law and circumstances. However, the concept of the parties’ ‘free choice’ common to arbitration law in general19 should not pose a problem. Even so, rights can be transferred, lent or even renounced. Therefore, such rights may only be available under certain circumstances. Theoretically, the more fundamental the right, the more risks there are that this right will be affected. It is possible to refer to the determined legislation of the subjective rights to determine the level of availability of the said rights. It is established that, for example, disputes in the enforcement or termination of an employment contract are arbitrable.20 This solution is interesting taking into consideration the overzealous nature of employee protection under labour legislation. States as well as public establishments can also submit to arbitration. Furthermore, public entities cannot invoke their own laws to contest their own standing, the validity of the arbitration agreement or the validity of their participation in arbitration proceedings.21 18 G. Kenfack-Doujni, “La portée abrogatoire de l’Acte Uniforme relatif au droit de l’arbitrage”, Revue camerounaise de l’Arbitrage, October 2001, p. 28. 19 We find this concept, for example, in Art. 2059 of the French Civil Code, Art. 1030(3) of the Dutch Code for Civil Procedures or Art. 442 of the Algerian Code for Civil Procedures. 20 An arbitrator can be appointed to rule over indemnities relating to the breach of an employment contract: CA Abdijan n 1435, 27 March 2003. Certain authors criticize this view. For a general study of this question, see H. Tchantchou, “L’arbitrage en droit africain du travail”, OHADATA D-05-23, . 21 M. Kamto, “La participation des personnes morales africaines de droit public à l’arbitrage OHADA”, in L’OHADA et les perspectives de l’arbitrage en Afrique, op. cit., et seq.

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International Arbitration and Corporate Law Shareholders have a pre-eminent place in arbitration law, protected by specific provisions of corporate law – the Uniform Act on arbitration (Art. 148, Section 1, AUSC; see supra, § 219). 224. Capacity to Arbitrate. The Uniform Act does not limit arbitration only to corporate disputes, nor disputes among professionals, regardless of whether the parties reached arbitration by an arbitration agreement or an arbitration clause, and therefore including corporate law. In the OHADA system, a conflict with public policy appears to be the only limit for the arbitration clause or the arbitration compromise.22 225. The Lex Arbitri Citae. The Uniform Act on arbitration governs all arbitration proceedings where the seat is located in one of the Member States (Art. 1, AUA). No distinction is made between domestic or international arbitration, which are both ruled by the same provisions. Henceforth, all ad hoc arbitration that develops in a Member State will be governed by the Uniform Act and, if necessary, by all other rules that were chosen by the parties, where the Uniform Act allows them. If the parties have chosen a procedure of institutional arbitration, and if the seat of the tribunal is in one of the Member States, the Uniform Act will be available to complement the institutional rules chosen by the parties. For example, if the parties have intended for an arbitration in Cameroon, ruled by the ICC arbitration rules or the LCIA rules, the Uniform Act will not be applicable except if there are gaps in these arbitration rules that the arbitrators must fill in. In contrast, a territorial conception is supported by case law to set aside the OHADA arbitration provisions, in the domain of acknowledging the award, because “the seat of the arbitral tribunal is in Switzerland.”23 3.3.1.2 Arbitration Agreement 226. In order for an arbitration clause to be valid, a certain level of formalism must be respected, which permits the clause to benefit from the principle of autonomy. 3.3.1.2.1 Formalism in the Arbitration Agreement 227.  Moment of Engagement. The most common form to engage in arbitration is the arbitration clause, inserted in a contract, in a shareholder’s agreement, in the statutes of a corporation or in a separate act before any dispute arises. The parties can also draw up an arbitration compromise when a conflict among them arises or even when judicial action has already been taken (Art. 4, AUA). 228. Choice of Written Form or Non-written Form. The arbitration clause must be written “or by any other means that allows the evidence to surface, notably by reference made to a stipulating document” (Art. 3, AUA). This would be the case, for example, if a contract simply states the general conditions applicable to the parties, or if an agreement 22 To further study the content and the nature of community public policy, see E.A. Assi, “International Public Policy in the OHADA Uniform Act regarding arbitration”, Revue de l’arbitrage, 2007, n 4, p. 753. 23 CA Abidjan, n 1157, 19 November 2002.

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3  Crisis Management states the corporate statutes of a company or an agreement of partnership among the same parties. This provision is consistent with the actual tendency, observed in many countries, to validate arbitration clauses by reference often found in the general conditions or a master agreement. It is, however, necessary to avoid oral contracts in front of witnesses, which are theoretically possible, because the original or the copy of a contract with an arbitration clause must be produced when there is an exequatur procedure of a Member State (Art. 31, AUA), and in all the countries that have ratified the New York Convention it is applicable because it is required to present the arbitration clause in written form.24 3.3.1.2.2 Principle of Autonomy of the Arbitration Agreement 229. Content of the Principle. An autonomy principle in an arbitration clause is clearly admitted in OHADA law. According to the texts, “the arbitration agreement is independent from the main contract” (Art. 4, AUA). In reality, the wording of the above-mentioned text demonstrates that its drafters wanted to consolidate two great principles of autonomy or a reinforced autonomy. The Uniform Act states that an arbitration agreement is independent of the principal contract (and it is the same if the agreement takes the form of an arbitration clause) and its validity may not be affected by the eventual annulment of the contract. It is the principle of autonomy in a strict sense, arrived at in French case law after the Gosset case.25 But Article 4 goes even further. It proposes that the validity of the arbitral agreement is appreciated “from the common will of the parties, without any reference to a state law” (Art. 4, Section 2, AUA). Here, we see that the French case law seals this formula consecrated in 1992, in the Dalico decision,26 which comes from the principle of the validity of the arbitration clause. 3.3.1.3 Arbitral Tribunal 230. For an arbitration proceeding to continue properly, it is necessary to respect certain principles that guarantee the efficiency and validity of the award rendered. 3.3.1.3.1 Number of Arbitrators 231.  Composition of the Arbitral Tribunal. The arbitral tribunal may either be made up of a sole arbitrator or by three arbitrators (Art. 8, AUA). This provision is imperative. The goal of this provision is to avoid a split arbitral tribunal, although there is a risk that if the parties agree to have a tribunal composed of five arbitrators, this tribunal might be 24 The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards – The New York Convention – in the territory of each Member State that ratified the convention of arbitral awards given in another country. Some 140 countries are part of the New York Convention, which has a large scope of application. 25 Cass. Civ. 1re, “Gosset”, 7 May 1963. 26 Cass. Civ. 1re, “Dalico”, 20 December 1993.

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International Arbitration and Corporate Law considered irregularly constituted; this might trigger, as a consequence, a possible setting aside of the award (Art. 26, AUA). Considering all the possible ways to appoint arbitrators, the Uniform Act clearly prefers that its drafters limit the arbitral tribunal to one or three arbitrators (Art. 5, AUA), which is without a doubt a wise decision, notably for financial reasons. 3.3.1.3.2 Choice of Arbitrators 232. Principle. The parties are free to decide among themselves the applicable rules of appointing, revoking or replacing the arbitrators (Art. 5, AUA). In the absence of such an understanding, or if their agreement is insufficient, the rules of the Uniform Act apply. Also, a completely blank arbitration clause regarding the procedure of appointing arbitrators is nevertheless efficient, which is not the case, for example, in domestic French arbitration law. When there is a tribunal composed of three arbitrators, each party appoints an arbitrator and then both party-appointed arbitrators choose the third arbitrator who will be the president of the tribunal. When the arbitration agreement contains a provision stating that there should be one sole arbitrator, the parties appoint the arbitrator conjointly. If the parties cannot reach an agreement, or if one of the parties abstains from appointing an arbitrator, an arbitrator is appointed by a competent jurisdiction if the seat of arbitration is located in one of the Member States. 233. Multiple Parties and Extensions. It poses a problem when there are more than two parties in an arbitration agreement, each having distinct interests, wishing to form an arbitral tribunal of three arbitrators. In arbitration, the parties must have the same weight of equality and none of the parties should have more influence over the other in appointing the tribunal. However, there is no provision in the Uniform Act that can help them with this issue. In a practical sense, if the parties cannot reach an agreement, they must go to a competent court and request that the court appoint the arbitrators, or at least the two arbitrators that normally the parties get to choose themselves. The judge must appoint an arbitrator for many parties. 234. The Extension of Arbitration to Third Parties. In this case, it is necessary to determine whether the arbitration clause may be extended to the benefit of a plaintiff or, if he is a defendant, whether it can be imposed upon him. This issue is the subject of many debates in international arbitration,27 and one where the solution varies from one country to another. Certain countries are favourable to an implicit acceptance of extension,

27 See notable J. Beguin et al., “Droit du commerce international”, § 960 et seq.; P. Fouchard, et al., Treaty of International Commercial Arbitration, Litec, § 497 et seq.; Permanent Court of Arbitration, Multiple Party Actions in International Arbitration, Oxford University Press, 2009.

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3  Crisis Management by the applicability of the convention for example, whereas in other countries there is a strict interpretation of the quality of the parties. It will be necessary to strictly follow the OHADA law on this issue to adhere to the preferred options of the judges. 3.3.1.3.3 Quality of Arbitrators 235. Independence and Impartiality. Every arbitrator must be independent and impartial vis-à-vis the parties (Art. 6, AUA).28 If an arbitrator has reason to believe that there is a cause that might lead to his recusal, he must inform the parties, and he cannot accept his duties until there is a unanimous and written agreement. Recusing an arbitrator can also happen during arbitral proceedings if one party considers that he lacks independence or impartiality. Except if the parties have decided on particular proceedings for this case, it is the competent court where the seat of the arbitral tribunal is located that must rule over the recusal. The causes for recusal must be raised “without delay from the party that raises the claim,” and the recusal can be admitted only for causes raised after the appointment of an arbitrator (Art. 7, AUA). Article 7 (Section 3) does not specify the applicable sanction if a party raising the recusal claim does not comply with the “without delay” condition. The most efficient sanction would be the loss of the right to invoke the setting aside of the award because of irregular arbitral tribunal composition. But this sanction would not be generally admitted because independence and impartiality of arbitrators are imperative rules in arbitration. Whichever it may be, in case the recusal is successful or if all other circumstances that obstruct the arbitrator from continuing his duties persist, a new arbitrator is chosen by the rest of the arbitrators or, otherwise, by a competent court, but only if the parties have not agreed on a particular mechanism for replacing arbitrators (Art. 8, AUA). 3.3.1.4 Arbitral Proceedings 236. All arbitration procedures are ruled by guiding principles that must be followed in order to reach an enforceable award. 3.3.1.4.1 Guiding Principles 237.  Public Procedural Order. The parties must be treated with equality and must be allowed every opportunity to exercise their rights (Art. 9, AUA). Arbitrators must respect this principle as well as the adversarial principle. These rules guarantee that parties are in a position of equality. Therefore, parties have the burden of proof of the facts, and an arbitral tribunal can invite parties to submit explanations and necessary supporting evidence to resolve the dispute;

28 Independence and impartiality exclude that the lawyers of the parties are appointed as arbitrators; CCJA, 001/2002, 10 January 2002, .

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International Arbitration and Corporate Law the tribunal cannot mention in the award the means, the explanation or the documents put forward or produced by the parties even if they were an essential part of the adversarial process; any irregularities in the procedure must be invoked without delay by the party who seeks this action under pain of being reputed to have renounced the right to raise the claim (Art. 14, AUA). 238. Other Imperative Rules. An arbitral tribunal must also apply all institutional rules or all national procedure laws that the parties have chosen. Lacking this, the arbitral tribunal can itself determine the rules that it judges appropriate (Art. 14, AUA). Parties can also submit to institutional arbitration proceedings (Art. 10, AUA), and are then bound by the arbitral institution’s rules, except if they have discarded certain provisions provided these rules allow them to. A tribunal must rule over the substantive issues of the dispute according to the rules chosen by the parties. In lack thereof, a tribunal chooses the rules that it considers appropriate taking into account, when appropriate, the customs of international commerce. A tribunal can also rule as amiable compositeur,29 but only if the parties have assigned this power (Art. 15, AUA); this rule is expressly referred to in disputes by shareholders (Art. 148, Section 2, AUSC). 239. Competence-Competence Principle. An arbitral tribunal has jurisdiction to rule on all questions regarding its own jurisdiction, which includes the issue of validity or existence of an arbitral agreement (Art. 11, AUA).30 All claims of lack of jurisdiction must be raised before reaching the substantive issues, except if there are facts and evidence that were revealed afterwards. In the case of lack of jurisdiction, a tribunal can render a partial award on jurisdiction issues, or on a single award about jurisdiction and substantive issues. If a partial award is rendered only on jurisdictional issues, the award is subject to being set aside. 240. Lack of Jurisdiction in State Courts. Uniform law consecrates arbitration as a priority in regard to all procedure in front of state courts when parties are bound by an arbitration agreement. Consequently, if a state court is hearing a case and if a defendant raises a claim of lack of jurisdiction supporting a claim by proving that there is an arbitration

29 The amiable compositeur arbitrator rules by reference to equity, without being held to refer to rules of law to decide on substantive issues. On the contrary, he is held by the guiding principles of the procedure and the duty to hand out an enforceable award. The arbitrator also has the obligation to confront equity legal solutions without violating his duties as an arbitrator, see OHADA J-02-127, J-02-23, J-02-171. Regarding this issue, see also the ICC publications on arbitration and amiable composition at . 30 In a recent decision of the CCJA, the Court overturned an award because it found that the arbitral tribunal had breached public policy of res judicata by hearing a case that was already before a state court. Certain authors have criticized this decision as being a potential threat to the principle of competence-competence because they believe that the state court should have refused jurisdiction in the first place, in the presence of an arbitration clause. CCJA, 1st Chambers, n 03, 31 January 2011.

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3  Crisis Management agreement, a state court must then decline jurisdiction31 unless an arbitration agreement is manifestly null and an arbitral tribunal has not yet entered. If, however, a defendant does not raise a claim of lack of jurisdiction, it can be reputed that he has waived his right to go into arbitration and the state court will not by its own motion decline its jurisdiction (Art. 13, AUA). But the fact of resorting to a state court does not necessarily mean that they waive their rights of arbitration, particularly when a party resorts to a state court to request intermediate or emergency measures.32 Even in the presence of an arbitration agreement, the state courts have the jurisdiction to order provisional or conservatory measures in case of an emergency, or when the measures have to be enforced in a non-Member State; henceforth, these measures do not imply examining the substantive issues (Art. 13, AUA).33 It is necessary to keep in mind that when judicial authorities are needed for the administration of evidence, an arbitral tribunal can order by their own motion or upon request of the parties a demand for the assistance of a state court (Art. 14, AUA).34 241. Length of Arbitration. Unless otherwise agreed upon by the parties, an arbitral tribunal has up to six months to render an award. This period officially commences the day an arbitral tribunal is constituted (Art. 12, AUA). It is unrealistic to believe that this time period will be respected in most cases. It can nevertheless be extended, by an agreement among parties, by a competent jurisdiction upon the request of one of the parties or by an arbitral tribunal itself. If one party considers, during the proceedings, that the outcome will not be favourable, there is a risk that they will not consent to an extension. In consequence, in order to avoid seeking a state court under those circumstances (also to avoid having this jurisdiction deny the extension), it would be wise for the parties of an arbitration agreement to assign longer time periods for the proceedings in order not to have hard time constraints. Regarding institutional arbitration, the extension modalities for proceedings are generally administered by an arbitration centre, which solves many difficulties of this kind.

31 The Abidjan appellate court states that “the arbitration clause forbids any jurisdiction to state judiciary courts” CA Abidjan, n 1032, 30 July 2002. This stance is confirmed by CCJA interpretations, see CCJA n 012/2005, 24 February 2005. 32 The fact of requesting a grace period does not represent renouncing the arbitration agreement, CA Douala, arrêt n 81, Sociaa c/ Bad, OHADATA J-02-31. 33 See G. Kenfack-Douajni, “The Conservatory and Provisional Measures in OHADA Arbitration”, Penant, special n 833 OHADA, May-August 2000, p. 137 et seq. 34 See D. Hascher, “Les rapports entre le juge étatique et l’arbitre” in L’OHADA et les perspectives de l’arbitrage en Afrique, op. cit., p. 209 et seq., G. Kenfack-Douajni, “Le juge étatique dans l’ arbitrage OHADA”, Revue camerounaise de l’arbitrage, 2001, n 12, p. 3 et seq. A. Malle, “La coopération du juge lors de la procédure arbitrale”, in L’OHADA et les perspectives de l’arbitrage en Afrique, op. cit., p. 185 et seq.

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International Arbitration and Corporate Law 3.3.1.4.2 Drafting the Award 242. Formal Aspects. The Uniform Act indicates that certain formalities must be respected (Art. 20, Section 1, AUA). Therefore, an award must indicate the complete name of the arbitrator(s) that rendered the award; the date; the seat of the arbitral tribunal; names and addresses of the parties involved, as well as the address of their registered offices and the names of the lawyers or any other persons who will represent the parties, their claims, their arguments and the stages of the arbitration. Also, an award must be based on legal grounds (Art. 20, Section 2, AUA). Unless otherwise agreed, an award is handed down by the majority and signed by all arbitrators when a tribunal is composed of three arbitrators (Art. 19, AUA). However, if one arbitrator refuses to sign, an award has the same legal effect as if all three arbitrators had signed (Art. 21, AUA). However, if one of the arbitrators expressed a dissident opinion, it is almost certain that the parties and judges will study it in the context of a request for setting aside the award. 243. Provisional Enforcement. An arbitral tribunal may agree on a provisional enforcement of the award, under the condition that its enforcement has been requested. If a provisional enforcement request is refused when one of the parties has requested it, the tribunal must give the reasons for such a refusal (Art. 24, AUA). A provisional enforcement allows the party who requested it to benefit from the enforcement before the other party eventually contests the award. 244. Interpretation. Once an award is signed, arbitrators are no longer part of the arbitration. Nevertheless, they retain the power to interpret the award or to repair any purely procedural errors that do not affect the substantive issues (Art. 22, AUA). Furthermore, if an arbitral tribunal has failed to decide on one of the main points of dispute, it can make an additional award. In this case, the party that intends to request this motion has a thirty-day period to submit it to the arbitral tribunal, which starts running upon the notification of the award. The tribunal has a 45-day period to rule upon the request. If it is impossible to reunite a tribunal again, the power to rule upon this issue belongs to a competent jurisdiction in the location of the seat of arbitration. No deadline is imposed on this jurisdiction under the circumstances, where a new hearing with the parties can be arranged. In such a case, it is necessary, without a doubt, to apply the same principles during the request of setting aside an award. 3.3.1.5 Implementing the Award 245. Implementing an award generates principally two attitudes. For the party that lost, it will seek to contest the award. For the winning party, it will only be concerned with enforcing the rendered award. 3.3.1.5.1 Legal Remedies Following an Award 246. An award can be subject to many categories of remedies when one party wishes to have this award set aside, reviewed or enter third-party proceedings, where the goal is not enforcing the award. 98

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3  Crisis Management Setting Aside an Award 247. Working around the Absence of a Second Jurisdiction. An arbitral award is not susceptible to an ordinary appellate proceedings, opposition or pourvoi en cassation (Art. 25, AUA). However, one party can seek a legal remedy to set aside the award in a competent jurisdiction in the Member State where the seat of the arbitral tribunal is located. The remedy is admissible at any moment “as soon as the award is handed out” 35 and until the expiration of the deadline, one month after the notification of the award provided with an exequatur (Art. 27, AUA). And, if an arbitral tribunal did not grant the provisional enforcement, the implementation of legal remedies seeking to set aside an award suspends the enforcement of the award (Art. 28, AUA). The legal remedy of setting aside the award is admissible only in limited cases under the Uniform Act (Art. 26, AUA): an arbitral tribunal ruled on the dispute without an arbitration agreement or a void or barred agreement; an arbitral tribunal that has been irregularly composed or the sole arbitrator irregularly appointed; an arbitral tribunal ruled on matters outside the scope of arbitration;36 the violation of due process; the lack of legal grounds in the arbitral award or an arbitral tribunal violated international public policy or public policy of one of the Member States.37 National jurisdictions cannot examine the substantive issues of a dispute. They can intervene only in cases where such a review is necessary to determine whether there was indeed a violation of international public policy. But, in the same case, a state jurisdiction does not have the power to rule over the substantive issues. It can only reject legal remedies or, if it deems it appropriate, set aside the award, making it void of any legal effect. Consequently, in the case of setting aside the award, one of the parties must engage a new arbitration proceeding in order to obtain an award over the substantive issues (Art. 29, AUA). 248. Possibility of a pourvoi en cassation. An award is not susceptible to a pourvoi en cassation. However, any ruling from a state court rendered in the framework of a procedure to set aside the award – rejecting or admitting the validity of an award – is susceptible of a pourvoi en cassation in the CCJA (Art. 25, AUA). For the legal remedies against a court ruling rejecting an exequatur, see infra, § 253.

35 The term ‘handing out the award’ in this case is a little curious because the time period for seeking legal remedies actually starts with the notification of the award. 36 In order for the claim that the arbitrator(s) did not respect the scope of arbitration to prosper, it is necessary to explain where exactly the arbitrator(s) failed in their duties, CCJA n 010/2003, 19 June 2005: OHADATA J-04-108, . 37 A strict interpretation of this text might lead to difficulties determining the exact meaning of international public policy when taking into consideration the interpretation of international public policy of each Member State. However, we can assume that an award obtained by fraud will be declared null and void under this provision. For a study of public policy in this context, see J. Beguin, & M. Menjucq, Droit du commerce international, § 2745 et seq., pp. 1080 and 1081.

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International Arbitration and Corporate Law Appeal for Review and Third-Party Proceedings 249. Procedures for Review. The procedure for review of an award by an arbitral tribunal is admissible every time the parties discover a new relevant fact that can exert enough decisive influence and that, before handing out an award, was unknown by the arbitral tribunal and the party requesting the review (Art. 25, AUA). The Uniform Act does not set any deadlines to request a revision of an award, nor the intervention of a state jurisdictional body if an arbitral tribunal cannot be reconvened to rule over the motion for revision. The CCJA case law is to be followed concerning these points, because the practical implementation of the revision supposes to find ways to allow the parties to benefit from the remedies available to them. 250. Third-Party Proceedings. All third parties that were not called upon to take part in arbitral proceedings and that believe that an award harms their rights can motion for third-party proceedings in arbitral proceedings (Art. 25, AUA). This provision is original because only the parties that have signed an arbitral agreement are held to it. Moreover, there are not, in principle, many possibilities to call upon third parties to be part of arbitration. However, the Uniform Act does not detail the procedure that must be followed by third parties who wish to have third-party proceedings linked to arbitration, nor time periods or deadlines, nor the possibility to seek a state court if an arbitral tribunal cannot be gathered again. These proceedings constitute an original solution for OHADA law allowing a person to defend his rights and interests that are affected by an award, considering that the arbitration is, normally, confidential. We can appreciate in this point the innovative aspect of the uniform law, but we cannot be certain that the implementation of this solution conforms to the classical fundamental rules in international arbitration. 3.3.1.5.2 Enforcement of the Award 251. Most international arbitration awards are subject to the voluntary enforcement of the parties. This principle must not be altered in corporate law and other domains of business law, because the parties generally choose arbitration to settle their dispute because of the celerity of the proceedings. Moreover, because the parties are the ones who appoint the arbitrator(s), it is easier for them to accept their decision, even if it is unfavourable. Therefore, there are few cases where implementing an obligatory enforcement of the award is necessary, notably when the other party resists any enforcement attempts. In this case, when reaching the enforceability of the award, it must be complemented with an exequatur issued from a competent state jurisdiction of one of the Member States (Art. 30, AUA), because only the state courts have the necessary imperium to enforce an award. However, the text that contains this provision has some ambiguities, because it does not specify whether it is within the jurisdiction of a Member State where an award was handed out or the jurisdiction of a Member State where one party seeks to

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3  Crisis Management enforce the award, which evidently does not have the same consequences. However, it must logically mean the jurisdiction of a Member State where an award has the vocation to be enforced, because the rulings of one jurisdiction cannot have, in principle, extrajurisdictional effects. Exequatur Procedure 252. Requesting an Exequatur. The party that requests an exequatur must provide one original format of an award and the arbitration agreement, or a copy of these documents but with complementary documents that prove their authenticity. If these documents are not drafted in French, a translation in French must be provided, certified by a registered translator, from the list of expert translators from the competent jurisdiction (Art. 31, AUA). This last provision may cause certain difficulties for physical or legal persons whose official language is English, Portuguese or Spanish. Consequently, it is likely necessary to translate the award to the official language of the jurisdiction where an exequatur is requested. A clarification by the CCJA or a modification of the Uniform Act will be nevertheless useful. 253. The Exequatur Ruling. An exequatur is refused if an award is manifestly contrary to the rule of international public policy of Member States (Art. 31, AUA). This provision is a little ambiguous because it is a delicate matter to question public policy rules of other countries. It may be a determined state, a community of Member States of the Uniform Act or supra-state international public policy. Judges surely have different views on what is the standard in international public policy regarding the different levels of legal protection. Thus, it is important to look to case law on this point to fully grasp this issue. A ruling that refuses an exequatur is susceptible of a pourvoi en cassation in the CCJA. However, the ruling that admits an exequatur is not susceptible to any legal remedy except during the context of a procedure to set aside the award because this procedure renders the award suspended until an outcome is reached (Art. 32, AUA). The refusal of a procedure to set aside the award logically causes the validation of an award and an exequatur (Art. 33, AUA). Recognition of Awards Rendered Outside the Scope of the Uniform Act 254. Recognition. The recognition of arbitral awards rendered under the Uniform Act arbitration rules is covered by the texts (Art. 34, AUA).38 Foreign arbitral awards are rendered by an arbitral tribunal that has the seat of arbitration located elsewhere than that of the countries of the parties. Article 34 of the Uniform Act supports that awards

38 See P. Le Boulanger, “La reconnaissance et l’exécution des sentences arbitrales”, Penant, n spécial 833 OHADA, May-August 2000, p. 166 et seq.

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International Arbitration and Corporate Law are recognized under the conditions provided by international conventions that are applicable, or in lack of this, an award is recognized by the conditions provided by the Uniform Act.39 255. Enforcing Foreign Awards. A problem might arise because the Uniform Act only mentions the ‘recognition’ of awards and not the ‘enforceability’; hence we can suppose that the intention of its drafter was to equally include the enforceability of foreign awards. If this problem does not present itself when the enforceability of an award is sought under the New York Convention, which binds the Member States to recognize and enforce the awards when certain conditions are met, then it could proceed differently. One example is if a party seeks to enforce an award in a country that is not a party to the convention. In this case, the issue is whether we should interpret the Uniform Act to recognize the enforceability of an award; moreover, we should take into consideration the pre-existing national legislation in arbitration (if available). 3.3.2

Arbitration under the Auspices of the Cour Commune de Justice et d’Arbitrage (CCJA)

256. The Uniform Act establishes a standard procedure to resolve private contractual disputes by way of arbitration under the CCJA.40 This very original mechanism constitutes a form of institutional arbitration specific to OHADA law and the zones covered by Uniform Acts. The provisions of the treaty about arbitration are complemented by a set of arbitration rules, the CCJA rules, adopted 11 March 1999 (the same date that the Uniform Act on Arbitration was adopted) and entered into force thirty days later.41 The CCJA rules strongly resemble the ICC arbitration rules. There are, nevertheless, differences between the two rules, notably in the enforceability of awards and the legal

39 The most useful international convention is the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. There are nine Member States that are parties to this convention: Benin, Burkina Fasso, Cameroon, Ivory Coast, Guinea, Mali, Nigeria, the Central African Republic and Senegal. It is advised to refer to bilateral conventions regarding mutual recognition of justice rulings that may be applicable to awards and allow easier enforcement in the OHADA zone, which contains quasiautomatic mechanisms of validity. 40 R. Amoussou-Guenou, “L’arbitrage dans le Traité relatif à l’harmonisation du droit des affaires”, Revue de droit des affaires internationals, 1996, n 3, p. 321 et seq. 41 R. Bourdin, “Le Règlement d’arbitrage de la cour commune de justice et d’arbitrage”, Revue camerounaise de droit, n 5, April-June 1999, p. 10 et seq. R. Bourdin, “A propos du Règlement de la cour commune de justice et d’arbitrage”, in L’OHADA et les perspectives de l’arbitrage en Afrique, op. cit., p. 151. G. Kenfack-Douajni, “L’arbitrage CCJA”, Revue camerounaise de l’arbitrage, 1999, n 6, p. 3, et seq.; G. Kenfack-Douajni & C. Imhoos, “Le Règlement d’arbitrage de la Cour Commune de Justice et d’Arbitrage de l’OHADA”, Revue de droit des affaires internationales, 1999, n 7, p. 825 et seq. P.G. Pougoue, “Le système d’arbitrage de la Cour commune de justice et d’arbitrage”, in L’OHADA et les perspectives de l’arbitrage en Afrique, op cit., p. 129 et seq.

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3  Crisis Management remedies available to contest them. The CCJA rules determine the arbitration fees according to the type of procedures; a scale for administration fees and arbitrator(s) fees is included in the rules.42 3.3.2.1 OHADA’s Own Institute 257. CCJA arbitration is designated by the Uniform Acts as the institutional arbitration dedicated to OHADA. In this type of arbitration, the CCJA plays a real role as an arbitration centre, like the model of the International Court of Arbitration of the ICC that is located in Paris. 3.3.2.1.1 Scope of Application of the CCJA Arbitration Procedure 258.  Disputes of Inter-community International Commerce Interests. CCJA arbitration is not possible if there are certain links with one or more Member States. Article 21 of the treaty states that in application of an arbitration clause or an arbitration compromise, all disputes of a contractual nature can be submitted to CCJA arbitration when one of the parties has residence in one of the Member States or the contract was performed or ought to be performed, in whole or in part, in the territory of one of the Member States. It is not expressly stated that the seat of the arbitral tribunal must be located in the territory of a Member State. Consequently, it does not appear to be an obstacle to have the seat of the arbitral tribunal in CCJA arbitration located in a non-Member State. For practical reasons, however, notably for legal remedy procedures, it is advisable not to fix arbitration outside the OHADA zone. 3.3.2.1.2 CCJA as an Arbitration Centre 259. Administrative Functions. The CCJA does not have jurisdictional functions. Like all arbitration centres, it only has administrative functions.43 One main difference between the ICC and the CCJA is that the CCJA plays an important role in the enforcement of an award. The CCJA’s functions as an arbitration centre entails appointing the arbitrator(s) (or confirming the party-appointed arbitrator[s]); ruling over arbitrator recusal; overseeing the proceedings and reviewing the project awards. The decisions made by the CCJA are administrative in nature and not jurisdictional. They are not susceptible to any appeal and their motives are never communicated to the parties (Art. 1.1, CCJA Rules). The administrative functions of the CCJA are under the management of a General Secretary, who is also the chief clerk of the CCJA, whose duty is to ensure, most notably, that all the

42 See infra, Ann. 3, Art. 14 et seq. 43 T. Lauriol, “Le centre d’arbitrage OHADA: formation et effets de la convention d’arbitrage”, Revue de droit des affaires internationales, n 8, 2000, p. 99 et seq. J. M’Bosso, “Le fonctionnement du centre d’arbitrage et le déroulement de la procédure arbitrale”, Revue camerounaise de l’arbitrage, n spécial, October 2001, p. 42 et seq.

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International Arbitration and Corporate Law necessary notifications are done (Art. 1.1, CCJA Rules). This type of institution is interesting, but it can pose a problem regarding the principle of independence. In fact, when the CCJA handles arbitration as the arbitration centre, it may seem strange that it also functions as a regulating body of an award. This function does not affect the award itself, and plenty of arbitration centres function this way as well. The scrutiny of the award by the centre is one of the techniques that ensure the quality of the award and also that ensure that the arbitrators have responded to the claims submitted by the parties. The internal functioning rules of the CCJA, and how motions are formed over the quality of an award, must be precisely examined to know the degree of independence the arbitrators have reached in their conclusions. 3.3.2.2 Arbitration Agreement 260. Formalism. The CCJA texts do not mention anything about the written or the nonwritten form of an arbitration agreement. Nevertheless, it is preferable for parties to indicate in writing their choice of having CCJA arbitration, in order to avoid any difficulties. If there is no agreement that includes the application of CCJA rules, and if a defendant opposes arbitration or has not replied to the request of arbitration within 45 days, the CCJA can decide that the arbitration will not take place (Art. 9, CCJA Rules). When the CCJA esteems that there is an arbitration agreement that intends to resolve the conflict by way of CCJA arbitration, but that one of the parties refuses to participate in the proceedings, the arbitration will proceed notwithstanding the refusal (Art. 10.2, CCJA Rules), which does not impede the arbitration proceedings from starting, but will constrain the centre, and arbitrators will have to pay special attention to the notification procedures in order to respect the adversarial principle. 261. Principle of Autonomy. According to the autonomy principle of an arbitration clause, an arbitral tribunal can rule over the dispute even if the contract between the parties is null, pursuant to the condition that the arbitration clause is valid (Art. 10.4, CCJA Rules). 3.3.2.3 Arbitral Tribunal 262. The arbitrator appointment procedure is very organized and the composition of an arbitral tribunal varies according to the wishes of the parties or if they prefer the CCJA as an appointment authority. 3.3.2.3.1 Nomination of Arbitrators by the Parties 263. Principle of Imparity. The parties must choose to have an arbitral tribunal composed of one sole arbitrator or three arbitrators. If the parties cannot reach an agreement in this matter, the CCJA will appoint a sole arbitrator, unless the dispute merits the involvement of three arbitrators (Art. 3, CCJA Rules). If one party wishes to have a sole arbitrator, or if they consider that it would be desirable that three arbitrators resolve all disputes that arise from the contract, it is best to stipulate this in an arbitration agreement.

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3  Crisis Management 264. The rules regarding the appointment of arbitrators are essentially similar to the rules for arbitration according to the rules of the Uniform Act (Art. 3, CCJA Rules) and give priority to the choices of the parties. The CCJA will not interfere in the confirmation of their choices. However, if the parties or one of the parties fail to appoint an arbitrator, or if the parties cannot reach an agreement over the arbitrator(s), it is the CCJA (and not a state jurisdiction) who will appoint the arbitrator(s) (Art. 3.1, CCJA Rules). In this case, the CCJA will need to appoint all three arbitrators; it will appoint the President as well, unless the parties have agreed otherwise. 3.3.2.3.2 Nomination of Arbitrators by the CCJA 265. Organization of Multiple-party Arbitration. One difference between the Uniform Act and the CCJA rules is that the CCJA rules established the possibility of arbitration involving multiple parties. Under Article 3.1, when there are multiple parties, claimants or respondents, they must provide conjoint propositions for the appointment of arbitrator(s). If they do not reach an agreement in the allotted time period, the CCJA can appoint the entirety of the tribunal. This way, any inequality among the involved parties for the appointment of the arbitrator(s) is avoided. 266.  CCJA List of Arbitrators. The arbitrators can be chosen from an arbitrators list established by the CCJA and updated yearly (Art. 3.2, CCJA Rules). To establish this list, the CCJA can take prior opinions of practitioners who are competent in a field in the domain of international commercial arbitration. 267. Arbitrator Appointment Criteria by the CCJA. When the CCJA appoints an arbitrator, it must take into account the nationalities of the parties, their place of residence, as well as the place of residence of other arbitrators and parties’ counsel, the languages of the parties, the nature of the main points of the dispute and, eventually, the laws chosen by the parties that will rule over the dispute (Art. 3.3, CCJA Rules). These criteria are only some indications because decisions taken by the CCJA are purely of an administrative nature and not susceptible to any appeal. 3.3.2.3.3 Unique Status of the Arbitrators Nominated by the CCJA 268.  Principle of Independence. The CCJA rules indicate that an arbitrator must be independent of the parties and that he must inform the CCJA of facts and circumstances that might tarnish the appearance of independence in the eyes of the parties, to which the CCJA informs the parties and fixes a time period where they will make their observations over this issue known to them (Art. 4.1, CCJA Rules). The CCJA can rule over claims of recusal. The party that intends to raise the motion of recusal must do it within thirty days upon the notification of the appointment of an arbitrator in mind, or thirty days following the date which they were informed of the facts that will substantiate the claim, if the date is after

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International Arbitration and Corporate Law the notification of the appointment of an arbitrator. The party or parties, the arbitrator in question and the other arbitrators are invited to present their observations in written form (Art. 4.2, CCJA Rules).44 269. Diplomatic Immunity of the Appointed Arbitrators. Article 49 of the treaty constitutes an extremely original provision of CCJA arbitration. Indeed, the CCJA-appointed arbitrators enjoy, through the exercise of their functions, privileges and diplomatic immunity. This means that these arbitrators, and not the ones appointed by the parties, cannot be openly prosecuted by any legal action that the parties initiate. This provision intends to protect the arbitration centre’s appointed arbitrators against any actions done in bad faith; it also highlights the person of the arbitrator and not his duties, which can be pursued for engaging his liability. This rule creates a surprising inequality among arbitrators, which has been subject to many critiques.45 270. Resignation and Replacement. In principle, an arbitrator cannot resign and must continue his duties until the end (Art. 4.1, CCJA Rules). The CCJA can, however, decide on the resignation of an arbitrator if it considers it to be well justified. Replacing an arbitrator is obligatory when the arbitrator has died, when the CCJA has admitted his recusal or when his resignation has been accepted by the CCJA (Art. 4.3, CCJA Rules). If an arbitrator resigns and the CCJA refuses, but this arbitrator does not continue his duties, he must be replaced when it is a sole arbitrator or the president of the arbitral tribunal. If, however, he is another member of a composed arbitral tribunal, the CCJA will determine whether this member should be replaced or not, taking into account the stage of the arbitral proceedings and the comments of the other two arbitrators. In the case where the CCJA decides that there are no grounds for the replacement, the procedure will continue, and the award will be rendered despite the resignation of the arbitrator (Art. 4.3, CCJA Rules). An arbitrator might be replaced if he is impeded in accomplishing his duties or if he does not perform his duties in an effective manner. In this case, parties and arbitrators, including the arbitrator in question, are invited to make observations. If the soon-to-be-replaced arbitrator was appointed by one of the parties, this party is invited to give their opinion about appointing a new arbitrator. But the CCJA is not, nevertheless, held by this opinion (Art. 4.4, CCJA Rules). Once the arbitral tribunal is reconstituted after all the above-mentioned situations have passed, it will decide where to take up the proceedings again, after inviting the parties to make their observations known (Art. 4.5, CCJA Rules).

44 In a recent case, a party protested the nomination of an arbitrator, for lack of independence because the arbitrator in question had ruled against the same party in a prior proceeding. CCJA arrêt n 010/2010/CCJA/ ADM/ARB du 9 April 2010. 45 P. Le Boulanger, “L’arbitrage et l’harmonisation du droit des affaires en Afrique”, Revue de l’arbitrage, 1999, n 3, § 74-75, p. 578; F.-M. Sawadogo, “Le droit OHADA de l’arbitrage”, in Mélanges Guyon, Aspects actuels du droit des affaires, Dalloz, 2003, p. 963.

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3  Crisis Management 3.3.2.4 Arbitral Proceedings 271. From the request for arbitration to an award rendered by an arbitral tribunal or sole arbitrator, the Uniform Act and the CCJA arbitration rules serve to highlight the rights and duties of all participants of the proceedings and to assure that the award will be rendered in the best material and legal conditions. 3.3.2.4.1 Request for Arbitration 272.  Submitting the Request for Arbitration. The CCJA rules contain detailed provisions for the procedure to be followed during the course of the arbitral proceedings.46 The proceedings start with a request of arbitration addressed to the secretary general (Art. 5, CCJA Rules).47 The request should have specific references to Article 5 of the CCJA rules, and have a summary of claims and supporting documents for the claims. The claimant must also advance the fees for the arbitration. Unlike the ICC, the CCJA does not send the respondent a copy of the request for arbitration. It is the claimant’s duty to send a copy. Moreover, the secretary general notifies the respondent the day of receipt of the request for arbitration and acknowledges receipt of the request for arbitration. The date of receipt is considered to be the date of commencement of the arbitration proceedings. 273. Time period for Answer. Within 45 days of the notification of receipt by the Secretary General of the CCJA, a respondent must respond to the request for arbitration (Art. 6, CCJA Rules). Along with a brief explanation of the facts and the position of a respondent to the claims raised against him, the answer must have a confirmation or denial of the existence of an arbitration agreement between the parties. A respondent can also raise a counterclaim, to which a claimant must respond within a 30-day time period (Art. 7, CCJA Rules). 274. Intervention by the CCJA. After the exchange of the request for arbitration and the answer (or expiration of the deadline for an answer), the CCJA fixes the fees for arbitration, fixes the seat of arbitration if the parties have not chosen one and assigns the case to an arbitral tribunal once it is constituted (Art. 8, CCJA). The tribunal can, after consulting the parties, decide to have the hearings in another location other than the seat of arbitration, notably for practical reasons or to avoid making one of the parties travel long distances and incur steep travel expenses (Art. 13, CCJA). In the case of disagreement on the location of the hearings, the CCJA will have the final say. Changes in the location of hearings do not affect the seat of arbitration. Moreover, when

46 A. Bamba, “La procédure d’arbitrage devant la Cour commune de justice et d’arbitrage”, Penant, n spécial 833 OHADA, May-August 2000, p. 147 et seq. 47 One difference between judicial proceedings from the CCJA is that when it is a CCJA arbitration, the parties do not have the obligation to choose their main address in Abidjan.

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International Arbitration and Corporate Law the circumstances render the arbitral proceedings impossible or difficult in the place where the parties have assigned the seat of arbitration, the CCJA can, upon the request of both parties, one of the parties or an arbitral tribunal, choose another seat (Art. 13, CCJA).48 3.3.2.4.2 Implementation of the Procedure 275. First Meeting. Within sixty days from the receipt of the case by the arbitral tribunal, a meeting must take place between the parties and the tribunal. A procès-verbal of the meeting will be made to determine the object of the arbitration and certain questions regarding procedure (Art. 15, CCJA Rules). This procès-verbal must contain a summary presentation of the parties’ respective claims; the seat of arbitration and the language of arbitration, as well as the choice of laws that will rule over the substantive issues and that will rule over the proceedings and finally, any agreement or disagreement the parties have regarding the existence or non-existence of the arbitration agreement that was sent to the CCJA. If there is a lack of agreement over the language of the arbitration, the tribunal will make an immediate decision after hearing the parties over the issue (Art. 15.1[b], CCJA Rules). During this meeting the tribunal must ask the parties if they intend to give the tribunal the power to decide as amiable compositeur (Art. 15.1[b], CCJA Rules). If needed, an arbitral tribunal can appoint one or more experts and define their duties (Art. 19.3, CCJA Rules) during the first meeting or at any moment during the proceedings. 276. Establishing the Provisional Calendar. A tribunal must fix a provisional calendar highlighting the dates for submitting their memoranda as well as the dates when the hearings will take place (unless the parties decide not to have hearings), after which the debates will be closed. Unless the parties have already agreed, the dates for the hearings must not be fixed more than six months after the first meeting (Art. 15.1(b), CCJA Rules). In case of urgency, the tribunal may modify the provisional calendar on its own initiative or upon the request of the parties. In this case, the modified calendar is then communicated to the CCJA (Art. 15.3, CCJA Rules). The award must be signed within the ninety days from the closure of the debates. This time period can always be extended by the CCJA, upon request by the tribunal (Art. 15.4, CCJA Rules).

48 The distinction between the seat of the tribunal and the location of the hearings has little importance if the enforcement of the award must take place inside the OHADA zone because, as it will be mentioned after, the CCJA can render exequatur ordinances at a supra-national level, which allows the enforcement without problems of all the awards handed out in Member States. If, however, the seat is transferred from a Member State party to the New York Convention (Benin, for example) to a non-party State (Togo, for example), the enforcement of the award might become difficult in other countries, like France, where the New York Convention is not applied to foreign arbitral awards handed out in States not party to this Convention.

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3  Crisis Management 3.3.2.4.3 Arbitration Fees 277. Fixing the Fees. After the exchange of the first written submissions, the CCJA fixes the fees the parties must advance to cover the provisional costs of arbitration (Art. 11.1, CCJA Rules). These fees include an arbitrator’s fees and expenses, administrative fees of the CCJA, the arbitral tribunal’s fees and the fees of the eventual experts. Arbitrator’s fees and administrative fees are determined in relation to the value of the claims and the fee scale.49 If the tribunal is composed of three arbitrators, the total amount of their fees will be three times the amount of a single arbitrator. The provision may be adjusted during the course of the proceedings, if the value of the claims changes by at least 25%, or if new elements render the adjustment necessary (Art. 11.1, CCJA Rules). 278. Differentiated Provisions and Lack of Payment. In principle, the provisions are due in equal parts by claimant and respondent. Moreover, if one of the parties abstains from paying their share, the other party can pay the total amount of the provision. The fees must be advanced in their entirety before transferring the case to an arbitral tribunal. If the parties wish, they can only comply with one-quarter of the provisions, subject to the condition of a bank guarantee for the rest of the fees (Art. 11.2, CCJA Rules). By the request of one of the parties, different fees can be assigned to the claims and to the counterclaims. The tribunal cannot be convened until the fees are covered either by the actual payment of the fees or by having a bank guarantee for the unpaid sums. Either way, the proceedings will be brought to a halt until the complete amount of the fees are paid, which can be requested during the course of the proceedings (Art. 11.3, CCJA Rules). 3.3.2.4.4 Applicable Law and Arbitrators’ Jurisdiction 279. Rules of the Proceedings and the Law that Governs the Substantive Issues. The rules that are applicable to the procedure will be the CCJA Rules. In the absence of rules over the proceedings, the rules that are applicable are those agreed by the parties or, if none are chosen, those determined by the tribunal. The use of domestic law for the proceedings is authorized but remains facultative (Art. 16, CCJA Rules). Regarding the substantive issues, an arbitral tribunal must apply the law chosen by the parties. If the parties have not made a choice, the tribunal will apply the law designated by the conflicts of law, taking into account the customs in international commerce (Art. 17, CCJA Rules). 280. Exceptions in limine litis. If one of the parties wants to raise a question of jurisdiction, it must do so, at the latest, during the first meeting of an arbitral tribunal. A tribunal may also examine the lack of jurisdiction on its own at any moment for issues of public policy. The tribunal may rule on its own jurisdiction in an initial award, a partial award or final award after the debates on the substantive issues (Art. 21.3, CCJA Rules). The 49 See infra, Ann. 3.

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International Arbitration and Corporate Law practice of a procedural order attached to the final award does not seem to pose a problem in the framework of the CCJA, because it is flexible enough regarding the timing of the decision on jurisdiction. This position is quite satisfying because it avoids having to rule immediately in a partial award, susceptible to a motion for setting aside the award if it deals with the substantive issues, which might slow down the proceedings. The arbitrators will render either partial awards or procedural ordinances on a case-by-case basis, depending upon the seriousness of the jurisdictional issue. 281. Provisional and Conservatory Measures. An arbitral tribunal has the jurisdiction to order any provisional or conservatory measure during the proceedings, except if the parties have agreed otherwise (Art. 10.5, CCJA Rules). This rule is very useful because it allows the arbitrators to ensure the conservation of evidence and to reply with diligence to the parties’ requests. If an exequatur is necessary for enforcement measures, it can be requested immediately at the CCJA or submit this request to a judge of the CCJA who has been appointed for these purposes (Arts. 10.5 and 30.2, CCJA Rules). Before the communication of the file to the tribunal, and after the transfer of the file in the case of urgency, the party concerned may request provisional or conservatory measures to the competent jurisdiction. In this case, the CCJA must be informed of the request, as well as all other measures ordered by the state court that must in turn inform the arbitral tribunal (Art. 10.5, CCJA Rules). 3.3.2.4.5 The Award 282. Arbitrators’ decisions have a particular value in CCJA arbitration. In addition to the classical principles of international arbitration, there are certain existing specificities that are important. Drafting the Award 283.  CCJA Scrutiny of Awards. Before the final signature of the arbitral tribunal, all awards concerning jurisdiction, partial awards that put an end to certain contentions of the parties or a definitive award are scrutinized by the CCJA (Art. 23.1, CCJA rules). During the review of the draft award project, the CCJA can propose changes (Art. 23.2, CCJA rules). If this is a final award, the CCJA must notify the arbitral tribunal of the final amount of the arbitration costs, fix the fees of arbitrators and determine in what proportion the fees will be shared between the parties (Art. 24.1, CCJA rules). Unless otherwise agreed upon by the parties, provided that such agreement is permissible under applicable law, all awards must be legally grounded (Art. 22.1, CCJA rules). 284. Signature of the Award. An arbitrator shall sign the award. If the court is composed of three arbitrators and no majority emerges (which assumes that each arbitrator proposes a different solution), the presiding judge alone decides and he is the only one required to sign the award. If a majority determine the award, a minority arbitrator may refuse to sign without affecting the validity of the award. Any separate or dissenting opinion may also be attached to the award at the request of the arbitrator (Art. 22.4, CCJA Rules). Once the 110

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3  Crisis Management costs of arbitration have been fully paid, the Secretary General shall send the signed award to the parties (Art. 25.1, CCJA Rules). Amendment of an Award 285. Correction, Interpretation or Complements of the Award. Any request for correction of clerical errors, interpretation or an addendum to the award must be addressed to the CCJA within 45 days of the notification of the award (Art. 26, CCJA Rules). The request shall be forwarded immediately to the arbitral tribunal, which must give the parties the opportunity to comment on the issue. The arbitral tribunal will then draft an award for consideration by the CCJA within sixty days. If it is impossible to reconstruct the same court, the CCJA will appoint one or more new arbitrators after consulting the parties.50 286.  Fees and Expenses. This procedure has no mechanism for payment of additional fees, except in cases where it is necessary to appoint a new arbitrator (Art. 26, Sections 3 and 5, CCJA Rules). Assuming it is possible for the court to approve such a request, a tribunal will be made up of a new arbitrator and two previously appointed arbitrators. The CCJA Rules do not explain how the issue of the fees should be dealt with. An interpretation of the CCJA rules is needed to clarify this issue. If arbitration costs are incurred, these must be borne by the party raising the motion if it is rejected completely. Otherwise, the costs of arbitration are shared between the parties in proportion determined by the modified award (Art. 26, Section 5, CCJA Rules). 287. Authority of res judicata. Awards made under the CCJA rules have the final authority of res judicata in the territory of each Member State, as well as decisions made by state courts. The awards can also be enforced in the territory of any Member State (Art. 27, CCJA Rules). It is nevertheless necessary for a party intending to proceed with the enforcement of the award in a Member State to first obtain an ordinance for enforcement (Art. 30.1, CCJA Rules). 3.3.2.5 Enforcement and Remedies 288. Like all arbitration proceedings, CCJA arbitrations benefit from the parties’ goodwill. Parties are thus encouraged to voluntarily carry out the decisions. But there are options for a losing party that resists enforcement of the award. In some cases, the losing party may challenge the award, under the condition that it establishes proof of a breach of public policy. 50 In a common law procedure pursuant to the Uniform Act and under these specific circumstances, there is no procedure before the constitution of a new arbitral tribunal, but the dispute is subject to a national competent jurisdiction. This obligation of establishing a new tribunal seems curious when there is a claim for the interpretation of the award rendered by the tribunal of origin. The CCJA rule solution is not clear on the point of knowing whether there is a case by a tribunal composed of three arbitrators, whether it is necessary to establish a completely new tribunal or only the arbitrator(s) who can no longer perform as arbitrator are replaced. It would be desirable that the Uniform Act clears up this issue.

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International Arbitration and Corporate Law 3.3.2.5.1 Enforcement 289.  Prior to an Exequatur. The party that wants to proceed with the enforcement of a CCJA award must apply for the CCJA exequatur (Art. 30.1, CCJA). An ordinance for enforcement is granted by the President of the CCJA or the judge designated for that purpose, and cannot be denied on the merits or the basis of a grievance that can ground a challenge to the validity of the award (Arts. 30.2 and 30.6, CCJA Rules). The international award benefits from complete autonomy. For example, the enforcement of such an award has been accepted in France, and attempts to block its enforcement in courts have been dismissed, when a motion to set aside the award was raised in the Ivorian courts.51 290.  Appeals. If enforcement is refused, the applicant may appeal that decision to the CCJA (Art. 30.4, CCJA Rules). Unlike the enforcement procedure, this application is judged according to an adversarial procedure in one of ordinary judicial hearings in the CCJA. It is the same for any appeal against the ordinance of exequatur contesting the validity of an award (Art. 30.3, CCJA Rules). If the award is already subject to a proceeding where its validity is contested, an exequatur will be denied for procedural reasons. In this case, the two motions are consolidated, and the CCJA rules on both the validity and the enforceability of the award (Art. 30.3, CCJA Rules). If the exequatur is denied in such circumstances, the refusal is subject to appeal. 291.  Power of Enforcement. The order of an exequatur gives the ability to enforce an award in all Member States (Art. 30.2, CCJA Rules). It will be, nevertheless, necessary to attach an exequatur to the award, granted by the national authority of the State where enforcement is to take place, even if it is, under the CCJA rules, a simple formality, which cannot be overlooked (Art. 31, CCJA Rules). 3.3.2.5.2 Appealing Awards under CCJA 292. Challenge to Validity. Awards of the CCJA are not susceptible to appeals. However, the validity of an award may be challenged on the basis of one or more limited grounds listed in the CCJA rules (Art. 29, CCJA Rules). Although terminologies are not identical, proceedings to contest the validity of an award have essentially the same effects as an action to set aside the award under the Uniform Act and other national laws on arbitration. However, contrary to what is permissible, for example, under French law, it is possible to give up the right to challenge the validity of an award. In such a case, an award will not be subject to any appeal, and its control will happen only within the framework of the exequatur procedure. 293. Challenge Procedure. A party wishing to contest the validity of an award must do so before the CCJA upon request at any time between handing out the award and the 51 CA Paris, 31 January 2008: Société Ivorienné de raffinage, LPA, 3 October 2008, n 199, p. 24.

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3  Crisis Management expiration period, which is two months after notification (Art. 29.3, CCJA Rules). Of course, the CCJA will no longer have the role of administrative organization of the arbitration. It will assume a judicial function in accordance with Article 25 of the treaty. The CCJA will rule on its formation according to the ordinary contentious process. 294. The Grounds to Challenge an Award. Contesting the validity of an award is admissible only if it is based on the following grounds: when the arbitrator rules that there is no arbitration agreement or an agreement is void or expired; when the arbitrator rules without complying with the duties it has been assigned; when the adversarial principle has not been respected or the award is contrary to international public policy (Arts. 29.2 and 30.6, CCJA rules).52 These grounds are more restricted than the grounds provided by the Uniform Act, which allow an action for annulment founded not only on the reasons provided in the CCJA rules but also on the lack of substantiation of the award or irregular constitution of the arbitral tribunal. It is logical that the lack of legal reasoning is not a ground for contesting the validity of an award as the CCJA rules themselves do not require that reasons be given. If, however, the parties’ agreement or applicable law requires legal support, we can assume that any lack of substantiation would be considered a breach of the court and its obligation to comply with the duty entrusted to it, which would then be grounds for challenging the validity of the award. The absence of any provision that would allow parties to challenge the validity of an award in the event of improper constitution of the arbitral tribunal is more troubling. This failure probably stems from the fact that the application of CCJA rules and the appointment of arbitrators by the CCJA itself should ensure the regular constitution of the tribunal. 295. Acceptance of Setting Aside the Award. The CCJA annuls the award if the challenge of its validity is well-founded. In this case, and if the parties have requested it, it will rule on the merits. If the parties have not requested the review, the arbitral proceedings resume at the request of either party from the last act of the arbitration proceedings that the CCJA recognized as valid (Art. 29.5, CCJA rules). It seems that the evocation is required when the annulment of an award is related to the absence, the nullity or the expiration of an arbitration agreement, because in this case, the arbitration cannot resume. 296. Revision. A party may also seek review of an award or a judgment of the CCJA, having decided on the merits following the annulment of an award (Art. 32, CCJA rules). The review may be requested when there is a discovery of a new fact with decisive influence and which, before handing out the award or the decision, was unknown to the arbitral tribunal or the CCJA. The request for review must be filed within three months from the

52 Unlike the Uniform Act, the CCJA Rules do not mention international public policy of “Member States.”

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International Arbitration and Corporate Law date the party knew the fact in question, and ceases to be admissible after a period of ten years from an award or of the original judgment (Art. 49, CCJA rules). 297. Admissibility of Third-party Proceedings. Third-party proceedings are allowed before the CCJA (but not before the arbitral tribunal, in contrast to what is provided by the Uniform Act) against arbitral awards and judgments where the CCJA decided on the merits. This procedure is open to third parties that were not called to the procedure, where the award or the ruling required them to pay damages (Arts. 33 and 47, CCJA rules). 298. Comparison chart of the procedure for ad hoc arbitration governed by the Uniform Act and arbitration procedures under the CCJA and ICC.

Uniform Act

CCJA

ICC

Seat of the arbitral tribunal in a Member State.

Application of an arbitration clause or agreement to arbitrate. The dispute may be submitted to arbitration by any of the parties to the contract, by one of the parties who has his residence in one of the Member States, where the contract is performed or has the vocation to be performed, in part or whole in the territory of one or many of the Member States.

Disputes that have an international aspect in the business world, pursuant to the ICC rules or disputes pertaining to business affairs that do not have an international aspect but the arbitration agreement attributes jurisdiction to the ICC.

2. Arbitral tribunal Disputes are resolved by a sole arbitrator or by three arbitrators. Appointments made by a national jurisdiction, if needed. No provisions regarding multipleparty arbitration. Recusal of arbitrators possible before a national jurisdiction.

Disputes resolved by a single arbitrator or by three arbitrators. The arbitrators may be chosen from a list of arbitrators established by the CCJA, which is updated each year. Multiple-party arbitration is possible. Recusal of the arbitrators before the CCJA.

Disputes resolved by a single arbitrator or by three arbitrators. If the parties have not agreed on the number of arbitrators, the ICC Court appoints a sole arbitrator, in the case where it is not justified to have three arbitrators. Recusal of the arbitrators possible before the ICC Court.

1. Jurisdiction

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3  Crisis Management Uniform Act

CCJA

ICC

3. Procedure

Procedural rules chosen by the parties or the arbitral tribunal.

CCJA rules: Request for arbitration answer and, if needed, counterclaim in a time period of 45 days; answer of counterclaim within 30 days; request for arbitration addressed to the Secretary of the Court; answer and, if needed, counterclaims from respondent within 30 days.

ICC rules: Tribunal’s meeting with the party within 60 days; drafting the calendar of the proceedings; possibility for the claimant to answer for counterclaims within 30 days; establishing the Terms of Reference and approval act by the ICC Court; hearings and closure of debates.

4. Provisional and conservatory measures

May be ordered by a national court.

Before the communication of the case file to the arbitral tribunal, parties have the possibility to seek any judiciary authority. Arbitral tribunal may order the delivery of the case file. Request for exequatur immediately possible.

Before the communication of the case file by the arbitral tribunal, possibility for the parties to seek any judiciary authority. Arbitral tribunal may order the delivery of the case file. Following the case, intervention of a judge, including on the tribunal’s request.

5. Time period to render the award

Six months after the appointment of the last arbitrator, extension of time possible.

60 days to compose the tribunal and the parties + 6 months for a hearing + 90 days starting from the closure of debates. Extension is possible.

Six months starting from the signature of the Terms of Reference. Extension possible by motion to the ICC Court.

6. Costs

Determined by the tribunal.

CCJA scale.

ICC scale.

7. Award

No control over the award by a motion or institution.

Before signing any award, the arbitral tribunal must submit the draft of the award to the CCJA. The CCJA can make modifications to the form.

Before signing any award, the arbitral tribunal must submit the project of the award to the ICC Court. It can make modifications regarding the form and attract the arbitrators’ attention to the merits. (continued)

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International Arbitration and Corporate Law Uniform Act

CCJA

ICC

8. Appeals

Ordinary appeal excluded. Remedy to set aside the award possible before a national jurisdiction. Pourvoi en cassation possible before the CCJA against the decision that admits or rejects this action.

Ordinary appeal excluded. All requests for rectification or material mistakes, interpretations, complementary documents to the award remains in the CCJA jurisdiction. Claims formulated within 45 days of the notification of the award.

The parties are reputed to have renounced any appeals. Remedies open according to the provisions of the applicable national law.

9. Enforcement

Ordinance of exequatur from national judge or the judge of the country where the enforcement is sought.

Ordinance of exequatur of the CCJA or the judge of the country where the enforcement is sought.

Ordinance of exequatur issued from a jurisdiction of the country where the award has the vocation to be enforced.

3.3.3

Arbitration Pursuant to Other Arbitration Rules

298-1. It is necessary to acknowledge that, due to the growth of the African economy and particularly the surge of investments, disputes can arise pursuant to rules of institutions other than the CCJA, for example the ICC, which is very similar to the CCJA, as described above. However, it is also useful to note that there are other modes by which parties can decide to resolve their disputes. When the parties elect such a procedure, as an alternative to the CCJA arbitration rules, the Uniform Act will be applicable to any issue that is not specifically solved by this elected set of rules. 3.3.3.1 International Centre for Dispute Resolution (ICSID) 298-2. One of the most prevalent types of arbitration in Africa relates to investment arbitration. Where commercial arbitration is based on an arbitration agreement, investment arbitration may be based either on an investment treaty (such as a bilateral investment treaty or a BIT), the host State’s national investment law, which often provides for protection of foreign investors or, in certain circumstances, an investment agreement. 298-3. Typically, where a bilateral investment treaty exists, investors are free to bring arbitration actions in any of the arbitral institutions identified in the treaty, and the host State is required to submit to the jurisdiction of the arbitration institution. One of the most common institutions for investment arbitration is the International Centre for Dispute Resolution (ICSID). 116

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3  Crisis Management 298-4. ICSID is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID or Washington Convention). The institution currently contains over 140 Member States. The primary purpose of ICSID is “to provide facilities for conciliation and arbitration of international investment disputes.”53 298-5. The purpose of the ICSID Convention was to facilitate the international flow of private investments. As there was no specialized international method for investment dispute settlement, the ICSID Convention sought to establish such a procedure, thereby minimizing the risk posed by non-commercial factors. 298-6.  Like other forms of arbitration, recourse to arbitration under ICSID is always subject to the parties’ consent. Parties are free to choose the law governing the contract, including OHADA law.54 298-7. Of the 54 African countries, 44 are contracting States to the ICSID Convention. Of those 44 countries, only seventeen have not been involved in ICSID proceedings to date.55 These are Benin, Botswana, Cape Verde, Chad, Comoros, Lesotho, Malawi, Mauritania, Mauritius, Mozambique, Sierra Leone, Somalia, South Sudan, Sudan, Swaziland, Uganda and Zambia.56 298-8. Logically, international investment disputes occur in industries that attract foreign investments. In Africa, some of these industries have given rise to disputes involving mining, agriculture and forestry, oil and gas contracts, hospitality, power generation contracts and other general commercial activities. 298-9. As a matter of legal evolution, many countries elect ICSID arbitration as the applicable rule to a dispute in a specific industry. ICSID rules will be, when specifically mentioned in a regulation or codified, the governing arbitration procedure in certain regulated industries, such as mining, telecom or other industries. However, a Member State may also make specific reference to other rules such as ICC rules, UNCITRAL rules or CCJA rules as the applicable procedural rules in their specific area or industry regulations, in case of a dispute. 298-10. Owing to the high number of signatory countries coupled with the vast wealth of industries, investment arbitration under ICSID is expected to continue to grow exponentially in Africa, including within the OHADA zone. 3.3.3.2 Other Institutions and Ad Hoc Arbitration 298-11. As previously discussed, parties who opt to settle their dispute through international arbitration in the OHADA zone are free to choose the procedural rules by which to settle their disputes. 53 See . 54 See e.g. Togo Eléctricié et GDF Suez Energie Services c/ La République Togolaise, Affaire No. ARB/06/07 1à August 2012 (determining that the applicable law of Togalaise law included the application of OHADA law). 55 See . 56 Id.

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International Arbitration and Corporate Law 298-12. In addition to the CCJA and ICC rules, another popular set of rules for Englishspeaking countries includes the London Court of International Arbitration Rules, or the ‘LCIA rules’. Further adding to the importance of these rules in Africa, the Government of the Republic of Mauritius, the LCIA and the Mauritius International Arbitration Centre Limited (MIAC) entered into an agreement for the establishment and operation of a new arbitration centre, LCIA-MIAC Arbitration Centre, in Mauritius in July 2011. 298-13. Much like other institutions, the LCIA-MIAC is a neutral and independent arbitral institution, providing administrative services only under its own, and under ad hoc, rules and procedures. It neither practises law nor renders legal services. As arbitration is a consensual process, parties should expressly include a clause referring a dispute to LCIAMIAC in order for these rules to apply. 298-14. Finally, parties may also choose to have other rules determine the procedure of their dispute, without the assistance and oversight of an institution. For example, parties may choose to have the procedure of their dispute governed by the UNCITRAL rules or the Uniform Act. If no rules are expressly provided in the arbitration clause, the latter will be applicable by default. 3.3.4

Arbitrability of Corporate Disputes

299. Arbitration and Risk Management Tools. In corporate life, the use of arbitration may seem logical. The use of alternative dispute resolution is the natural goal of any business: to maintain its margins and profitability while maintaining a relationship with suppliers or customers. This economic view conflicts with the fact that it is also a means to preserve their interests, whether convergent or divergent; the nexus of contracts in business affairs generates a large number of international or internal disputes.57 A company’s management strategy and the reality of a dispute naturally lead the parties to resort to arbitration. They are attracted by the classic advantages of this method of conflict resolution. These advantages are the choice of arbitrators, the ability to have the case decided by expert practitioners, speed, discretion, ability to solve complex international conflicts and the possibility of reaching the final judgment. To be clear, it is necessary to mention corporate litigation in arbitration, where the examples are variable and multifaceted. Indeed, dispute arbitration in corporate law is not just corporate contracts, but all relationships and business activities. Think of corporations as an instrument of world trade. It allows, in this specific context, the realization of exchanges by signing domestic or international contracts, where there is a transfer of goods over 57 See D. Cohen’s thesis, “Arbitration and corporations”, LGDJ, 1993, Bibl. de droit privé, tome 229, préf. B. Oppetit. Also see B. Le Bars, “Arbitrating a dispute of corporate law in OHADA law”, Bulletin Joly Sociétés, March 2009, p. 267.

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3  Crisis Management borders and world interests come into play. These contracts can generate disputes that can be resolved through the arbitration clause. These concerns are found in international trade, and, of course, in the context of the economically active OHADA zone. 300. The Corporation: Subject to Arbitration. One aspect of a company is that as a legal person, it is subject to operations of commerce. Thus, all rights of restructuring, divestitures or business acquisitions (see infra, § 659 et seq.) also generate a multiplicity of agreements, often linked together under the indivisibility of an operation designed to transfer control or significant participation in the capital of a company. In this context, arbitration may also be present to regulate, inter alia, the effects of the agreements, adjust prices (this will most often be expertise clauses rather than arbitration in this case), determine the type of a guarantee, grant additional compensation, determine the existence of a fraud by concealment or other cause of nullity or liability. An object of commerce, the company is also, as a group, the meeting place of associates and, therefore, their potential conflicts. The question is then that of arbitrability of disputes among shareholders within the application of various statutes or agreements concluded between shareholders, including shareholder agreements, to regulate certain aspects of their relationship or their relationship to the corporation. 301. Delimitation of Corporate Activities in Arbitration. The implementation of arbitration to companies raises the problem of delimitation. Indeed, every company has a wide range of activities that are part of several sets of regulations whose statutes are not uniform from the viewpoint of arbitration. A few examples: a gathering of companies may cause an incident from an antitrust law point of view or the creation or exploitation of an incorporate asset may touch industrial or intellectual property law. These different domains cannot be approached in a uniform manner using the logic of corporate law and arbitration. These matters show, from the viewpoint of arbitration, a separate legal regime frequently discussed under the concept of public policy,58 and are subjects of study by themselves. This is why we will assess the impact of arbitration and its utility in intra-company relations, between shareholders and the agreements relating to the acquisition or equity participation in the capital of a company, excluding management agreements and intra-group relations. 3.3.4.1 Conditions of Implementation of Company Arbitration 302. Arbitrability of a Dispute. Corporate litigation should not deviate from a simple principle of arbitration: the jurisdiction principle of common law cannot be excluded if the parties have an agreement expressly stipulating an arbitration clause touching an issue that is part of public rules. This is what is generally called the arbitrability of the dispute. In other words,

58 It is widely accepted that public policy rules do not impede the arbitrator to rule but constrain the arbitrator to apply public policy rules under threat of having the award challenged.

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International Arbitration and Corporate Law when can one submit this particular dispute to arbitration and when should this solution be excluded? This preliminary estimation should not obscure the formal aspect of the provision of an arbitration clause. Like any agreement, it must meet certain formal requirements, varying according to circumstances, and be able to adapt according to the parties involved. The arbitration agreement also has some typical characteristics when used in respect to a company. 3.3.4.1.1 Arbitrability and Companies 303. Autonomy of the Arbitration Agreement. In a simple manner, the arbitrability may be presented as an opportunity to submit a dispute to an arbitrator or arbitrators. The arbitration clause also removes this area from litigation in state courts and entrusts the care of the dispute to the arbitrator or an arbitral tribunal responsible for making an award. Once formed with the signing of an arbitration clause, this stipulation acquires a separate autonomy from the contract. The principle of autonomy of the arbitration agreement covers both the idea of the autonomy of the clause in respect to the principal contract and the agreement to submit to arbitration and its relation to various state laws likely to govern it.59 These questions of arbitrability and autonomy are addressed very differently depending on whether the company is subject to international law or domestic law. Corporations Subject to International Law 304. Relative Freedom. Corporate international litigation constitutes a field of arbitrability and a large field of freedom in OHADA law. Indeed, the Uniform Act was intended to apply to any arbitration where the seat of arbitration is in one of the Member States (Art. 1, AUA). Outside the specific rules of international arbitration taking place in the territory of a Member State, it is also possible that litigation involving the interests of a company located in the OHADA zone may be subject to arbitration in a country under uniform law. In this case, Article 2 of the Uniform Act states that “any person or entity may seek arbitration on the rights which it has freely available” (Art. 2, AUA; see supra, § 223). Freedom in terms of arbitrability is very strong in OHADA law, and this is what distinguishes OHADA law from the laws of many countries. This flexibility is supplemented by the rule of autonomy reiterated in Article 4 of the Uniform Act (see supra, § 229). This autonomy of international arbitration has particularly strong effects since the arbitration clause is valid even when one party is not a professional part of the business world, as stated in Article 2 of the Act. Corporations Subject to OHADA Law 305. Arbitrability and the Form of the Company. The criterion that certain rights related to being a ‘professional’ in order to arbitrate is not found in OHADA law. Section 48 of the 59 J.P. Ancel, “L’actualité de l’autonomie de la clause compromissoire”,Travaux du Comite. Francais DIP, 19991992, p. 75.

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3  Crisis Management Uniform Act states that any company disputes between shareholders or between one or more shareholders and the company may “be submitted to arbitration, or by an arbitration clause, statutory or otherwise” (Arts. 147 and 148, AUCC). All companies covered by the Uniform Act are eligible for arbitration. For companies and groups that would be unaffected, the principle that “any person or entity may seek arbitration on the rights which it has freely available” (Art. 2, Section 1, AUA) opens a very wide jurisdiction to arbitrators, especially since “states and other local authorities may also be parties to an arbitration” (Art. 2.2, AUA). Developments in modern arbitration law will therefore be monitored very closely to assess the extent given by judges and arbitrators to these very flexible legal provisions. This simple quality allows arbitration for everyone under the OHADA law. Case law has already confirmed the validity of assuming an arbitral clause in a contract between two non-merchants.60 3.3.4.1.2 Arbitration Agreement and Companies 306. Conventional Nature of the Arbitration Clause. The conventional nature of an arbitration clause, and arbitration itself, involves determining the specific means of arbitration as part of a corporate dispute. Deciding to insert an arbitration clause requires, in effect, the need to assess what form it should take, to consider issues of jurisdiction of the signatory, especially when intervening on behalf of a corporation, and the enforceability of the clause in respect of non-signatories. The stipulation of the arbitration agreement and its enforceability are a central concern of any person wishing to submit a business dispute to arbitration. Stipulation of the Arbitration Agreement 307. Legal Formalism of the Arbitration. At first sight, the formalism of an arbitration agreement, in corporate disputes, is governed by a simple principle by which an arbitration clause may be “non-statutory” or the result of a “compromise” (Art. 148, AUCC). This legal formalism has some flexibility since the law does not indicate that the clause must necessarily be stipulated by the contract that it could be submitted to arbitration if there is a dispute between the parties. Therefore, arbitration may be agreed upon even after signing an agreement. The examples are numerous in practice. However, acceptance of the clause does not seem to be implied. Thus, the mere fact that two companies have formed a consortium to carry out work together should not result in the automatic application of all the clauses of an agreement, including arbitration. Moreover, even in the absence of protest by a party, the letter confirming to the other party of a contract made by phone containing an arbitration clause does not meet the requirements of the Uniform Act. 60 CA Abidjan, decision n 1032, 30 July 2002, SCI Les tisserins c/ Dame Coste, OHADATA J-03-28.

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International Arbitration and Corporate Law 308. Possible Exemptions. Given the flexibility of the text of Article 148, it seems possible to have implicit acceptance of an arbitration clause. The statutes and the rules of a company should be enforceable against managers when they are familiar with the provisions. We must also remember the great liberalism of OHADA law regarding the arbitration clause by reference (see supra, § 228). Once the contract that contains a clause is valid and has been brought to the attention of the parties, the parties’ agreement should constitute acceptance of it, without further formality. 309. The Authority to Bind the Corporation. Besides the issue of formalism of the stipulation, corporate disputes could also cause a problem regarding the power of representation. As a corporation, a company is necessarily represented by a person to sign the agreements on its behalf. This principle of representation of the company by its management bodies (or their representatives in the broader sense), also called delegated management mechanism, has generated questions regarding the stipulation of the arbitration clause. Logic suggests that directors can engage the company in arbitration without a special power because it is an act of management, and case law confirms this.61 The solution is different when there is a commitment from the company to submit to arbitration by the decision of a non-executive member of the company. In this case, by hypothesis, the executive involved is normally devoid of the power to represent the company against third parties, unless special authority authorizing the commitment is granted. The use of signing authority or power can deal with this limitation by finding a pragmatic solution. It is important not to forget to allow this power in order to dismiss any argument on the basis of the validity of the commitment of the company. 310. The Reference to the Lex Societatis. International arbitration holds a different view of assessing the validity of an arbitration clause for corporations.62 It follows the lex societatis, since it governs the functioning of a company. Getting rid of this analysis, one author argues, inter alia, that recent case law identifies a substantive rule relaxing the strict principles of lex societatis.63 Thus, one could accept that a substitute director, a non-executive member of a company, could legally bind a company. The arbitrators sometimes apply the theory of apparent authority,64 considering that the signing of an arbitration clause was an act of routine management.

61 Supreme Court of Ivory Coast, Ch. Jud, case n 288/02, 14 March 2002, Société des conserveurs de Côte d’Ivoire dite SCODI c/ SOGEF, OHADATA J-04-63. 62 H. Battifol & P. Lagarde, “Droit international privé”, tome 1, LGDJ, 1993, n 203; P. Mayer & V. Heuze, “Droit international privé”, Montchrestien, 2004, n 1041; B. Audit, “Droit international privé”, Economica, 2006, n 1128; M. Menjucq, “Droit international et européen des sociétés”, Montchrestien, 2001, n 76. 63 D. Cohen, “L’engagement des sociétés à l’arbitrage”, Revue de l’arbitrage, 2006, p. 35, note, § 39 et seq. 64 CA Abidjan, 20 April 2001, Parti démocratique de Côte d’Ivoire c/ SARL J&A International, OHADATA J-02-127.

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3  Crisis Management Enforceability of the Arbitration Agreement 311. A Frequent Occurrence. As a corporate group, the parent company has many shareholders of many companies under its wing, which represents a problem of enforceability of an arbitration clause. This issue is particularly challenging: it involves determining, for example, the effectiveness of an extra-statutory or statutory clause against a parent company, a subsidiary company or a major shareholder. This hypothesis generates, in itself, a form of complexity that the Uniform Act ideally should resolve in its Article 148, which does not require that the clauses shall be included in the articles of association. But Article 147 adopted a different approach, centring on the relationship between the shareholders and the companies in which they hold shares. The preference of OHADA law for the group of company’s theory (see infra, § 701) should provide more extensive conceptions of enforceability. It will be necessary to see how case law interprets this point. Two other points very common in practice must also be examined: the transmissibility and the extension of an arbitration clause. 312.  Transferability: Assumptions. Transmissibility of an arbitration clause includes, in practice, the movement of extra-statutory covenants as commitments contained therein, and that of its statutes. For extra-statutory agreements, it is necessary to determine the law applicable to the convention in order to assess whether the arbitration clause may be assigned without the express agreement of third parties. Some cases are relatively simple. There are, for example, covenants concluded intuito personae that by their very nature have spared no opportunity to let new beneficiaries enter. The arbitration clause cannot then be raised by a third party since, by hypothesis, the latter cannot be bound by the agreement, which is subject to acceptance by all signatory parties. This should be the case where a shareholder’s agreement establishes a conventional closed shares system or makes shares available for a specified period. In contrast, another hypothesis exists when there is a new party that expressly agrees to arbitration. In such a case, the dispute will voluntarily be submitted to arbitration, which rules out any question of the consent of the parties. 313. Enforceability by the Transferee. The assumption of enforceability of an arbitration clause to a transferee who has not expressly accepted it is more difficult to grasp. The challenge for parties wishing to enforce an arbitration clause against a new party is to determine whether this stipulation has been transferred, at least tacitly. In addition to a group of companies, this assumption is not taken up often because it concerns the provisions of guarantees/guarantors, joint debtors, subcontractors or other assignees. 314. Illustration of the Transmission of the Arbitration Clause. Consider some examples. In complementarity agreements: an agreement for the original failure to comply with a previous exclusive concession agreement may fall within the scope of the arbitration clause stipulated in the first agreement. The empire of the clause extends to the new agreement with the option to amend, supplement or modify the original contract.

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International Arbitration and Corporate Law Regarding guarantees, the issues are different. Imagine an arbitration clause in a main contract that is not included in the guarantee document itself. If the guarantee is pursued for failure of the principal debtor, it may seem logical to avail itself of the arbitration clause to clearly identify the quantum of the principal debt. There is a risk, however, if the party goes before a state judge. Understandably, the debtor’s situation is not simply accessory. Therefore, it may be useful to introduce a clause of indivisibility between several agreements for all parties to claim the benefit of the arbitration clause, especially in case of a dispute as to the amount of their obligation to do or pay. 315. Corporation’s Statutes. The situation is simpler when an arbitration clause is incorporated in the statutes of the corporation. In principle, an arbitration clause is accessory to the attributes of votes or shares. The question that arises generally involves the time of entry of each shareholder in order to determine who will be party to the arbitration clause when there is a dispute. The transferee may therefore be held to the clause, and shall also be entitled to evoke it in his favour. 316.  Extension of the Arbitration Clause. The extension of an arbitration clause is a slightly different idea of transmissibility. In that case it involves shareholders who signed many acts including dispute resolution clauses. These acts could be for financing a business, guaranteeing liabilities, statutes, rules of procedure and would thus not necessarily contain the same arbitration clause. Which one of these agreements must prevail for a solution to the dispute? Lack of uniformity of terms used in various contracts risks making the clauses incompatible. As a rule, it is necessary to have the agreement of all parties accepting the use of a single arbitration tribunal, under a single jurisdiction. Failing this agreement, it will be very difficult to force the parties to arbitrate. To avoid deadlock situations, often under the ‘pathological clause’ that does not allow the implementation of an arbitration, special attention must be paid to how the clause is drafted, the mode of appointment of an arbitrator and the fact that the matter may be submitted to a single identifiable arbitration centre. Sometimes agreements are simply impossible, such as the disputes opened for several agreements signed by the same parties in different countries so that the clauses do not apply to a single rule of arbitration. Conflicts of laws and jurisdictions are then traps into which it is best never to enter. Again, the practical solution to lessen the risk of incompatibility of arbitration clauses is to adopt uniform provisions. These practical issues must not conceal substantive discussions taking place, necessarily, when it comes to arbitrating business affairs. 3.3.4.2 Arbitration of Company Activities 317.  Proliferation of Corporate Litigation. Cases dealt with by arbitration centres show the wide variety of business activity submitted to arbitration. Corporate disputes are generally present in three categories: those that arise from the shareholder’s rights

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3  Crisis Management dispute; disputes arising from extra-statutory agreements and those arising during sale and purchase agreements. Thus, we can see more contentious institutional and functional approaches that bind to the implementation of the companies’ statutes and another that binds with the relations established with the company. These disputes can be grouped around the company after it is, directly or indirectly, in dispute or subject to a transaction that was originally open to arbitration. 3.3.4.2.1 Corporate Dispute 318.  Disputes Relating to Shareholders and Corporate Bodies. The company enters arbitration when disputes touch key fundamental rights of shareholders, corporate operations, interpretation or application of the statutes and the corporate bodies. “These include, the issue of distribution of dividends, the liability of directors, the payment of contribution, dissolution, shareholder agreements, mergers and transformations of companies.”65 Disputes Regarding Shareholders’ Rights 319. Arbitrability Easier for Corporations. The Uniform Act directly regulates the case of shareholders (Arts. 147 and 148, AUSC). But the range of possibilities for arbitration should extend beyond the borders of the corporation’s capital. The law applies not only to shareholders but also to others who may be affected by the operation of a commercial company when contracting. Naturally, we must first think of all those who do not have the status of shareholders but who hold securities issued by the company as bondholders or holders of complex securities. The agreement to issue such debt securities may submit arbitration disputes to their holders. One must pay special attention when drafting the arbitration clause, to respect the rules concerning laws applicable to the company; for example, the obligation to appoint a representative of the governing bodies to act on their behalf. Outside of the holders of debt securities, the new provisions of the Commercial Code can affect other stakeholders in the company. 320.  Playing with Public Policy Rules? Who says the status of shareholders is public? This assumption results from the frequent imperative character that corporate law has on certain principles that the shareholders do not believe they have the ability to exclude or modulate conventionally. It is necessary to clear up one ambiguity: it is not because of an issue of corporate public policy that an arbitrator cannot rule. They will only decide in accordance with the principles of public policy relating to the dispute arbitrated. Of course, the parties could not arouse the vigilance of the arbitrator on such public policy provisions to try to make him implicitly accept a situation they know is absolutely contrary

65 Y. Reinhard, “Arbitrage et sociétés”, LPA, 15 May 1996, n 59, p. 10.

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International Arbitration and Corporate Law to corporate law. Regulating such agreements should have been authorized by the corporate bodies, or forbidden by them. This strategy cannot resist censorship, because if the parties do not invoke the sanction of a breach of public order, an arbitrator must decline jurisdiction or raise the question of jurisdiction with the parties. In this case, the subject of the arbitration agreement is void as it would amount to the execution of an illegal contract. When the arbitrator decides on a matter of public policy, it is the result of his motivation to control, respecting the law and order of the award, in the context of possibly having the award set aside. With a protective mechanism in place, disputes concerning the fundamental rights of the shareholders may be submitted to arbitrators. They are to have jurisdiction over the right to remain associated, to participate in the deliberations and equality of partners. The arbitration clause also departs from the jurisdiction of ordinary courts to the exclusion of shareholders or the issue of voting trust. However, the arbitrator will not be a substitute for corporate bodies. Hearing a dispute concerning a dismissal of an officer, the arbitrator may consider awarding him compensation. But an arbitrator will not be able to reinstate him. The mission of the arbitrator is to decide a case, not to replace the managing bodies. Disputes Regarding Corporate Bodies 321.  The Barrier of the Hierarchy of Corporate Bodies. The operation of the corporate bodies may also depend heavily on the principles of public corporations. However, beyond this issue already discussed above, disputes relating to corporate bodies concern, more fundamentally, the mode of operation of those bodies. In this area, corporate law is clear. It is not possible to modify any contractual agreements by using the legal powers of corporate bodies. In the field of arbitration disputes, it is not possible to attempt, by a statutory provision, or extra-statutory, to amend the powers of the managing bodies. Thus, a dispute concerning the terms of representatives is very often subject to the discretion of the arbitrators. In this case, they cannot give a binding stipulation that alters the legal mandates. Similarly, it is not possible to obtain a review or enforcement authority for violation of corporate statutes, replacing a management body, and when such an assembly is in direct conflict with the provisions of the Uniform Act. However, he may, if a decision is made, legitimately intervene or manage the effects of management decisions taken by a legitimate body. For example, the arbitrator will not validate a clause extending the term of a particular mandate limited in time by the law governing the substance of the dispute, but will be able to say that such a dismissal was unfair. 3.3.4.2.2 Corporate Transactions 322. The company can be an object of transaction. These situations occur when assets are passed around on the occasion of a restructuring (merger, asset contribution), during a

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3  Crisis Management transfer of participation resulting in change of majority control or acquisition of a blocking minority. Without being exhaustive, as this would lead us to an analysis of all the provisions envisaged in the context of acts of disposal of businesses, it is interesting to focus on two critical points in any transaction. The first relates to the sale price and the possibility of using an outside expert to try to overcome the crisis, and the second relates more specifically to the provisions of guarantees and their effectiveness in the context of arbitration. Disputes Regarding the Price 323. Developing and Challenging the Price. The price is the stumbling point of any sale of massive corporate rights. It must match the value of the company and reflect, as much as possible, reliable information about the content of corporate assets. This is the subject of operations before acquisition due diligence, conducted in an attempt to assess the reliability of the accounting provided to the transferor. If the parties have stipulated an arbitration clause for any dispute regarding the award, or any dispute relating to the validity or treaty obligations, the arbitration could be used to solve the matter of prices in several ways. A first approach to these situations is to invoke the theory of nullity, including fraud by concealment, to try to get a reduced sale price. Citing case law under which the victim of fraud may recover damages for this tort rather than request the nullity of the agreement (which does not interest him because he wants to maintain its general interest in the capital but paying a fair price), a claimant in the arbitration proceedings requires the payment of damages that offset its overpayment. Of course, this type of litigation is uncertain, because it assumes all elements of fraud by concealment are proven, including the element of intent, which is not always simple to prove. Prior to signing the transfer of stocks, an arbitration clause can also govern relations of parties in the pre-contractual negotiations. Thus, several cases were pre-contractual obligations. An award of the ICC ruled in a dispute between a US seller and a European buyer located in Geneva, where the elements hidden by the seller had been decisive in the choice of the buyer to accept a certain price level for assignment. The arbitrators found that these concealed facts were relevant to the purchaser and that he was entitled to rely on his contractual partner in the circumstances of the case, and allocated compensation to the victim of this breach of good faith.66 324. Effects of Fractionated Payment. Apart from cases in which an agreement stipulates a fixed price paid at once, the practice also includes price-splitting clauses. This splitting is accompanied by ways to resolve disputes relating to the calculation of the price schedule, including for adequate evaluation of the rules for calculating the fraction of the price from

66 E. Jolivet, “Aperçu du droit des sociétés dans l’arbitrage CCI”, Cahiers de l’arbitrage, Vol. II, Gaz. Pal. 2004, p. 243.

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International Arbitration and Corporate Law the due date. This situation is often complex in arbitration, mainly due to the fact that pathological clauses do not clearly specify the jurisdiction of the arbitrator and that of an expert to give judgment. Several scenarios are possible. A clause may submit any dispute to arbitration and indicate that an expert appointed on terms agreed by the parties will decide the assessment methods for price calculation. Such a stipulation is dangerous because it can be construed as divesting the arbitrator of all or part of his discretion. For this reason, any provision of expertise must clearly specify whether the expert involved or arbitrators may decide on the issues. It would be much easier to simply give the comprehensive decision-making power to the arbitrator. Guarantees 325. Location of the Arbitration Clause. Warranty agreements are a classic figure of the contemporary landscape of massive transfers of corporate rights. When the parties wish that disputes relating to the sale were subject to arbitration, the location of an arbitration clause is often the first constraint. Indeed, the arbitration law is dominated by a sense of acceptance of the arbitration clause. The clause may be located in an assignment during a bulk purchase of the entire share capital. In this case, the majority will be minority parties to the conveyance containing an arbitration clause. They may therefore be against the clause if the transferee challenges it. However, the arbitration clause may also be located in the security agreement under which only the majority agrees. The transferee cannot act against the minority on the basis of the arbitration clause because it is not incorporated in the act itself, but in the guarantee. In case of conflict, the transferee may raise a claim against the minority using a legal remedy. 326. Beneficiaries and Stipulation for the Benefit of Third Parties. Regarding the location of an arbitration clause, guarantee commitments also raise questions when it comes to identifying their beneficiaries. In the case of a guaranteed recovery, which is to compensate the target company of any increase in liabilities or decrease in assets, the signatories of the act concerning the warranty could certainly invoke an arbitration clause. But what about third-party beneficiaries in the second rank of the guarantee? On the basis of the mechanism of stipulation for another, a beneficiary in the second degree can be recognized in the target company or creditors. If we thus see that the law of contracts and torts comes to the aid of arbitration law, to determine the beneficiaries of the guarantee specified, the status of these beneficiaries is not simple in terms of an arbitration clause. Indeed, by definition, these beneficiaries of the stipulation for another did not accept the arbitration clause because they are not signatories to the contract of assignment or deed of guarantee. In the classic scheme of the stipulation for another, contractors are born to third parties without receiving a law that its acceptance is the condition of the birth of this

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3  Crisis Management right.67 This logic clashes against that of arbitration, regarding an explicit acceptance of the arbitration clause. Yet as one author wrote, “in the case where the arbitration clause is incidental to a right or obligation, we must consider that it is transmitted along the right and obligation which are the subject of an assignment or contract or a subrogation without the need to require an acceptance of the assignee.”68 This design, for favourable transmission to third-party beneficiaries of rights and accessories, namely the arbitration clause, was admitted by a French case law.69 Maybe the arbitrators and judges consider this analysis as relevant OHADA law. 327. Finally, whether in a corporate context or a more generally conventional context, an arbitration clause when considered a stipulation is not like others. Derogating from the jurisdiction of ordinary courts must be specifically written and thoughtful, to determine that the parties wish to submit disputes to the jurisdiction of arbitrators.

67 For a detailed study on this issue, see C. Larroumet, “Promesse pour autrui, stipulation pour autrui et arbitrage”, Revue de l’arbitrage, 2005, p. 903. 68 C. Larroumet, article pre-cited, § 12, p. 912. 69 Cass 1er civ., 11 July 2006, SA Sangar, aff. n 03-11.983: JCP E 2006, pan. 2433, p. 1677.

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Part II Specific Corporate Law

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International Arbitration and Corporate Law 328. Specificities of this Specific Law. OHADA law chose a pragmatic corporate law organized around corporate forms that appear in all international legal systems. It also uses two forms of limited liability, the SA for medium- and large-sized corporations, with the option to be listed. The SARL is for smaller-sized operations. There are also structures without limited liability and grouping of economic interests. Also, despite French corporate law’s influence on OHADA laws, the Uniform Act contains different and unequivocal innovations. For example, the Uniform Act has no clauses that discuss sociétés par actions simplifiées (SAS), but recognizes an SA without a board of directors when the associates are below a certain number, which strongly opposes the idea of a structure dedicated to investors or purchasers that make up an SAS. This form loses in contractual freedom what it gains in legal security, by using a more certain and identifiable method. Current French jurisprudence may give OHADA initiators a reason to choose a more structured regime rather than one that is easily malleable. 329. Innovations and Comparisons. OHADA law contains, as we shall see, innovations that differ from the French law that it is based on. In addition, the SA with a general administrator presents a unique innovation to OHADA law. Likewise, the ability to choose between structure and dual management (a president of the board of directors and a general director) and the structure with a chief executive officer maintaining those responsibilities as the president of the board of directors seems groundbreaking. OHADA law, in this regard, moved beyond French corporate law’s recent evolution stemming from the NRE law. It must also be noted that OHADA law also recognizes individual forms of the SA and the SARL. However, the SA with a board of directors and a surveillance council is not among the management forms maintained by the Uniform Act’s legislator. This organizational form is certainly considered complex and often useless, and it seems that it would have remained seldom used in African business practices. This chapter discusses corporations without limited liability after a study of structures with limited liability.

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1

Limited Liability Companies

330. OHADA law does not create different types of corporations in order to give its users the largest possible range of forms of enterprise. On the contrary, the writers decided to maintain two known forms of company, the SA and the SARL, granting them innovations and updates, which could be useful for the needs of contemporary corporate practice. This choice creates a simplified image of the structure with limited liability, which facilitates understanding the essential operating rules. These two corporate forms are discussed successively below. 1.1

La Société Anonyme (SA)

331. The SA’s Characteristics. OHADA law recognizes two corporate forms with limited liability, the SA1 being the most commonly used in substantial investments. The SA’s main advantage over other forms such as société en nom collectif, société en commandite simple or société non immatriculées is its limited liability. This means “shareholders are only responsible for corporate debts that correspond to their contributions” (Art. 385, AUSC) and only stand to lose, in the worst-case scenario (except for cases of fraud and de facto management), their stake in the corporation in case of bankruptcy. The corporation’s creditors will not be able to individually pursue them for payment of the corporation’s debts. One particularity of the SA in OHADA law is that the structure does not require a minimal number of shareholders. In fact, the SA may have one shareholder. It must have a corporate capital greater than or equal to 10 million CFA. This amount increases to 100 million CFA in case of an IPO (Arts. 387 and 824, AUSC). Contributions in cash and kind are possible, but this form may not use contributions in services (see supra, § 41). 1.1.1

Rules of Incorporation Unique to Sociétés Anonymes

332. An SA’s creation must adhere to all general law conditions that apply to any corporate form (see supra, § 21 et seq.). However, the SA also requires, upon its creation, the adherence to certain specific conditions and formalities.

1

For the general rules for the SA, see also F. Anoukaha et al., OHADA: sociétés commerciales et GIE, Juriscope, p. 404 et seq.; B. Martor et al., Le droit uniforme africain des affaires issu de l’OHADA, Litec, 2nd ed., p. 102 et seq.; O. Sambe & M. Diallo, Guide pratique des sociétés commerciales, p. 117 et seq.

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International Arbitration and Corporate Law 1.1.1.1 Drafting the By-laws 333. Necessary Clauses. The by-laws are a corporation’s foundational document – they allow third parties to access necessary information and serve as a sort of identification document for the corporation. The by-laws must contain information relating to the corporation’s administration and direction, the corporation’s name, the amount of corporate capital, which serves as a security for the creditors, issued share’s form etc. (Arts. 13 and 397, AUSC). This is why the by-laws are more than a simple identity document; they give third parties and associates a first look at rights and obligations that come from participating in the corporation’s activities. 334. Authentic Act. The SA’s by-laws must be “established by a notarized act or by any act granting authenticity guarantees in the State where the corporate headquarters are located, deposited with written acknowledge and signatures of all the parties signed by a notary” (Arts. 10 and 395, AUSC). The by-laws are signed after the establishment of the notarized declaration of subscription and deposit (see supra, § 69) for all underwriters (Art. 396, AUSC). 1.1.1.2 Contribution of Funds 335. The methods of contributing funds in an SA vary depending on whether the corporation consists of contribution in kind and/or provision of special benefits. This differentiated method is seen as the legislator’s opportunity to protect founding associates and third parties. In fact, in the case of contributions in kind or provision of special benefits, overevaluation of contributions or exaggerated advantages is a common problem creating an erroneous image of the corporation’s assets, which serves as a guarantee for acts passed under the corporation’s name of the associate’s right. 1.1.1.2.1 Incorporation without Contribution in Kind or Benefits in Kind 336. A Notary’s Assistance.2 Incorporating an SA requires several steps. Using a notary is the general practice in Member States, insofar as the law requires this service for different steps of an SA’s incorporation. In practice, the shareholders will each make available the number of predetermined shares and deposit the funds with a depositor, generally a bank within the Member State. Consequently, the notary swears, using a deposit certificate that the deposited funds correspond to the amounts that must be released as shown in the underwriting balance sheets. The notarial declaration of subscription and deposit is the document that certifies that everything is in order and allows the corporation to continue to the next step of registration. 2

The reform will likely seek to provide the founders of the company with an alternative to having to go through a notary to deposit funds and certify all documents. For example, the Revised Act will likely provide the possibility to deposit the funds at a credit or microfinance institution, located in the Member State where the company is to be headquartered (Art. 313, revised AUSC).

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1  Limited Liability Companies Preparation of Share Allotment Letter 337. Subscription Form. “The subscription of shares representing contributions in cash is recorded by a subscription bulletin established by the founders or by one of them and signed and dated by the subscriber or by his agent, who records the number of underwritten shares” (Art. 390, AUSC). The written agreement of the SA’s future shareholders must contain certain information about the corporation: its name, its form, the total amount of its corporate capital and the assumed address of its headquarters. It is sometimes difficult for the founders to know where this will be located, the corporate charter often being completed before the lease or purchase of this property. The Uniform Act’s text seems to tolerate an address being mentioned on the subscription without consequences if the corporate headquarters will eventually be located elsewhere. The bulletin must also contain “the number of issued shares and their nominal value by declaring, where appropriate, the different categories of shares created” (Art. 392, Section 5, AUSC; see infra, § 493). The subscription bulletin must contain the methods for issuing cash shares. In this respect, the cash shares “are those whose amounts are paid in cash or by compensating certain credit, liquidity or taxable upon the corporation, those which are issued following an incorporation of capital reserves, profits, or emission premiums and for part of freeing cash” (Art. 749 and Art. 389, Section 3, AUSC). This demonstrates that in the case of a partial freeing up of a contribution, the share may not be converted into a title for the holder until the complete freeing of funds, which must occur, at the latest, within three years (see supra, § 37). The subscription bulletin also contains information about the underwriter, providing “the underwriter’s name or corporate name and the number of shares he has underwritten and the deposits he has made” (Art. 392, Section 7, AUSC). The underwriter or his agent “writes on each letter the number of underwritten shares,” dates and signs the bulletin (Art. 390, AUSC). In practice, a typed bulletin that includes the number of shares in each letter does not cause any problems, even if it is not handwritten. In fact, the underwriter’s signature at the bottom of the document demonstrates that he recognizes the obligation. The bulletin must include the name of the individual who deposited the funds as well as the notary who prepared the declaration of subscription and deposit. Finally, the underwriter must receive a copy of the bulletin. The corporation maintains an original, and a second original is provided to the custodian of the funds. A certified copy is given to the subscriber (Art. 391, AUSC). Deposit of Funds of Notarized Subscription Statements and Transfer of Funds 338. Freeing Corporate Capital. Since the corporate capital must be completely underwritten before the signing of the by-laws, it does not necessarily have to be completely freed at the time of the corporate registration. Underwriters, therefore, need only pay onequarter of their share’s nominal value when underwriting capital and have a maximum of

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International Arbitration and Corporate Law three years from the registry date with the RCCM to clear the nominal value balance given to the corporation (Arts. 388 and 389, AUSC). This does not come without consequences for the corporation or for the shareholders who exercise this option. Indeed, the corporation will not be able to either increase its capital, except for cash contribution, or issue bonds. This rule’s underlying logic is simple: shareholders who have not fully paid for their underwritten shares will not likely be able to underwrite new shares or ask new shareholders to do so. These new shareholders would run the risk of being asked to mitigate the initial shareholder’s failure to meet their obligations. Also, using third-party creditors’ corporate capital would occur because of the ability to increase ‘fake’ corporate capital while the already issued shares would not lead to the shareholders actually receiving promised funds. This measure is meant to protect third parties, notably creditors who could base their line of credit on the corporate capital underwritten in the by-laws, although the corporation only actually possesses one-fourth of this amount. 339. Depositing Funds. Funds that make up corporate capital are deposited either with a custodian or in a special account opened in the corporation’s name at a bank located within the Member State where the corporation has its corporate headquarters (Art. 393, Section 1, AUSC). In this case, the bank must provide the custodian with a certificate of deposit, confirming that the funds have been properly deposited. “The depositor provides the bank, upon depositing the funds, a list mentioning the underwriter’s names and indicating, for each of them, the amount deposited” (Art. 393, Section 3, AUSC). On the basis of this list and the deposit certificate, the notary will be able to confirm that the deposit agrees with the subscription bulletin. 340. Deposit Declaration. After presenting the subscription bulletin and, where appropriate, the fund’s deposit certificate, a deposit certificate, called the declaration of subscription and deposit, is created. This act certifies that the amount of declared subscriptions corresponds to the amount indicated on the subscription bulletins and that the deposit matches, depending on the situation, the amount on the bank’s certificate. The underwriters have the right to request a copy of the declaration of subscription and deposit from the notary (Art. 394, AUSC). 341. Criminal Sanctions. The following lead to criminal liability: − Those who, knowingly, certify subscriptions through the declaration of subscription and deposit that they know to be false or have declared funds that were made available to the corporation but were never actually deposited; − Those who give the depositor a list of shares or bulletins of subscription and deposit mentioning false subscriptions or deposits of funds that were not definitively made available to the corporation; − Those who, knowingly, by falsifying a subscription or a deposit or by publishing a subscription or deposit that does not exist or any other false facts, obtain or attempt to obtain subscriptions or deposits; 136

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1  Limited Liability Companies − Those who, knowingly, to provoke subscriptions or deposits have published the names of individuals designated contrary to the truth as attached to a corporation or any share; − Those who, fraudulently, give a superior value to a contribution in kind than its actual value. − These sanctions are meant to prevent dishonest acts that affect corporate capital, thereby protecting future corporate creditors who base their trust on a fake capital, but also duped shareholders who would find themselves in a corporation with little capital. Original Constituent Meeting 342. A general constituent assembly must be held if the corporation initiates an IPO (see infra, § 540) or when contributions are made in kind and consequently require an evaluation that the associates must collectively approve. However, holding such an assembly does not seem necessary when all the contributions are made in cash and there is no IPO. Although the Uniform Act is a little ambiguous on this point, Article 101 indicates that a corporation is effectively created once the by-laws have been signed. In practice, however, upon creating an SA, it is advisable to hold a general constituent assembly, even if the Uniform Act does not require it regardless of the types of contributions or financing. In fact, this practice is an effective way to reinforce or verify the associate’s or shareholder’s affectio societatis. It also protects against the danger of falsifying the corporation as the associates are being called together to demonstrate the collective will of the newly created legal entity. 1.1.1.2.2 Incorporation with Contribution in Kind and/or Individual Benefits 343. Evaluating Contribution in Kind. When dealing with contributions in kind, an auditor must evaluate the corporation. The corporation must select the auditor from a list of official auditors provided by the Member State where the corporation is registered3 (Art. 400, AUSC). He will then create a report following the requirements of Article 401 and of AUSC. 344. General Constituent Assembly. This assembly must be held to approve the auditor’s report. The conditions for convocation, quorum and majority are the same for extraordinary shareholder meetings (Art. 404, AUSC). This requirement is justified because these decisions affect corporate capital. It should also be mentioned that one who contributes in kind or provides special benefits does not have the right to vote during the assembly when the decision directly concerns him (Art. 208, AUSC). Nevertheless, he has a certain power 3

Acquiring such a list may be difficult when the profession has no representative body or regulating authority. The best solution is to go before the corporate headquarters’ tribunal to confirm the existence of such a list before seeking an expert who provides the same guarantees the Uniform Act requires.

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International Arbitration and Corporate Law because only a unanimous vote of the subscribers and his consent may reduce the value of his contribution (Art. 409, AUSC). This clause demonstrates the need to prevent the situation where one unhappy shareholder could corrupt the will of the other shareholders. His interest may be clear, but it also could create a harmful situation. In fact, if the other founding shareholders legitimately believe that a contribution in kind is overvalued, their only recourse is to vote against this contribution. This refusal to validate the contribution’s valuation will block the corporation’s registration process and force an expert to re-examine his copy or, in cases of fraud, to replace the expert with a more trustworthy one. Whatever the shareholders vote, contributions in kind are liberated integrally upon the corporation’s registration (see supra, § 39 and 40). The general constituent assembly is necessary for a corporation’s conception more than title. Not only does it deal with contributions, but it also allows for adopting by-laws, appointing the first administrators and ratifying the acts that were done on behalf of the corporation under formation (Art. 410, AUSC). The founders will have to carefully respect the conditions for calling this assembly to avoid its annulment (Art. 412, AUSC). In this case, the founders “may be declared jointly liable for the harm to third parties that results from the corporation’s annulment” (Art. 413, AUSC). 1.1.1.3 Legal Formalities of Registration and Publication in a Legal Journal 345. These formalities are not discussed in depth for this corporate form because their requirements have already been explored (see supra, § 73 et seq.). 346. Criminal Sanctions. Founders and managers face criminal liability when they issue corporate shares before its registration or at any other time when registration occurs through fraud or the corporation is irregularly formed (Art. 886, AUSC). The fraudulent intention is not required, the simple material fault characterizes the crime. 1.1.2

Corporate Bodies of a Société Anonyme

347. Depending on the chosen governing form, a general director or general administrator assures a société anonyme’s direction. Auditors control this direction and are responsible for informing shareholders of poor management. Shareholders have the power to dismiss one of several administrators when their management is no longer satisfactory. Shareholders weigh in as well for important decisions that affect corporate capital or the by-laws. 1.1.2.1 Governing Bodies 348. The Uniform Act only provides two administrative and directive forms for a société anonyme. Divergence from either form is not possible (Art. 414, AUSC). The founders may choose either of the two options: direction with a board of directors and direction given to a general administrator. OHADA law adopts one of the société anonyme forms 138

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1  Limited Liability Companies from French law – that of a general director who deals with the daily management and a board of directors that supervises this director and is responsible for managing and creating the corporation’s main strategic plans. On the other hand, OHADA did not adopt the German form of an organization with a board of directors and a supervisory council. This form was most likely deemed too complex for the African business world. The board of directors fulfils this responsibility itself. However, OHADA moved towards a relaxed form of general administrator by installing the original position of a general administrator, which gives this sole individual the powers of a general director and a board of directors. One can see here the precursor to the French law concept of a President of a société par actions simpliée. But the option of a general administrator is not open to all SAs. It applies only to those with one to three shareholders (see infra, § 376). 1.1.2.1.1 Société Anonyme with a Board of Directors 349. Dilemma of a Single-Person SA. The choice between a board of directors and a general administrator is not clear because the wording of Article 494 of the Uniform Act is not easy to understand. In reality, besides the case where the SA has two or three shareholders, there is no choice: an SA with one shareholder will not be able to create a board of directors, which, by definition, must have at least three members (Art. 416, AUSC) where at least two-thirds must hold shares in the SA (Art. 417, AUSC); and a board of directors is required for corporations having more than three shareholders. This shows the impossibility of creating a board in an SA with only one shareholder. The only solution available that allows a board of directors in an SA with one shareholder is to add shareholders. The sole shareholder may maintain control of almost all the capital, maintaining, for example, 99% of the shares, and the shareholder’s subsidiary or a sister company may hold the remaining shares if the shareholder is a corporation. If the shareholder is a physical person or if the intervening corporation is not part of a group, the individual must create another corporation where the shareholder owns 100% of the shares. The choice is between a société en nom collectif and a société en commandite simple, which have no minimum capital requirements, or of course an SARL, with a capital of only 1,000,000 CFA which offers limited liability. In practice, a sole shareholder could rarely meet such conditions, when a general administrator could be appointed and make decisions more quickly and simply. Yet certain situations may require this, and in those cases, there are possible solutions with existing structures. Composition of the Board of Directors 350. Number of Directors. The board of directors must have at least three and no more than 12 directors (Art. 416, AUSC). If the SA issues an IPO, the maximum number of directors increases to 15 (Art. 829, AUSC). A temporary increase to 24 directors is allowed

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International Arbitration and Corporate Law for a merger (Art. 418, AUSC). This clause allows for the anticipation of an IPO, which is rather rare in the world of African business. 351. Directors’ Requirements. Directors are not necessarily corporate shareholders. However, the number of non-shareholder directors is limited to one-third of the board of directors’ members (Art. 417, AUSC). Consequently, in an SA with three directors, two directors must be shareholders, while the third need not be. If the shareholders are legal entities, it is important that the legal entities themselves be declared directors. They will then appoint one of their managers or employees to represent them physically at the board of directors meetings. Directly appointing these physical individuals as directors does not fulfil the composition requirements. These terms create difficulties in some corporations, notably when shares are transferred to individuals outside the corporation to allow them to sit on the board of directors, and these individuals then abandon their responsibilities as directors. In such a case, the shareholders run the risk of not being able to recover the transferred shares. Because of the practice of regularly changing directors, particularly in corporate groups, it may be useful to explore legal mechanisms such as loaning shares to directors, as is the common practice in many countries, despite the absence of this practice in the Member States. The practice of loaning shares has the advantage of allowing the title to return, with all its functions frozen, as long as the terms of the loan are well written and organized. This avoids having directors who have left the company but remain shareholders, in certain situations, to create problems. Moreover, the presence of old shareholders and former agents may cause difficulties when shifting a majority of corporate capital, restructuring or additional financing. It is useful to discuss the practical tools used when there is a massive handover or before this operation, in order to limit future risks. Appointing legal entities as directors allows for flexibility, which may sometimes be absent in the make-up of a board of directors. The legal entity would continue acting as a director even if its physical representative changes (see infra, § 354). Appointment, Scope of Duties and Revocation 352. Appointing Methods. The Uniform Act states that the “bylaws, or when necessary the general constituent assembly, name the first directors. During a corporation’s life, the ordinary general assembly appoints the directors” (Art. 419, AUSC). These appointment methods must be respected or risk being annulled. These formalities may pose a practical question when there is an agreement that maintains such a position outside of the bylaws or appointment of a shareholder representative, such as an agent. As such, it should be noted that the Uniform Act contains clauses that allow associates to put in place a categorical representation of shareholders in terms of the board of directors. This is why “methods for electing directors are freely determined by the bylaws which may allow for a division of seats according to the category of shares” (Art. 424, AUSC).

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1  Limited Liability Companies When applying this article, in order to reassure a minority shareholder of a director who represents him, it is possible to create a proportional election method. Inversely, a majority shareholder may desire a simple-majority election in order to individually approve each director. To appease the other shareholders, it may also be wise to create a renewal by third parties of the board, every two years or every three years, if the term of office is six years. This by-law provision would ensure an overrepresentation of the majority shareholder. 353. Publishing the Appointments. “Appointing administrators must be published with the RCCM” (Art. 427, AUSC). In a country without an RCCM, publication in a nationally circulated legal announcement journal is required. Depositing a copy of the decision with a notary is a good idea in that it constitutes useful proof in case of litigation in terms of the associate’s respective rights. 354. Legal Entity Directors. It should be noted that legal entities may serve as directors. However, they must appoint a permanent representative to sit on the Board for the duration of the mandate. Appointment is carried out by sending a registered letter to the corporation where the director has his seat. Removal and appointment of a new permanent representative is carried out in the same manner (Art. 423, AUSC). This way, the permanent representative of the legal entity need not necessarily be a corporate shareholder ­(Art. 421, AUSC). Moreover, his appointment is only the object of corporate information since the appointed director remains the corporation itself and not the physical person who represents the corporation simply by applying the general law of agency. This flexibility allows one to change the representative’s identity within the internal organization of the legal entity, which is particularly useful in international groups. Upon renewing the mandate of the legal entity’s representative, the legal entity “must clarify if it is keeping the same physical person as a permanent representative or moving, depending, to the appointment of another permanent representative” (Art. 422, AUSC). Nevertheless, changing a permanent representative must be the subject of a new publication in the RCCM as in the case of physical directors (Art. 427, AUSC). 355. Duration of the Term. The duration of the term is unlimited in the SA, as long as it complies with the by-laws and does not exceed six years. As well, “the director’s term length is freely decided by the bylaws without being able to exceed six years during the exercise of corporate activity, and two years, in case of appointment by the bylaws or general constituent assembly” (Art. 420, AUSC). The director’s term is renewable as long as the by-laws permit it (Art. 424, AUSC). 356. Dismissing Directors. Deciding to dismiss a director is always a very delicate situation because it is difficult to remove someone from a post who was chosen to fill such a post because of his capabilities or what he represented in terms of the corporation’s financial investment. Whatever these elements may be, the Uniform Act states that “Board members may be dismissed at any moment by the ordinary general assembly” (Art. 433, AUSC). It should be noted that the text does not mention a requirement to justify the

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International Arbitration and Corporate Law decision. The absence of this obligation brings us back to the concept of dismissal ad nutum, according to which neither justification nor indemnity is owed the director in the case of dismissal. Despite its apparent simplicity, this rule reveals several subtleties of which one should be aware. Case law allows for the theory of ‘performance incidents’ to justify an immediate firing of a manager, which may be dealt with in ‘diverse questions’ of the minutes.4 This signifies that if a general assembly is called, at any moment, an administrator commits a fault in one of his responsibilities; the associates may decide to dismiss him on this ground. In this case, it will simply be necessary to allow the agent to express himself so that he could not later say that he was not allowed to present a defence. This case of performance incidents must be distinguished from that of ‘false’ incidents, which consist of dismissals of imaginary representatives. In this case, it should be of some concern that the assembly could bring up many insufficient, yet diverse questions. If the agent manages to establish that in fact the dismissal occurred before the assembly, he may have support for a case of damages for a false dismissal. 357. Possible Jurisprudential Evolutions for Dismissal. The courts have not yet answered the question to know whether the right to one’s own defence must be respected to carry out a dismissal ad nutum. One must be vigilant in this area to appreciate the convergent and divergent changes in the Uniform Law in terms of the questioned practices, for example, in French law. French law’s influence and the developed arguments by several managers in terms of persecutory dismissal may foreshadow a converging shift in dismissal principles. One author seems to have confirmed this tendency,5 and he also mentions that these alleviations could occur by putting in place ‘golden parachutes’. However, this case is slightly different from that of false dismissal in a general assembly. Persecutory dismissal is mostly found in cases where managers have committed wrongful acts. It could be, for example, an automatic dismissal, or the President of the board of directors’ decision issued by a letter when the general assembly has not yet met. This all depends on the facts available to the judges and their analysis of the dismissal’s abusive character in light of the circumstances. Characteristics of the Board of Directors 358. Powers. The board of directors has the most power to act in the corporation’s name in any situation. It must exercise these powers within the limits of the corporate purpose and the by-laws and without damaging the rights the Uniform Act grants shareholders (Art. 435, AUSC). The board of directors may determine the corporation’s goals and the direction its administration follows; supervise the CEO or management of general 4 Regional Tribunal of Dakar, aff. N 327 of 19 February 2003, , (OHADATA J-03-180). 5 B.Y. Meuke, Brèves réflexions sur la revocation des dirigeants sociaux dans l’espace OHADA, OHADATA D-05-51, .

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1  Limited Liability Companies directors, depending on the direction provided for in the by-laws and close the accounts for each exercise. These powers are a matter of public policy and neither the by-laws nor the general assembly may impose limitations enforceable against third parties. Third parties must have full confidence in the fact that the board of directors may engage the corporation’s responsibility. The legislature has reinforced this protective clause (Art. 436, AUSC); only a third party’s bad faith, i.e. if he knows that the board has surpassed its powers, would allow one to seek the act’s annulment (Art. 122, AUSC). Third parties have no obligation to confirm the director or manager’s powers within the by-laws. To protect against such conflicts, the corporation may require its managerial and directorial bodies to include in contracts with third parties, the by-law provisions or the general assembly’s decisions that outline the corporate purpose and its manager’s powers. Failing to respect this provision could lead to the manager’s proper dismissal and give the corporation a claim for damages. 359. Security, Approval and Guarantees. The board must also certify all securities, approvals and guarantees for the corporation’s engagements with third parties (Art. 449, AUSC). Owing to a lack of guidance in the Uniform Act on this subject, one must consider the guarantee as a larger concept in order to avoid the annulment of the corporation that is underwritten to secure a transaction. Notably, using assurance letters could create problems when determining whether it is a simple obligation of ‘best effort’ or a true obligation of results, in which case securing the corporation’s engagement will occur only when one has actually respected the certification procedure. The Uniform Act grants judges room for interpretation, which should encourage the board of directors to act cautiously. The board may grant this authorization power to the CEO or to the general director, up to a certain set amount. This method is used mostly for banking and financial establishments, where these engagements make up a part of their daily activity. Judges have determined that in cases of using guarantees as a common tool for an activity, the board of directors’ authorization remains necessary.6 Delegation allows the use of a simplified procedure compatible with OHADA’s legal requirements. 360. Special Delegation. The board of directors may grant one or several of its members special mandates for one or several specific objects, without this mandate altering the other manager’s powers (Art. 437, AUSC). This option allows for the possible creation of other bodies responsible for managing certain aspects of the corporation’s business, notably all committees that would have decision-making powers, outside the by-laws, such that members would be able to benefit from certain advantages because of their delegated status. The Uniform Act also allows for the creation of internal corporate bodies and tools in order to control its management and place itself within the current state of modern corporate rules relating to corporate governance. More immediately and for a daily, direct 6

CCJA, avis n 02/2000, 26 April 2000: .

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International Arbitration and Corporate Law application, this article allows for delegating powers in order to facilitate working internal function for the board’s work and to assign any special mission to one of its members who is particularly competent in any particular area. Compensation and Dual Mandates of the Board Members 361. Compensation. “The ordinary general assembly may allocate to the board members, as compensation for their work, an annual set sum that it independently determines. Unless contrary to the bylaws, the board of directors freely divides this compensation between its members” (Art. 431, AUSC). The board’s president, as well as the more experienced directors, may receive a larger compensation. Each one’s efforts are equally compensated since “the board of directors can also grant its members, exceptional compensation for its assigned missions and mandates, or authorize travel fee reimbursements, displacements and expenses incurred in the corporation’s interest under the terms of Articles 438 and following of the current Uniform Act” (Art. 432, AUSC). These clauses conform to compensation rules practiced abroad. One must simply be vigilant to ensure that compensation is not excessive in terms of the director’s activities; proportionality between the amount of the compensation and the actual performance of the board is a good practice. 362. Rules for Director’s Dual Mandates. According to the Uniform Act, a “physical person, director in his own right or a permanent representative of a legal entity director, may not simultaneously belong to more than five SA’s boards of directors whose seats are within the same Member State” (Art. 425, AUSC). This limitation applies to all physical persons who are named administrators, as well as permanent representatives of legal entities. On the other hand, it does not concern legal entities whose number of board seats is not limited. Without an express term or interpretation, insofar as the Uniform Act’s limitations concern the number of board of directors and not the number of mandates, it seems also possible for a physical person to hold more than five mandates if he is both a director in his own name and the permanent representative of a legal entity for the same board of directors. Finally, one must note that this limitation on multiple mandates only applies to one country at a time, as it is very common, in the OHADA zone, for a person belonging to one corporate group to be director in several Member States. This clause may be modified because its intended goal, which aims to make each director available in order to best exercise his mandate, may not be met if one need only change the country in the OHADA zone to hold five extra mandates. 363. The Effects of Accumulation. A director who passes the legal limit by accepting a new mandate must resign from one of the boards of directors within three months. If the director does not do so within this period, the presumption is that he resigns from the most recently acquired post and must return the compensation received (Art. 425, AUSC).

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1  Limited Liability Companies Luckily, this resignation has no effect on the deliberations in which the director participated. This pragmatic solution is realistic because it avoids nullifying the board’s deliberations, which may have been very useful for corporate function. 364. Accumulation between Mandate and Labour Contract. A corporate employee may become a director and vice-versa. His labour contract must correspond to an actual post. If the director’s mandate precedes the labour contract’s conclusion, the board of directors must authorize this contract by applying regulated conventions (Arts. 426 and 438, AUSC). OHADA law does not apply the rule that a director may not become a corporate employee because it is impossible to subordinate his position. Requiring an actual post is without a doubt meant to protect against abuse, which would be submitted before a judge if the issue arose. Board Vacancies 365. Director’s Co-option between Two Assemblies. It is important that the board’s structure and its balance not be too seriously altered during the corporate operations. As such, it is not always possible to prevent a seat vacancy before the following general assembly, which is capable of appointing the agents. This is why “in case of a vacancy of one or several board seats, by death or dismissal, the board of directors may co-opt new directors between two assemblies” (Art. 429, AUSC). The simple power of co-opting a director becomes an obligation for the remaining directors when the board no longer contains the minimum number of directors the by-laws require. Furthermore, “when the number of directors becomes less than the minimum bylaw requirement or when the number of shareholder directors is less than two-thirds of the members of the board of directors, the board of directors must appoint new directors to become effective within three months from the date the vacancy appears. The Board’s deliberations during this period remain valid” (Art. 429, AUSC). In any case, the shareholders must ratify the co-option at the next ordinary general assembly. One should also take care to properly register this resolution because without such ratification, the corporation will find itself in the same situation as before, i.e. the co-opted administrators being managers without rights. 366. Calling the Assembly. If the number of directors falls below the legal minimum, the remaining directors may not co-opt new directors, but must immediately call an ordinary general assembly in order to fill the board of directors. The main risk for a limited board with only three directors is to have to call a general assembly upon each death or dismissal of a board member. It is therefore preferable to choose a larger number of directors in order to avoid this block and have the ability to use co-option. Board Meetings 367. Convening Methods. The directors must receive a notice from the chair of the board for each board meeting under the forms outlined in the by-laws (Art. 453, AUSC). 145

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International Arbitration and Corporate Law ­ ne-third of the directors must also convene the board if it has not met for two months. O One must also note that rules that facilitate convening methods by a smaller number of directors are not allowed, unless the Uniform Act expressly authorizes this (Art. 453, Section 1, AUSC). There is no required frequency for convening a board of directors’ meeting, except for one annual meeting to close the accounts (Art. 452, AUSC). The by-laws, however, may go further than the legal provisions, but one must also consider the interest because if the board does not respect this condition, this could cause problems for the associates later. They would be able to claim that there was a violation of the by-laws when the board did not convene, creating managerial problems. The by-laws freely specify the convening mechanisms. This demonstrates that the associates can create relative convening methods: beyond the convocation, instead of a gathering and the methods of gathering (fax, registered letter, email) or any other method. This large textual flexibility allows also for the use of modern tools, as long as they assure that the information was actually received. If all the directors do not regularly meet, the meeting must be held at another date under penalty of annulment, unless all the directors are present, which would validate the meeting. Too brief a meeting may also lead to the board’s annulment.7 368. Meeting Locations and Distance Meetings. The Uniform Act contains no particular guidelines relating to the board meeting’s location. As such, without contrary terms in the by-laws, meetings may be held either at the corporate headquarters or in any other place. Nothing seems to prevent such board meetings from being held in a foreign country, absent restrictions in the by-laws. With foreign investors, it is not uncommon to see a clause that holds the meeting alternatively in the country of the corporate headquarters and a foreign country. 369. The Uniform Act does not currently state whether the by-laws may allow for meetings to be held by using modern, telecommunication methods, such as video conferences, in order to avoid the director’s unavailability. Without a tribunal interpretation or a CCJA decision, even if it is regrettable, it may seem wise to hold these meetings in the same place and not to resort to these methods. However, Article 453 of the Uniform Act indicates that “within the limits of the terms of the present Uniform Act, the bylaws determine the rules relating to the gathering and the deliberation of the board of directors”; it seems that these by-law provisions may foresee the eventual possibility of holding meetings via video conference.8

7 8

Tribunal regional hors Classse de Dake, jugement n 2301 of 27 October 2004, Bara Tall c/ Cheikh Dioum et Toussou Ndour, not W.J. Ngoue, . The revised Uniform Act will likely seek to clarify this point by expressly providing for the possibility to vote by video conference, or by other means that allow them to be clearly identified, if the by-laws allow, ensuring their effective participation (Art. 454-1, revised AUSC).

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1  Limited Liability Companies 370. This solution only seems applicable insofar as the corporation uses reliable methods to ensure the verification of the board’s vote. Using personal identification systems, such as double codes (password and confidential codes assigned to each voter), is advisable for this configuration. In some countries, however, such virtual meetings may be difficult because of the network’s insufficiency or unreliability. This solution is used, when included in the by-laws, with certain pragmatism in order to avoid a situation where a voter cannot attend a meeting and prevents an annulment action against the board. 371. Presidency. A president, in theory, presides over the board of directors’ meetings. In case of his absence, the board member who has the largest number of shares or, in a case of equality, has been with the company the longest takes on his responsibilities (Art. 457, AUSC). The article does not state, however, whether in cases where an equal number of shares is held the older of the shareholders must preside over the meeting, if this could potentially lead to a non-shareholder director, or a holder of fewer shares presiding over the session since he is the oldest. Likewise, for legal entities, the question is to know whether one must consider their age or that of their representative. Logic states that it would be the age of the representative since the Uniform Act requires the nomination of a physical person to ensure a more stable representation of specific shareholders. Logically, they would want the oldest shareholder holding the largest number of shares to preside over the session. To avoid such a situation, it is advisable to include in the by-laws a more simple replacement method similar to the Uniform Act. 372. Proxy. Unless there is a contrary provision in the by-laws, each director may appoint another director by letter, telex or fax as his agent for representation at the board of directors’ meeting. Nevertheless, no director may be a proxy for more than one other agent for the same board meeting (Art. 456, AUSC). This rule avoids an accumulation of votes in one sole individual by returning to a systemic delegation method. 373. Quorum and Majority. Generally, all of the board’s decisions require the majority of present or represented directors. However, a stronger majority and/or a specific majority for each decision category may be outlined in the by-laws (Art. 454, Section 2, AUSC). In terms of the quorum, it is allowed that the “board of directors may only validly meet if half of its members are present.” It is not possible to alter this quorum rule since the Uniform Act states that “any contrary clause is deemed void” (Art. 454, AUSC). 374. Blockades. In case of a tie, the president of the board is the tiebreaker, unless the by-laws state otherwise. When the by-laws state that the president is not a tiebreaker and there is a tie, the board of directors may legally convene again with the same agenda at another date. Such a clause creates the risk of many blockades. 375. The Board’s Minutes. Voted resolutions during a board of directors’ meeting must be passed according to the form included in the special registry, with numbered pages initialled by a competent judge from the corporate headquarters and maintained at the corporation’s headquarters (Art. 458, AUSC). The minutes must indicate the date and the

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International Arbitration and Corporate Law place of the meetings as well as the name of the present or represented directors, as well as the absent and non-represented. They must also mention the presence or the absence of any individual called to the meeting in terms of a legal obligation, as well as the presence of any other person having attended any or the entire meeting. These individuals in attendance are mainly auditors and the general director, eventual counsel or any person called by the board to speak during the board’s meeting. Once compiled, the board of directors’ minutes must fulfil certain criteria of proof and validity imposed by the Uniform Act. Further, it is required that “the minutes be certified by the board president and by at least one other director” (Art. 459, AUSC). Copies or extracts from the minutes may be validly certified by the board president, the general director or by any other person deemed capable (Art. 460, AUSC). The minutes are deemed valid until contrary proof is shown (Art. 461, AUSC). Management of the Société Anonyme and the Board of Directors 375-1. Choosing between Dissociated and Unified Direction. OHADA law allows the associates to choose between two types of general management. The corporation may be led by a single person holding the powers of president of the board and general director, called chief executive officer or CEO (Arts. 462-476, AUSC), or by a president of the board and a general director (Arts. 477-493, AUSC). Regardless the choice, the manager will be able to have a joint general director who has responsibilities clearly defined in the by-laws or by the board of directors. The Uniform Act does not allow for the ability to appoint a vice president or a secretary general. Since these positions do not exist, co-general directors may join the CEO.9 375-2. The Chief Executive Officer (CEO). The board of directors nominates the CEO from its members and must, under penalty of annulment, be a physical person (Art. 462, AUSC). It is neither possible to appoint a third party nor a non-director associate. The CEO has a mandate the same as his term as a director, and his term may be renewed (Art. 463, AUSC). The number of CEO appointments is also limited. Further, the same individual may not hold more than three posts as a CEO within the territory of the same Member State (Art. 464, AUSC). However, going beyond three mandates is possible for any individual who is a CEO in corporations with seats in several different Member States, as long as they respect the limit of three mandates within the same Member State. The CEO’s role cannot be held simultaneously with more than two mandates as a general administrator or general director. The mandate accumulation rules in Article 425 AUSC also apply to CEOs (see supra, § 362). 9

Opinion CCJA of 26 April 2000, n 02/2000/EP, OHADATA J-02-04. For the CCJA, it is not possible to create such a post without violating the applicable legal terms. One can deduce that the functions provided for in the Uniform Act have an imperative and limitative character.

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1  Limited Liability Companies In terms of his position, the CEO may be connected to the corporation by a work contract conforming to Article 426, AUSC (actual work), and the board of directors sets his compensation, and all of these methods include the eventual benefits in kind (Arts. 466 and 467, AUSC). The CEO may be dismissed ad nutum (without motive) and at any moment by the board of directors (Art. 469, AUSC). In case of an impediment, the board of directors may choose another director to carry out the CEO’s responsibilities. In case of the CEO’s death, resignation or dismissal, the board of directors appoints or delegates a director to fulfil the CEO’s responsibilities (Arts. 468 and 469, AUSC). The rules relating to his appointment, dismissal, accumulation of mandates and position as CEO also apply to the president of the board of directors when the corporation ­has chosen ­to dissociate the responsibilities of president and general director (Arts. 477-484, AUSC). When the CEO holds both the responsibilities of president of the board and general director, he presides over the board meetings and the general assemblies, all the while ensuring the corporation’s general direction to third parties. To accomplish this, he holds extending powers, within the limits of the corporate purpose and within the limits of other corporate bodies (board of directors and general assembly). He engages the corporation with third parties even if his actions go beyond the corporate purpose and the by-laws or the decision of the assembly or the board of directors limiting his powers, which are not enforceable against good faith third parties (Art. 465, AUSC). When the responsibilities of the president of the board and the general director are dissociated, the president’s attributions are different. In this case, the president ensures that the board of directors fulfils its role of controlling the corporation’s management by appointing a general director. To accomplish this, he may, at any moment during the year, pursue verifications that he feels are appropriate and provide all useful documents to accomplish this goal (Art. 480, AUSC). 375-3. The General Director. The board of directors also appoints the general director. Unlike the CEO or the president of the board, the general director may be chosen from the directors or outside the board members. However, he must always be a physical person (Art. 485, AUSC). The board freely decides the length of his mandate. This term does not necessarily coincide with the director’s term when the general director simultaneously holds both positions (Art. 486, AUSC). The general director insures the corporation’s management towards third parties. To fulfil his functions, he holds the most powers when he operates within the corporate purpose, as long as the law or by-laws do not grant these powers to other corporate bodies (i.e. board of directors or general assembly). The general director binds the corporation even when he goes beyond the corporate purpose. Moreover, the by-law provisions or the deliberations of the assembly or board limiting his powers are not enforceable against good faith third parties (Arts. 487 and 488, AUSC).

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International Arbitration and Corporate Law The general director may have a work contract with the corporation complying with Article 426, AUSC (actual position), and the board sets his compensation, in all its forms, including possible payment in kind (Art. 490, AUSC). Except when the board dismisses him ad nutum (Art. 492, AUSC), death or resignation, the general director’s responsibilities end at the same time as his mandate (Art. 493, AUSC). In case of temporary or definitive impediment, the general director is immediately replaced by a decision of the board of directors upon a proposal from the president of the board (Art. 491, AUSC). 375-4. The Co-General Director (CGD). The board of directors may also appoint, upon proposition from the CEO or general director, depending on the chosen form (Arts. 470 and 485, Section 2, AUSC), one or several co-general directors (a CGD). The CGD must be a physical person, but he need not be a director or an associate. Appointing a third party to this post is completely possible. The board freely determines the length of his term, but it cannot exceed his term as a director if he is also a director. The CGD’s term is renewable, as for the president or the general director (Art. 471, AUSC). It must be noted that Article 471, AUSC does not create a direct subordination link between the general director, the CEO and the CGD even if Article 472, AUSC indicates that the CGD exercises his powers “delegated” by the CEO. To avoid any complication with the CGD’s powers such as an order, the Uniform Act maintains that resignation, dismissal or death of the CEO or the general director does not end the CGD’s responsibilities. He remains in place until the board appoints a new CEO or general director and will have to, in this case, be renewed or replaced (Art. 476, AUSC). The board of directors in agreement with the CEO determines the co-general director’s powers. Whatever the length of powers the board determines, the CGD engages the corporation to third parties in the same conditions as a CEO or a general director (Art. 472, AUSC). He may also hold a work contract under Article 426’s conditions (Art. 473, AUSC), and the board that appoints him determines his compensation (Art. 474, AUSC). The board may dismiss the CGD ad nutum at any moment with the CEO’s agreement (Art. 475, AUSC). The Uniform Act does not directly discuss the CGD’s death, dismissal or resignation. One can deduce, in this case, that the functions given to the CGD return to the CEO or the general director, who will be able to begin appointing a new CGD in order to help with his managerial responsibilities within the limits he chooses (subject to by-law provisions discussing this situation). 1.1.2.1.2 Société Anonyme with a General Administrator 376. OHADA law allows individuals to use an SA for projects that could be financially important all the while highlighting the management methods and controls. Although some consider this solution inconvenient, it can also be a benefit. In fact, outside of specific management rules, the corporation remains an SA and therefore benefits from all the SA’s legal framework, protecting investors and third parties. This allows one to create a

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1  Limited Liability Companies structure whose founders did not imagine certain problems; an auxiliary regime may be brought in to solve the problems that running a corporation may cause. This type of SA’s main characteristic remains the fact that in an SA with a general administrator, there is not a board of directors.10 The general administrator solely assumes the corporation’s direction and administration functions. He may also have one or several executive officers to help with these responsibilities (Arts. 494 and 510, AUSC). Appointment and Duties 377. Nomination. The first general administrator may be either nominated in the by-laws or nominated by the constituent general assembly. Throughout the corporation’s life, the ordinary general assembly carries out this decision (Art. 495, AUSC). The assembly may choose from shareholders and non-shareholders alike. 378. Term of Office. The by-laws freely determine the general administrator’s term of office. However, it may not exceed six years when the nomination occurs during the corporation’s daily functioning, and two years when the by-laws or the general constituent assembly appoint him. Each general administrator’s term is renewable (Art. 496, AUSC), unless the by-laws state otherwise. Powers 379. Representation towards Third Parties. As in any SA form, the executive offer has the most power when he acts within the corporate purpose’s limits, except for the powers the Uniform Act or the by-laws expressly grant the general assemblies. He holds, among others, the power to convene and preside over the general assemblies (Art. 498, AUSC). Shareholders will have to be particularly vigilant when choosing this office because his acts bind the corporation, and no by-law limitation is enforceable against good faith third parties. Contrary to the general director in the SA with a board of directors, no method regularly controls the general administrator’s action. The assembly only oversees his actions once a year at the general assembly. 380. Delegating. The general administrator may propose the nomination of other executive officers to the shareholders’ general assembly. His dismissal occurs under the same conditions as his appointment (Arts. 510 and 515, AUSC). Salary 381. Compensation. The general administrator may receive an annual compensation and/or specific payments relating to missions and mandates he receives. Whatever the nature of these compensations or payments, the ordinary general assembly decides them (Art. 501, AUSC). 10 E. Miessan, L’administration et la direction de la société anonyme de type nouveau issue de la réforme du droit des sociétés commerciales applicable dans la zone OHADA, OHADATA D-07-06, .

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International Arbitration and Corporate Law Restrictions on the Number of Positions Held 382. Several Offices. A general administrator may not simultaneously hold more than three positions as the CEO of an SA whose headquarters are located within the territory of the same Member State (Art. 497, Section 1, AUSC). Likewise, no general administrator may simultaneously hold, while a general administrator, more than two mandates as a CEO or general director of an SA with a corporate headquarters within the territory of the same Member State (Art. 497, Section 2, AUSC). In case of a breach, the solution is identical for the one used for administrators, meaning the voluntary or forced resignation with the payment of back compensation (see supra, § 362-364). 1.1.2.2 Auditors 383. The auditor’s role in OHADA law is similar to all modern corporate law systems. He is responsible for guaranteeing the authenticity of information given to the shareholders and third parties to avoid a faulty presentation of the corporation’s financial situation. The Uniform Act regulates the auditor’s responsibility and the method for choosing him. However, some national laws from the respective Member States may also apply to the auditor, notably relating to revealing breaches and the auditor’s liability. 1.1.2.2.1 Choosing and Appointing the Auditor 384. The List of Auditors. OHADA law regulates the profession of auditors to ensure the competence, the know-how as well as the professional ethics applicable to corporate auditors. As such, only accounting experts certified by the Member State’s bar of expert accountants may serve as auditors (Art. 695, AUSC). If such a bar association does not exist, a commission maintains the list of accounting experts who may work as auditors (Art. 696, AUSC). 385. Conflicts. An auditor may not pursue an activity that compromises his independence, he may not have a job except to teach or work with another auditor nor may he exercise a commercial activity (Art. 697, AUSC). Other conflicts related to directorial functions or the role as a corporate shareholder are listed in the Uniform Act’s Articles 698, 699 and 700 (founders, contributors, recipients of specific benefits, corporate managers or managers of a subsidiary, spouses and parents to the fourth degree of these individuals, corporate managers connected to the corporation by a 10% capital link, corporate employees or their spouses, former corporate administrators or directors). Failing to respect these rules leads to annulling the decisions taken by the auditors or on the irregularly nominated auditor’s report (Art. 701, AUSC). 386. Criminal Sanction for Conflicts. Any person who, either in his personal name or as a corporate auditor, knowingly accepts, exercises or maintains his responsibilities as auditor notwithstanding these legal conflicts incurs criminal liability. 387. Appointment. An auditor and a deputy must be appointed in each SA, unless the corporation issues an IPO, in which case two auditors and two deputies must be appointed 152

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1  Limited Liability Companies (Art. 702, AUSC). The first auditors and their deputies must be named in the by-laws or appointed by the general constituent assembly. They are next confirmed by the ordinary general assembly (Art. 703, AUSC). The corporate managers are subject to criminal sanctions if they do not require the auditors’ appointments (Art. 897, AUSC). 388. Length and Renewal of Terms of Office. The length of their functions when the by-laws or the general constituent assembly appoints them is for two corporate terms, and expires once the ordinary general assembly votes on the second exercise’s accounts (Arts. 704 and 705, AUSC). The auditor’s terms are renewable. When the ordinary general assembly carries out the nomination, the office expires at the end of the sessions that must vote on the annual corporate accounts for the following sixth exercise (Art. 705, AUSC). 1.1.2.2.2 Exercising Their Control 389. Convening. Auditors must be called to each general assembly at the latest within the same time period as the shareholders, by registered or hand-delivered letter (Art. 721, AUSC). In practice, it may be useful to give the auditor notice in advance, so that he may complete his obligations with due diligence. If the managers do not convene the auditors, they may face criminal sanctions. 390. Obligations. The Uniform Act’s Article 710 and the following define the auditor’s legal mission. They must certify that the combined financial reports are true and provide a faithful image of the completed exercise as well as the corporation’s financial situation and holdings at the end of the exercise (Art. 710, AUSC). To do so, they give a report to the general assembly in which they declare “to either certify the regularity and the sincerity of the combined financial reports, match his certification to the reserves, or refuse to certify the reports by clearly outlining the reasons why” (Art. 711, AUSC). The auditors also verify “the combined financial report’s sincerity and the consistency, the information given in the report to the board of director’s management or to the general administration, depending on the situation, and in the documents, the financial situations and the corporation’s combined financial reports sent to the shareholders” (Art. 713, AUSC). They also explain their observations in the report to the general assembly. Further, the auditor is responsible for assuring the shareholders that information the directing bodies give them is exact. This idea of a true image of the corporation’s financial situation and operations, which appears throughout the Uniform Act on commercial corporations, derives from the Uniform Act on Accounting Law, which auditors must respect while carrying out their responsibilities. The shareholders may also be able to understand the corporation’s position at regular intervals and have a clear idea of their share’s value, which facilitates making decisions in the general assembly as well as the personal choice to sell or keep one’s shares. The auditor’s control of accounting information is especially important since managers tend to embellish a situation or speak too optimistically in order to place value on their management. His independence allows the auditor to play an 153

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International Arbitration and Corporate Law essential role in the protection and management of the corporation in order to avoid an inexact presentation of the corporation’s financial situation. As such, one could question the efficiency of an annual report in order to avoid possible problems. This is why the legislator reinforces the auditor’s role, and therefore the shareholders’ rights, by giving a consistent quality to this mission. “The auditor has the permanent mission, excluding any interference in management, to verify the corporation’s values and accounting documents and to monitor the compliance with the current accounting rules” (Art. 712, AUSC). Therefore, the auditor does not simply take a photograph of the accounting once a year, he also takes on a permanent mission in order to avoid events during the course of an exercise that an annual report may miss. This is why if the auditor reveals elements that may compromise the continued exploitation, he will have to begin an alter proceeding which will eventually be presented to the shareholders (see supra, § 192). The auditor serves as a watchdog and warns the shareholders in case of risk to the corporation’s survival. The shareholders must pay close attention to the choice of an auditor, in order to choose a professional with all the required qualifications because this corporate agent will regularly confront the managers to verify the corporation’s accounts. This choice is even more crucial in an SA with a general administrator because the auditor is the only one who may regularly examine the general administrator’s management, thereby counterbalancing his vast powers. 391. Obstruction Offence. Corporate managers or any person working for the corporation who, knowingly, hinders the auditor’s mission or who refuses to provide him with all the useful information for his mission, and notably all contracts, books, accounting documents and registries of verbal proceedings, is subject to criminal sanctions (Art. 900, AUSC). 392. Liability. Similar to all corporate agents with a specific mission for the associate’s common interest, “the auditor is civilly liable, towards the corporation and third parties, for harmful consequences, faults, and negligence that he commits during the exercise of his function” (Art. 725, AUSC). This action has a three-year statute of limitations from the date of the damaging fact or, if it has been hidden, its revelation. The statute of limitations changes to 10 years in the case of a crime (Art. 727, AUSC). This liability is contractual towards the corporation and tortious for third parties. The auditor will not be held liable for damages caused by members of the board of directors or the general administrator unless he had knowledge and did not reveal such in his report to the general assembly (Art. 726, AUSC). 393. Beginning Point for the Statute of Limitations. The Uniform Act does not clarify what it means by “revelation” of the damaging fact. In fact, there are several possible interpretations for when to start the statute of limitations. A first analysis maintains that any element relating to the corporation’s upkeep is necessarily reflected in its accounts. Therefore, if this fact included in the accounts was certified by the associates when they voted

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1  Limited Liability Companies on the annual accounts (in an ordinary general assembly), it would necessarily be considered to be revealed and make the statute of limitations begin once the assembly voted. This first theory has the advantage of avoiding that a fact reflected in the accounts but not precisely known by the shareholders (because it is not always easy to identify) will not be barred by the statute of limitations three years after the account vote. But this analysis is also inconvenient because its sense is slightly lost in the text, because it is not easy to see what use the notion of “revelation” may serve if its statute of limitations is not reported within time. This is why another definition of revelation could be taken into account – the shareholder’s direct and precise knowledge of the damaging fact. Only the auditor’s wrongdoing known by the shareholders would be revealed. The action would be barred after the threeyear statute of limitations from the date of this knowledge. The convenience of this second concept is that it partially eliminates the possibility of a statute of limitations for facts that the associates have not realized, the vote on the annual accounts not being sufficient to satisfy the statute of limitations. This is why a third option is desirable, based on taking into account the auditor’s intention to conceal a harmful fact. Also, there would be some ordinary faults resulting from the auditor’s simple blunders but which would not be serious negligence. They could have statutes of limitations that begin after the shareholders’ vote on the accounts at the ordinary general assembly. And there would be particularly severe fault from which the beginning of the statute of limitations would be different. These faults could be serious violations of the auditor’s ethical obligations or fraud concerning the shareholder’s rights, committed in accord with the managers. For this type of fault, the statute of limitations would not begin to run until acknowledgement by the shareholders, which would assure their protection against particularly harmful intentional acts. The case law will deal with this notion, but it is likely that an investigation will have to occur before any definitive response in this matter. 394. Report to the Board of Directors or the General Administrator. The auditor must prepare a report that informs the board of directors of verifications and tests that the auditor has carried out. He must also indicate the amounts on the balance sheets and other accounting documents to which he feels modifications are necessary by making all useful observations on the methods used to create these documents. The report must also evaluate all irregularities or mistakes that he may have discovered and contain his conclusions on the exercise in comparison with his conclusions on the preceding exercise (Art. 715, AUSC). 395. Presenting the Report. The auditor’s report must be made available to the chair of the board or the general administration before the board meeting or the general administrator’s decision that closes the exercise’s accounts (Art. 715, AUSC). This anticipated communication allows the board or the administrator, depending on the situation,

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International Arbitration and Corporate Law either to prepare explanations of the auditor’s observations or to repair the accounting documents according to the conclusions from the latter. This procedure is preferable to a direct communication with the shareholders, insofar as some of the problems may be resolved by the board of directors and thus removed from the report’s final version. The shareholders will only be able to rely on the auditor’s observations if there is a disagreement between the auditors and the directors. In fact, “the auditor signals, at the next general assembly, the irregularities and the inaccuracies he discovered during his assignment” (Art. 716, AUSC). The shareholders will discuss the appropriate action visà-vis the director’s or general administrator’s suggestion when voting on the exercise’s accounts. 396. Duty to Denounce. The auditor must also inform the public minister of illegal acts that he knows of while fulfilling his duty, but this revelation does not lead to liability (Art. 716, AUSC). The auditor has not only a duty to inform the shareholders but also to protect the general interest that the state represents. This “quasi-auxiliary rule of the public minister” is an obligation that the auditor must respect, or he risks criminal liability. Not only is giving or confirming false information about the corporation subject to criminal liability, but not revealing tortious acts to the public minster is also criminally sanctioned (Art. 899, AUSC). Each Member State must include the proper sanction in its own legislation. 397. Professional Secrecy. Besides the public minister and the shareholders, no one else may receive information from the auditor. He is bound by professional secrecy for the facts, acts and information that he is privy to as a result of his position (Art. 717, AUSC). The interest of this term is to protect a corporation from competitors with poor intentions who could try to access the confidential information of the auditors. Once again, the Uniform Act defines the crime, but the penalty is left to the Member States. 398. Dismissal. The auditor’s dismissal must have a cause. Shareholders who hold at least one-tenth of the capital or the public minister may request the dismissal for a just cause. Beyond these, the board of directors or the general administrator, depending on the case, as well as the ordinary general assembly may request the dismissal in case of an auditor’s fault or hindrance (Arts. 730 and 731, AUSC). Consequently, in the eventual change of corporate shareholders, the new shareholders may not simply convene to dismiss the auditor. Except in cases where the auditor is incapable of continuing his position or decides to resign, the shareholders must wait for the expiration of his term to appoint another auditor, unless the judge authorizes a cause for dismissal. This method solves the problems with dismissing directors ad nutum. The reason for this legal difference is notably the need for the auditor’s independence. He must be free from all pressure, for example from a majority shareholder.

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1  Limited Liability Companies 1.1.2.3 Shareholders 399. The essential shareholder qualities, shared among all corporate forms (see supra, § 142-146), are found and clarified in the SA form to be adapted to the specific context of a limited liability corporation. 1.1.2.3.1 Political Rights 400. Political rights derive from protecting voting rights. In fact, to be able to vote, a shareholder must not only be able to attend and vote in assemblies, but must also have access to information to be well prepared for meetings and make an informed decision. Right to Information 401. Before a General Assembly. Each shareholder has the right, before an ordinary general assembly, to observe at the corporate headquarters, either himself or using an appointed agent, financial documents such as the combined financial reports, the auditor and board of directors’ reports, the list of directors when a board is created, information on director or general director candidates, proposed resolution texts, list of shareholders, the total amount of compensation for managers and the highest paid employees (Art. 525, AUSC). The shareholder may, at his own cost, copy these documents. This right is available during the 15 days prior to the general assembly. For non-ordinary assemblies, the right to information only relates to proposed resolutions, the board of directors’ report and the auditor or liquidator’s report, where appropriate. It should be noted that the shareholder’s information right does not force the corporation to provide each shareholder with this information. These are available for shareholders who will be able to consult them or make copies of them at their own cost. A different mechanism would create heavy costs for the corporation each year, which is not desirable. 402. Criminal Sanction in Case of Failing to Respect This Information Right. Corporate managers are criminally sanctioned when they knowingly publish, or provide, the shareholders’ combined financial reports that do not provide an accurate image of the exercise’s transactions, the corporation’s holdings and financial situation at the end of this period, if they do so with the goal of concealing the corporation’s actual situation (Art. 890, AUSC). The publication includes anything that may be brought to the public’s attention, be it written or oral. The intent element is doubled because the intention must be to intentionally mislead the shareholders by concealing the corporation’s situation. 403. Permanent Right. Outside the timely communication before holding a general assembly, shareholders permanently retain the right to observe and copy corporate documents from the previous three exercises. They may also request verbal proceedings and attendance sheets from assemblies held during the previous three years. This permanent information right is the minimal legal amount that the by-laws may allow under the form of communicating other documents (Art. 526, AUSC).

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International Arbitration and Corporate Law 404. Written Questions. Shareholders may also, twice per exercise, ask the CEO, the general director or the administrator written questions on any subject that may jeopardize the continuation of the corporation. The auditor is informed about the given answer (Art. 526, AUSC). The Uniform Act leaves slight ambiguity on this point because it says that “the response is communicated to the auditor.” One could wonder whether, in fact, only the auditor must receive the answer or whether the shareholders themselves must also receive it. The text is not clear, but it seems likely that the answer must also be given to the associates, who began the questioning. If such was not the case, the text would indicate that the response is “given” to the auditor, not that it is “communicated”, which seems to signify rather that he must receive a copy. 405. Refusal to Communicate. If the corporation refuses to provide the documents listed in Articles 525 and 526 of the Uniform Act, the president of the competent jurisdiction must quickly rule on the refusal to grant the shareholder’s request. The judge may order the corporation to provide the requested information. The judge could also order the report of the assembly, if the corporation has not already done so, until it completes this formality.11 This term is efficient insofar as it compels the corporation to provide these documents by blocking, for example, corporate account approval, or the general assembly’s renewal of the board of directors. But should the managers also be sanctioned? In fact, to support a corporate penalty, the shareholders wind up paying in the end since they support the corporation’s financial losses or see their dividends reduced by this financial penalty. In order to gain reparations, the shareholders will have to determine the manager’s responsibility who denied this communication, which creates a penalty and an additional cost that the texts should have been able to avoid by foreseeing a specific case of civil responsibility for violating the obligation of information to the shareholders (see supra, § 126 et seq.). Right to Vote 406. General Assembly. The general assembly is the sole place for shareholder expression. This is where they approve or disapprove the corporate manager’s management, which they cannot oversee on a daily basis. The following developments apply to all general assemblies, but the special rules also apply to extraordinary general assemblies. 407. Criminal Sanction. Those who knowingly prevent a shareholder from participating in a general assembly are subject to criminal sanctions (Art. 892, AUSC). 408. Calling the General Assembly. The board of directors or the general administrator, depending on the case, calls the shareholders’ meeting. They do not exclusively maintain this prerogative. A general assembly may also be called by: (1) the auditor, when he has vainly tried to have the board of directors or the general administrator call one; (2) an 11 TPI Yaoundé, Ord. Réf. n 494/0, 6 February 2001.

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1  Limited Liability Companies agent that the president of the competent jurisdiction appoints upon the request of any interested party in an emergency;12 (3) one or several shareholders representing at least 10% of the corporate capital or (4) finally, the liquidator if the corporation is under liquidation (Art. 516, AUSC). The by-laws outline convening rules within the limits the Uniform Act imposes. Further, the convention notice must be received or brought to the attention of the shareholder and auditor at least 15 days before the general assembly is held, in the case of a first convention, and at least six days before the following conventions of the same order of business. The judge may choose a different time period in case a justice agent oversees the convention (Art. 518, AUSC). 409. Publishing the Announcement. General assembly announcements must be published in a legal announcement journal. However, when all of the shares are nominatives, the announcement may be personally sent to each shareholder, by hand delivery or registered mail. Whatever method is chosen, the call must include the order of business for the meeting. The Uniform Act lists detailed information that each notice must contain. These things relate to notably the time, the date, the place and the nature of the assembly (Art. 519, AUSC). Moreover, the information relating to the corporation itself such as the corporate name, its symbol, its corporate form, the amount of corporate capital, the address of the headquarters and its registration number with the RCCM must be included with the notice. 410. Assembly Annulment. An improperly called assembly may lead to an annulment. However, a general assembly irregularly gathered but regularly held, and at which all shareholders would be present, is nevertheless valid (Art. 519, AUSC). 411. Order of Business. The individual who calls the general assembly decrees the order of business. However, when an agent of justice calls the assembly, the president of the competent jurisdiction that appointed the agent sets the order of business. One of several shareholders may request registering a draft project to the order of business if they represent a certain percentage of fixed corporate capital in relation to the amount of corporate capital (Art. 520, AUSC). This request must contain certain precise information to allow other shareholders and managers to consider these resolutions before holding the general assembly. This is why the shareholder’s request must be “accompanied by: (1) the draft resolution with a brief, attached explanation of its purpose; (2) justification of possession or representing the amount of required capital by the present article; (3) when the draft resolution relates to presenting a candidate for a director or general administrator post, the information required by Article 523 (identity, professional references and professional activities from the last five years).” The draft resolution the shareholders propose must 12 Summary judgment may appoint the agent of Art. 516, § 2-2: Supreme Court of Niger, Case N 04-158/C 16 August 2001, Snar Leyma v. Groupe Hima Souley.

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International Arbitration and Corporate Law be addressed to the corporate headquarters at least 10 days before the general assembly­ (Art. 521, AUSC). The deliberations held during a general assembly where the resolution does not receive a vote are void. This demonstrates that if the general assembly took place and that the order of the day only included the points the board of directors provides without including the draft resolution the shareholders validly form, all deliberations taken during the course of this general assembly will be void and therefore without effect (see supra, § 89 et seq.). 412. Proxy. Each shareholder may appoint an agent of his own in order to represent him or her at the general assembly. The agent need not be a corporate shareholder or have a link with the shareholder, which is more flexible than other corporate legislations. In light of the mandate’s specialty principle, appointing an agent is valid for only one assembly. It may, however, be allowed, exceptionally, for two assemblies, when these two are an ordinary general assembly and a special, general assembly held the same day or within seven days of each other. A shareholder’s proxy is also valid for successively held assemblies based on the same order of the day (Art. 538, AUSC). The proxy forms that the Uniform Act allows are very precise (Art. 538, Section 3, AUSC) and must therefore be respected to avoid the secretary of the meeting rejecting the proxy, leading to a block of the shareholder’s vote. 413. Place of the General Assembly. The assemblies must be held at the corporate headquarters or in any other place within the Member State’s territory containing the corporate headquarters. The corporate by-laws may state otherwise and allow, notably, a meeting outside of the corporate headquarters’ Member State (Art. 517, AUSC). This ability is very useful for corporations where foreign shareholders hold a large amount of capital, which would allow for a change of venue when holding general assemblies. 414. Conditions for the General Assembly Proceedings. The chairman of the board or the general administrator presides over the general assembly depending on the corporate structure, or, if this is not possible, by the shareholder holding the largest number of shares or, in case of equality, by the oldest in age. The by-laws may allow for another replacement for the president of the general assembly (Art. 529, AUSC). 415. The general assembly’s office contains an assembly president, two poll officials and a secretary. The two shareholders representing the largest number of shares are named polling officials, subject to their acceptance (Art. 530, AUSC). The assembly appoints the secretary, who need not be a shareholder (Art. 531, AUSC). The president appoints these individuals at the beginning of the assembly, and mention must be included in the minutes in order to avoid confusion. At each general assembly, a shareholder attendance sheet must be present. This attendance sheet includes each shareholder’s identity, his address, the number of shares held and the number of voices attached to these shares (Art. 532, AUSC). If an agent represents a shareholder, the agent’s name must also be included on the attendance sheet. Shareholders

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1  Limited Liability Companies or their agents initial the attendance sheet when they enter the conference room. Proxies are annexed to the attendance sheet (Art. 533, AUSC). The polling officials are responsible for truly certifying the attendance sheet (Art. 534, AUSC). 416. Minutes. The meeting secretary creates a report (Art. 531, AUSC). In practice, the assembly general reports are often prepared in advance, the secretary being responsible for including the resolution’s voting results as well as the subsidiary questions. The report must contain the date, the place of the meeting, the nature of the assembly, the method of convening, the order of the day, the office’s composition, the quorum, the resolution’s text, the vote results for each one, the documents and reports presented to the assembly and a summary of the arguments. The office members sign this report, which is then archived at the corporate headquarters (Art. 535, AUSC). 417. Ordinary General Assembly. The ordinary general assembly may make any decision except for those reserved for extraordinary and special assemblies. In particular, it approves the corporation’s financial reports, decides the allocation of profits, appoints members of the board of directors and auditors, issuing obligations, and approving contracts concluded between the corporations and its managers (Art. 546, AUSC). In terms of the frequency of ordinary general assemblies, one must indicate that it must be held at least once a year to decide on the exercise’s combined financial reports, within six months following the exercise’s closure. Authorizing an extension of this delay may only be given by the competent jurisdiction (Art. 548, AUSC), which varies depending on the Member State in question. The quorum necessary for the general assembly’s deliberations varies depending on whether it is the first or second gathering. If a first meeting, the ordinary general assembly may only validly deliberate if the present or represented shareholders hold at least a quarter of the shares with a voting right. For the second meeting with the same order of business, a quorum is not necessary (Art. 549, AUSC). If the quorum is met, the proposed resolutions during the assembly must be voted with the majority of votes. Blank ballots are not counted (Art. 550, AUSC). The rules relating to the quorum and the required majority for the assembly’s deliberations are imperative. No exceptional clause may be included within the by-laws. The rule is the same for other general assembly reunions in an extraordinary or special form. 418. Extraordinary General Assembly. The extraordinary general shareholder meeting has the essential ability to modify the by-laws (Art. 551, AUSC). Further, for any modification of corporate capital such as an increase or reduction of capital, merger operations, separation or partial contribution to assets, changes to corporate form or the change of the corporate headquarters, the extraordinary general assembly must authorize a corporation’s dissolution or its prolongation. The same applies for any other modification of the by-laws content necessary for the evolution of the corporate agreement by the associate’s will.

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International Arbitration and Corporate Law No specific rule dictates the frequency of these meetings, since, as their name indicates, they are only held for reasons relating to the appearance of exceptional events while running the corporation. Rules concerning the quorum vary in extraordinary general assemblies because modifying the by-laws requires guaranteeing a presence of shareholders or that they be represented at the moment of the decision. In order for an extraordinary general assembly to be able to validly deliberate at a first meeting, the present or represented shareholders must hold at least half of the corporation’s shares. If this quorum is not met, the deliberations will not be validly held, and upon the second meeting, the quorum is reduced to shareholders holding a quarter of corporate shares. If the quorum is still not met upon the second meeting, the extraordinary general assembly must be held for a third time within two months from the date of the second meeting. At the third meeting, the quorum remains one-quarter of corporate shares (Art. 553, AUSC). It should be noted that the Uniform Act has no terms that go beyond these three meetings. There is a risk of blocking the corporation, which could create a disagreement case that may lead to the corporation’s dissolution (see supra, § 179 et seq.). The board of directors would be able to call a new extraordinary general assembly by changing the minutes the same date as an ordinary general assembly that includes a prior agreed upon order of the day. The shareholders will be, for example, inclined to change their minds if a resolution proposal allows for issuing a generous dividend. Such a manoeuvre will be able to ensure that the shareholders attend the assembly, but it would not guarantee that their vote will be favourable. In terms of majority rules, the extraordinary general assembly can rule only with twothirds of the votes. Blank ballots are not counted (Art. 554, AUSC). However, a unanimous vote of present or represented shareholders is necessary in case of a change of corporate headquarters to the territory of another Member State or to increase shareholders’ engagements beyond their contributions (Arts. 551 and 554, AUSC). An example of increasing the shareholder’s liability is transforming an SA into a company without limited liability, such as a société en nom collectif. 419. Special Assembly. Special assemblies are shareholder assemblies that gather holders of a specific category of shares (Art. 555, AUSC). Special assembly meetings are responsible for approving or rejecting ordinary and extraordinary general assembly decisions that modify the member’s rights. This endorsement is not a simple ratification without any legal value. In fact, the ordinary general assembly’s decision to modify the rights of a specific type of share is only definitive after the special assembly of these shareholders provide their endorsement. The quorum and majority rules are the same as for extraordinary general assemblies (see supra, § 418).

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1  Limited Liability Companies 420. Table of Different Rules for Quorums and Majorities Board of directors (Art. 453)

Ordinary general assembly (Art. 548)

Extraordinary general assembly and special assembly (Arts. 552 and 556-7)

Quorum

Half the administrators

First meeting: shareholders representing a quarter of corporate capital.Second meeting: no quorum required.

First meeting: shareholders representing half of the corporate capital.Second meeting: shareholders representing a quarter of the corporate capital.Third meeting: within two months. Shareholders representing a quarter of corporate capital.

Exemption from quorum

Impossible

Impossible

Impossible

Majority

Simple majority. The Simple majority of Chairman of the votes cast. Board has a deciding vote.

Two-thirds majority of votes cast. Unanimity for moving the corporate headquarters to another Member State or for increasing the shareholders’ engagement beyond their contributions.

Exemption from majority

By-laws may require a greater majority and eliminate the chairman’s deciding vote.

Impossible

Impossible

421. Individual Société Anonyme. The unilateral form always raises the question of the possibility of a simplified form for adopting a resolution that would require, in a multiperson corporation, the approval of the associates acting collectively. Without this joining together, in corporations with only one person, a choice must be made between respecting formalism that requires the shareholder to hold a special meeting to adopt the assembly’s decisions and the pure and simple concentration of all powers in the hands of a single shareholder, doing away with the need for the special rules of the assembly. OHADA law chose to maintain a certain formality as well as the specific competence rules for assemblies that can be explained for several reasons. First, the corporation may become multi-personal and in this case, it will be logical to have an assembly in the proper sense of the word. Next, approving the accounts must be the subject of a specific vote because it engages the corporation towards third parties and allows creditors to have an image of the corporation’s financial health. Finally, it forces the single shareholder to annually make note of his situation, which is also a very good thing to be able to make decisions or certain reworkings that could be useful. This is why the sole shareholder makes decisions normally taken in a general assembly. The administrator general and the auditor’s reports 163

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International Arbitration and Corporate Law precede the ordinary general assemblies. The resolutions that the sole shareholder adopts take the form of a report, which are placed in the corporation’s archives. These decisions are also published in the same forms as the general assembly’s decisions, giving rise to a legal publication (Arts. 558, 560 and 561, AUSC). 1.1.2.3.2 Pecuniary Rights 422. A shareholder’s pecuniary rights are not different in an SA, concerning the right to receive a dividend (for a review of pecuniary rights in corporate common law, see supra, § 145). However, there are several specificities concerning patrimonial rights. Right to Receive Dividends 423. For an explanation of these rights and the allocation of profits, see supra, § 145. Patrimonial Rights 424. Transfer of Shares. OHADA law applies the principle that all shares are freely transferable and negotiable. However, when all issued shares are nominative, some terms may be included in the by-laws, or in a shareholder agreement, in order to impose restrictions on these transfers, such as requiring that the board of directors or general assembly approve the transferee. Likewise, the transfer may be subject to one or several shareholders’ pre-emption right. It must also be mentioned that clauses that restrict the transfer of shares have no effect upon inheritance, division of property between spouses or transferring shares to a spouse, family member or another corporate shareholder. These approval clauses allow the corporation to avoid the entrance of an unwelcome shareholder, for example an investor who would attempt a hostile takeover. In case of a certification procedure, the transferor does not participate in the vote when the general assembly votes whether or not to approve the transfer. The same would apply if the transferor were a director, when the board of directors makes the decision (Art. 766, AUSC). The certification request sent to the corporation by hand delivery, registered letter, telex or fax must contain the surnames, given names, occupation and address of the proposed transferee, the number of shares subject to the transfer and the offered price (Art. 767, AUSC). The corporation must give its response within three months; if it does not, the approval is presumed (Art. 768, AUSC). When approval is denied, the board of directors or the general administrator must see that the corporation, as a reduction of capital, acquires the shares, either by a shareholder, a third party or with the transferor’s agreement. The buy-back must take place within three months of being notified that the approval was denied (Art. 769, AUSC). The shareholder is guaranteed to be able to transfer his shares even when approval is denied. However, he may have to wait up to six months between his transfer proposal and the actual transfer. This wait may be extended when the approval was denied and the transferor does not accept the new buyer’s offer price. In this case, the president of the competent jurisdiction

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1  Limited Liability Companies appoints an expert upon the demand of the most diligent party (Art. 770, AUSC). The judge may then extend the delay by three months. The transferor has the most interest in waiting for the buyer to approach the judge when the end of the three-month period approaches. In fact, once this delay is over, if the purchase has not occurred and no expert has been appointed, the approval is considered granted (Art. 771, AUSC). 425. Criminal Limits on Negotiating. Anyone who knowingly negotiates (1) nominative shares that do not remain under the nominative form until they are entirely paid for, (2) contribution shares before the end of the period during which they are not negotiable and (3) cash shares for which a quarter of the nominal value has not been deposited are subject to criminal liability (Art. 888, AUSC). 426. Shareholder Agreements. Shareholder prerogatives and organization methods for their contributions must be defined in the by-laws. However, in addition to the bylaws, when some or all shareholders wish to preserve the confidentiality of some private arrangements, they may create a shareholder agreement. This agreement remains strictly private unless the corporation issues an IPO, in which case the agreements will have to be in whole or partially the subject of information provided to other shareholders. Business law pragmatism works well with the flexibility of these agreements outside of the by-laws, which allows shareholders to freely alter their legal relations, as long as it complies with the law and, in particular, public policy. Whatever their utility, the legal foundation of these agreements may be called into question even if the contract law general principles and, particularly, the freedom to contract conform to their use. Note that the agreements may suffer from their sanction by being ineffective when the terms are violated. In fact, providing for damages does not repair well and often diminishes the decision taken that violated the shareholder agreement. Such agreements may, notably, provide for joint or forced exit clauses that allow in the case of forcing a transferee candidate to buy back shares from all who wish to sell them, or to compel the other shareholders to sell their shares at the same time as the first transferor. This type of clause allows one to avoid a cohabitation between old and new shareholders who will not necessarily have the same views on the corporation’s future. Nevertheless, the Uniform Act, public policy and the certification clauses when included in the by-laws take precedence over a shareholder agreement, which may only exist outside of the by-laws. 427. Share Securities. Another limitation on the transferability or negotiability of shares may result from placing collateral on the shares by their owner. To secure his shares the shareholder must, first, obtain the corporation’s approval. He must send his collateral plan to the corporation by hand delivery, registered letter, telex or fax, indicating the surname, given names and number of shares that will have to be secured. Agreement occurs either from accepting a communicated collateral in the same form as the approval request or for failing to answer within the three-month period starting from the time of the request (Art. 773, AUSC).

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International Arbitration and Corporate Law It must also be noted that the Uniform Act provides specific rules for collateral on securities “registered in the accounts” (Art. 747, AUSC). The collateral occurs when a declaration of deposit is issued, signed by the owner, that indicates the amount owed, the amount and nature of the shares, which are wired to a special account opened in the name of the owner held by the legal issuing entity or by a financial intermediary. A certification of this deposit is then delivered to the lienholder. It should be noted that the Uniform Act never mentions the notification term or signification during the following procedure. We can examine the formalities that must be respected in this regard. In order to be enforceable against third parties, the collateral must have an authentic act or a signed act registered with the RCCM. If the corporation gave its approval to the project for collateral of shares, this accord gives the transferee approval in case of forced acquisition of secured shares, unless the corporation prefers to buy back its shares without delay in order to reduce its capital (Art. 772, AUSC). 1.1.3

Changes in the Société Anonyme

428. Changes in the Société Anonyme are mainly the operations that affect its capital or its form. This system is important because it provides the flexibility for corporate capital evolution while conditioning the adaptability of corporate law within the operational limits of its managers. 1.1.3.1 Capital Variations 429. Corporate capital variations are subject to the most solemn decision-making in the SA – decision by the extraordinary general assembly. In fact, the corporate capital reflects the power of each shareholder in the corporation because the division of corporate capital allows the recognition of voting rights. If financial motivations principally motivate capital modifications, in order to recapitalize a corporation with financial problems or allowing it to develop itself, there are political consequences for the corporation. 1.1.3.1.1 Increasing Capital 430. The Uniform Act has several, specific terms for any increase of an SA’s capital. In fact, there are several methods to increase an SA’s capital: either by new contributions, incorporating reserves or associate’s accounts. General Conditions 431. Increasing Methods. An SA’s capital may be increased either by issuing new shares or increasing the nominal amount of existing shares. Increasing the capital by increasing the share’s nominal value may only be decided unanimously (Art. 562, AUSC). If new shares are issued, new shareholders may underwrite them; however, the existing

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1  Limited Liability Companies shareholders must support increasing the share’s nominal value, the number of shares remaining unchanged. This explains the need for a unanimous consent of their engagement by choosing to use a sum equivalent to the difference between the new and former nominal share values. The new shares may be released either by capital contributions, capitals in kind or even by compensation of certain credits, liquid or enforceable on the corporation, or finally by incorporating reserves, profits or emission premiums. Newly issued shares may be either at the nominal value or this amount plus an emission premium when the corporation’s value requires the evaluation of the difference between the value of rights conferred to the shareholders by the shares at different periods of its existence (Art. 563, AUSC). For example, a corporation whose initial capital of 1,000,000 CFA divided into 100 shares of 10,000 CFA each may need capital two years later. If the corporation prospered during these two years, and it has a new economic value of 1,500,000 CFA, the newly issued shares will have a nominal value of 10,000 CFA and an emission premium of 5,000 CFA. All the shares have a nominal value of 10,000 CFA, but the new shareholders will have had to pay 5,000 CFA more in order to acquire them, in order to avoid unjust enrichment created by the corporation and its former associates. Setting an emission premium is not necessary in light of Article 563, AUSC. The associates present in the capital may not be able to establish their contributions if they accept a value dilution of their shares when they want to give a benefit to the entering associate. This could be the case when a new associate gives the corporation financing it desperately needs. 432. Freeing Up Shares. Capital must be integrally freed before any new shares are issued that must be paid for in cash (Art. 572, AUSC; see supra, § 338). Not respecting this requirement leads to annulling the operation, and the corporate managers may face criminal sanctions (Arts. 572 and 893-3, AUSC). Decision to Increase Capital 433. Extraordinary General Assembly’s Competence. The extraordinary general assembly is the only body capable of deciding to increase capital, after presenting the reports of the board of directors and the general director and also the auditor’s report (Art. 564, AUSC). The board of directors or general director’s report must clarify the reasons for the capital increase as well as its impact on business’s progress since the beginning of the current exercise, if the ordinary assembly called to rule on the accounts has not yet been held during the previous exercise (Art. 570, AUSC). 434. Special Rules for Quorum and Majority. When an increase in capital occurs by incorporating reserves, profits or emission premiums, quorum and majority rules are those applied to ordinary general assemblies rather than those, more rigorous, applicable to extraordinary general assemblies (Art. 565, AUSC).

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International Arbitration and Corporate Law 435. Delegation to the Board of Directors. Shareholders may delegate powers to the board of director or the general director to carry out the capital increase in one or several operations, set all or some of the methods for this operation, noting its completion and proceeding to the proper modifications in the by-laws (Art. 568, AUSC). The methods for selling rights forming a break may also be set by the board of directors or the director if the extraordinary general assembly grants them this power (Art. 567, AUSC). The breaks are the residual value that may appear between the shareholder’s rights and the share’s emission value. For example, suppose a corporation increases its capital by incorporating all of the corporation’s reserves. Shareholder X has the right to 123,500 CFA in the corporation’s reserves, and if the created shares have an emission value (nominal + emission premium) of 20,000 CFA each, then shareholder X will have the right to six shares. The remaining 3,500 CFA create breaks, and the shareholder will be able to either sell them to another shareholder or buy the equivalent of 16,500 CFA of breaks in order to create a complete share and receive its compensation. It is also possible to plan for the corporate reserves to only be used in order to avoid breaks, to create exact figures, to avoid using a complicated procedure of allocating and transferring breaks. Professionals often prefer this solution because it is the most simple to put in place and explain to associates. However, the power to decide the increase is only for the extraordinary general assembly, which may only delegate this power to the board of directors or the general director (Art. 569, AUSC). The shareholders may, however, delegate executing the increase and its details, but they must take a position on the opportunity to begin such an operation. Any other contrary clause in the by-laws authorizing the board of directors to vote on an increase of corporate capital is deemed void (Art. 569, AUSC). Pre-emptive Subscription Rights for Existing Shareholders 436. Pre-emptive Right. In principle, existing shareholders have a pre-emptive subscription right for any capital increase (Art. 573, AUSC). This right is proportional to the amount of shares held and demonstrates a non-reducible character. This pre-emptive subscription right demonstrates, for example, that a shareholder holding 10% of capital will be able to subscribe 10% of the new shares and will not be able to lose this right except in case of suppression decided by the assembly (Art. 586, AUSC) or his own renunciation of this right (Art. 593, AUSC). The idea of a pre-emptive right is connected to the shareholder’s right to corporate profits. If a capital increase is decided by increasing the number of shares, the share of each existing shareholder will be proportionally reduced (dilution). If the emission premium is judged by the shareholder to be inferior to what it should be, because of this pre-emptive subscription right, he will have the possibility to underwrite a minimum number of shares, allowing him to maintain the same proportional share of capital.

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1  Limited Liability Companies This term also brings justice to the first shareholders who supported the corporation since its inception and do not want new arrivals to take their share of future earnings. However, the pre-emptive right is, as its name indicates, a right and not an obligation. Current shareholders may actually vote against a capital increase at the extraordinary general assembly without having to individually purchase the shares they are entitled to because of this pre-emptive right. In fact a shareholder may feel that a corporation is in a bad position and not want to underwrite new shares. He may also find that the price of issued shares is overvalued or, simply, does not have the necessary funds to participate in this new round of issuing shares. 437. Suppressing a Pre-emptive Right. Shareholders may decide to eliminate the preemptive right by introducing a resolution at the extraordinary general assembly (Art. 586, AUSC). The extraordinary general assembly may, in fact, decide to eliminate this right either for all capital increases or for one of several parts of this increase favouring one or several appointed beneficiaries. When these beneficiaries are already corporate shareholders, they may not participate in the vote, not as themselves or as proxies. Their shares will not be counted for the quorum or the majority (Art. 587, AUSC). Why would the shareholders decide together to eliminate this pre-emptive right? This situation could occur when the corporation needs money that the current shareholders do not possess. An investor may agree to take a share of the capital. In this case, it will be understood that the investor will underwrite the increase being appointed as beneficiary from suppressing this pre-emptive right. 438. Individually Renouncing a Pre-emptive Right. Shareholders may also individually renounce their pre-emptive right for the benefit of named individuals or without indicating a beneficiary (Art. 593, AUSC). The renouncing made to an appointed beneficiary must be accompanied by the beneficiary’s acceptance (Art. 595, AUSC). The individual renunciation does not present much interest for the shareholder except in the case of an agreement with a beneficiary with financial compensation. In fact, pre-emptive subscription rights have a venal value and are negotiable. 439. Negotiability. During the subscription period, pre-emptive rights are freely negotiable when they are detached from shares that are themselves negotiable. When the shares are not freely negotiable, pre-emptive rights may be transferable under the same conditions as the share itself (Art. 574, AUSC). They will be subject to a certification procedure if the by-laws contain such a provision for transferring shares to third parties. If he has no interest in underwriting new shares, the shareholder can also sell his pre-emptive subscription rights to another shareholder who would like to increase his share of corporate capital. 440. Reducible Pre-emptive Right. The general assembly may decide to grant shareholders a pre-emptive subscription right reducible for new shares that will not have been underwritten and are non-reducible (Art. 575, AUSC). In such a case, shares are

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International Arbitration and Corporate Law considered to be reducible for shareholders who have underwritten a number of shares greater than those that may be underwritten as non-reducible within the limits of their request (Art. 576, AUSC). These terms are useful when all pre-emptive subscription rights have not been exercised, which demonstrates that some shareholders have not exercised their rights but they have not sold them to others who would have exercised them in their place. In this case, the remaining pre-emptive subscription rights are given to shareholders who have underwritten more shares than those to which they have the right. For example, shareholder X had 100 pre-emptive subscription rights; he neither exercised them nor sold them. Shareholder Y had 200 pre-emptive subscription rights and could underwrite 200 new shares; he is confident in the corporation’s future and wants to underwrite 300 shares. Y did not try to buy pre-emptive subscription rights from other shareholders, as he felt that an absent-minded member would forget to exercise his rights and at the end of the period, he would have freely received what he should have paid during this period. In our example, Y is correct since X kept 100 pre-emptive subscription rights that no longer have any value. Y recorded in his subscription bulletin that he wanted to exercise all of his 200 pre-emptive subscription rights and underwrite 100 more shares as a reducible title. Thanks to X’s 100 preferential rights that he did not exercise, Y could underwrite 300 shares, of which 100 are at a reducible title. 441. Partial Subscriptions. If after exercising all pre-emptive rights, the total subscriptions received does not correspond to the total estimated amount needed to increase the capital, the capital may nevertheless be increased, to the limit of subscriptions received provided that (1) the amount of the subscriptions received is at least three-fourths of the imagined capital increase and (2) the extraordinary general assembly expressly allowed for this possibility. Alternatively, and unless the extraordinary general assembly decided otherwise, the remaining shares may be freely returned or may also be offered to the public, completely or partially, when the general assembly expressly allowed for this possibility (Art. 579, AUSC). In all these situations, the board of directors or the general director may decide that the capital increase is effective when the total amount of subscriptions reaches 97% of the amount of the proposed capital increase (Art. 580, AUSC). The Uniform Act includes several possible options for each step of the capital increase. Generally, the fact that all the shares have not been underwritten is due to a poor evaluation of the share’s value and therefore their emission price. Issuing Price and Report 442. Share Price. The extraordinary general assembly must determine the issuing price for new shares or the conditions for setting this price (Art. 588, AUSC), after seeing two specific reports. The emission price contains both the nominal value and the emission premium where appropriate.

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1  Limited Liability Companies 443. Reports. The board of directors of the general administrator present the first report and indicate the maximum amount for a capital increase, the reasons for this increase and when such a solution is imagined, the reasons for proposing to delete a preferential subscription right, the names of the new shareholders, the number of shares each one possesses, the emission premium and the reasons for this price (Art. 589, AUSC). If the assembly did not grant its powers to set the methods of increasing capital to the board of directors, the report must also indicate “the effects on the shareholder’s situation, the proposed emission, particularly in terms of its quota for the capital of the last exercise” (Art. 590, AUSC). This allows the shareholders to establish the dilution effect of increasing capital and the powers that they will possess after the capital increase in terms of voting rights compared with the current situation. This also provides an idea of holding’s value for each individual’s shares. The second report that the auditor provides gives an opinion on the suppression of preferential rights (when this suppression is proposed), on the elements used for calculating the emission premium and on the effects of the emission for each shareholder in terms of capital. In this setting, the auditor must also verify and certify the information taken from the corporation’s accounts that he used to provide his opinion (Art. 591, AUSC). 444. Complementary Reports in Case of Assembly Delegation. When the general assembly grants the board of directors or the general administrator the powers to pursue a capital increase, they must prepare a complementary report about the operation (Art. 592, AUSC). This report must detail the capital increase, complying with the assembly’s authorization. Similarly, the auditor must also provide a report on the same subject. The complementary report must be sent to the corporation’s headquarters 15 days after the board of directors’ meeting or the general administrator’s decision, to be presented at the next general assembly. These complementary reports are a useful barometer of the operation for the shareholders who will be able to compare the plan as it was voted to the board of directors’ execution of the plan. This is a part of the information right previously mentioned, which avoids the shareholders having to search through all the operation’s details in the corporation’s by-laws in order to find the division of capital, the number of shares issued and the share’s set price. Subscription Forms 445. Publishing an Opinion. Unless the preferential subscription right was removed, the shareholders must be informed of issuing new shares, and this must be brought to their attention at least six days before the subscription’s opening date by signed hand-delivered or registered mail (Arts. 598 and 599, AUSC). The opinion contains the ordinary information about the corporation in order to identify it; it also contains specific information about the operation, such as the number of shares issued, their emission price, distinguishing the

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International Arbitration and Corporate Law nominal value and the mission premium, the dates and place of subscription and the existence or not of a preferential subscription right. 446. Subscription Bulletin. To find the information that a subscription bulletin must contain, one should reference the Uniform Act’s Article 603. The majority of these already appear in the published opinion. One adds to them the subscriber’s name and the number of shares he subscribes, the name of the notary responsible for preparing the subscription and deposit declaration and note of returning a copy of the subscription to the subscriber. Subscription bulletins must also be prepared in two original copies, one for the corporation and the other for the notary responsible for creating the notarized subscription and deposit declaration (Art. 601, AUSC). Each subscription bulletin must be signed and dated by each subscriber or his agent and indicate, in letters not figures, the number of subscribed shares (Art. 602, AUSC). Paying Up of Shares 447. Depositing Subscriptions. At least one-quarter of the nominal value of subscribed shares in cash and, where appropriate, the entire emission premium must be provided upon subscription (Art. 604, AUSC). This means that for a new share with a nominal value of 10,000 CFA and an emission premium of 5,000 CFA the minimum amount that must be provided upon subscription is 7,500 CFA. This rule favours a greater liberation of corporations where their own capital largely exceeds corporate capital, meaning large reserves. The corporation’s creditors are protected in two alternative ways: either the shareholders decide to increase corporate capital, also allowing them to have a lower emission premium for the next capital increases and therefore a lower standard (in this case the intangible amount of capital not allowed to be distributed as dividends will be higher, reinforcing the creditors’ protections), or the shareholders leave the corporate capital in such a state, but in this case, the emission premium will be proportionally larger upon future capital increases and shareholders will have to free a larger portion of the subscription amount, as such, increasing the corporation’s available funds and therefore the creditor’s guarantees. The amounts remaining owed, making up the surplus, must be freed upon a call from the board of directors or the general administrator in one of several payouts, within three years following the capital increase’s approval (Art. 605, AUSC). However, shares subscribed in cash resulting partly from a cash payment and partially incorporating reserves, profits or emission premiums must be fully integrated upon subscription (Art. 606, AUSC). 448. Depositing Funds. A corporation’s managers must deposit the funds derived from the share’s subscription in cash within eight days following their reception, at a bank located in the Member State where the corporation has its headquarters, or at a notary’s office (Art. 607, AUSC). The Uniform Act provides no sanction if this delay is not respected. One should distinguish between a small delay of a few days, which could be justified, and

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1  Limited Liability Companies a larger delay during which the depositor could have run off with the subscriber’s money, which could lead to a swindle charge. The depositor, meaning the manager responsible for depositing the funds either at a bank or with a notary, must, at the same time, provide a list of subscribers with the amount each one deposited (Art. 608, AUSC). Each subscriber may see this list and obtain a copy (Art. 609, AUSC). When one chooses a bank account, the bank must issue a certificate certifying the fund’s reception, called “a deposit certificate” (Art. 610, AUSC). 449. Deposit by Compensation. In the case of paying for shares by paying for the corporation’s credits, these credits must be included in an account summary that the board of directors or the general administrator prepares and that the auditor certifies (Art. 611, AUSC). These credits must be certain, liquid and payable. The auditor’s certification constitutes a guarantee by the corporation’s associates and creditors against fraud risks. It avoids a credit being abusively recorded in the accounts under an associate’s name and then converted into shares that in fact were falsely paid for. Preparation of the Notarized Statement of Subscription and Payment 450. Notary’s Certification. The managers list the subscriptions and deposits in a declaration called “the notarized declaration of subscription and deposit” (Art. 612, AUSC). Upon presenting subscription bulletins and, depending on the case, a bank certificate certifying the fund’s deposit, the notary certifies that the amount of declared subscriptions conforms to the amount of deposits that the managers declared as well as to the amount of money deposited at his office or at the bank. The deposit certificate must be attached to the notarial declaration (Art. 613, AUSC). The subscribers may consult and copy the notarized statement of subscription and payment. 451. Compensation for the Creditors. When a capital increase occurs by compensating genuine, liquid and due credits, the notary must establish the payment of the cash shares in light of the statement of accounts that the auditor certifies. This statement must be attached to the notarized declaration of subscription and deposit (Art. 611, AUSC). Capital Increase and Fund Withdrawal 452. Fulfilment Delay. The capital increase must occur within three years from when the general assembly decides or authorizes the increase (Art. 571, AUSC). The capital increase will be considered fulfilled from the day the notarized declaration of subscription and deposit is created (Art. 616, AUSC). The period may reach a maximum of six years between the extraordinary general assembly’s vote called to rule on the capital increased and the complete payment of shares. In fact, the first three-year delay halts when at least a quarter of the capital is given to the notary. The second delay runs from the day the notarized declaration of subscription and deposit is created until full payment. A six-month time frame runs from the day the subscribers deposit the funds, which allows them,

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International Arbitration and Corporate Law beyond this period, to request the president of the competent jurisdiction to appoint an agent responsible for withdrawing the funds and returning them to the subscribers if the capital increase did not occur (Art. 617, AUSC). This six-month delay increased the first three-year delay between the extraordinary general assembly vote and the notarized declaration of subscription and deposit. 453. Withdrawing Funds. Withdrawing funds from cash subscriptions may occur only after the capital increase occurs. The fund’s withdrawal may only occur, from a bank or a notary, after showing the depositor the notarized declaration of subscription and deposit (Art. 615, AUSC). The CCJA ruled that the depositing bank for the funds, which prematurely wired from the special account and blocked the corporation’s checking account the subscription’s amount before receiving the notarized declaration of subscription and deposit, had an obligation to compensate the associates who were not able to receive reimbursement from the corporation.13 454. RCCM Formalities. The capital increase must be included in a legal publication and a deposit of acts with the RCCM (Arts. 263 and 264, AUSC). Capital Increase through In-kind Contributions and/or with Specific Advantages 455. Specific Advantages Defined. Specific advantages are specific rights, or advantages, conferred individually on one of several shareholders and that deviate from the shareholder’s traditional system established by the law. The Uniform Act does not resolve the debate well known in French law14 in terms of the categories of specific advantages subject to a control scheme. If it is easy to identify the specific advantage to a monetary benefit, such as a preferred dividend or a systematic discount on the corporation’s products, the question is discussed more for non-pecuniary benefits, such as a pre-emption right. Such an oversight is without doubt harmful because of the temporary multiplication of benefits of a non-pecuniary nature allowing one to organize the associate’s reports between themselves and to balance power within the corporation. A specific qualification work will have to be systematically established in order to determine whether it is useful to put in place the applicable procedure when faced with such specific advantages. 456. Evaluation. An auditor, who may very well be the corporation’s auditor, must evaluate contributions in kind and/or specific advantages used for a capital increase (Art. 620, AUSC); the president of the competent commercial jurisdiction appoints the auditor upon the request of the board of directors or the general administrator (Art. 619, AUSC). One or several assistants that the corporation pays may assist the contribution’s auditor (Art. 621, AUSC). However, the valuation of contributions in kind and specific

13 CCJA, 29 June 2006: OHADATA J-07-26; note B. Diallo, Jurifis info, n 6, January 2010, p. 16, . 14 See P. Le Cannu, Corporate Law, 3rd ed., Montchrestien, 2004, § 643 et seq., p. 428 et seq.

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1  Limited Liability Companies advantages remains his responsibility, and the auditor may not give his responsibility to the experts. 457. Report and Assembly Vote. The board of directors’ report must be brought to the corporation’s headquarters eight days before the extraordinary general assembly is held to vote on the approval of a contribution in kind or conferring a specific advantage (Art. 622, AUSC). The contributor in kind’s shares or the recipient of the specific advantages are not considered for calculating the quorum and the majority when the extraordinary general assembly votes on certifying the contribution or conferring the advantage (Art. 623, AUSC). Once the contributions are evaluated or the specific benefits are approved, the general assembly certifies the fulfilment of the corporate capital increase (Art. 624, AUSC). If the general assembly decides to reduce the contribution’s value or the amount of specific benefits, the contributors and beneficiaries or their agents must expressly approve this reduction, without which the capital increase will not be fulfilled (Art. 625, AUSC). Also, the method of contributions in kind is identical whether it is for creating a corporation or increasing its capital. Contrary to cash contributions, those for contributions in kind are fully paid for upon their issuance (Art. 626, AUSC). Criminal Sanctions 458. Prematurely Issuing Shares. Shares give their holder not only a political right in the corporation but also financial and patrimonial rights. It is therefore important that the shares not be fictitious but correctly represent a part of the corporation’s capital. The law criminally sanctions any managerial infractions leading to destabilizing the existence or the value of issued shares, meant as well to protect not only the shareholders but also third parties who would be able to buy or guarantee shares. Corporate managers face a criminal sanction when they issue shares or clip shares before the deposit certificate is complete; without respecting the preliminary formalities for increasing capitals, without the previously underwritten corporate capital being fully paid, without the new contribution shares being fully paid before the modification is registered with the RCCM, without the new shares having at least a quarter of their nominal value paid at the subscription moment and, where appropriate, without the emission premium having been paid at subscription. The managers will be equally criminally sanctioned if the cash shares are not maintained under a nominal form until they are fully paid (Art. 893, AUSC). Moreover, the texts that define the infractions relating to certificates of incorporation apply to capital increases. Shareholders are protected in terms of their preferential subscription right. “Are subject to criminal sanction, corporate managers who, during a capital increase: (1) will not have compensated the shareholders, proportionally to the amount of their shares, of a preferential subscription right for cash shares when the general assembly has not revoked this right and the shareholders have not renounced it; (2) will not have reserved the shareholders at least

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International Arbitration and Corporate Law twenty days from the opening subscription date, unless this delay had no purpose; (3) will not have given the shares deemed available, due to a lack of sufficient subscription numbers, to the shareholders who subscribed to a reducible title a number of shares superior to that which they could have subscribed as an irreducible title, proportionally to the rights they possess; (4) will not have reserved the rights of subscriptions holders” (Art. 894, AUSC). Finally, corporate managers are subject to sanctions when they knowingly gave or confirmed inexact indications in their reports presented to the general assembly called to decide on suppressing a preferential subscription right (Art. 895, AUSC). This final infraction requires a moral element on behalf of the managers that is stronger than the previous two articles. In fact, the managers must act knowingly, meaning in full knowledge of the cause. A simple mistake or negligence will seem sufficient for the infractions mentioned in Articles 893 and 894 of the Uniform Act. 1.1.3.1.2 Reduction of Capital 459. Motives. Losses generally reduce capital that takes the respective capital levels close or inferior to half of the corporate capital. By pre-emptively reducing corporate capital, one can avoid further drastic measures such as dissolving the corporation. The reduction may, on the contrary, occur in a financially healthy corporation. For example, if the corporation experienced an increase in corporate capital in the past that seems unjustified, the capital decrease will allow a distribution to shareholders, in the form of dividends based on their respective shares. General Conditions 460. Diminishing the Nominal Value or the Number of Shares. Corporate capital may be reduced either by decreasing the share’s nominal value, provided that they do not go below the minimal required amount,15 or by reducing the number of shares (Art. 627, AUSC). 461. Competency. The extraordinary general assembly may decide to authorize a capital reduction. The extraordinary general assembly may also delegate this responsibility to the board of directors or the general administrator (Art. 628, AUSC). The reduction may not harm the equality between shareholders, unless the affected shareholders decide otherwise. 462. Minimum Capital. The minimum allowed corporate capital for an SA is 10 million CFA (Art. 387, AUSC). Consequently, the capital may not be lower than this amount, except for the possible use of an “accordion squeeze.” This technique allows for reducing corporate capital in order to eliminate corporate debts, a capital increase having been 15 10,000 CFA, Art. 387, AUSC.

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1  Limited Liability Companies approved during the same extraordinary general assembly. Normally, new shareholders join the corporate capital without responsibility for the debts that the corporate previously acquired and also bring a new financial flexibility to a corporation with financial difficulties. For example, if a corporation with a corporate capital equal to the required, legal limit of 10,000,000 CFA divided into 100 shares of 10,000 CFA each meets the required minimum (Art. 387, AUSC) with net assets (assets – liabilities) of 4,000,000 CFA, its own capital holdings are therefore 4,000,000 CFA, less than half of the legal base of 10,000,000 CFA. An accordion squeeze would allow this corporation to reduce its capital beyond 4,000,000 CFA, by reducing the number of shares to 40, each shareholder losing 60% of his shares. During the same general assembly, a capital increase of 6,000,000 CFA will allow it to return to the minimum legal limit. The entering shareholder will therefore possess shares with a real and nominal value of 10,000 CFA. If he had joined the corporate capital before the capital reduction, the shares bought for 10,000 CFA would have had a lower real value, reduced for the existing debts. Procedure 463. Communication with the Auditor. The auditor must receive notice at least 45 days before the extraordinary general assembly’s meeting that will decide on the proposal to reduce the capital (Art. 629, AUSC). The auditor must present a report to the extraordinary general assembly in order for the shareholders to approve the capital reduction (Art. 630, AUSC). 464. Formalities. According to Articles 263 and 264 of the Uniform Act, certain formalities relating to a capital decrease must be provided to the RCCM and a legal announcement journal (Art. 638, AUSC). Moreover, “when the board of directors or the general administrator, depending on the case, approves a capital decrease after the extraordinary general assembly’s delegation, it must prepare a verbal record for publication and motivate the bylaws appropriately” (Art. 631, AUSC). Creditors’ Objections 465. Presenting and Time Limit for Object. Corporate creditors may not oppose a capital decrease when losses motivate the decisions (Art. 632, AUSC). In other situations, creditors (including bondholders), whose credits existed before the corporation provides the RCCM with a copy of the verbal recording of the general assembly that approved or decided to decrease capital, may present their opposition within 30 days following the presenting of the verbal record of the general assembly’s deliberation deciding on the capital deduction (Arts. 633 and 634, AUSC). This opposition right is rooted in the principle that the corporate capital is the creditor’s common barometer. The creditors, in fact, contracted with the corporation understanding

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International Arbitration and Corporate Law it to possess a certain amount of corporate capital. If the corporation unilaterally reduces this amount, the gage decreases and consequently, the likelihood of receiving payment in case of insolvency is significantly reduced. The competent judge will quickly rule on this objection (Art. 635, AUSC). 466. Suspending the Reduction Procedure. The capital reduction process may begin neither during the 30-day opposition period nor before the trial court’s decisions on a creditor’s opposition (Art. 636, AUSC). When the court accepts the objection, the capital reduction procedure is suspended until the debt’s payment or until the creditors receive guarantees, if the corporation offers guarantees that are considered sufficient (Art. 637, AUSC). Criminal Sanctions 467. Corporation managers who knowingly approve a capital reduction without respecting shareholder’s equality or without having notified the auditors within 45 days of the general assembly called to rule on the deduction face criminal liability (Art. 895, AUSC). Failing to publish the reduction does not result in criminal sanctions. The managers are, nevertheless, civilly liable (see supra, § 126). 1.1.3.1.3 Reconstituting Shareholder’s Equity 468. Reconstituting respective shares is an exceptional measure that remains a last resort. Managers and shareholders must know how to differentiate a corporation suffering a few difficult years, leading to hypothetical losses but maintaining future possibilities, from a structurally deficient corporation that will eventually find itself in liquidation. Managers are advised to propose adjustment measures or an anticipatory liquidation if the corporation runs the risk of having to restructure its capital during the next exercise, in order to be able to pay its creditors and distribute the rest of its funds to shareholders. Modalities for Reconstituting Shareholder’s Equity 469. Reconstitution of Shareholder’s Equity. The clauses that discuss reducing shareholder equity were included in the Uniform Act to protect the financing and assure corporation’s futures, in case of significant losses in their combined financial statements.16 This clearly concerns preserving creditor rights insofar as the capital provides the main gage for creditors, and although ideas may be discussed in practice, the ratio of liabilities and equity provides a more and more preferred indicator. One must note that managers face criminal sanctions when the amount of corporate equity becomes less than half of the corporation’s capital, as a result of losses displayed in the combined financial reports (Art. 901, AUSC), but they do not lead to calling an 16 M. Lecerf, “The new rules for diminishing shareholder equity: from the loss of three-quarters of corporate capital to the loss of half of the capital”, Cahiers juridiques et fiscaux de l’exportation, CFCE, 1998, n 2, p. 333 et seq.

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1  Limited Liability Companies extraordinary general assembly in order to vote on the corporation’s eventual dissolution. The manager also faces liability when, in the form of a decision to liquidate, he does not inform the relevant, commercial jurisdiction, does not register the liquidation with the clerk or does not publish the liquidation in a legal announcement journal. Procedure 470. Calling an Extraordinary General Assembly. When corporate equity becomes less than half of the corporation, the board of directors or general administrator must call an extraordinary general assembly within four months following the publication of accounts showing the losses (Art. 664, AUSC). One may question the efficiency of such a measure for a corporation that has kept its corporate capital at the legal minimum. In fact, 10,000,000 CFA represents a rather weak corporation, and some losses may lead corporate equity to fall below 5,000,000 CFA in less than a year, especially during an economic crisis. This is why managers must strictly observe this indicator in order to avoid finding themselves in a situation that may lead to their liability. 471. Liquidation Decision. The extraordinary general assembly rules on the corporation’s liquidation. In case the assembly decides not to liquidate the corporation, the corporation must reduce its capital by an amount that is at least equal to the amount of losses that its reserves could not cover. This reduction must occur, at the latest, at the close of the second exercise following the term during which the losses appeared, unless the corporate equity was reconstituted during this period with a value at least equal to half the corporate capital (Art. 665, AUSC). 472. Registration and Publication. All extraordinary general assembly decisions must be given to the competent commercial jurisdiction in the same location as the corporate headquarters, meaning with the RCCM. They must appear in a national, legal announcement journal (Art. 666, AUSC). Failure to Reconstitute Shareholder’s Equity 473. Sanctions. When an extraordinary general assembly is not called, or if this assembly could not validly deliberate during its last meeting or still, if the financial situation is not resolved after the extraordinary general assembly’s decision regarding the losses, any interested party may demand the corporation’s liquidation (Art. 667, AUSC). Under such circumstances, the competent jurisdiction may allow the corporation a maximum period of six months in order to correct the financial situation. If this regularization does not occur during this period, liquidation occurs (Art. 668, AUSC). Simultaneously, any fault of the board of directors or the general administrator in terms of calling the extraordinary general assembly exposes these corporate bodies to a criminal sanction (Art. 901, AUSC). 474. Straightening up and Liquidation. In order to avoid applying measures for reconstituting corporate equity, the corporation may begin judicial reorganization or liquidate 179

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International Arbitration and Corporate Law its assets. In fact, a specific set of rules applies to these corporations that find themselves exempt from dispositions of reconstituting corporate equity (Art. 669, AUSC). 1.1.3.1.4 Share Buy-back by a Société Anonyme 475. Introduction. The Uniform Act forbids an SA from purchasing its own shares. It provides, however, a certain number of exceptions to this principle, and more generally regulates financial assistance. If the SA could buy back its own shares, the portion of its assets that corresponds to these shares would be fictitious and the creditor’s gage would decrease. None of these exceptions allow the SA to permanently hold its own shares; it becomes only the temporary owner before cancelling, reselling or allocating them. Principle 476. Ban on Purchasing Its Own Shares. According to Article 639 of the Uniform Act, an SA may not, either directly or indirectly by a person acting on its behalf, underwrite or purchase its own shares. The founders or, where appropriate, the directors or general administrator in case of a capital increase are responsible for releasing the shares that the corporation illegally underwrites or acquires. Moreover, any person who may have underwritten or acquired shares in his own name but for the corporation must jointly release these shares along with the founders, the directors or the general administrator, depending on the case. The law considers that these shares were underwritten for its own benefit. 477. Advances, Loans or Securities. The same article provides that an SA may not advance funds, issue loans or approve of a security for the underwriting or the purpose of its own shares by a third party. 478. Corporate Collateral for Its Own Shares. It is forbidden for a corporation to undertake its own shares, directly or by using an intermediary acting in his own name but for the corporation, unless this undertaking occurred during an operation for a credit corporation (Art. 642, AUSC). In other cases, all shares that the corporation undertakes must be returned to their owner within one year. A default of these provisions voids the security contract. Exceptions 479. Justified Exceptions. There are several exceptions to the ban on corporations buying back their own shares. These exceptions become necessary because of the need to specifically alter the capital in certain circumstances or the obligation for the corporation to hold, for at least a time, its own shares, in order to be able to use them in a specific operation with a legitimate cause. 480. Capital Reduction. The first exception applies when the shares are acquired during a capital reduction not motivated by losses in order to cancel them (Art. 639, AUSC). 481. Attributing Shares to Employees. The second exception allows the extraordinary general assembly to authorize the board of directors or the general administrator to 180

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1  Limited Liability Companies purchase for the corporation a certain number of shares so that they may distribute them to corporate employees (Art. 640, Section 1, AUSC).17 In such a case, purchasing shares must respect five conditions: the shares must be granted to employees within one year from the date of their acquisition; the corporation may not hold more than 10% of the total of its own shares, directly or indirectly; the acquired shares must be transformed into nominative shares and be entirely paid for upon acquisition; the acquired shares must not cause corporate equity to go below an amount less than that of the capital increased from non-distributable reserves and the shares the corporation possesses do not hold a dividend right. This clause is necessary because it seems to open up the possibility of putting in place profit-sharing plans in an SA subject to the Uniform Act, which could prove to be very useful to motivate corporate employees by tying them to these results. These plans will be, notably, essential in large, international groups who would wish to grant their colleagues working in Africa the possibility of benefitting from the advantages employees worldwide receive. 482. Mergers, Divisions and Contributions. A third exception allows a corporation to acquire its own shares, as long as they are entirely paid for, following a complete estate transmission or following a judicial decision (Art. 641, AUSC). This exception applies, mainly, in the context of mergers, divisions and partial assets contributions. It requires, however, that the shares be granted within two years from the date of their subscription or acquisition. At the end of this period, the corporation must cancel the shares. 483. Failure to Certify a Share Assignee. A final exception to the buy-back ban allows the corporation to buy back its own shares when the proposed assignee was not certified (Art. 647, Section 2, AUSC). Procedure 484. Legal Publication. When the corporation decides to purchase its own shares in order to cancel them and reduce its corporate capital to a certain level, it must present this purchase offer to all shareholders, by a notice inserted in a legal journal containing the following information: name, corporate form, corporate headquarters, amount of corporate capital, number of shares the purchaser desires, price offered per share, payment method, offer period, which may not be less than 30 days, and the place where the offer may be accepted (Art. 643, AUSC). When all the shares are nominatives, the shareholders may, alternatively, receive notification by hand-delivered or registered mail (Art. 644, AUSC). These terms ensure respecting the principle of equality between shareholders that all may participate in this buy-back. 17 This article allows OHADA law corporations to put in place employees incentive plans, such as stock options, which may be organized according to the laws of the Member State of the corporate headquarters.

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International Arbitration and Corporate Law 485. Sharing. When several shareholders agree to sell their shares, and when shares presented for the purchase exceed the number of shares available for purchase, it follows that, for each selling shareholder, a reduction proportional to the number of shares which he demonstrates to own or possess will take place (Art. 645, AUSC). Moreover, when the presented shares for purchase do not reach the desired number, the corporation must reduce its corporate capital by an amount equal to the purchased shares (Art. 646, AUSC). The Uniform Act provides two situations, a surplus or a shortage of offered shares to sell. The board of directors may reissue the buy-back operation if it did not initially succeed. This renewal will have to be made within a time period that the general assembly decides upon. Outside of this instance, another general assembly may be called again in order to restart the process from the beginning. 486. Exception. The above-described procedure does not apply when the corporation purchases its own shares to facilitate a capital increase, a merger or a division, and when the general assembly authorized the purchase for a maximum of 1% of the total shares in order to cancel them, or when the corporation buys back its shares from a potential assignee who was not certified by the designated department for this purpose (Art. 647, AUSC). 487. Cancelling Shares. The shares that the issuing corporation buys back in order to reduce its capital must be cancelled within 15 days following the end of the period for maintaining the buy-back notice published in the legal announcement journal. When the buy-back occurs in order to facilitate a capital increase, merger or division, the cancellation must occur within 15 days following the buy-back. The managers have great interest in respecting this delay if they do not want to be forced to buy back these shares from the corporation for themselves. 1.1.3.2 Transformation and Dissolution 488. The Uniform Act allows for an SA to become another type of corporation. Additionally, according to the Uniform Act’s general rules on corporate transformation, which we studied in Chapter 2 dedicated to general corporate law (see supra, § 165 et seq.), specific rules apply for the transformation of an SA. The same rule applies for liquidation rules. 1.1.3.2.1 Transformation of the Société Anonyme 489. Conditions. An SA may transform into another corporate form, under the condition that, at the time of the decisions to transform that, (1) the corporation has existed for at least two years, (2) has established and had the shareholders approve the balance sheets for the first two exercises and (3) an auditor’s report certifies that the corporate equity is at least equal to the corporate capital (Arts. 690 and 691, AUSC). The corporate bondholders, if they exist, must approve the corporate transformation, as we shall s­ ee below on financing the SA, which addresses securities, notably the debts (see infra, § 493, et seq.). 182

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1  Limited Liability Companies 490. Voting Methods. When the SA becomes a société en nom collectif, a unanimous shareholder decision is necessary. This decision creates an increased obligation for the shareholders towards third parties since the SNC does not have limited liability, and the shareholders are responsible for losses beyond their contributions. The transformation may take place within two years from the SA’s registration and the auditor’s report on the net assets is not necessary (Art. 692, AUSC). Transforming an SA into an SARL occurs under the same conditions as modifying the corporate by-laws for this form (Art. 693, AUSC). 491. Publicity. The transformation decision is subject to publication under the conditions for modifying the by-laws in Articles 263 and 265 of the Uniform Act (Art. 691, AUSC). 1.1.3.2.2 Dissolution 492. Reasons for Dissolution. Corporations under judicial restructuring or liquidating assets have their own rules and may not be dissolved for the normal reasons of dissolution once the procedure has begun (Art. 735, AUSC). Outside the common dissolution reasons (see supra, § 174 et seq.), dissolving an SA may occur when the corporate equity represents less than half the corporate capital and no recapitalization is taking place (Art. 736, AUSC). Finally, the dissolution may occur as an anticipatory measure by the extraordinary general assembly (Art. 737, AUSC). 1.1.4

Financing a Société Anonyme

493. Financially, a société anonyme requires a precise study of the shares that the corporation has issued. This preliminary analysis of securities law will allow for an undertaking of the specificities for an initial public offering. One must note that the Uniform Act of OHADA law still maintains the terminology formally used in French corporate law. This terminology, which has practically disappeared as a result of the European Union’s uniformity for financial market law, continues in OHADA law, as long as the act has not been reformed. It is, however, not certain whether adopting European Union law reforms would be a good source of inspiration for business practices within the OHADA zone. 1.1.4.1 Securities 494. Share Categories. Investors who are owners of the securities, which represent the debts of the company, assure the financing of an SA. There are two main types of securities – debts and equity. The equity shares represent a part of the share capital of the company, and the debts represent the loans granted to the company. 1.1.4.1.1 Securities as a Source of Financing for the Société Anonyme 495. Securities’ Status. Article 744 of the Uniform Act states that “this article describes the rules and characteristics for securities that a société anonyme issues. The same category confers identical rights and provides direct or indirect access to a share of the issuing 183

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International Arbitration and Corporate Law corporation’s capital, or to a general credit right on its holdings. They are indivisible towards the issuing corporation.” 496. Security Notions. Article 744, which sets the common rules for securities’ regulation, is difficult because it juxtaposes two rather incompatible ideas. On the one hand, Article 744 refers to the notion of ‘security value’, which has a large definition in private law due to the flexible notion of a creditor. On the other hand, using the phrase “the present title lists the form, the rules, and the characteristics” (Art. 744, Section 1, AUSC) may signify that only the two security forms described in the Uniform Act, the action and the obligation, are compatible with financing OHADA law corporations. In the face of this contradiction, a comparison with French law may help our analysis. 497. Comparison with French law. Since Article 744, Section 2 adopts a very similar wording to French securities’ law, it follows that this law, before its evolution over the last few years, makes an analogous comparison possible. The French definition also indicates that there “are considered securities, titles issued by legal entities, public or private, transferrable by custom or inscription, which confers identical rights by category and grants access, directly or indirectly, to a share of the issuing legal entity’s capital or to a general creditor’s right on its holding.”18 Also, after the influence from numerous legal texts, the OHADA legislator seems to have anticipated a possible evolution of its securities’ law by maintaining a strict interpretation of securities in the first section, which the second section immediately tempers by providing a general definition. The Uniform Act also provides a potential evolution possibility for issuing corporations on a conventional basis. This evolution will only be possible if corporations accept the risk of financial innovation, and the banking establishments and regulatory authorities follow this lead. 498. Founder’s Shares. The beneficiary or founder’s shares are not negotiable titles because they have no nominal value, conferring neither the role of associate nor that of shareholder, but only a set or proportional shares of the profits or the corporation’s liquidation surplus are banned by the Uniform Act (Art. 744, AUSC). The Uniform Act, nevertheless, authorizes maintaining all issued shares before this provision came into effect on 1 January 1998 when the Members State’s law allows this type of issuance.19 1.1.4.1.2 Issuing Stock 499. Any physical or legal entity may hold shares in a commercial corporation. This is subject to certain bans, incapacities or incompatibilities in terms of the shareholder (Art. 7, AUSC). These essential principles, derived from general capacity principles, must not undermine the specificities of shares studied as securities. 18 This is a text from the French Code monétaire et financier, Art. L. 211-2, § 2. 19 Founder shares entered French law on 23 January, 1929.

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1  Limited Liability Companies Paying Contributions 500. Paying Contributions. A title for the beneficiary or a nominative share form represents each shareholder’s contributions (Art. 745, AUSC). Some types of shares must always have a nominative share form during a certain period of time. Cash shares must also remain nominative until they are completed paid. However, contribution shares (Art. 749, AUSC) must also have first been nominative shares for two years before conversion to bearer shares may occur: “cash shares are those whose consideration was paid in cash or by paying for debts, some, liquid and enforceable against the corporation, those issued following an incorporation of capital reserves, profits, or emission premiums, and whose amounts paid results partially from incorporating reserves, profits, or emission premiums and partially from a cash payment. The forms must be fully paid upon subscription. All other shares are contribution shares” (Art. 748, AUSC). Cash shares are therefore those that give the corporation liquidity, or that allow the corporation to keep them or not to use them. Maintaining nominative shares, until their full payment, allows one to know at any time the shareholders who must pay for the full value of their shares. Indeed, it would be difficult for a corporation to keep track of its shareholders who, by definition, do not appear in the corporate registry, making it difficult to remind them of their obligation to fully pay for their shares before the end of the three-year period. Right to Vote 501. Principle: ‘One Share, One Vote’. In theory, the voting right attached to shares is proportional to the amount of capital it represents. This principle recalls that of ‘one man, one vote’, which applies in democracy and was brought to the international scene when people began to support democracy in South Africa. Each share therefore gives the right to one vote (Arts. 53, 543 and 751, AUSC). However, different share categories or shares with special rights, such as a double vote, may also be issued. It is also possible for the by-laws to limit the number of voices that one shareholder holds in general assemblies, as long as this limitation affects all shareholders, regardless of category (Art. 543, AUSC). However, the Uniform Act does not allow for the creation of shares without a voting right. In fact, Uniform Act’s Article 125 states that each associate has a right to participate in collective decisions. This means that some shareholders may have a disproportional political importance vis-à-vis their capital share, but this does not lead to a total ban on other shareholder’s voting rights. It is only possible to reduce this right. 502. Exception in Proportionality. The double voting right (Art. 752, Section 1, AUSC) may only be conferred to shares that have been nominative for at least two years under the name of the same shareholder. This double voting right is equally possible for shares issued during a capital increase by incorporating reserves, profits or emission premiums, at their issuance, when these shares are nominative and freely granted to a shareholder because his older shares already carry this right (nominative held actions for at least two years).

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International Arbitration and Corporate Law The double voting right may appear as a break in equality between shareholders, but by putting in place a requirement that the shareholders possess the share for two years, the Uniform Act allows for the possibility to compensate loyal shareholders. A corporation benefits from having a stable shareholder body that also participates in the corporation’s management; the double vote right increases this fidelity. The texts also state that a nominative share converted into a beneficiary share loses its double voting right (Art. 753, AUSC). Dividend Rights 503. Proportionality Principle. As with voting rights, dividend rights are proportional, each share of capital giving right to an equal dividend (Art. 754, AUSC). Nevertheless, as with the voting right, exceptions to the proportionality principle are possible. These exceptions may occur through the by-laws or an extraordinary general assembly. 504. Proportionality Exceptions. Shares may carry a first dividend, a super dividend or an increased dividend (Art. 754, AUSC). Likewise, the corporation may issue preferred shares “enjoying advantages above the other shareholders. These advantages are notably a larger share of the profits or the liquidation surplus, a preferred right to the profits, cumulative dividends” (Art. 755, AUSC). Advantages may not be excessive, otherwise the clauses may be considered null and void. Without any case law, it is difficult to provide a clear demarcation between a permissible advantage and an excessive one. As such, it is better to create advantages with a non-absolute character, meaning granting at least a part of its profits to non-preferred shareholders, and justifying as much as possible the reasons for granting such an advantage. Manager’s Control 505. Particularities for Listed Shares. Listed shares (Art. 830, Sections 1 and 3, AUSC) belonging to corporate managers or to their children or spouses must be under the nominative form. This requirement is connected to overseeing stock operations and insider trading. A manager may have privileged information about a corporation and may try to sell shares or buy new ones before the market discovers such information; this information will have an impact on the share’s future. For example, a manager may know before everyone else a corporation’s financial situation. If the results are lower than last year’s, show losses or are simply lower than analyst’s expectations, the share may drop in value when the results are announced. The manager, like any shareholder wishing to protect his investment, may be tempted to sell his shares before the drop occurs. Such a decision constitutes insider trading insofar as the manager benefits from his position within the corporation by using information that the shareholders do not possess. If the manager holds beneficiary shares, it would be easy to sell them without anyone discovering the transaction. Indeed, on the market, buyers and sellers are anonymous, and there is no signed contract, contrary to a mutual agreement. The fact that shares are

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1  Limited Liability Companies nominative relaxes the supervision of future, suspicious transactions. Those close to managers are also monitored, because it would be simple for the manager to convey the information to his children or spouse so that they could turn a profit and share a portion or all of this financial advantage gained from this privileged information. 1.1.4.1.3 Financing by Issuing Debt 506. Issuing debts is becoming a more common source of financing for corporations, which progressively developed in many countries during the 20th century, notably from the development of the initial public offering. The development of financial markets in West Africa has recently allowed the Member States to issue loans in places such as Senegal, Côte d’Ivoire or Mali, or by major African corporations such as EDM, SAGA or SONATEL, or loans are assessed by BRVM in Abidjan. These financing methods are often preferred to issued, assessed shares, because they seem simpler for establishing and avoid crushing instruments that may undermine shares. Definition and Distinction 507. Credit Title. An obligation is an issued, negotiable title that represents a corporate loan (Art. 779, AUSC). It grants the same credit right for an equal nominal value for those who hold corporate creditors, called ‘debt holders’. Contrary to the associate, the debt holder cannot be held responsible for the corporation’s liabilities, and must receive compensation for his loans to the corporation under any circumstance. However, in the case of financial difficulties, and in the absence of any specific guarantees in terms of his role as a creditor, he may assume the risk of losing large sums of money. Moreover, the debt credit is a collective credit, insofar as several creditors normally hold debts created at the same time. Finally, the debt holder most often receives a fixed interest rate (except for inflation), whereas a shareholder’s dividend rights vary depending on corporate performance and remain the sole responsibility of the shareholders at a general assembly. This dividend right disappears during a loss period, yet the requirement to reimburse a debt survives. 508. Variety of Debts. Originally the OHADA legislation did not intend to expressly allow, alongside classic debt instruments, for the creation of other instruments. We will see that it is possible to create other debt instruments with an underlying right to other titles (see infra, § 526 et seq.). There are also debts that may become shares, exchangeable debts or debts that corporate shares may reimburse, all belonging to the same category of complex securities. 509. Classic Debt Instruments. The credit title made by an obligation principally receives, in its most common form, a fixed interest rate and the ability to be reimbursed of the loan amount. The debt may, in practice, have a nominal value and be nominative or for the beneficiary, even if the OHADA legislation provides no clarification in the Uniform Act.

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International Arbitration and Corporate Law 510. Reimbursement and Rate Requirements. The Uniform Act bans prize obligations that are debts designated by assignments reimbursed with greater and lesser amounts (Art. 782, AUSC). This ban seems perfectly justified because of the break in equality between debt holders that such a practice may create. Prime debts are, however, allowed and concern debts that the society undertakes and promises to pay back at greater amount than it borrowed. Issuance Conditions 511. Entities Capable of Issuing Shares. Only SA and GIE consisting of SA may issue bonds. To do this, it must demonstrate at least two years of existence and two balance sheets approved by the SA shareholders or the GIE members (Art. 780, AUSC). Moreover, according to Article 781, only corporations whose capital is entirely paid for may issue bonds. 512. Issuance Decision. The ordinary general assembly has the ability to decide to issue bonds, but it may also delegate this responsibility to the board of directors or the general administrator, depending on the circumstances, the necessary powers to, within two years, issue one bond once or several times and lay out the methods for this issuance (Art. 783, AUSC). However, this issuance may modify the by-laws when, for example, changing the corporate capital when the bonds allow for the possibility to create shares, which are subject to the extraordinary general assembly’s approval. This concerns, for example, bonds convertible to shares when due. 513. Reimbursement, Buy-back and Cancellation. Reimbursing obligatory bonds theoretically occurs during the entire period described in the contract and an anticipatory reimbursement may only occur if there is a specific clause within the bond agreement (Art. 814, AUSC). Once the issuing corporation buys back and finishes the reimbursement, the bonds are cancelled and may not be put back into circulation (Art. 784, AUSC). 514. Transmission. The Uniform Act does not ban alienating debts that are negotiable titles; the transfer occurs by wire from one account to another, by the issuing corporation, if they are nominative shares, and a trained intermediary is required if the transfer affects beneficiary titles. Specific rules for the placing and the information of savers apply when issuing bonds are subject to public offering rules (see infra, § 531 et seq.) because of its placement method. Articles 841-844 of the Uniform Act notably describe certain information obligations in terms of the publication of the legal announcements and the publication of notices and circulations. Rights and Obligations Attached to the Debt 515. Political Rights. Bondholders are not able to individually exercise control over the corporation. They may only receive corporate documents and may only request a copy, at

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1  Limited Liability Companies their own expense, of the minutes from an assembly of bondholders to which they belong (Art. 813, AUSC). 516. Mass and Grouping. The bondholders who hold bonds from the same issuance belong to the same group that benefits from the legal entity (Art. 785, AUSC). This mass allows for a unique defence of the bondholders’ interests. Also, each new issuance leads to the creation of a legal entity representing the purchasers of these shares. In case of successive issuance of bonds, the bondholders with the same rights may create a group within a group, if the terms of the bond agreement allow for such an act. 517. The Group’s Representation. The general assembly of bondholders elects one to three bondholders to represent the group (Art. 786, AUSC). The same assembly may also revoke the representatives’ positions (Art. 789, AUSC). They may obtain documents given to the shareholders and participate in shareholder assemblies, without a voting right, but they may not interfere in the corporate management (Art. 791, AUSC). The group representative’s compensation, which is the corporation’s responsibility, is the prerogative of the general assembly that decides to issue the bonds or the bond agreement (Art. 794, AUSC). The bondholder’s representative may act in their names and include the amount that the corporation owes the bondholders in the list of corporate liabilities in case of bankruptcy proceedings (Art. 792, AUSC). In fact, “group representatives have, unless the general assembly of bondholders decides otherwise, the power to fulfil, in the group’s name, all acts for debt management and the protection of the bondholders’ interests” (Art. 790, AUSC). The representatives’ powers relieve each individual shareholder, as these requirements may be time-consuming, and also regroup the shares, each bearing the same interest within the same group. 518. Representing the Mass. The representatives, physical or legal entities residing within the Member State of the issuing corporation’s corporate headquarters, receive a mandate from ordinary assembly of bondholder to represent the collective body of bondholders (Arts. 803 and 787, AUSC). Uniform Act’s Article 787 lists, in this light, individuals who may not take on this responsibility because of conflicts. These incompatibilities mostly derive from conflicts of interest, such as being an auditor of the issuing corporation or a guarantor of the issuing corporation. 519. Bondholders’ General Assembly. Bondholders gather in general assemblies at any time that the group’s representatives, the board of directors, or the general administrator, or even the liquidator during a liquidation period call them. The group’s representatives or a judicial officer may also call the meeting when bondholders holding at least onethirtieth of the issued shares call for a meeting (Arts. 795 and 796, AUSC). 520. Ordinary and Extraordinary Assemblies. Ordinary assemblies decide issues related to the representatives of the whole, the duration of their mandate, their compensation, their substitutes and any element relative to defend the bondholders and executing the

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International Arbitration and Corporate Law bond agreement, for managerial expenditures and any conservatory or administrative matter (Art. 803, AUSC). Extraordinary assemblies address any question that may modify the bond agreement, notably any modification that fundamentally affects the corporation such as a merger, division, dissolution or transformation (Art. 804, AUSC). The corporation may ignore the bondholders’ decision rejecting changing the corporation’s form or the corporate purpose by reimbursing the bonds before this event occurs (Art. 809, AUSC). In this final case, the bondholder’s situation corresponds to putting in place an opposition right. The assemblies may not increase the bond amount or install an inequitable treatment between bondholders of the same issuance (Art. 808, AUSC). 521. Gatherings and Communicating Information. Preliminary gatherings and communication of information, resolution projects and reports occur under the same conditions as those for shareholder assemblies. The gathering notice must contain the details specified in Article 798 of the Uniform Act and, in particular, the one calling the bondholders and the loan that the group will discuss. Irregularly called bondholder assemblies may be void unless all the bondholders affected are present or have a representative present (Art. 799, AUSC). 522. Holding the Bondholder Assemblies. Assemblies may not consider a question that does not appear on the agenda. Bondholders representing at least one-thirtieth of shares may also require that an issue be included on the daily agenda. Bondholders who cannot participate in the assembly may appoint a representative, except for those who are subject to one of the incompatibilities in the Uniform Act’s Article 787 (Art. 804, AUSC). A group representative presides over the assemblies, and when there are several, by the representative who represents the largest number of bonds in case of a disagreement. Each bondholder’s voting right is proportional to the amount of the underwritten loan, and each obligation has one vote. This vote may occur by correspondence (Art. 805, AUSC). 523. Collateral. According to Uniform Act’s Article 815, the shareholders’ general assembly deciding to issue bonds may issue collateral for the bondholders, either deciding on this collateral itself or appointing this responsibility to the managers. This collateral must be decided upon and presented to the bondholders before the bondholders underwrite the bonds. However, the guarantees or securities may also be accepted before subscription by the legal representatives if the shareholders’ general assembly authorizes it, or by the appropriate corporate entity if the by-laws permit, and if the bondholders’ group accepts these guarantees (Art. 821, AUSC). This collateral may attract a larger amount of bondholders by offering a supplement payment guarantee. 524. Relinquishing Collateral. Relinquishing debts taken as guarantees and securities is within the sole power of the representatives of the group that benefits from the guarantee

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1  Limited Liability Companies or collateral, after authorization from the bondholder assembly, and under the condition that the loan has been fully paid, as well as its interest (Art. 820, AUSC). Financing by Issuing Convertible Securities 525. Compound Securities. Aside from financing by issuing shares or notes, practice and certain modern regulations have developed the ability to create combined securities, granting their owners options beyond a simple credit towards the corporations. The question of creating combined securities may have occurred in Africa because of the development of the initial public offering and financial markets, although the Uniform Act’s texts do not provide a precise mechanism. Upon reading Articles 744 and 822 of the Uniform Act, it would seem that creating combined securities, autonomous goods (dry goods) and, in particular, shares or notes without underwriting shares (ABSA or OBSA), or exchangeable or reimbursable shares, may be possible in certain situations. 526. Creating Goods Attached to a Title. The general character of Article 744, Section 2 of the Uniform Act seems to allow, in conjunction with Section 1, société anonymes to issue titles other than shares or notes, under the condition that “each category confers identical rights and grants access, directly or indirectly, to a share of capital of the issuing legal entity or a general creditor right on its holdings.” Another textual argument seems to allow for an evolved concept of securities’ rights in the case of OHADA. Article 760 of the Uniform Act also provides that “negotiating share promises is forbidden unless it concerns creating shares upon a corporate capital increase in a corporation whose former shares were already recorded in the market’s official registry within one or several of the Member States. In this case, a negotiation is only valid if it occurred under the conditions of a capital increase. Without express indication to the contrary, this condition is presumed.” One should note that this article, a part of Section 3, Title II of the Uniform Act concerning “negotiability of shares,” concerns deconstructed securities. 527. ‘Dry’ Goods: Creation and Legal Nature. Promising negotiable shares is generally called ‘a dry good’ or an ‘autonomous good’. Many theoretical studies have already taken the lead on this subject, mostly insofar as the autonomous good is mainly a dismemberment of the share. Finally, Uniform Act’s Article 822 also provides that “upon issuing securities that represent creditors against the issuing corporation or giving a right to subscribe or acquire a security interest that represents credits, it may be provided that these securities will only be reimbursed after the other creditors, excluding holders of participatory loans.” The generality of this new article is equally noteworthy. In fact, Chapter 4, Title II of Book IV of the Uniform Act concerning “other security interests” concerns this unique article number 822. Moreover, the essential message of this text allows for the issuance of other security interests concerning the “credit.”

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International Arbitration and Corporate Law The question raised by this dismemberment concerns its legal nature. Some jurists feel that the autonomous goods isolate the share’s subscription right, similar to the preferential subscription right attached to any share.20 Other commentators feel that the autonomous good contains a part of the sum that the underwriting should have acquitted upon a traditional emission in order to acquire shareholder status. The good is therefore a contribution compliment or an advance on a contribution that the holder will have to realize later by effectively participating in a capital increase in order to become a shareholder. 528. Credit Right. The fact that Article 822 refers to this general idea must not be ignored because it is the creditor that served as the past support for the creation in terms of issuing securities, in France as in other countries. In private law, the creditor may in fact be considered as having a personal right by which an individual, the creditor, may compel another person to complete performance concerning an obligation to give, to do or not to do. The subscription good, constituting a promise for a corporation or a corporation that belongs to the same group that issues a share, constitutes a credit right that Article 822 authorizes. It therefore seems difficult to state that Uniform Act’s Article 822, which operates in conjunction with Article 744, Section 2, authorizes a general issuance of shares that allows one to obtain a right against a corporation. As much as Article 744, Section 1 states that “sociétés anonymyes issuing securities whose form, rules and characteristics are listed in this present article,” Article 822, which allows for creating in terms of securities, is part of Title II of the Uniform Act concerning “securities,” which concerns Chapter 4, containing an article uniquely entitled “Other Securities.” 529. Limits on Creating Titles with Goods. Insofar as creating autonomous goods seems possible, creating titles containing a good authorizing their exercise and the creation of other titles such as shares with goods of underwriting shares (ABSA), which fulfils the conditions that Article 744, Section 2 lists, seem possible. In fact, the Uniform Act’s special term that shows up in Article 760 implicitly and coherently references the existence of capital shares, which often take the form of subscription goods for listed corporations. On the other hand, this article does not mention creating combined titles such as ABSA. However, a combined reading of Articles 744 and 822 demonstrates that creating and putting in place such shares, whose legal rules and mechanisms are financially, internationally recognized, must be possible under the terms of the Uniform Act. In fact, from the moment where the ABSA is a title whose legal rules concurrently fulfil the status of shares and that of goods, it is not possible to imagine a structure based on issuing combined shares since OHADA law acknowledges both shares and the promise of shares. 530. Combined Shares and Notes. Beyond shares, some obligations could also support combined securities: (1) it could concern debts that may be converted into shares (OCA), 20 Uniform Act’s Art. 757 allows for the existence of a preferential subscription right.

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1  Limited Liability Companies within the conditions the loan issuer establishes;21 (2) the issuing contract may require either that the bondholder will have a time limit for converting his bonds or that the conversion right may be removed at any moment; (3) bonds with the possibility to underwrite shares or securities issued at the same time as subscription goods and that allow one to underwrite shares of the issuing corporation;22 (4) subscription goods issued with bonds may also be sold independently of the bonds and (5) finally, reimbursable bonds whose reimbursement will only occur by returning the shares, conforming to the terms of the original issuing contract. Hesitations and interpretations that current securities law creates invite the legislator to investigate the possibility of implementing a clear set of rules for combined securities. However, such a reform will only be necessary if financing methods seem adapted to African business practices. The weak regime for complex financing applicable today allows for creating reserves in terms of the possibility of a possible Uniform Act modification. 1.1.4.2 Initial Public Offering (IPO) 531. Scope of Application. An initial public offering opens many possibilities to corporations in terms of raising capital and financing their projects, notably due to issuing shares, bonds or combined securities, attaining local or foreign investors.23 In the Member States, the Uniform Act regulates the IPO, and there are also two laws from regional economic integration organizations that regulate the practice – UEMOA and CEMAC.24 These organizations use different bodies or rules, and several sources of supranational law must be taken into account in order to understand the applicable legal rules for corporations that wish to raise funds from private investors depending on the region where they will raise the capital. The IPO concerns, first and foremost, the Uniform Act: Articles 81-96 for general terms, Articles 823-853 for SA-specific provisions and Article 905 for criminal sanctions. At the same time, UEMOA and CEMAC elaborated an institutional and legal framework to promote and regulate placing titles within their respective territories. 532. UEMOA Institutions. In terms of UEMOA, the financial market structure centres on three main institutions: (1) the Regional Council for Public Offerings on Financial Markets (CREPMF), a public structure for regulation and control of public offering, based on the AMF in France or the SEC in the United States; (2) the Regional Securities Market

21 This mechanism is found in a decree number 53-811, 3 September 1953, still applicable in the majority of Member States. 22 It should be noted that the Uniform Act does not define subscription goods. 23 B. Martor & S. Thouvenot, “Les acteurs des marches financiers et l’appel public à l’épargne dans la zone OHADA”, Revue de droit des affaires internationals, 2002, n 7, p. 749 et seq. 24 UEMOA covers Western African States and CEMAC covers Central African States.

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International Arbitration and Corporate Law (BRVM), replacing the Abidjan Market in Côte d’Ivoire25 and (3) the Central Depository/ Regulating Bank (DC/BR), consisting of, for the latter two, the société anonyme form and the status of a public service dealer. One also adds management and intermediating corporations to this classification, which benefit from the sole right to negotiate listed securities as well as their management share accounts. 533. CEMAC Institutions. A CEMAC financial market structure seems less successfully accomplished and centres on two concurrent markets: (1) the Douala market, called the Cameroonian Securities Market (BCVM) and (2) the Central Africa Securities Market (BVMAC), based in Libreville, Gabon, and focused on the region. If many public announcements concerning creating two markets were issued, the first transaction seems of little significance. 1.1.4.2.1 Scope of Application 534. Not all corporations may use an IPO, and not all titles may be listed. It would be helpful to outline the possibilities in OHADA law in this regard. Definition 535. Idea of an IPO. A corporation carrying out an IPO may be defined as a corporation which, for financing, may use a public offering by diverse methods such as recording shares in the official securities registry and/or, more largely, placing its titles by using a bank or financial establishments as an intermediary. Such corporations are subject to specific registration and operation rules meant to protect the investors. The Uniform Act uses a presumption of an IPO in three situations (Art. 81, AUSC): (1) placing shares on a market’s official list within one of the Member States of the OHADA treaty – this refers to the BRVM, the BCVM or the BVMAC; (2) offering shares to the public with the help of credit establishment or change agents, or by using publicity methods or door-to-door promotions or (3) dividing the operating shares beyond a circle of 100 people (restrained investor’s circle). 536. Non-listed Corporations. One must emphasize that a corporation may be subject to IPO rules even if it is not listed on a security market’s official registry. In particular, the issuers will have to pay attention to the fact that a corporation will be presumed to have called an IPO from the simple fact that the distribution of its titles occurred beyond 100 shareholders and/or bondholders. Companies Authorized to Carry Out IPOs 537. Identifying the Targeted Corporations. Only SAs may issue shares and negotiate their values by way of a securities market or a financial establishment (Art. 58, AUSC). The 25 The BRVM is an accounting market, entirely electronic, containing about 40 listed corporations. The BRVM has two compartments, one for shares and a second for bonds.

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1  Limited Liability Companies Uniform Act specifies that an SA that issues an IPO must have corporate capital of at least 100 million CFA, under penalty of dissolution (Art. 824, AUSC), and must have a board of directors (Art. 828, AUSC); this requirement seems superfluous insofar as an SA with four or more shareholders must choose a board of directors for its management, and it is difficult to imagine a corporation with only three shareholders issuing an IPO. One of the Uniform Act’s particularities is found in the fact that its rules for an IPO affect any corporation with its corporate headquarters in one of the Member States and that may issue its titles in one or several other Member States, by approaching the residents of the mentioned country, while still respecting the other community’s regulations. 538. Interaction of Other Regional Regulations. For corporations issuing an IPO in several OHADA Member States, the corporations must also respect the UEMOA or CEMAC regulations, depending on the location in either Western or Central Africa. For example, Article 174 of the UEMOA Rules provides that a public or private entity, non-resident of the Union, be it a commercial corporation or a Collective Securities’ Placement Organization, may not appear on the list of a regional market. On the other hand, in the case of an IPO without registry on a listing, Article 176 of this same regulation provides that any demand by the public for a non-resident entity or on behalf of it, with the goal of acquiring placement products, must have the regional council’s preliminary authorization. Distinction of Financial Instruments 539. The Uniform Act provides that offering titles in the case of an issuance or a transfer without the latter is not definitively clear (Art. 83, AUSC). Although there are different terms within OHADA law vis-à-vis issuing shares, bonds or parts of community funds, it should be noted that the definition of shares and securities differs depending on the reference within the Uniform Act (Art. 744, AUSC) or the regulations from the UEMOA or the CEMAC. This disparity proposes certain difficulties when the question concerns issuing titles. 1.1.4.2.2 Procedural Warranties and Publication 540. In order to protect the investor, the Uniform Act provides a procedure for an IPO and has certain requirements in terms of information and publicity for public offers. The Uniform Act provides several specific mechanisms in case of a capital increase or a new issuance of shares. Warranties and Information 541. Issuer’s Guarantees. Corporations using an IPO must respect three main conditions as guarantees: (1) obtain a completion guarantee from one or several credit establishments in the country where the IPO occurred, if the operation’s amount, regardless of its form, passes 50 million CFA; (2) have the option to approach one of these credit establishments 195

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International Arbitration and Corporate Law in order to insure the financial service for the placement operation and (3) appoint one or several auditors in the Member State(s) where the IPO occurred, if the IPO’s amount exceeds 50 million CFA, in order to allow for the verification of the financial accounts and make them sign the information document (Art. 85, AUSC). The completion guarantee from the credit establishments is a del credere clause that allows the issuing corporation to place its titles. If the underwriting is insufficient, the bank must underwrite the shares for its account and then resell them. The corporation must guarantee the operation’s success when the offer exceeds 50 million CFA. Reports, Notices and Other Publications 542. Reports for the Public. Any corporation issuing an IPO must prepare a report for the public describing the transaction (Art. 86, AUSC). The report must be prepared and distributed in each country where the IPO will occur. It must include, among other things, information concerning the organization, the financial situation, the issuer’s activity and perspectives as well as the rights attached to the shares offered to the public. Where a corporation uses an IPO in a Member State other than where its headquarters is located, the report contains specific information concerning the tax scheme for its revenues, the establishments that insure its issuer’s financial services in the Member State as well as the publication methods used to inform investors. The report contains a complete presentation of the guarantees described in Article 85 of the current Uniform Act, which provides the same information as the corporation whose shares are offered, except for those shares that will be issued for the public (Art. 87, AUSC). The investor will have the opportunity not only to consult the necessary financial information concerning the issuing corporation but also for the financial establishment that guarantees the issuance. Some required information may not appear on the report when they are of little importance, their disclosure is contrary to public interest or would lead to a prejudice for the issuer or when the bidder is not the issuer and cannot access this information (Art. 88, AUSC). If new significant facts that may affect the value of the offered shares appear between the visa and the beginning of the operation, a complementary document must be provided to update the report. This document is subject to the visa then distributed under the same conditions as the initial report (Art. 93, AUSC). 543. Provided for the Information Statement’s Establishment. The Uniform Act does not require preparing an information document in certain cases. Such will be the case when: the offer’s global amount is less than 50 million CFA; the offer aims to gather contributions upon a merger or a partial securities assets contribution; the offer affects shares or parts of collective securities bodies other than closed; the offer affects people in their professional capacities; the offer concerns shares that are freely attributed upon dividend payments or upon incorporating reserves; the offered securities come from exercising an

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1  Limited Liability Companies issuance right whose issuance gave rise to creating a report and the securities are offered as a substitute for shares of the same corporations and their issuance does not lead to an increase of the issuer’s capital (Art. 95, AUSC). 544. The Report’s Control. The auditors appointed from the Member States where the transaction occurs must sign the report. The report must then be subject to the visa, either by the market’s control body in the state where the issuer belongs or in each state where the IPO is offered; in the absence of such a body, the finance minister of the state issues the visa (Art. 90, AUSC). This control authority has the power to require the modification or completion of certain clauses within the report, to demand any explanation or justification, to order the auditors to carry out complementary investigations (that the corporation must pay for), to require a warning and to demand any guarantee appropriate when the IPO occurs in another Member State other than the corporate headquarters’ location. 545. Delivering the Visa. The competent market control authority must issue or refuse the visa within one month of receiving the report. This period may increase to two months if the authority must carry out supplementary investigations.26 Refusing a visa must be justified, generally either by failing to provide sufficient information to the market authority or by consistent acts contrary to the investors’ interests in the state where the IPO occurs (Art. 91, AUSC). Silence must be considered acceptance by the control authority. 546. Availability to the Corporate Headquarters and Information Notice. Once the competent administrative authorities approve the report, it must appear in a legal announcement journal or be available to any interested person at the issuing corporation’s headquarters and the bodies responsible for ensuring the title’s financial services (Art. 93, AUSC). A notice must be created when the IPO occurs at the creation of an SA, or to increase the corporate capital of a corporation already registered on a securities market or for issuing bonds.27 The notice must appear in a legal announcement journal within the concerned Member States. Circulars are meant for the general public’s information; they reproduce a part of the information contained in the notice and mention the publication of this report in a legal announcement journal with the publication number (Art. 827, AUSC). Shareholders may also approach the legal announcement journal to receive the operation’s complete details. The circular describes the intended use for the collected funds.

26 Art. 115 of the UEMOA Regulations provides that “failing to obtain a preliminary visa, on behalf of the proposal or the solicited public, leads to the operation’s annulment.” Moreover, Art. 118 provides that “the regional council may use its veto, by a motivated decision, to any admission of a listed title, if it feels that this admission may lead to grave risks for the investors.” 27 Art. 825, AUSC. The notice’s content appears in Arts. 826, 833 and 842 of AUSC.

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International Arbitration and Corporate Law 547. Publishing the Financial Records. Any listed corporation, and in some cases its nonlisted subsidiaries, must publish its combined financial statements, affecting its results, and their combined financial records in a legal publication journal within four months of the exercise’s closure, at the latest 15 days before the annual shareholders’ meeting, and at the end of the exercise’s first quarter (Art. 846, AUSC). Potential Issuing Stock to Increase Capital 548. Evaluating Particular Advantages. When a registered corporation without an IPO goes forward with an IPO less than two years after its registration, meaning two years from the dates the by-laws came into force, all the specific advantages agreed at the moment of the corporation’s registration must be evaluated by an auditor who must verify the corporation’s assets and liabilities (Art. 836, AUSC). 549. Suppressing a Preferential Right. In theory, shareholders possess a preferential subscription right for any issuance of new shares. However, the extraordinary general assembly may decide to remove this preferential subscription right for corporate shares during an IPO and reserve the subscription for appointed beneficiaries (Art. 839, AUSC). In such a case, the assembly decides the issuance price or the conditions for determining this price from the reports of the board of directors and auditors. If the new share’s subscription grants the holders a subscription right the same rights as with the older shares, the corporation must issue shares within a period of three years from the issuance’s authorization decided on by the general assembly. But if the shares were already listed, the emission price will be determined in relation to the average during 20 consecutive days chosen among the 40 days that precede the issuance. Finally, if the shares were not listed, the emission price must be equal to a part of its own capital by share based on the last balance sheet, or the value fixed by an expert that the competent jurisdiction appoints (Art. 837, AUSC). If the subscription does not confer the same rights on the new shares as the old ones, the share’s emission must occur within two years following the general assembly’s authorization. The emission price must be determined by the extraordinary general assembly after the board of directors prepares its report and the auditors prepare their special report. However, this price must remain or be adjusted if the emission does not occur, at the latest, by the next annual shareholders’ meeting following the extraordinary general assembly that determines the emission price (Art. 838, AUSC). 550. Realizing a Capital Increase. “Increasing capital is deemed to have occurred when one of several credit establishments under the terms of the relevant banking law, having irrevocably guaranteed its completion” (Art. 840, AUSC). The subscription can therefore be underway, but the capital increase will not occur until the bank undertakes the legal obligation.

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1  Limited Liability Companies 1.1.4.2.3 Sanctions 551. Demand Dissolution. Any person who is concerned may ask for the dissolution of a corporation that uses an IPO and does not respect the legal requirements (Art. 824, AUSC). 552. Criminal Sanctions. Additionally, it should be noted that corporate managers issuing an IPO face criminal liability if they do not respect the Uniform Act’s legal obligations (Art. 905, AUSC); each Member State freely determines the applicable sanctions. Failing to provide notice before any publication, absence of the requirements in the notice or the prospectus, missing information in posters of announcements, the number of the journal where published or absence of a signature of the person leading the offer, whether or not the corporation is listed, incurs criminal liability. 1.2

Société à Responsabilité Limitée (SARL)

553. The SARL is, similar to the SA, a corporation where the partners are only responsible for corporate debts within the limits of their respective contributions to the corporation.28 The partners’ corporate shares represent their rights (Art. 309, AUSC). Uniform Act’s Articles 309-384 outline the specific terms for the SARL. 1.2.1

Incorporation of an SARL

554. For any SARL incorporation, one must respect substantive and formal conditions. 1.2.1.1 Substantive Requirements 555. Number and Nature of an Associate. There is no requirement for a minimum associate number. The Uniform Act allows, as does French law, for a single-person SARL. Contrary to French law, the Uniform Act does not provide a maximum number of associates. The associate(s) may be individuals or legal entities (Art. 309, AUSC). 556. Corporate Capital: Minimum Amount. An SARL’s corporate capital must contain at least 1,000,000 CFA. The minimum value of a corporate share may not be less than 5,000 CFA (Art. 311, AUSC). Contrary to the SA, an SARL may not allow for partial payment of its shares. However, the founders must immediately deposit funds derived from paying for shares either in an account opened in the corporation’s name or with a notary (Art. 313, AUSC). 28 For other explanations of the rules for SARLs, see F. Anoukaha et al., OHADA: sociétés comerciales et GIE, Bruylant, p. 367 et seq.; B. Martor et al., Le droit uniforme africain des affaires issu de l’OHADA, Litec, 2nd ed., p. 142 et seq.; O. Sambe & M. Diallo, Guide pratique des sociétés commerciales, ECJ ed., p. 61 et seq.

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International Arbitration and Corporate Law In both these cases, a notary certifies the fund’s deposit by providing a notarized declaration of deposit and subscriptions, indicating the list and contact information for all the subscribers (Art. 314, AUSC). 557. Valuing Contributions in Kind. An auditor must obligatorily value contributions in kind when their total amount is greater than or equal to 5 million CFA. The auditor must attach his report to the by-laws (Art. 312, AUSC). 558. Reconstituting Respective Capital. Following the SA’s lead (see supra, § 468 et seq.), which requires that when an SARL’s own capital becomes less than half of its corporate capital, the manager or the auditor, when there is an auditor, must approach the associates within four months in order to discuss the possible corporate dissolution (Art. 371, AUSC). Failing to notify the manager(s) incurs criminal liability (Art. 901, AUSC). When the associates decide against corporate dissolution, there are two possibilities. They may either recapitalize the corporation within two years or reduce the corporate capital to an amount lower than 1 million CFA, setting this amount at the minimum legal limit for an SARL (Art. 372, AUSC). In the case where these steps are not taken, any party that is concerned may ask the competent jurisdiction to dissolve the corporation (Art. 373, AUSC). 1.2.1.2 Formal Requirements 559. Formal requirements common to all OHADA law corporations also apply to SARLs (see supra, § 53 et seq.). However, the SARL rules present several particularities. 560. Shareholders’ Involvement in Constituent Acts. The shareholders must all, personally or by way of a proxy, participate in the creation of an SARL, under penalty of annulment. They must sign the by-laws. The managers and associates against whom the corporation’s dissolution would be enforceable are jointly liable towards the other associates and third parties for any harm that results from the dissolution. This action has a three-year statute of limitations from the date of the annulment decisions (Art. 316, AUSC). The managers therefore have an interest in regulating the situation, as allowed in Uniform Act’s Article 75. 561. Corporate Name. The SARL must have a name followed immediately by the denomination société à responsabilité limitée or with the initials SARL (Art. 310, AUSC). 1.2.2

SARL Management

562. The SARL’s manager has a specific status and powers that allow him to represent the company in all managerial acts. 1.2.2.1 Manager’s Status 563. Appointment. An SARL must have one or several managers. The manager must be a physical person and may or may not be a corporate shareholder. Either the by-laws

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1  Limited Liability Companies nominate him or the designation may occur during the company’s normal course of business by a majority of associates who hold more than half of the corporate capital (Art. 323, AUSC). This concerns a double majority; an associate holding more than 50% of corporate shares can only independently choose the manager if two other associates participate in the capital. This nomination process may lead to stalling. The manager has a mandate of four years unless the by-laws alter the mandate. His mandate is renewable (Art. 324, AUSC). 564. Compensation. The manager may receive compensation for his position according to the by-laws’ provisions or the shareholders’ collective decision (Art. 325, AUSC). 565. Removal and Resignation. Associates holding more than half of the corporate shares may dismiss the manager. When the dismissal does not have valid reasons, it may give rise to damages (Art. 326, AUSC). In other words, contrary to an SA’s administrators, managers may only be revoked ad nutum. For example, a dismissal is justified when disagreement may compromise the corporate interest or its functioning.29 Upon the request of any shareholder, the competent commercial jurisdiction may dismiss the manager for legitimate cause. This allows minority shareholders to protect themselves against majority shareholder abuse vis-à-vis the management. The manager may also resign, but the company will be able to request compensation if the resignation causes harm to the corporation and occurs without a just motive (Art. 327, AUSC). 1.2.2.2 Manager’s Powers 566. Responsibility. In terms of relations with the shareholders, the manager may perform all managerial acts for the good of the company, unless the by-laws limit this power.30 Should the corporation have several managers, and one manager’s acts conflict with another’s, it would have no effect on third parties, unless one proves that the third parties knew of this conflict (Art. 328, AUSC). The Uniform Act provides reparation methods. This is why it provides that “managers are liable, jointly and severally, depending on the circumstances, to the corporation or third parties, either for violations of regulatory or legislative texts applicable to SARLs, or violating the bylaws, or faults committing during their management. If several managers cooperated on the same facts, the commercial court determines each manager’s respective liability” (Art. 330, AUSC). Other than the individual action, associates may initiate a corporate action (see supra, § 131), meaning it is the corporation’s name against the manager. They must represent

29 CCJA, Dec. n 008/2003 24 April 2003, aff. Aly Karaki v. Hani Mezher, OHADATA J-03-194. 30 The manager must act within the interest of the corporation. It has also been held that an SARL manager may not grant a corporate good to another associate: Cotonou, n 65/99, 29 April 1999, M. Guy Barbara v. Société SIVAPT, .

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International Arbitration and Corporate Law one-fourth of the associates holding one-fourth of the corporate shares to initiate such an action (Art. 331, AUSC). These two actions have a three-year statute of limitations from the date of the damageable fact’s discovery. This time limit increases to 10 years in the case of a felony (Art. 332, AUSC). 567. Violating the Corporate Purpose. The corporation is liable to third parties for any of the manager’s acts, including acts that do not comply with the corporate purpose, unless one demonstrates that the third party knew that the act was violating the corporate purpose, or he could not possibly ignore it depending on the circumstances. One should note, in this case, that the simple by-law’s publication is insufficient to prove this (Art. 329, AUSC). 1.2.3

SARL Shareholders

568. Shareholders possess political and financial rights. They have the right to information at any moment concerning the corporation’s business; they also have a right to speak with managers before holding a general assembly and the right to participate in collective decisions. Finally, they have the right to receive dividends. 1.2.3.1 Political Rights 569. A shareholder’s political rights become a preliminary information right upon the associate’s decision in an assembly that concerns the collective shareholders’ consultation right. 1.2.3.1.1 Right to Information and Communication 570. Right to Information. Shareholders have a permanent right to information on the corporation’s business. They also have a preliminary communication right prior to holding an assembly (Art. 344, AUSC). Shareholders have access to an exercise’s combined financial reports, to the manager’s reports and the auditor’s reports for the past three exercises. They may also address questions to the manager twice per exercise concerning any fact that may compromise the business’s continuance (Art. 345, AUSC). 571. Right to Communication. Shareholders may make statements before the annual general assembly concerning the exercise’s combined financial reports or the management’s report. The manager establishes both reports. They also have the right to understand the proposed resolution’s text and the auditor’s report, if there is one. This communication right occurs during the 15 days that precede the assembly. The manager may receive some questions, which must be answered during the course of the assembly. If the managers do not respect the communication right, deliberations during the assembly may be null and void (Art. 345, AUSC). 1.2.3.1.2 Consultations and Meetings 572. Collective decisions are usually taken during the general assembly. However, SARL by-laws may allow for the decisions to be made by written shareholder consultation, except in the case of annual general assembly for certifying the accounts (Art. 333, AUSC). 202

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1  Limited Liability Companies Written Consultations 573. Consultation Methods. When decisions are made using written consultations, the proposed resolution’s text as well as any related document must be sent to each shareholder prior to the meeting. 574. Response Delay. Shareholders have a minimum period of 15 days from the date of receiving the resolution plan to cast their vote (Art. 340, Section 2, AUSC). Their response must be attached to a verbal record signed by the manager. General Meetings 575. Annual Meeting. An ordinary general assembly must occur each year within six months of the exercise’s closure (Art. 348, AUSC). Managers may, however, request an extension of this period from the president of the competent jurisdiction. 576. Meeting Emitter. The manager (and/or the auditor, if there is one) calls the shareholders to the general assembly. Nevertheless, one or several shareholders holding half of the corporation’s shares, or representing at least one-fourth of the associates who hold at least one-fourth of the corporation’s shares, may demand an assembly. Moreover, any shareholder, even if he holds only one corporate share, may petition the court to appoint an ad hoc agent responsible for calling the assembly and determining the agenda (Art. 337, AUSC; for the ad hoc mandate, see supra, § 201 et seq.). 577. Gathering Period. Shareholders must be called at least 15 days before the general assembly occurs. The assembly’s notice must contain the agenda and be either hand-delivered or sent via registered mail. If one does not respect these conditions, the assembly may be null and void (Art. 338, AUSC). 578. Representation. Unless the by-laws provide otherwise, a proxy may represent a shareholder, who may be another corporate shareholder or a spouse of a shareholder, unless the SARL is made up of only two shareholders who are married, in which case the spouses cannot represent each other (Art. 334, AUSC). The by-laws may also authorize non-shareholder agents. 579. Presidency. The manager, or one of the managers, as the case may be, presides over the general assembly, unless no managers are shareholders. In this case, the shareholder holding the largest number of shares, or in the case of equality, the oldest manager/shareholder, presides over the assembly (Art. 341, AUSC). Different Types of Collective Decisions 580. Ordinary Decisions. Ordinary collective decisions are required for certifying the annual accounts, appointing the manager(s), appointing the auditor(s), certifying regulatory conventions and generally any questions that do not modify the by-laws (Art. 347, AUSC). 581. Extraordinary Decisions. Collective decisions require respecting the extraordinary assembly’s formalities each time a proposal must lead to the by-law’s modification (Art. 357, AUSC). 203

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International Arbitration and Corporate Law Quorum and Majorities Applicable to Collective Decisions 582. Quorum and Majority for Ordinary Collective Decisions. An SARL collective decision does not require a quorum. One or more shareholders holding more than half the corporate capital can adopt resolutions upon the first convocation. When the majority is not met, associates must gather a second time. In this case, a simple majority adopts the resolutions, unless the by-laws provide otherwise (Art. 349, AUSC). However, when shareholders gather to decide upon a manager’s dismissal, the dismissal requires an absolute majority. This demonstrates that shareholders voting for dismissal must possess more than half the corporate shares. 583. Quorum and Majority for Extraordinary Collective Decisions. As for ordinary decisions, extraordinary decisions require no quorum. Extraordinary collective decisions that modify the by-laws require a favourable vote from shareholders representing at least three-fourths of the corporate capital. In the case of a corporate capital increase by incorporating profits or reserves, associates representing at least half the corporate shares must make the decision (Arts. 358 and 360, AUSC). 584. Unanimity. Unanimity is required when the shareholders increase their responsibility, or when the corporation becomes a société en nom collectif or when the corporate headquarters must transfer to another state other than a Member State (Art. 359, AUSC).31 Meeting Minutes 585. Holding Assemblies. At each general assembly, minutes must be prepared that indicate the shareholders present or represented, their addresses, the number of shares they possess and the number of votes attached to these shares. The minutes must contain the resolutions put to a shareholder vote and the result of these votes, and each present shareholder must sign them (Art. 342, AUSC). 586. Written Consultation. When decisions are made by written consultation, the minutes must also be prepared, attached to which must be each associate’s response. The manager(s) must sign the minutes (Art. 342, AUSC). 1.2.3.2 Patrimonial Rights 587. SARL shareholder’s patrimonial rights concern both dividends and patrimonial rights. 1.2.3.2.1 Right to Dividends 588. Sharing Profits. Subject to rules applicable to all corporations, profits are shares according to the corporate by-laws. Moreover, one-tenth of profits must be held as “stated 31 The corresponding clause for SAs (Art. 551, AUSC) does not require unanimity when the corporate headquarters must move to another state. It is not easy to determine whether this distinction between the rules for the SA and the SARL is intentional, or if it results from a mistake by the legislature, since both of these corporations limit shareholder liability.

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1  Limited Liability Companies capital.” When this reserve reaches one-fifth of the amount of capital, its requirement is no longer obligatory (Art. 346, AUSC). 589. Repeating Dividends. When shareholders receive dividends that do not correspond to truly acquired profits, the repetition must be required of the corporate shareholders. This action has a three-year statute of limitations from the date of the undue distribution (Art. 346, AUSC). The repetition requires the shareholders to reimburse the dividends that they should not have received. If the manager acted in bad faith, in the absence of an inventory or by using a fraudulent inventory, fictitious dividends, the manager faces criminal liability (Art. 889, AUSC). The manager will have to have been acting deliberately, not making a mistake or simple negligence. 1.2.3.2.2 Right to Transfer Shares 590. Transfers between Shareholders, Forbears, Descendants or Spouses. The Uniform Act maintains that the by-laws may freely organize the transfer of corporate shares between shareholders or third parties (Arts. 318 and 319, AUSC). Unless the by-laws contain specific stipulations, share transfers between shareholders or between spouses, forbears and shareholder descendants are free (Art. 318, AUSC). However, should a shareholder die, the by-laws may provide that the shareholder’s heirs only become shareholders after the other shareholder’s preliminary approval (Art. 321, AUSC). 591. Transfers to Third Parties: Certification Procedure. When the by-laws provide for transferring corporate shares to third parties, unrelated to the corporation, the Uniform Act only allows this transfer with the consent of the majority of shareholders holding at least three-fourths of the corporation’s shares. The transferor’s shares may not be counted towards this threshold (Art. 319, AUSC). The transferor must notify all other corporate shareholders of the transfer plan. If the corporation does not respond within three months, the approval is presumed. If the corporation refuses the transfer to a third party, the shareholders are indefinitely and collectively responsible for acquiring the shares within the three months that follow the refusal, at a price determined between the transferor and the corporation or, if this is not followed, by the expert that the competent jurisdiction appoints (Art. 319, AUSC). Beyond this period, which the president of the competent tribunal may increase to a maximum of 120 days, the approval is considered implicitly granted, which allows the transferring shareholder to complete the initial transfer, if he is still willing (Art. 320, AUSC). 592. Formalities and Opposability to the Transfer of Corporate Shares. When a share transfer occurs for a profit, either for another associate or a third party, the transfer must occur in writing. The transfer is not enforceable against the corporation until after its completion, either by having a bailiff notify the corporation of the transfer, or by an authenticated corporate act that accepts the transfer or by depositing an original copy of the

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International Arbitration and Corporate Law transfer act at the corporate headquarters, along with a signed notice of receipt by the manager (Art. 317, AUSC). The transfer is enforceable against a third party only after the above-mentioned formalities are completed, as well as the by-law’s modification and publishing these alterations in the RCCM.

1.2.4

Statutory Auditor

593. Appointment. An SARL must appoint an auditor when its corporate capital exceeds 10 million CFA, or when one of the following two conditions is satisfied: annual revenue exceeds 250 million CFA or the number of corporate employees exceeds 50 (Art. 376, AUSC). Outside of these two cases, the SARL does not require an auditor. The last two criteria pose some interpretation difficulties because the Uniform Act does not provide any clear stipulation of their details. Also, it is difficult to evaluate the consequences for an auditor’s mandate when the criteria are met during a certain period of time, but the revenue or the number of employees then goes below the figures present in Article 376. Good practice consists of addressing the nomination criteria at the end of an auditor’s mandate. In fact, once the auditor has been appointed for three exercises (Art. 379, AUSC), at the end of the mandate, the shareholders will have to take a position on his renewal, if the criteria are met, or non-renewal if they are no longer fulfilled. When none of the Uniform Act’s conditions are filled, appointing an auditor remains discretionary. The shareholders representing at least 10% of corporate capital may also petition the court to appoint an auditor (Art. 376, AUSC). 594. Quality and Incompatibilities. The procedure for appointing an auditor in an SARL is the same as in the SA. The auditor’s functions are incompatible with the position of the manager or the manager’s spouse, contributor in kind or recipient of certain benefits, people receiving periodic compensation from the corporation or its managers (Arts. 377 and 378, AUSC). 595. Mandate Duration. One or several associates holding more than half of the corporate capital appoint the auditor for three exercises. Nevertheless, a simple majority will suffice if this majority is not met, regardless of the represented capital proportion (Art. 379, AUSC). 1.2.5

Regulated and Prohibited Agreements

596. A supplementary control is used for agreements between the corporations and individuals who manage it or are its shareholders. It is therefore logical to take precautions when the person responsible for negotiating and engaging the corporation is also a contracted party.

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1  Limited Liability Companies 1.2.5.1 Definition 597. Scope of Application. The regulatory convention may be defined as agreements concluded, directly or indirectly, between an SARL and one of its manager(s) or shareholder(s). Agreements concluded with a sole proprietorship or a corporation where the owner or one of its managers is also a manager or a shareholder are part of these agreements (Art. 350, AUSC). 598. Exception. Current operations, meaning operations concluded regularly within the scope of the corporation’s business, are not considered regulatory conventions, under the condition that they execute these agreements under normal conditions (Art. 352, AUSC). A bank manager will also be able to open a checking account without going through the regulatory agreement procedure, under the condition that the conditions that apply to this account are the same as those for the holder of an ordinary account. 599. Prohibited Agreements. Prohibited agreements are agreements in which a physical person or a manager or his spouse, forbears or descendants contract a loan with a corporation, making itself known by a checking account, or through another manner or by guaranteeing a corporation’s liabilities towards third parties (Art. 356, AUSC). When such agreements enter into force despite their prohibition, they must be considered null and void. 1.2.5.2 Procedure 600. Proceedings for the Certification Process. The regulatory agreements must be authorized following a two-step procedure. First, when the corporation has an auditor, the manager must inform him within one month following the conclusion of the regulated agreement (Art. 351, AUSC). The auditor must also prepare a special report describing the identity of the parties, the conventions subject to certification, their main goal and their nature, the methods for these agreements and the amounts received or deposited (Art. 353, AUSC). If the corporation does not have an auditor, the manager prepares the report himself (Arts. 350 and 353, AUSC). Second, the shareholders must decide whether or not to authorize such agreements at the annual general assembly. One or several associates holding more than half the corporate capital must make the decision. The interested person may not participate in the vote, and his shares may not account for the majority (Art. 354, AUSC). 601. Authorization Failure and Liability. When the general assembly refuses to authorize a regulated agreement, the agreement remains effective (Art. 355, AUSC). The shareholder or manager may be liable for any damage the corporation suffers from a regulated agreement where he was a contracting party and did not receive the required authorization (Art. 355, AUSC). This clause imposes the risk on the manager who will not know until later if the contract is valid. This strongly enforces prudence and respects the contract’s equality. Any action relating to a regulated agreement has a three-year statute of

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International Arbitration and Corporate Law limitations from the date of the agreement’s conclusion, unless this has not been closed, and in such a case, the three-year period begins from the date of the agreement’s revelation. 1.2.6

Changes in the SARL

602. The SARL mutates each time its corporate capital evolves, whether it changes form or restructures itself. 1.2.6.1 Capital Variations 603. The rules for capital variations in an SARL are the same as those for an SA, to which reference is made (see supra, § 429 et seq.). 1.2.6.2 Transformation 604. The applicable rules for an SARL transformation combines general corporate law principles (see supra, § 165 et seq.) and those applicable for an SA, to which reference is made (see supra, § 489-491). 1.2.6.3 Dissolving or Merging 605. Dissolution Causes. Dissolution of an SARL occurs for reasons common to all corporations (see supra, § 174 et seq.). It does not face dissolution in a case of prohibition, bankruptcy or shareholder incapacity. Likewise, and unless the by-laws provide otherwise, a shareholder’s death does not dissolve it (Art. 384, AUSC). 606. Merger. General principles apply in case of SARL merger (see infra, § 659 et seq.). An SARL may occur by merger with no other contributions other than those of the merging entities.

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2

Unlimited Groups and Companies

607.  In addition to joint stock companies (SA and SARL), the Uniform Act provides for partnerships, such as Economic Interest Groups where associates have unlimited liability. Contrary to SA and SARL, the shareholders’ liability is not limited by the amount of contributed corporate capital. If the corporate creditors cannot obtain their full debt from the shareholders, they may have a claim against each shareholder responsible for the totality of the company’s debts (jointly and severally). One should thoroughly consider this fact before investing in one of these companies. All these companies are commercial. In fact, Book II of the Uniform Act discusses the applicable terms for these companies. It must be noted that this book does not discuss the rules applicable to sociétés civiles (privately held non-commercial companies), which remains the prerogative of each Member State’s national law. OHADA law also contains specific rules for non-registered groups that allow creditors to make note of the shareholders’ financial situation and that guarantee protection of third parties’ interests. 2.1

Registered Groups and Companies

608. There are three registered groups and corporate forms – the société en nom collectif (SNC), the commandite and the Economic Interest Groups (groupement d’intérêt économique or GIE). 2.1.1

Société en Nom Collectif

609. Forming an SNC often depends on criteria that are related to its particular status, which will be studied in turn below. 2.1.1.1 Choosing a Société en Nom Collectif 610. Characteristics. The Uniform Act defines a société en nom collectif as a corporation where all the shareholders are merchants and are jointly and severally liable for the company’s debts (Art. 270, AUSC). There is no minimum or maximum number required for the number of shareholders. There is a higher degree of intuitus personae between the shareholders than in other corporate forms within the Uniform Act. The company’s creditors must wait 60 days after attempting and failing to receive payment by way of an officer of justice to before being

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International Arbitration and Corporate Law able to sue the shareholders individually (Art. 271, AUSC). The presiding judge of the competent jurisdiction may grant an additional 30-day extension. 611. Corporate Capital. An SNC’s corporate capital must consist of corporate shares with identical nominal values. Transferring shares requires unanimous consent from the shareholders, justified by their unlimited liability (Arts. 273 and 274, AUSC). This also prevents the entry of new shareholders who might cause the company to incur losses and risk the other shareholders’ liability. The regime is stricter than the classic approval procedures found in the SA and the SARL. As a result, the shares of an SNC are not easily cashed in. This is because one shareholder is sufficient to block any share transfer. However, it is possible to establish a buy-back procedure in the by-laws allowing for the shareholder to withdraw, but the by-laws cannot alter the requirement of unanimity. The SNC is a closed capital company, where the connection between the shareholders is much more direct than in an SA or an SARL. This form is intended for a company with few shareholders where agreement between the parties is present from the beginning. 2.1.1.2 Managing a Société en Nom collectif 612. Management. The manager may or may not be a shareholder. Contrary to an SARL’s management, an SNC’s manager may be a legal entity. In such a case, the managers who are physical representatives of the legal entity (who is the SNC’s manager) must respect the same responsibilities and obligations as if they were individual SNC managers. When the by-laws do not address the form of the company’s management, all shareholders are presumed to be managers by default (Art. 276, AUSC). In the relationships between shareholders, the manager may carry out any managerial act within the interest of the company, in the absence of a by-law provision that limits these powers. The manager engages the responsibility of the company with third parties for acts within the corporate purpose (Art. 277, AUSC). In order to limit the corporation’s liability, and therefore shareholder liability, it is advisable to clearly limit the corporation’s purpose, because it is the only way to limit a manager’s powers vis-à-vis third parties; one manager may not object to another manager’s actions with third parties, unless the third party was aware of this objection. Without a by-law provision, the majority shareholders (in number and capital) determine a manager’s compensation. The shareholder-manager does not participate in this vote. 613. Manager’s Dismissal. When the by-laws provide for appointment of the manager, he can be dismissed only by a unanimous vote by the shareholders (Art. 279, AUSC). Unless the by-laws or a unanimous shareholder vote decide otherwise, a manager’s dismissal leads to the dissolution of the SNC. Any shareholder can ask a judge for the dismissal of a manager at any time for a legitimate cause. When the by-laws do not provide for appointment of the manager, he can only be dismissed following a vote representing the majority (in number and in capital) of the shareholders. 210

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2  Unlimited Groups and Companies The manager need not participate in the vote in order to calculate this majority (Art. 280, AUSC). It is therefore advisable to provide for the appointment of the manager in the by-laws in order to avoid life tenures. A manager’s dismissal does not occur ad nutum and as such may give rise to damages if just cause was not demonstrated (Art. 281, AUSC). 2.1.1.3 Shareholders of a Société en Nom Collectif 614. Transferring Shares. After the approval of a share transfer (see supra, § 611), it must be formalized by a written act. It is deemed enforceable against a company after it has been notified by a judicial officer, formally approved by corporate act, or by filing an original of the transfer agreement at the corporate headquarters containing the manager’s signature, certifying the filing (Art. 275, AUSC). The formality of share transfers reinforces the corporation’s closed nature. The shareholders who are transferring shares will have to be particularly vigilant in carrying out these requirements when publishing them with the RCCM, without which the transfer is not enforceable against third parties. These consequences are extremely important because shareholders will be liable so long as the requirements were not all carried out. 615. Collective Decisions and Written Consultations. Decisions that exceed a manager’s power require shareholder unanimity (Art. 283, AUSC). This may include, for example, transformation, merger or any decision beyond the corporate purpose. The by-laws may provide for a certain majority for some such decisions. Collective decisions may also occur via written consultations when no shareholder requests an assembly (Art. 284, AUSC). 616. Right to Information. The combined financial report, management report, inventory, the text of the proposed resolution and the auditor’s report (if there is one) must be given to the shareholders at least 15 days before holding an annual general assembly, failing which the decisions made at the meeting would be void (Art. 288, AUSC). The non-manager shareholders may also consult all the accounting documents, the minutes of the debates and the collective decisions twice a year at the corporate headquarters (Art. 289, AUSC). 617.  Account Approval. Holding an annual general assembly is necessary in order to certify the accounts within six months of the closure of an exercise. The majority of the shareholders representing at least half of the corporation’s capital determine the quorum at the annual general assembly. The shareholder holding the largest number of shares presides over the assembly (Art. 288, AUSC). 2.1.1.4 Dissolution of a Société en Nom Collectif 618. Shareholder’s Death. Unless otherwise provided in the by-laws, the company ends upon the death of one of its shareholders. The survivors will have to approve of the heirs or buy back their shares (Art. 290, AUSC). 211

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International Arbitration and Corporate Law 619.  Liquidation or Shareholder Bankruptcy. Unless otherwise provided in the bylaws or a unanimous shareholder decision to the contrary, the company ends if one of the shareholders enters bankruptcy, may not pursue a commercial activity, is declared incompetent or receives a liquidation judgment (Art. 291, AUSC). 2.1.2

Société en Commandite Simple

620. The OHADA legislative committee chose to only adopt the commandite simple form, and not the commandite par actions form. This demonstrates the desire to create fewer and simpler structures. A société en commandite simple (SCS) is a corporation with two coexisting classes of shareholders. The first kind of shareholders (‘general partners’) consists of shareholders who are jointly and severally liable for the corporation’s debts. The second kind (‘limited partners’) consists of shareholders who are only liable for corporate debts up to the limit of their contributions (Art. 293, AUSC). 2.1.2.1 Choosing a Société en Commandite Simple 621.  Characteristics and Naming. A limited partner’s name may not serve as the corporation’s name. Otherwise, the limited partner would have to accept joint and several liability for the corporation as a general partner would (Art. 294, AUSC). This is because third parties could be led to believe that such shareholder is a manager or, at least, that he actively participates in the corporation’s management, and therefore his liability would be unlimited. 622. Required Text. An SCS’s by-laws must contain the following text: the total amount of contributions, the respective value of each limited and general partner, the global share of the limited partners and the share of each general partner in terms of dividing profits and the liquidation surplus (Art. 295, AUSC). 2.1.2.2 Managing a Société en Commandite Simple 623. Management. One of several managers may be chosen exclusively among the general partners in the by-laws or by any other act (Art. 298, AUSC). It is logical that those whose liability is unlimited also be those who manage the corporation. Failing to appoint a manager, the general partners jointly lead the corporation. The partners must collectively make any decision that exceeds the SCS’s manager’s powers (Art. 302, AUSC). 624. Distinguishing the Partner’s Powers. The limited partners are not allowed to carry out any internal managerial act, even if they have a proxy to do so (Art. 299, AUSC). If a limited partner violates this ban, he becomes jointly and severally liable, just as a general partner, for all of the corporation’s debts and liability deriving from the managerial acts he accomplished (Art. 300, AUSC). This ban’s justification is the same as for the corporation’s

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2  Unlimited Groups and Companies name. The legislators want to dissipate any possible confusion in the mind of third parties who contract with the corporation via the limited partner. The sanction also considers the consequences of a factual situation: the limited partner who acts as a general partner, by intervening in the external corporate management must assume the same degree of responsibility (joint and severable). 2.1.2.3 Shareholders of a Société en Commandite Simple 625.  Transferring Shares. In theory, transferring shares of an SCS requires all of the partners’ consent, meaning unanimity. However, the by-laws may provide the following exceptions: (1) that limited partners’ shares are freely transferrable between other shareholders, (2) that limited partners’ shares may only be transferred to third parties if all the general partners and the majority of the limited partners agree or (3) finally, that a general partner may transfer some of his shares to a limited partner or to a third party under the same above-mentioned conditions, meaning the agreement of all the general partners and the majority of the limited partners (Art. 296, AUSC). The corporation’s hybrid nature appears in the rules for share transfers. The general partners, who resemble partners of an SNC, must give their unanimous agreement for any new partners. The limited partners only speak through majority (in number and in capital). 626. By-law Organization. By-laws may freely provide for the organization of quorum and majority rules for written consultations as well as general assemblies (Art. 302, AUSC). However, an annual general assembly bringing together all the partners must occur to certify the accounts, and the Uniform Act clarifies that in order for the quorum to be met, a majority of partners representing at least half the corporate capital must be present (Art. 306, AUSC). Additionally, any general partner or one of several limited partners representing one-quarter of the limited partners in number and capital may require that a general assembly be held (Art. 302, AUSC). In such a case, the quorum and majority rules in the by-laws apply. 627. Right to Information. The combined financial reports, the management report, the inventory, the proposed resolution’s texts and the auditor’s report, if there is one, must be sent to the partners at least 15 days before the annual general assembly; if this is not respected, the decisions taken at the assembly may be void (Art. 306, AUSC). The limited partners and the non-manager general partners may also consult all the accounting documents, the minutes of the debates and the collective decisions twice a year at the corporate headquarters (Art. 307, AUSC). 2.1.2.4 Dissolution of a Société en Commandite Simple 628.  Death of a General Partner. When the sole general partner dies, his adult or emancipated heirs become general partners when the by-laws permit such a solution. Without a by-law provision, or if his heirs are minors, a new general partner must be

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International Arbitration and Corporate Law appointed; otherwise, the corporation must change its form within one year from the date of death (Art. 308, AUSC). The corporation may not continue for an extended period of time without a manager. A limited partner may take the necessary time to find a replacement, but he is liable for all corporate obligations that he enters into under the corporation’s name (see supra, § 624). If no replacement is found and the corporation has not changed its form within a year, the société en commandite simple dissolves as a matter of law. 2.1.3

Economic Interest Groups (GIE)

629. The economic interest group or GIE originates from French corporate law from 1967. This grouping is not a commercial corporation and defines itself as a legal entity whose sole purpose is to facilitate or to develop its members’ economic activities as well as to increase the profits of these activities (Art. 869, AUSC). As with a corporation, “the GIE enjoys legal personality and the full capacity from the date of its registration in the RCCM” (Art. 872, AUSC). 2.1.3.1 Choosing an Economic Interest Group 630.  Economic interest groups have proven extremely successful in the Member States since their creation by the Uniform Act. They allow African corporations to cooperate better and to share methods and know-how in order to confront the competition on the African and international markets. An economic interest group may be created in order to divide fees, such as employing a common secretary for different professionals or combining work methods between several of its members. An economic interest group is an auxiliary structure created in order to facilitate its members’ activity. Consequently, the members maintain their own legal personality. They are, furthermore, jointly responsible for paying the group’s debts unless a member is exempt, as a result of a debt created prior to his arrival. The exemption decision must be published; otherwise third parties, notably creditors, risk being misinformed, which would artificially reinforce the group’s credit (Art. 873, AUSC). In order to avoid direct appeal and strategies meant to harm one of the other members, the GIE creditor must have failed to receive payment through a judicial officer before being able to sue the members individually (Art. 874, AUSC). In order to divide the definitive charge of the group’s debt between its members, the contract creating an economic interest group may determine the contribution of each member towards the debts. When no stipulation exists, each member must bear an equal share (Art. 876, AUSC). This rule may be particularly harmful when the GIE members do not have the same financial situation. This would be the case if the GIE consisted of physical and legal entities, such as the case of a group of artisans whose legal status would not be homogeneous.

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2  Unlimited Groups and Companies 2.1.3.2 Organization of an Economic Interest Group 631. The economic interest group operates on a contractual basis, which allows it to benefit from a precise operational legal regime. 2.1.3.2.1 Contract of an Economic Interest Group 632.  A written contract that serves as the by-laws creates an economic interest group. This contract must indicate, notably, the name, the duration, the purpose, the corporate headquarters as well as the identity and the contact information for each of its members (Art. 876, AUSC). The economic interest group must be registered with the RCCM in order to acquire a legal personality (Art. 872, AUSC). Any contract modification must be established and published under the same conditions as those imposed on the initial contract (Art. 876, AUSC). The legislator maintained that third parties should receive notice when they contract with a GIE. This is why all acts and documents coming from a GIE must contain the mention groupement d’intérêt économique or GIE, under penalty of receiving a fine (Art. 876, AUSC). 2.1.3.2.2 Members of an Economic Interest Group 633. Members of an economic interest group must meet certain criteria. They enjoy patrimonial and political rights. Capacity and Patrimonial Rights of Members 634. Individuals Eligible for Membership. A GIE may be created upon the initiative of two or more physical or legal entities. It may not be a single individual, which is logical because a GIE’s goal is to develop a common project or to rationalize costs by combining them. During the corporation’s existence, a GIE may accept new members according to the contract’s terms. It may have a commercial or non-commercial purpose (Art. 871, AUSC). A GIE’s members do not necessarily have the same status or the same corporate form; some may be merchants, or other professions, and it may contain non-commercial corporations and also SAs or SNCs. This large flexibility allows one to create GIE charters very easily. Any member may withdraw according to the contract’s terms, as long as he has completed his obligations (Art. 876, AUSC). It is therefore easier to leave a GIE than an SNC. The member will have to carry out his contributions. It is strongly advisable that members include this exit provision in the by-laws. It is also advisable to include the possibility of excluding a member, for example if he does not respect his financial obligations, in case of changing control (which requires a definition) or shareholder evolution of a legal entity member (the case of a buy-back by a competitor). 635. Corporate Capital and Right to Profits. A GIE may be registered without corporate capital and not give rise to generating and distributing profits (Art. 870, AUSC). A GIE’s goal is not to generate profits but rather to reduce costs for its members. The GIE has the

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International Arbitration and Corporate Law purpose of sharing common costs, not debts. The rights of a GIE’s members may not in any case be represented by negotiable titles. Any contrary stipulation will be considered void (Art. 871, AUSC). This feature brings the GIE closer to an SNC because the unlimited liability and non-negotiability of its member’s rights are closely related. Political Rights 636. Quorum and Majority. The general assembly of GIE members is authorized to make all types of decisions. The quorum and majority rules may be freely determined in the bylaws, and in the absence of particular terms, the Uniform Act provides that all decisions automatically require a unanimous vote by the members (Art. 877, AUSC). It is therefore better to create by-law provisions because unanimity creates risk for the GIE’s functioning. A general assembly can be called with a minimum of a quarter of the GIE members (Art. 878, AUSC). 637.  Different Rights. The by-laws may grant certain members different powers than those given to others. When the contract has no provision for this matter, each member is considered to have a single vote (Art. 877, AUSC). This term may notably be useful when different-sized participants make up the GIE. 2.1.3.2.3 Governing Bodies of Economic Interest Group 638. Directors. One or several directors manage a GIE. When the director is a legal entity, the latter must name a permanent physical representative (Art. 879, AUSC). 639. Powers and Responsibilities. The contract or the general assembly, depending on the case, freely determines the administration methods, setting the appointment procedures, and dismissing directors, determining the limits of their powers and the definition of their offices. In relations with third parties, the GIE’s responsibility is engaged by any director’s act within the corporate purpose (Art. 879, AUSC). The by-law limitations are not enforceable against third parties, which transfers the liability rules known in commercial companies (Arts. 121–123, AUSC). 2.1.3.2.4 Supervisory Bodies of an Economic Interest Group 640. Contractually Organized Supervision. Once again, the GIE demonstrates the flexibility of its organization. Controlling the management and the financial status are in fact performed according to conditions within the contract (Art. 880, AUSC). The members may therefore nominate the supervisor among themselves, for a determined rotating period. They may also choose to appoint an outside professional, to ensure that all rules are followed. This supervisory position may be essential in case of difficulties between the partners. It should nevertheless define limits in order to avoid the case of an outside supervisor facing problems accessing management documents.

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2  Unlimited Groups and Companies 641. Issuing Bonds. In the case of issuing bonds, the role of supervisor becomes critical and will be carried out by one or several individuals that the assembly chooses. One of the auditors chosen from the official list will also have to be appointed by the assembly for six exercises. Their status is identical to that of an auditor in an SA (Art. 880, AUSC; see supra, § 383–398). In order to issue bonds, the GIE will have to be specifically composed of corporations authorized to issue debts, i.e. its members must exclusively be SAs (Art. 875, AUSC). 2.1.3.3 Transformation and Dissolution of Economic Interest Groups 642. Like any legal entity, the GIE may change or dissolve. The applicable rules are very specific in this case. 2.1.3.3.1 Transformation 643. Transformation of a GIE into a Corporation. A GIE may be transformed into an SNC, without it being necessary to dissolve the group and create a new corporation. A GIE that would become a corporation other than an SNC would give rise to the GIE’s dissolution and to the creation of a new legal entity (Art. 882, AUSC). This rule results from the protection mechanism for creditors in order to avoid finding themselves in opposition to a group where the member’s responsibility is not joint and severable. In order to avoid dissolution and liquidation, a transformation in two phases is possible: by first transforming the GIE into an SNC, and then the SNC into another chosen form. The successive transformation decisions will be made unanimously unless the contract requires a qualified majority. It is important to confirm that all conditions for the new corporate form are respected, notably the requirement of a minimum corporate capital for an SA or an SARL. 644.  Transforming a Corporation into a GIE. Any corporation whose purpose corresponds to that of a GIE may become a GIE without leading to the dissolution or the creation of a new corporation (Art. 882, AUSC). In this case, it should be noted that becoming a GIE does not mean an increase of the partner’s engagements, which would require a unanimous vote. 2.1.3.3.2 Dissolution 645.  Circumstances. A GIE may be dissolved at the end of its contractual term, by accomplishing its corporate purpose, by a decision of its members (Art. 877, AUSC), by a judicial decision for just cause, by a physical person’s death or by the dissolution of a legal entity, a member of the GIE, unless provided for otherwise in the by-laws (Art. 883, AUSC). The GIE is also dissolved when one of its members becomes incapacitated, by personal bankruptcy, unless provided for otherwise in the by-laws (Art. 884, AUSC). 646.  Liquidation. The Uniform Act clarifies that “dissolving a GIE leads to its liquidation. The group’s personality continues for the liquidation needs” (Art. 885, AUSC). If the

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International Arbitration and Corporate Law by-laws are silent regarding liquidation, a liquidator is appointed by the general assembly or by a decision of the president of the competent jurisdiction if the assembly could not proceed with this appointment. The assets or the remaining liabilities are divided according to the by-laws, or equally if the by-laws are silent. 2.1.4

Cooperative Organizations

646-1.  The OHADA Uniform Act on Cooperative Organizations (UACO), which was approved on 15 December 2010 and came into force five months later, defines the société coopérative (cooperative organization) as “an autonomous grouping of persons voluntarily united to fulfil their common economic, social, and cultural aspirations and needs through a jointly-owned and managed enterprise where power is exercised democratically and according to the cooperative principles” (Art. 4, UACO). 2.1.4.1 Choosing a Cooperative Organization 646-2. Like many other cooperative legal forms around the world, the OHADA cooperative organization shares traits with traditional profit-driven company forms as well as non-profit organizations and associations. Like a commercial company, a cooperative organization typically engages in a revenue-generating activity for the benefit of its members and/or shareholders. Unlike a company, however, a cooperative organization does not pursue exclusively economic goals and generally does not distribute its surpluses – traits it shares with associations and other non-profit organizations. Additionally, cooperatives operate according to a set of unique principles that encourage member participation and democratic control. The UACO’s ‘cooperative principles’, mentioned in Article 4 and defined in Article 6, are adopted almost word for word from the cooperative principles of the International Cooperative Alliance (ICA), an organization that promotes the cooperative legal form across the world. Under the UACO, these principles are voluntary membership; democratic control; economic participation by members; autonomy and independence; education, training and independence and engagement with the community.1 2.1.4.2 Organization of a Cooperative Organization 646-3.  The UACO provides for two distinct types of cooperative forms: the simplified cooperative organization (société cooperative simplifiée, or SCOOPS) and the cooperative organization with a board of directors (société cooperative avec conseil d’administration, or COOP-CA). The SCOOPS legislation contains fewer requirements and is meant to accommodate adaptation by the informal collective organizations already existing in 1

The ICA includes one more principle not found in the UACO legislation: cooperation among cooperatives.

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2  Unlimited Groups and Companies Africa. The COOP-CA, on the other hand, provides the structure and formality needed for larger collective organizations. Those wishing to establish a cooperative organization will first need to determine which of the UACO’s two legal forms best fits their objectives: the simplified SCOOPS or the more formal COOP-CA. 2.1.4.2.1 Société Coopérative Simplifiée or SCOOPS 646-4. The SCOOPS is formed when a minimum of five physical or legal persons register their organization’s articles of incorporation with the national registry of cooperative organizations. The articles must indicate a variety of information, including the initial members’ names, contributions and the common link that unites them, and the organization’s name, object, seat and duration. 646-5. Management of a SCOOPS. As the names suggest, the management of the cooperative organization depends on which of the two legal forms is chosen: the SCOOPS permits a less formal management structure, while the COOP-CA requires a board of directors. A ‘management committee’ of at most three physical persons governs the SCOOPS. This number may be increased to five if the SCOOPS has over 100 members. The managers are elected in the general meetings and must be members themselves. A SCOOPS management committee chairman may be elected as the director of a COOP-CA but not as its chairman of the board; similarly, he or she may serve on various management committees, but as a member, not as chairman. 2.1.4.2.2 Société Coopérative avec Conseil d’Administration, or COOP-CA 646-6. The COOP-CA is formed when a minimum of 15 physical or legal persons register their articles of incorporation with the national registry of cooperatives. The founding members of the COOP-CA then have eight days to deposit their initial contributions with a financial institution. Certain collective organizations, such as unions and federations, must choose the COOPCA. In cases where a union or federation’s articles derogate from the COOP-CA rules, the COOP-CA rules supersede the cooperative’s articles. 646-7. Management of a COOP-CA. A board of directors manages the COOP-CA. This board is composed of at least 3 and at most 12 physical or legal persons. COOP-CA directors must be members of their respective organizations as well. COOP-CAs may also add other organs, including statutory and contribution auditors, both of which become mandatory when the organization reaches 1,000 members or sufficient annual turnover. A COOP-CA director may not be a director of another COOP-CA in the same Member State, though he or she may serve on the management committee of a SCOOPS in the same Member State. The same applies to the chairman of the board, who may serve as neither chairman nor director of another COOP-CA in the same Member State (though again, he may still serve on the management committee of a SCOOPS). 219

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International Arbitration and Corporate Law Both organizations also provide for a supervisory organ (a ‘supervisory commission’ in a SCOOPS, a ‘supervisory board’ in a COOP-CA) of three to five elected members who oversee the respective management organs. 646-8. For either organization, the decisions of a general meeting are valid only if a quorum of at least half of the members is present for the initial meeting. On a second meeting, one-quarter of COOP-CA members must be present, while no quorum requirement exists for SCOOPS. Normal decisions require a simple majority by default, though organizations may derogate from this rule in their articles. Exceptional measures, such as the dismissal of the chairman, require a two-thirds majority. 2.1.4.3 Rights of Members of a Cooperative Organization 646-9. Member Status. Cooperative organizations do not have ‘shareholders’ in the traditional sense. Instead, the participants in a cooperative organization are called members. Their rights as members are similar to those of traditional shareholders with a few important exceptions. Purchasing a cooperative membership grants the bearer the right to participate in the distribution of surpluses (if the articles permit it), to enjoy the services of the organization and to participate in collective decisions by voting. Voting Rights. The cooperative voting structure is one of the legal form’s defining characteristics. In contrast to traditional corporate voting, where an individual may possess a large number of shares and an attendant number of votes, cooperative members vote according to the rule of ‘one person, one vote’ regardless of the magnitude of their economic contribution to the organization.2 Thus, unlike a corporation, no single member may control the organization by purchasing additional shares. Right to Information. Cooperative membership also entails certain information rights. SCOOPS members have a broad right to be informed of the organization’s business and to be transmitted such documents as may be instructive prior to general meetings. The COOP-CA legislation goes into greater specificity as to its members’ information rights, laying out detailed lists of documents and under what circumstances members may access them. 2.1.4.4 Dissolution of a Cooperative Organization 646-10. Dissolution Procedure. A cooperative organization may specify procedures for dissolution in its by-laws; if no such provisions exist, the UACO provides for its own procedure. The organization must first notify the national registry of cooperatives 30 days prior to its anticipated dissolution. It must then publicize the dissolution so third parties may plan accordingly. 2 OHADA cooperatives are permitted to derogate from this rule in their articles, though in limited circumstances.

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2  Unlimited Groups and Companies The dissolution of a cooperative is strikingly different from that of a commercial company. Cooperatives are financed chiefly by their share capital, which is placed in reserve. However, members may not access these reserves either directly or indirectly, even upon dissolution of the cooperative. If assets remain upon dissolution, they may be transferred to another cooperative or a parent organization, but not to the members. Thus, no particular group of members may benefit from the dissolution of the cooperative. It is also important to note that a cooperative may not simply become a commercial company; members wishing to convert to a profit-driven company legal form would first need to dissolve the cooperative – which would thereby deprive them of the organization’s assets – and then incorporate as a commercial company using other assets. This arrangement was designed in part to discourage demutualization, or the abandonment of cooperative principles in order to capitalize on a thriving business. 646-11. Overall, the addition of cooperative organizations in OHADA law is in line with the global movement towards hybrid companies, allowing for socially minded entrepreneurs to raise capital for a social cause in a dynamic business environment. However, it is difficult to tell what effect the law has had in the OHADA zone, as it is still largely untested. 2.2

Non-registered Companies

647.  OHADA law recognizes three forms of non-registered companies: the société en participation (SEP), the société créée de fait and the sole proprietor. These three legal forms are very useful in practice for understanding situations requiring protection of third parties. 2.2.1

Société en Participation

648. A société en participation is not a company, strictly speaking. It is a concept borrowed from the common law’s joint venture where the partners agree not to register the entity with the RCCM. Consequently, the société en participation has no legal personality and need not go public (Art. 854, AUSC). This corporate form demonstrates the advantages of discretion and flexibility for specific operations. Partners may prove its existence by any means, notably to third parties with which they wish to contract by showing them that a corporate contract exists between them. The société en participation is a very flexible instrument that may prove very useful if the partners wish to create a secret agreement or a joint venture. However, the liability and tax problems applicable to partners in a société en participation must be carefully analysed upon preparing the agreement creating the société en participation.

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International Arbitration and Corporate Law 2.2.1.1 Choosing a Société en Participation 649. Since it does not have legal personality, a société en participation may not have a corporate headquarters, a corporate name or its own holdings. Nor may it have the ability to enter into contracts, file suit or be the object of a bankruptcy proceeding. The partners are nevertheless free to determine the société en participation’s purpose, the partners’ rights, its operational rules, its duration and its definition, as long as they conform to the Uniform Act’s requirements applicable to all corporations, except for those relating to legal personality (Art. 885, AUSC). But these characteristics will never be individualized or used by the company because of its lack of legal personality. It will only concern the partners’ liability. 2.2.1.2 Shareholders of a Société en Participation 650. Internal Organization. The relations between partners are subject to the terms applicable to an SNC, unless the partners choose otherwise (Art. 856, AUSC). The corporation cannot acquire proprietorial interests because it does not have legal personality. Consequently, the SNC has no corporate capital and the partners will grant the manager access to the necessary goods for a specific purpose (Art. 857, AUSC). 651.  Indivisibility. In order to facilitate the company’s management, the partners may declare certain goods as indivisible between themselves or agree that one of the partners is, towards third parties, the owner of all or a portion of the goods that he acquires in order to accomplish the corporate purpose (Art. 858, AUSC). This partner, who is truly the company’s official manager, will be able to also easily conclude contracts necessary for the corporation’s existence. Between partners, goods are considered indivisible, which signifies that each partner is an owner of a fraction of a good (Art. 859, AUSC). The division of assets in case of dissolution will occur between the partners, but sharing individual goods will not be able to occur before dissolution, unless the by-laws contain a contrary disposition (Art. 860, AUSC). 2.2.1.3 Société en Participation Partner’s Relationship with Third Parties 652.  In relations with third parties, each partner who contracts in his name is solely responsible for contractual obligations. However, when the partners expressly act in their capacity as partners with third parties, they are jointly and severally liable for their engagements (Art. 861, AUSC). Likewise, a partner who allows the other party to believe that he wishes to enter into an agreement, and it is shown that the agreement was solely for his own profit, will be held personally liable for the specific obligations. These clauses are very protective of third parties and encourage transparency for corporate partners in a société en participation. If they are completely open, their responsibility resembles that of a member of an SNC. They will also benefit from a larger credit with third parties who would prefer having several debtors to guarantee the debt, instead of one

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2  Unlimited Groups and Companies person. On the contrary, the partners may choose to remain in the shadows and choose one partner who signs all of the contracts. In this case, as there will only be one debtor, the liability of the other partners will not be subject to this creditor. Nevertheless, the contracting partner will be able to be indemnified by his partners, should he incur a loss. 2.2.1.4 Dissolution of a Société en Participation 653. The dissolution methods are the same as those for an SNC (see supra, § 618 and 619). The by-laws may, however, note that the corporation will continue. If the corporation has an unlimited duration, one of the partners may end it by sending a notice to all of the partners. This notice must be made in good faith and not to create a setback (Arts. 862 and 863, AUSC). 2.2.2

De facto Corporation

654. A de facto corporation has no legal personality. It is the result of a poorly created corporation, meaning without respect to the legal formalities or cancelling them. The only element that distinguishes this corporation from a société en participation is the desire and the consciousness of creating a corporation. For the société en participation, the partners voluntarily decide not to register the corporation, but they organize their partner reports amongst themselves, and they understand that the corporate charter links them. In a de facto corporation, people act as partners without even realizing it. They all have the characteristics of partners, but they are not concerned with organizing reports or with third parties. OHADA law organizes the reports for them. 2.2.2.1 Evidence of a De facto Corporation 655. Legal Request. Any interested party may ask the competent jurisdiction to recognize a de facto corporation (Art. 866, AUSC). Any method may prove its existence (Art. 867, AUSC). When a court recognizes its existence, the rules applicable to SNCs apply (Art. 868, AUSC). A de facto corporation will be evidenced by proving (1) reciprocal partner contributions, (2) the decision to share profits and losses and/or (3) the intent to work together for a commercial goal. 2.2.2.2 Operation of a De facto Corporation 656. Characteristics. A de facto corporation is a corporation where two or several individuals, physical or legal, act as if they were partners without having created one of the corporate forms that the Uniform Act recognizes (Art. 854, AUSC).3 It concerns, in reality,

3 This assumes that the partners gained profits and were regularly informed about the corporation’s operations, CA Daloa, n 195, 24 May 2000, .

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International Arbitration and Corporate Law a corporation, ‘created in fact’ in terms of French law, since they act as real partners by their behaviour or by the lack of accomplishing the necessary legal formalities for registering the corporation. 657. Case Plurality. This type of corporation may occur in several cases, notably when a Uniform Act corporation is created but the legal registration formalities have not occurred, or when a Uniform Act corporation was created but was not registered with the RCCM or when a corporation was made without respecting one of the Uniform Act’s requirements (Art. 865, AUSC). The idea adopted by OHADA law seems to aim to increase the uniform application of business law in the informal sector. The individual businessman takes no risks, but as soon as he searches for a colleague to work with him or to invest in his activity and accords him some profits, these two enter into a corporate agreement that one must legally classify. The resulting protection for third parties to the contract is a very good thing that contributes to the Uniform Act’s security. 2.2.3

The Sole Proprietor

657-1.  Through the adoption of Article 30 of the OHADA Uniform Act on General Commercial Law (AUDCG), OHADA legislators sought to include informal business people within its scope through the introduction of a new legal designation: the sole proprietor (l’entreprenant). Section 1 of Article 30 defines the sole proprietor as “an individual who, upon declaration provided in this Uniform Act, has a professional civil, commercial, or agricultural craft.” 657-2.  Regulating the ‘Informal Sector’. In the OHADA zone, business has long straddled the twin legal landscapes of formal, regulated commerce on the one hand and the so-called ‘informal sector’ on the other. Broadly defined, the informal sector consists of business activities that when taken individually, are too insignificant to register on any regulatory authority’s radar yet, and when taken as a whole, constitute a statistically and socially significant portion of the African economy. Often, actors in the informal sector engage in whatever types of commercial endeavours come their way, without necessarily exercising a regular, continuous activity. 657-3. Who Can Be a Sole Proprietor? The sole proprietor is a subcategory of economic operators (commerçants) subject to a simplified legal regime. Sole proprietors may exercise virtually any type of commercial activity, including civil, commercial, artisanal and agricultural trades. The designation is not available to groups or legal persons – only physical individuals – and cannot be imposed on a person who has not registered as a sole proprietor. This registration is a declaration made to the national commercial registry (RCCM), meant to be minimally burdensome on the individual. Only individuals with an annual turnover

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2  Unlimited Groups and Companies below a certain low threshold may register as sole proprietors. This threshold is defined by each Member State within the limits set by Article 30 of the AUDCG. 657-4.  Formalities of a Sole Proprietorship. Sole proprietors are required to maintain a simplified record of their accounts and transactions for a period of up to five years. These records include a chronological listing of sales and purchases, their object and nature and references to any necessary documentation. Sole proprietors receive optional preferential tax treatment, including lower payroll taxes. Certain types of sole proprietors, such as food vendors or housing providers, may be subject to industry-specific accounting requirements as defined by the Member States within the limits set by Article 31 of the UAGCL. 657-5. Transformation and Dissolution of a Sole Proprietorship. A sole proprietor who passes the turnover threshold for two consecutive years loses the designation and its attendant benefits, and becomes subject to the more formal regime of economic operators. 657-6. Potential Issues. This initiative is a step in the right direction in order to regulate the large informal sector in the OHADA zone. However, the status created by the AUDCG is far from perfect. The AUDCG does not clearly define the status or the regime of the sole proprietor, and in fact the obligations of the sole proprietor often overlap with that of a merchant (commerçant). The sole proprietor seems to be subject to both the broad obligations relative to his status as a merchant and, at the same time, the specific obligations of a sole proprietor. The cumulative obligations may be difficult for sole proprietors to meet and thus weaken the status of the sole proprietor. Finally, the AUDCG does not provide for the question of the liability of the sole proprietor, or for the possibility to affect only a portion of his personal estate for work purposes. Thus, it is up to Member States to provide the necessary incentives and protection for this particular status, by passing the necessary regulations to cover the gaps left by the AUDCG. The risk is that the status of sole proprietor may not be included in the national regulations in all countries in the OHADA region. At this stage, it is hardly possible to define whether this new status will help independent professionals to organize their business and turn smoothly to more structured structures, or whether the existing practice of an informal sector will remain in place.

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Part III The Law of Corporate Groups and Restructuring

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International Arbitration and Corporate Law 658. OHADA law chose a clearly identified and structured group law. It is not a vague law simply based on the relation between maintaining capital, but actually a law giving a group legal force and a unique recognition. OHADA law’s position equally favours investors, be they national or foreign, because the group today is one of the essential instruments of global commerce. Also, with modern law, the OHADA system may allow investors to seriously consider subsidiaries in the countries of the zone because it can enjoy solid legal protections. The group may also be created, from the beginning, by the successive creation of new legal entities. But, in the most common practice, one normally sees an acquisition of pre-existing companies. This technique, derived from restructuring law, comes from logical economics. It is, in fact, much easier to acquire existing corporate shares because, in this case, the new shareholder profits from the entire network of contractual relations that the corporation itself created (market knowledge, local regulation conformity, supplies relations etc.).

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1

Restructuring: Mergers, Scissions and Partial Asset Transfers

659. The Uniform Act’s Articles 189-199 contain general terms relating to three types of restructuring: mergers, scissions and partial asset transfers, which use different methods depending on the type of corporation.1 Articles 382 and 383 deal with SARL mergers and scissions, and Articles 670-689, SA mergers and scissions. These terms apply to restructuring operations between corporations whose headquarters are within the same Member States as well as corporations located within several Member States (Art. 199, AUSC). They consequently represent a substantial simplification for carrying out certain transactions and limit the usual risks found in international private law in terms of restructuring.2 1.1

Challengers and Incentives of the Different Operations

660. The challenges for different restructuring operations may vary. The applicable legal rules should nevertheless be understood. 1.1.1 Challenges 661. Merger Transactions. A merger is often a buy-back; very rarely do two corporations merge to create a third. Normally, a corporation with a larger capital figure buys the others. The absorbing buys back the absorbed. New shares are issued and the absorber pays exchanges in place of the bought corporations or the absorbed shares. The merger allows a corporation to grow by external means. It will allow, for example, a corporation to enter into a market or a region without having to develop, internally, its own distribution chain, agents or on-site commercial contacts. It instantly enjoys all that the purchased society had previously developed. It also allows two corporations to rationalize their costs by gaining a larger business figure. A single manager accomplishes the same work that once required two. The same applies for the financial directors, the accountants, the secretaries, the number of directors or general assemblies.

1 2

B. Martor & S. Thouvenot, “OHADA Corporate Mergers”, Revue de droit des affaires internationales, n 1, 2002, p. 47 et seq. J. Béguin & M. Menjucq et al., Droit du commerce international, p. 235 et seq.

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International Arbitration and Corporate Law The merger also allows a company to buy back a supplier or even a client. By mastering a larger share of the economic chain, the company secures its profits. Finally, the merger may aim to reorganize the structure of several subsidiaries, by eliminating those that are not necessary. 662. Scission. Scission leads to a corporation’s dissolution for the benefit of two or several corporations that were made for that specific purpose or were pre-existing. It is a fusion variation where instead of joining two holdings, it separates an existing one. 663. Partial Asset Transfer. A partial asset transfer, PAT, allows for the creation of subsidiaries. A corporation will be able to become a pure holding, receiving dividends from its subsidiaries. It also allows one to more easily cease an activity by directly selling the subsidiary’s shares. For example, if a corporation manages a hotel-restaurant, it will be able to separate the hotel and the restaurant by using a partial asset transfer of each activity to a distinct subsidiary. The holding corporation will then hold its two subsidiaries’ shares. It will then be able to eliminate one of its activities by transferring all of the subsidiary’s shares. This operation may also lead to a separation of two activities that follow different trajectories, one in decline and the other expanding. The losing subsidiary will be able to be sold in order to finish the other’s expansion. Finally, the PAT allows a corporation to accomplish a complete transfer of its holding, therefore surrendering its assets and also liabilities that consist of debts, which is clearly simpler than taking back each engagement one by one and allowing one to gain all the creditor’s agreement into one operation. 1.1.2 Definitions 664. The Uniform Act generally defines a merger as an operation where two corporations join in order to form one, either by creating a new corporation or by one absorbing the other (Art. 189, AUSC). Inversely, “scission is an operation where one corporation’s holdings are divided among several existing or new corporations” (Art. 190, AUSC). The merger leads to a transfer of complete title to the company’s holdings, which disappears once the scission occurs. The scission is different from a PAT because the existing corporation disappears and maintains neither its assets nor any part of its activity. 665. Finally, “the partial asset transfer is an operation where a corporation contributes a sovereign part of its activity to a pre-existing corporation or a created one. The contributing company does not disappear as a result of this transfer. The partial asset transfer is subject to the same rules as a scission” (Art. 195, AUSC). The company that transfers a part of its holding does not disappear as a result of the transaction. It transfers part of its possessions. It is therefore an intermediary between a merger and a scission, which allows

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1  Restructuring: Mergers, Scissions and Partial Asset Transfers for the continuance of different activities all the while benefiting from the advantage of a universal transmission mechanism. 1.1.3

Common Characteristics of Restructuring Operations

666. Restructuring operations work, in OHADA law, on a common base of simple principles that allow these operations to occur following some necessary rules. 1.1.3.1 Universal Transfer of Assets 667. Universal Transfer. Mergers and scissions are, in the Uniform Act, a universal transfer of the absorbed company’s holdings and the former’s dissolution (Arts. 189 and 190, AUSC). The universal transfer ability demonstrates that all elements of the assets and liabilities of the absorbed corporation are transferred to the corporation(s) that receives them, either in whole or in part. This transfer demonstrates a transfer of full law. However, when there is a partial asset transfer, only the assets and the liabilities identified in the operation transfer, without the corporation’s dissolution (Art. 195, AUSC). 668. Effects. The idea of a full transfer demonstrates that all absorbed corporation’s goods and responsibilities, even if they are not included in the restructuring agreement, as the result of a mistake or omission, are automatically transferred to the absorbing corporation (Art. 191, AUSC). Consequently, an absorbing corporation may be bound to pay one of the absorbed corporation’s debts that were not included in the contract’s liability list. This is why, before a restructuring operation, due diligence generally occurs upon the absorbing company’s initiative. A general audit of the absorbed company allows it to ascertain future obligations that have not yet materialized in the accounting documents. This may concern, for example, litigation between the absorbed and one of its employees or a client that would give rise to an indemnity, a risk of procedure or administrative audit (tax, corporate or other) or an environmental obligation such as the clean-up of a polluted industrial site that the absorbed corporation may have to pay in the future. 669. Elements Subject to a Particular Status. There remains, however, a question that the Uniform Act does not seem to resolve, in terms of the complete transfer when restructuring some contracts becomes impossible because of some legal provisions. This problem may affect administrative contracts between the Member States and the private corporations. It also concerns knowing whether an absorbed corporation that holds an exploitation permit, from an investment agreement or a concession contract, could transfer to an absorbing corporation or to the new corporation such benefits, certifications or authorizations.

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International Arbitration and Corporate Law The general rule traditionally applied, in such a case, provides that the contractual relationship between a public person and a private person follow the intuitus personae principle. One must imagine, in this sense, that the type of contract is, on the one hand, non-transferable without the administrative authority’s preliminary agreement and that, on the other hand, the latter may make it impossible without the preliminary agreement for the transfer. The absorbed corporation’s value may decrease if a large part of the activity is with the state or if some clients included their contract with the corporation in a non-transferable provision and a resolution clause in case of merger, scission or buy-back by another corporation. The operation may lose its interest if the absorbed corporation’s wealth exists in its client list, and these disappear once the merger occurs. This risk must be anticipated and discussed with the administrative authority in order for it to certify the new legal entity. 1.1.3.2 Transfer of Stocks 670. Title Exchange. The Uniform Act provides that following a merger or scission, the absorbed corporation’s shareholders become shareholders of the absorbing corporation (Art. 191, AUSC). Mergers and scissions result in a title exchange, where the absorbed corporation’s shareholders receive shares of the absorbing corporation. This operation requires a determination of the exchange equality between the absorbed corporation’s shares and those of the absorbing corporation. In restructurings involving an SARL or an SA, the competent jurisdiction must appoint a merger auditor or a scission auditor in order to prepare a detailed report of the operation (Arts. 382, 672 and 684, AUSC). The auditor plays a very important role in certifying the determined value for each of the involved corporations in the restructuring and in giving its opinion on the transaction’s equitable character. The defined value will determine the number of shares that the absorber will grant the absorbed company’s shareholders. This value will be capital for sharing the future profits of the absorbing corporation and the power of new shareholders in it. Several methods may be used that lead to different valuations: the accountable value for the corporation’s net assets; multiples of the revenues applied to the corporation’s benefits in terms of corporations in the same economic sector is also possible. The report will explain the method(s) used for determining the exchange rate, the value that each method produces and the relative importance each one receives. The potential difficulties in the valuation are also in the report (Art. 672, AUSC). An exception to the above-mentioned principle is found in the fact that no title exchange may occur when the absorbed corporation’s shares are held either by the absorbing corporation, by the absorbed corporation itself or by a person acting on its behalf (Art. 191, Section 3, AUSC). In this case, the shares will have to be cancelled by reimbursing their contribution to the affected shareholders.

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1  Restructuring: Mergers, Scissions and Partial Asset Transfers 671. Labour Law. All labour law positions, notably those concerning protecting interest and consulting employees, must be respected during a restructuring. Particular attention must be given to labour law applicable in each of the Member States affected by the restructuring, in order to determine which terms are applicable for the personnel transfer in case of a merger or a scission. In fact, the Uniform Law does not (yet) contain a unified employment law. National employment law terms normally guarantee employee protection by requiring the automatic continuance of the employment contracts. In such a case, the absorbing corporation is considered the new employer. For example, the labour law codes in Burkina Faso, Mali, Niger and Chad provide that in case of a merger, employment contracts in force when control changes are moved between the new employer and the absorbed company’s employees.3 1.1.3.3 Dissolution of an Absorbed Company 672. A merger or a scission leads to the absorbed company’s automatic dissolution when holdings automatically transfer to the absorbing company. It is not necessary to follow a liquidation procedure and appoint a liquidator (Art. 191, AUSC), because this is an exception to dissolution without liquidation. This clause allows for a simplified process, avoiding the disagreements a liquidation procedure causes. 1.1.4

Applicable Rules when Restructuring Companies with Different Structures or Nationalities

673. Corporate Forms. The OHADA legislator provides that mergers, scissions and partial asset transfers may occur between different corporate forms except for Uniform Act terms to the contrary (Art. 196, AUSC). Upon reading the Uniform Act, it seems, in reality, that there are no contrary dispositions. However, subject to a review of their purpose, it seems that société en participation or GIE who need not possess corporate capital may have difficulty participating in a restructuring operation. One may assume that this is the same case for a société de fait, which is not registered. A contrario, a restructuring may occur between all other Uniform Act corporate forms, meaning SA, SARL, SNC and SCS, as well as between the former and foreign corporations, subject to imperative clauses in non-OHADA Member States and those whose corporations would be parties to the restructuring.

3

Burkina Faso Labour Code (1992) Art. 39, Mali Labour Code: Law n 92-020 23 September 1992, Art. L. 57; Niger Labour Code: Ord. N 96-039 29 June 1996, Arts. 90 and 91; Chad Labour Code: Law N 038/PR/96, Arts. 136 and 375.

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International Arbitration and Corporate Law 674. Public Corporations. Since public capital corporations, having the state as the sole shareholder, or mixed economic corporations whose capital the state partially holds are subject to the Uniform Act (Art. 1, AUSC), one may assume that they are also subject to restructuring laws. 675. Corporations in the Process of Dissolution or Liquidation. A dissolved corporation or one in the process of liquidation may participate in a merger transaction (Art. 189, AUSC). However, this corporation may only be absorbed, and it may never be an absorbing corporation. There is no similar rule for scissions or partial asset transfers implicating corporations in such a situation. This leads one to believe that this shortcoming is the result of a simple oversight in the Uniform Act. Consequently, the same rules should be able to apply at least for the scission insofar as the corporation disappears after the transaction. 676. Trans-boundary Transactions. The Uniform Act should facilitate international restructuring in the OHADA zone since it allows corporations, through its community aspect, to avoid conflicts of law applicable for restructuring that involve corporations whose headquarters are in different Member States. Consequently, the applicable law and procedures will be the same, for example, a restructuring between a corporation registered in Senegal and a Central African Republic corporation. A debate still continues, nevertheless, in terms of the law applicable to a restructuring between a corporation subject to the Uniform Act and a corporation not having the nationality of a Member State. In such a case, although the Uniform Act does not mention it, it seems possible to subject such an operation to any public policy disposition contrary to the third-party state. The most common case, but also the most prudent, will be, without a doubt, one where both states’ rights are joined so that the operation is valid in both countries. 1.1.5

Procedure Applicable in Restructuring Operations

677. For each corporation involved, restructuring requires detailing a restructuring plan (merger agreement, scission agreement or partial asset transfer agreement, depending on the case), as well as nominating an auditor if an SA or an SARL participates in the operation. 1.1.5.1 Restructuring Process and Contributions 678. Details of the Merger or Scission. The restructuring details must be included in a restructuring plan that the managers of each of the involved corporations prepare. The plan must contain information allowing one to identify the involved corporations, the themes and conditions for the merger or scission, the appointment and valuation of the asset and the liabilities whose transfer to the absorbing or new corporations is

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1  Restructuring: Mergers, Scissions and Partial Asset Transfers planned, the methods for dividing the shares, the dates of closing the involved corporation’s accounts, the report on exchanging corporate rights, the amount determined for the merger or scission premium as well as the rights given to associates having special rights and to the holders of titles other than shares (for example, bonds or subscription goods) (Art. 193, AUSC). This plan gathers in a single document the necessary elements for a restructuring operation. The document will allow all parties who are aware of its publication or who consult it at the corporate headquarters to have a global understanding of the transaction. The shareholders of each corporation will also be able to determine the valuation methods and to form an opinion before voting on the operation in a general assembly. The creditors will know if the absorbing corporation has a higher risk of defaulting than the absorbed and can then decide whether or not to exercise its opposition right. 679. Formalities and Depositing the Information. Two formalities must then be fulfilled for each corporation involved (Art. 194, AUSC). First, the restructuring project must be given to the commercial court’s clerk at the corporate headquarters of the involved corporations. Second, a legal opinion describing the planned restructuring must be published in a legal announcement journal one month before holding the first general assembly called to vote on the restructuring. These formalities create a guarantee for the shareholders that no amendment may be made to the plan as well as a method of informing the creditors of the involved corporations. Specific, national rules for each Member State may also require that the institutions that represent the personnel are consulted or informed about the restructuring. 680. Board of Directors’ Report. When several SAs participate in a restructuring, the board of directors for each corporation must prepare a report describing the legal and economic reasons for the planned restructuring (Art. 671, AUSC). This report must also be available to the shareholders along with the merger or scission plan, the merger auditor’s report, the combined financial statements and the management reports from the last three exercises for the corporations participating in the operation as well as recent accounting, at least fifteen days before holding the assembly responsible for approving the restructuring (Art. 674, AUSC). The shareholders may copy these documents, which will then help them to establish whether the fusion or scission failed to conform to the plan or to contest the valuations used. 681. Auditor’s Inspection. The participation of one or several auditors dedicated to the restructuring is obligatory for restructuring between two SAs, two SARLs or between an SA and an SARL (Arts. 382 and 672, AUSC). Their mission is to prepare a written report about the planned operation, describing, on the one hand, the values assigned to the corporations’ shares that participate in the transaction, and on the other hand the equitable character of the exchange report for the shares. The auditor must also verify the reality of the current liability the absorbing corporation accepts.

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International Arbitration and Corporate Law Consequently, the auditor’s function seems to be that of an examiner; since the Uniform Act specifies that he can obtain the useful documents and proceed to the necessary verifications with each involved corporation (Art. 672, AUSC). When several auditors intervene in the case of a restructuring, they must submit an individual report since they were nominated by agreement between all the involved corporations. This report allows the shareholders to access an objective and impartial opinion on the corporation’s value and to compare it to the different corporate managers’ plans. 1.1.5.2 Decisions Relating to Restructuring Operations 682. Competency. As a general rule, the restructuring decision belongs to each of the participating corporations under the conditions outlined for modifying by-laws and according to the applicable procedure for an increase of capital or corporate dissolution. The competent body will therefore be, generally, the general shareholder or partner assembly. 683. Documents Made Available in Advance. For an SA, the Uniform Act requires that the restructuring plan, the special manager’s report, the combined financial statements as well as the manager reports from the last three corporate exercises be available to the shareholders at the corporate headquarter at least fifteen days before holding the general assembly called to vote on the restructuring (Art. 674, AUSC). The Uniform Act also requires that a complete accounting be provided according to the same method and the same presentation as the latter annual balance sheet, if the last combined financial statements deal with a period that ended more than six months before the date of the restructuring plan. This new accounting must date from less than three months before the restructuring plan. 684. Competency and Majority in an SA. When several SAs are part of a restructuring, the decision is the exclusive responsibility of each SA’s extraordinary general assembly. This term means that this assembly may never delegate this power to the board of directors or the general director of the corporation involved in the transaction (Art. 671, AUSC). In fact, OHADA dispositions are public policy, and they may only be statutorily derogated when the Uniform Act allows, which is not the case here. Moreover, the Uniform Act’s Article 551 states that the extraordinary general assembly has the jurisdiction to authorize mergers, scissions and partial asset transfers. This exclusive power is justified because of the importance of the decision that directly impacts the shareholder’s holdings. A two-thirds majority in the general assembly is required in order to adopt the restructuring decision (Art. 554, AUSC). In an SA, the restructuring must also be approved in a special shareholder’s assembly when it involves cancelling specific rights guaranteed to certain shareholder categories (Art. 671, AUSC).

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1  Restructuring: Mergers, Scissions and Partial Asset Transfers 685. Competency and Majority in Other Companies. In an SARL, a general assembly must meet to make extraordinary, collective decisions. According to the Uniform Act’s terms, the partners holding at least three-fourths of the corporate capital must make the decision (Arts. 215 and 358, AUSC). In an SNC, the partners must unanimously approve the restructuring (Arts. 215 and 274, AUSC). In the SCS, the general partners must unanimously approve the restructuring as well as a majority of the limited partners (Arts. 215 and 296, AUSC). 686. Unanimity. The Uniform Act, however, allows for one exception from the majority rule applicable for SA, SARL and SCS according to which if the planned operation increases the partners’ or shareholders’ liabilities, only the unanimous opinion of the shareholders or partners may approve the transaction (Art. 197, AUSC). This usually occurs when the absorbing corporation is a corporation without limited liability. 1.1.5.3 Simplified Restructuring Procedures 687. Absorbing 100% of a Subsidiary. The Uniform Act authorizes a simplified restructuring procedure for SA or SARL that applies when an absorbing corporation possesses all of the absorbed corporation’s capital from the restructuring plan’s presentation until the operation’s completion (Art. 676, AUSC). In other words, the simplified procedure applies where the absorbed company is a subsidiary that the absorbing company completely owns. It is ineffective, for this type of operation, to discuss the different reports since the absorbing company already holds 100% of the capital of the absorbed. The absorption’s only effect is that the absorbing company’s shareholders will directly hold the absorbed company’s assets. Instead of two intermediary levels, there is only one sole shareholder group – that of the absorbing company that represents both corporations’ assets. 688. Absorbing a Company’s Decision. In terms of a simplified procedure, one need not call the extraordinary general assembly of the absorbed companies. In fact, since the absorbing company is the absorbed company’s only shareholder, the decision comes back to the absorbing company’s shareholders. However, the absorbing corporation’s extraordinary general assembly must approve the restructuring. Appointing a restructuring auditor as well as preparing a manager report is not necessary. Nevertheless, it would be wise, in certain cases, to appoint an ad hoc auditor to certify the value of the components of the assets and liabilities the absorbed corporation possesses, as the managers recorded them. 689. Creating a New Corporation. The simplified procedure does not apply when the restructuring involves creating a new corporation, created with no other contributions other than those of the absorbed company. In such circumstances, only each absorbed company’s approval is necessary for the restructuring, understanding that these companies

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International Arbitration and Corporate Law must also approve the new company’s by-laws. Consequently, the new company need not approve either the new by-laws or the restructuring (Arts. 677 and 685, AUSC). Moreover, when there is a scission or a partial asset transfer and the shareholders or partners see an attribution of proportional rights in the new corporation, similar to those they held in the former corporation, an auditor’s report is not necessary (Art. 685, AUSC). 1.1.6

Creditors’ Rights

690. A debtor’s restructuring operations are very important to a creditor; if the corporation dissolves for the benefit of another, they must be able to determine whether the newly created corporation or the absorbing corporation will be able to pay its debts or even whether it runs the risk of default. If the absorbing corporation is the debtor and not the absorbed, creditors may find that the absorbed corporation’s assets were overvalued and that the absorbing corporation’s own capital, that the creditors correctly weighed, become reduced. In a restructuring process, the creditors’ rights depend on their quality as bondholders. Bondholders have a particular status because they are not shareholders and they do not directly participate in the corporation’s management; still in certain situations, they are questioned. A restructuring project is one of these decisions. 1.1.6.1 Non-bondholder Creditors 691. Opposition Right. The right to oppose a restructuring is given to the absorbed company’s creditors, which aims to guard themselves against a debtor’s change, for the absorbing company’s creditor, in order to protect the absorbing company’s creditors from an argument with the absorbed company’s creditors. 692. Creditor Protection. In theory, the absorbed company’s creditors, when they are not bondholders, automatically become the absorbing company’s creditors (Art. 679, AUSC). However, each involved corporation’s creditors, who are not corporate bondholders and whose debts predate the restructuring plan’s publication, may oppose the operation within thirty days following the publication in a legal announcement journal. Such objections cannot prevent completing the restructuring, contrary to what could happen when creditors oppose a capital reduction (Art. 637, AUSC). The jurisdiction that receives all objections may either reject the objection or order that the company pay the affected creditors, and/or registering guarantees, if the company may offer them, and the creditors deem these guarantees sufficient. If the company does not reimburse the debts, or it does not register any guarantee, contrary to the judge’s order, the merger is unenforceable against the creditor. 693. Reimbursement. Additionally, creditors may enter into agreement allowing them to demand immediate reimbursement for their debt if the debtor corporation becomes 238

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1  Restructuring: Mergers, Scissions and Partial Asset Transfers involved in a merger or scission operation with another corporation (Art. 680, AUSC). This type of agreement is much more efficient than an opposition right, and creditors have many interests in including this type of clause, and the judge will certainly be more inclined to order the immediate payment instead of establishing a guarantee. 1.1.6.2 Bondholder Creditors 694. Plan Approval. The absorbed company’s bondholders must see the restructuring plan at their meeting, unless the offer appears in a legal announcement journal in order to reimburse the debts upon a simple request, in which case the absorbing corporation would become the debtor for the absorbed company’s bondholders (Arts. 678 and 686, AUSC). The bondholder has two options: he may either request immediate reimbursement for his shares or maintain his bonds and automatically become a bondholder of the absorbing company. When reimbursement is an option, the bondholder may not object to the restructuring plan. The absorbed company also avoids blocking the transaction, but the risk is that a large number of unsatisfied bondholders of the absorbing corporation request reimbursement. In this case, the company must find the necessary funds to reimburse them all. 695. Absorbing Company’s Bondholder’s Objection Right. This procedure for endorsing the plan does not apply to the absorbing company. For the absorbing company, the bondholders’ general assembly may nevertheless authorize its representative to oppose the restructuring. Such objections are subject to the same rules as those for non-bondholder creditors (Art. 681, AUSC). 1.1.7

Enforceability and Irregularity of Restructurings

696. A restructuring, since it creates a complete transfer of holdings in most cases, requires transparency and discussion with third parties, so they may object. 1.1.7.1 Deadlines 697. Effective Date. The restructuring’s effective date depends on the date that the absorbing company’s holdings transfer. This effective date differs depending on whether a new corporation emerges, or whether it concerns a merger. In the case of creating one or several new companies, the restructuring occurs from the date that the company registers with the RCCM, or the last date if there are several corporations made. When the restructuring involves one or several corporations absorbing existing corporations, the operation takes effect from the date of the last general assembly that approves the transaction. Nevertheless, the project may always expressly provide another date. This date, however, may not follow the date that the corporations who transfer their assets close their final 239

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International Arbitration and Corporate Law exercises (Art. 192, AUSC). In fact, if a date is chosen by mistake, the values taken from the financial reports become invalid. The exchange rate would have to be determined yet again in order to validly account for the absorbed and absorbing’s values. 1.1.7.2 Sanctions for Procedural Irregularities 698. Declaration of Regularity and Conformity. Under penalty of annulling the restructuring operation, and as a complement to the above-described formalities, the Uniform Act requires the companies that participate in the transaction to provide the competent court’s clerk with a notice that recaps all the restructuring acts that conform to the Uniform Act (Art. 198, AUSC). The representatives of the managing bodies for each company must sign this declaration. 699. Regularization. The Uniform Act provides no time period to correct a procedure in case of a restructuring irregularity. Nevertheless, the annulment process for a restructuring has a statute of limitations of six months from the date of the last registry with the RCCM (Art. 251, AUSC). One understands that OHADA law provided a relatively short time period because of the constant instability that surrounds a merged corporation or that results from a scission and the ensuing difficulty for such an operation. Any interested party may use this time period to bring an annulment action before the competent jurisdiction. The action is considered extinct if the cause for the annulment action no longer exists on the day that the court rules on the merits (Art. 246, AUSC). 700. Annulment. The court for the annulment action may determine a period allowing the company to correct the situation, and may not, in any situation, declare the restructuring void less than two months after the introduction of the dispute (Art. 247, AUSC). In some cases, a general shareholders’ meeting will have to meet to correct the situation. The court may also establish, by a judgment, a necessary grace period so that the partners or shareholders may make a decision. For example, if a document is not presented to the shareholders as a board of directors’ report, a general assembly may meet to vote on the report. This vote formally acknowledges the report and a posterior validation of the restructuring. If this decision has still not been made when the delay expires, the court rules upon the request of the most diligent party. When the annulment has not been corrected, the corporations who participated in the operation are severally liable for executing the obligations that the restructuring created (Art. 254, AUSC). Contrary to general law, annulment does not have a retroactive effect on the company (Art. 253, AUSC). Engagements previously taken on will still be valid. The company that was created will become a de facto corporation. This does not come without consequences for the partners who will be jointly and severally liable for the debts that occurred during this period. The corporate managers to whom the annulment is imputable may be found jointly liable for the harm that results towards third parties as a result of the corporation’s annulment (Art. 256, AUSC). 240

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2

Groups, Branches and Subsidiaries

701. OHADA law contains specific provisions concerning corporate groups, this legal idea being very well recognized. This group law allows us to understand all situations where a corporation possesses so much influence that it makes important decisions for another company, which it controls through assembly meetings. Geared towards the pragmatic ideas of global commerce, the Uniform Act also explains the notions of a subsidiary, an entity with a legal personality that presents one of the classic methods for implanting international commerce by allowing a mother corporation to make its presence felt in a chosen country. These two distinct methods demonstrate a large step into modernity for uniform law. Indeed, it places essential instruments for international business in the hands of Member States by regulating them, which allows it to guarantee transactions, all the while clearly indicating what could be done and how it should be accomplished. 2.1

Corporate Groups

702. The Uniform Act defines a corporate group as a “group formed by united companies between themselves by diverse links that allows one to control the others” (Art. 173, AUSC). This definition is not based on the sole consideration of holding capital. On the contrary, as a very efficient snapshot of the business world, the corporate group defines itself as referring to control, which may be expressed by connecting capital beyond “more than half of a company’s voting rights” (capital control) like when it may exercise its voting rights based “on an agreement between other corporate partners” (political control) (Art. 175, AUSC). Control may be financial, and express itself in capital, or by more political or conventional means and result in agreements between individuals not holding the majority of votes in the assembly. 2.1.1

Legal Framework of Corporate Groups

703. Although the term often appears in corporate law, accounting and tax law, the idea of a corporate group does not easily translate to a legal thought, since it most frequently corresponds to an economic and contractual agreement between several corporations. The Uniform Act does, however, provide a useful definition of the idea of control, as well as clarifying that a corporate group is “the group formed by united corporations between themselves by diverse links that allows one to control the others” (Art. 173, AUSC). This

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International Arbitration and Corporate Law definition does not give legal personality to a corporate group. The idea of control is, on its own, defined as effectively holding a company’s decision-making power, with the presumption of holding control by a physical or moral entity when it holds more than half the direct voting rights in a corporation or indirect by virtue of agreements with other partners (Arts. 174 and 175, AUSC). 2.1.1.1 Capital Control 704. Participation. In order to avoid participation conflicts between several companies that lead to a fictitious corporate capital (creditor’s gage) or a confusion in terms of the shareholder’s power or dividing profits, OHADA law forbids the intersections of shares for SA and SARL. Participation is the rule for a corporation to possess a share of capital equal or superior to 10% of another corporation (Art. 176, AUSC). Additionally, if an SA or an SARL holds a corporation’s share (10% or more of its capital), this company may not become a partner of the SA or SARL (Art. 179, AUSC). Inversely, when a company holds a stake in an SA or SARL, this SA or SARL may not hold rights in the company holding the share (Art. 178, AUSC). Reciprocal holdings may occur when each company’s holdings remain inferior to 10%. Crossed holdings do not have great interest for corporate partners because in this case, their shares or corporate titles do not grant them a dividend right or a vote.1 Put simply, this regulation aims to avoid creditors having the impression of a certain value for the corporate capital, although reciprocal holdings do not constitute a normal guarantee. 705. The Subsidiary. “A company is a mother company of another company when it holds more than half of the latter’s capital. The second company is the first’s subsidiary” (Art. 179, AUSC). This is a typical example that one finds in reports in corporate groups or a holding company that holds more than 50% (often 100%) of its subsidiary’s capital. There are several interests in a subsidiary. If one of the subsidiaries fails, the other companies in the group will not necessarily be affected, although if all companies only made one, each recorded loss would have a large effect. Creating a subsidiary allows one to more easily sell an activity. This is moreover one of the cases where a scission or a partial asset transfer often occurs. Likewise, creating different companies leads to more legal formalities to register in order to allow them to survive and that, therefore, necessitates more managers. 2.1.1.2 Political Control 706. Common Subsidiary. A company may be a subsidiary of several mother companies, based on a control report, and becomes, consequently, a common subsidiary. The idea 1 This rule logically results from the theory of bonds and, more specifically, the confusion of debtor and creditor rights.

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2  Groups, Branches and Subsidiaries of a common subsidiary is different from simple control by the fact that the companies that control it cannot dispose of it by decisions from the extraordinary general assembly. It concerns a majority, absolute control scenario, allowing the other to choose the controlling company in the extraordinary general assemblies. Parent companies must therefore separately maintain a sufficient financial stake so that no extraordinary decision may occur without their agreement (Art. 180, AUSC). The majority threshold for decisions made in general assemblies is two-thirds or threequarters. The adequate financial participation for blocking will therefore be one-third and a vote in an SA and one-fourth and a share in an SARL. The mother corporations must also participate in the management of the common subsidiary so that one may define it as such (Art. 180, AUSC). 2.1.2

The Fiscal Framework of Corporate Groups

707. Consolidated Accounts. When a company whose headquarters or its principal activity in an OHADA treaty Member State controls exclusively or jointly one or several other companies, it must publish the consolidated financial reports each year for the group, consisting of all the businesses, as well as a report on the group’s management (Art. 74, AUDC). The parent corporation’s shareholders may hold influence over different subsidiaries in terms of the global result other than periodically issuing dividends or carrying out recapitalizations. 708. Combined Accounts. When companies established in OHADA Member States are subject to a decision centre located outside of the region, they represent their combined financial reports as though they were only one company (Art. 103, AUSC). The Uniform Acts have exactly the same goal as the corporate group’s consolidated accounts. It concerns finding a legal reality so that all may understand the reality in terms of its economic dynamics. 2.2 Branches 709. International business law clearly distinguishes subsidiaries and franchises, the first being an autonomous entity with legal personality, whereas the second is only a stable incarnation of a foreign corporation that does not have legal personality and is therefore not an autonomous entity.2 Corporate law’s international approach distinguishes these two situations because they do not lead to the same applicable law – the subsidiary 2

On the international status of franchises, see J. Béguin & M. Menjucq et al., Droit du commerce international, Litec, Section 2147 et seq., p. 761 et seq.

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International Arbitration and Corporate Law being subject to the lex societatis of the location of its corporate headquarters, whereas the franchise mainly answers to the laws of the corporation that created it, except in terms of the eventual regulations that apply to setting it up internationally. Since uniform law also aims to allow foreign investors to enjoy a simple and efficient legal regime, it is particularly important for the Uniform Act to contain specific clauses applicable to subsidiaries. 2.2.1 Definition 710. Lack of Legal Personality. The Uniform Act defines a branch as a commercial, industrial or service-based establishment, belonging to a corporation or to an individual and having a certain degree of managerial autonomy, without having an independent legal personality apart from its owner.3 This absence of legal personality forbids establishing the theory of multiple franchises or main stations.4 This last fact is undoubtedly regrettable because it calls into question the theory of main principles that are made in order to allow one to sue the company closest to the place where the harm occurred since the person filing suit for the legal entity possesses sufficient autonomy. It is desirable for this jurisprudence to evolve towards greater victim protection for acts that are eventually harmful for individuals in charge of autonomously managed franchises. The rights and obligations running from the activity or the existence of a franchise belong to the franchise’s owner (Arts. 116 and 117, AUSC). 711. Franchise Typology. The Uniform Act distinguishes two types of franchises: franchises of corporations that register in a Member State and franchises of foreign companies, meaning companies that are not registered in one of the Member States. In terms of the law applicable to the franchise itself, OHADA law is slightly ambiguous. In fact, Article 118 states that “subject to international agreements or contrary legislative terms, it is subject to the law of the Member State where it is located.” This clause is unfortunate insofar as a franchise answers, in principle, to a system of the applicable laws. In fact, any local representative of the corporation who establishes a franchise draws his power from the foreign company and, consequently, his legal link is subject to this foreign law. Likewise, any of the representative’s acts engage the foreign corporation and not the franchise itself. The local law does not aim to address questions concerning the local establishment (registry, labour law, international financing, transferring funds, customs etc.). Moreover, it concerns without a doubt what the OHADA legislator aims to accomplish, but the wording in Article 118 is rather confusing on this point. 3 O. Boisseau Chartrain, “Quel avenir pour les succursales des sociétés étrangères dans l’OHADA?”, Revue de droit des affaires internationals, 2000, n 3, p. 358 et seq. 4 Ch. Civ. Et com. De N’Djamena, 5 May 2000, SDV Cameroun et SDV Tchad v. Star Nationale, .

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2  Groups, Branches and Subsidiaries 2.2.2 Registration 712. Initial Registration. The franchises of a corporation already registered in one of the Member States or non-registered corporations in a Member State must register with the RCCM in the Member State where they are established, within the month that follows their establishment (Art. 119, AUSC and Art. 48, AUDCG). The type of franchise varies depending on whether it concerns a corporate franchise already established in one of the OHADA countries or a foreign company relocating to this zone. For the first, there is no other required formality. For the second, other formalities are required in certain specific circumstances. 713. Transformation. For franchises of foreign corporations, the general rule is that a franchise scheme may not be durable. The franchise “must become a legal corporation, pre-existing or created, in one of the Member States, within two years after its creation, unless it is discharged of this obligation by an order from the commercial minister of the Member State where the franchise is located” (Art. 120, AUSC). For franchises of foreign corporations, creating a franchise is only an intermediary solution that must lead to creating a subsidiary. This solution may seem pragmatic in terms of the objective for the initiators of the uniform law being to reinforce the fabric of local corporations. It may also create too heavy a constraint for foreign corporations not desiring to permanently establish themselves in the given country. This disposition is slightly undesirable, although its aim is rather honourable. The ability to obtain an exemption from the Minister of Commerce of the Member State creates a very useful, pragmatic solution. Establishing contact with this authority will allow, in terms of a constructive dialogue and taking into account the local business interests such as regional and international economic situations, to obtain authorization to establish the subsidiary. In case of effectively transforming the franchise into a corporation under the uniform law, the question of the applicable law will no longer be resolved by the same method. In this case, the foreign company will maintain a subsidiary under local law whose functioning will be subject to the uniform law. The law for the foreign mother corporation should not interfere with its internal business because of the application of lex societatis principles.5 For local companies, the scenario is very different, and the franchise rules may seem interesting. Indeed, for a corporate group that wants to establish itself in different OHADA countries but does not wish to create several subsidiaries, it may be wise to create a subsidiary in an OHADA country, then franchises of this subsidiary in all the Member States where the group wishes to establish itself.

5

J. Béguin & M. Menjucq et al., Droit du commerce international, Litec, Section 470 et seq.

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Annexes

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Annex 1 Uniform Act Relating to Commercial Companies and Economic Interest Group The Council of Ministers of the Organization for the Harmonization of Business Law in Africa (OHADA), Mindful of the Treaty on the Harmonization of Business Law in Africa, in particular Articles 2, 5, 6, 7, 8, 9, 10, 11 and 12 thereof; Mindful of the report of the OHADA Permanent Secretariat and the observations of the Contracting States; Mindful of the opinion of the Common Court of Justice and Arbitration dated 7 April 1997; The Contracting States present have deliberated upon and unanimously adopted the Uniform Act set out below: Preliminary Chapter. Scope of the Provisions of This Uniform Act Art. 1 : Every commercial company, including those in which the State or a corporate body governed by public law is a partner, whose registered office is located on the territory of one of the Contracting States to the Treaty on the Harmonization of Business Law in Africa (hereinafter referred to as “Contracting States”) shall be subject to the provisions of this Uniform Act. All economic interest groups shall equally be subject to the provisions of this Uniform Act. Besides, commercial companies and economic interest groups shall be subject to the laws which are not contrary to the provisions of this Uniform Act applicable in the Contracting States of their registered office. Art. 2 : The provisions of this Uniform Act 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 those of this Uniform Act or to supplement the provisions of this Uniform Act with their own provisions. Art. 3 : Any persons, whatever their nationality, wishing to engage in a commercial activity in the form of a company on the territory of one of the Contracting States, shall choose a form of company which suits the activity envisaged from among those provided for by this Uniform Act.

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International Arbitration and Corporate Law .

The persons referred to in the preceding paragraph may also elect, under the conditions provided for by this Uniform Act, to form an economic interest group. PART 1. GENERAL PROVISIONS GOVERNING COMMERCIAL COMPANIES BOOK 1. FORMATION OF A COMMERCIAL COMPANY TITLE 1. DEFINITION OF THE COMPANY Art. 4 : A commercial company shall be formed by two or more persons who agree, by contract, to assign assets in cash or in kind to an activity for the purpose of sharing profits or benefiting from savings that may derive therefrom. The partners of the company shall accept to bear losses under the conditions stipulated in this Uniform Act. A commercial company shall be formed in the common interest of the partners. Art. 5 : A commercial company may also be created, as provided by this Uniform Act, by a single person, referred to a “sole proprietor”, on the basis of a written document. Art. 6 : The commercial nature of a company shall be determined by its form or object. Private Companies, Sleeping Partnerships, private limited companies and public limited companies are commercial companies by virtue of their form, irrespective of their object. TITLE 2. CAPACITY TO BE A PARTNER Art. 7 : Any natural person or corporate body may be a partner in a commercial company where he is not subject to any prohibition, incapacity or incompatibility as defined notably in the Uniform Act Relating to General Commercial Law. Art. 8 : Minors and legally incapacitated persons may not be partners in a company where their liability for the company’s debts exceeds their contributions. Art. 9 : A husband and wife may not be partners in a company in which they shall be indefinitely or jointly and severally liable for the company’s debts. TITLE 3. ARTICLES OF ASSOCIATION CHAPTER 1. FORM OF THE ARTICLES OF ASSOCIATION Art. 10 : The Articles of Association shall be established by a notarial deed or by any other instrument that ensures legal validity in the State of the company’s registered office. Such instrument, together with a certification of the writing and signatures of all the parties, shall be deposited as originals in a notary’s office. They may be amended only by the same procedure.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 11 : Where the Articles of Association are drawn up in a private document, as many original copies shall be established as shall be needed to deposit one copy in the company’s registered office and to fulfil all the required formalities. A copy of the Articles of Association on plain unheaded paper shall be given to each partner. However, in the case of Private Companies and Sleeping partnerships, one original copy shall be given to each partner. Art. 12 : The Articles of Association shall either be a partnership deed, in the case where there are several partners, or a unilateral deed of intent, in the case of a sole proprietor. CHAPTER 2. CONTENTS OF THE ARTICLES OF ASSOCIATION - MANDATORY INFORMATION Art. 13 : The Articles of Association shall contain the following information: (1) the form of the company; (2) the name of the company, followed by its acronym where necessary; (3) the nature and field of the company’s activity which constitute its object; (4) the company’s registered office; (5) its duration; (6) the identity of contributors in cash and, for each of them, the amount of their contribution and the number and value of the shares handed over in exchange for each contribution; (7) the identity of contributors in kind, the nature and value of the contribution made by each of them, the number and value of the shares handed over in exchange for each contribution; (8) the identity of persons enjoying special benefits and the nature of such benefits; (9) the amount of the registered capital; (10) the number and value of shares issued, stating, where necessary, the various classes of shares; (11) the provisions relating to the distribution of profits, the constitution of reserves and the distribution of the bonus after liquidation; (12) the rules governing the functioning of the company. CHAPTER 3. COMPANY NAME Art. 14 : Every company shall have a name which shall be mentioned in its Articles of Association. Art. 15 : Unless otherwise provided for in this Uniform Act, the name of one or more partners or former partners may be included in the company name.

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International Arbitration and Corporate Law Art. 16 : A company may not take the name of another company which is already registered in the Trade and Personal Property Credit Register. Art. 17 : The company name shall appear on all deeds and documents from the company to third parties, especially letters, bills, notices and various publications. It shall be preceded or followed immediately by an indication of the form of the company, the amount of its registered capital, the address of its registered office and its registration number in the Trade and Personal Property Credit Register. Art. 18 : The company name may be changed under the conditions stipulated in this Uniform Act for amending the Articles of Association for each form of company. CHAPTER 4. OBJECT OF THE COMPANY Art. 19 : Every company shall have an object which shall constitute the company’s activity and which shall be identified and described in the Articles of Association. Art. 20 : Every company shall have a lawful object. Art. 21 : Where the company is engaged in a regulated activity, it shall comply with the special regulations governing such activity. Art. 22 : The company’s object may be changed under the conditions stipulated in this Uniform Act for amending the Articles of Association for each company. CHAPTER 5. REGISTERED OFFICE Art. 23 : Every company shall have a registered office which shall be indicated in the Articles of Association. Art. 24 : Partners shall decide on the location of the registered office either at the company’s principal place of activity, or at the place where its administrative and financial services are concentrated. Art. 25 : The registered office may not consist solely in a postal address. It shall be localized by an address and or a specific and adequate geographic indication. Art. 26 : Third parties may rely on the statutory registered office but it may not be relied upon by the company as against them where the real registered office is located elsewhere.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 27 : The registered office may be changed under the conditions stipulated in this Uniform Act for amending the Articles of Association for each form of company. However, it may be transferred to a different location in the same town by a simple decision of the company’s management or administration. CHAPTER 6. DURATION - EXTENSION Section 1. Duration Art. 28 : Every company shall be set up for a duration which shall be indicated in the Articles of Association. The duration of the company may not exceed ninety-nine years. Art. 29 : The existence of a company shall begin on the date on which it is entered in the Trade and Personal Property Credit Register, unless otherwise provided by this Uniform Act. Art. 30 : The expiry of the term shall entail the automatic dissolution of the company, unless an extension has been decided upon the conditions laid down in Articles 32 et seq. of this Uniform Act. Art. 31 : The duration of the company may be changed under the conditions laid down in this Uniform Act for the amendment of the Articles of Association for each form of company. Section 2. Extension Art. 32 : The existence of a company may be extended one or more times. Art. 33 : The extension of the duration of the company shall be done under the conditions laid down in this Uniform Act for the amendment of the Articles of Association for each form of company. Art. 34 : The extension of the duration of a company shall not entail the creation of a new legal entity. Art. 35 : The partners shall be consulted at least one year before the date of expiry of the company to decide whether or not to extend the duration of the company. Art. 36 : Failing this, any partner may request the president of the competent court within whose jurisdiction the registered office is located to designate, by summary proceedings, a legal representative to initiate the consultation provided for in the preceding article.

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International Arbitration and Corporate Law CHAPTER 7. CONTRIBUTIONS Section 1. General provisions Art. 37 : Each partner shall contribute to the capital of the company. Each partner shall owe the company what he has pledged to contribute in cash or in kind. Art. 38 : In return for their contribution, the partners shall receive shares issued by the company, as defined in Article 51 of this Uniform Act. Art. 39 : The provisions of this chapter shall apply to contributions made during the existence of the company, at the time of an increase of capital. Section 2. Types of contributions Art. 40 : Each partner may contribute to the company: (1) money, as a contribution in cash; (2) services, as a supply of labour; (3) rights on movable or immovable, tangible or intangible property, as a contribution in kind. Any other contribution shall be forbidden. Section 3. Realization of Contributions in cash Art. 41 : Contributions in cash shall be effected by the partner transferring to the company the ownership of the amount of money that he has pledged to contribute. Unless otherwise provided in this Uniform Act, contributions in cash shall be fully paid up at the time of formation of the company. Art. 42 : The only cash contributions that shall be considered as fully paid up are those over which the company has acquired ownership and which are fully and finally placed in its coffers. Art. 43 : In case of a delay in payment, the balance due to the company shall automatically bear interest at the official rate from the date on which the payment was due, without prejudice to the payment of damages, if any. Art. 44 : Contributions in cash at the time of an increase of capital of a company may, unless forbidden by the Articles of Association, be realized through off-set with an unquestionable, liquid and due claim on the company.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Section 4. Realization of Contributions in kind Art. 45 : Contributions in kind shall be made by the transfer of real or personal rights in the property contributed and the effective conveyance to the company of the property to which those rights are attached. Contributions in kind shall be fully paid up at the time of formation of the company. Art. 46 : Where the contribution is in the form of property, the contributor shall stand security for the company as a vendor for the buyer. Art. 47 : Where the contribution is in the form of a leasehold, the contributor shall stand security for the company like a lessor for the lessee. However, where the contribution is in the form of interchangeable goods or any other property which normally needs to be renewed during the existence of the company, the contract shall transfer ownership of the property to the company, on condition that it gives an equal quantity, quality and value in return. In that case, the contributor shall stand security for the company under the conditions provided in the preceding article. Art. 48 : Contribution by property or a right subject to publication before it may be relied upon as against third parties may be published before the company is registered. The retroactive effect of this formality can only begin from the date the company is registered. Art. 49 : The partners shall evaluate the contributions in kind. In the cases provided for by this Uniform Act, such evaluation shall be checked by a contributions assessor. Art. 50 : The Articles of Association shall make provision for the evaluation of contributions in kind, under the conditions laid down in this Uniform Act. CHAPTER 8. COMPANY SHARES Section 1. Principle Art. 51 : A company shall issue shares in return for its partner’s contributions. Such shares shall represent the partners’ rights and shall be referred to as shares in joint-stock companies, and stocks in the other companies. Section 2. Nature Art. 52 : Company shares shall be personal property.

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International Arbitration and Corporate Law Section 3. Rights and obligations attached to shares Art. 53 : Company shares shall confer on their holders the following rights and obligations: (1) a right to a share of the company’s profits whenever they are distributed; (2) a right to the company’s net assets when shared following the dissolution of the company or where the company’s share capital is reduced; (3) where necessary, the obligation to share in the company’s losses under the conditions laid down for each form of company; (4) the right to participate in and vote on the collective decisions of the partners, unless otherwise provided by this Uniform Act for certain classes of shares. Art. 54 : Unless otherwise provided in the Articles of Association, the rights and obligations of each partner as stipulated in Article 53 of this Uniform Act shall be proportional to the amount of his contributions, whether such contributions were made during the formation of the company or during the existence of the company. However, provisions attributing all of the company’s profits to a partner, or exonerating a partner from all liability for losses, as well as those excluding a partner from sharing in the profits or charging all losses to one partner shall be deemed to be unwritten. Art. 55 : The rights referred to in Article 53 of this Uniform Act shall be exercised under the conditions laid down for each form of company. Such rights may only be suspended or cancelled by express provisions of this Uniform Act. Section 4. Face value Art. 56 : The shares issued by a company shall have the same face value. Section 5. Negotiability - Transferability Art. 57 : Company stocks shall be transferable. Shares shall be transferable or negotiable. Art. 58 : Public limited companies shall issue negotiable shares. It shall be forbidden for companies other than those referred to in paragraph one of this article to issue such shares, under penalty of the contracts signed or the shares issued being null and void. It shall also be forbidden for such companies to underwrite the issue of negotiable instruments, under penalty of such underwriting being null and void. Art. 59 : Where there is provision for a partner’s rights to be transferred or redeemed by the company, the value of such rights shall be determined, where the parties fail to agree, by an expert designated either by both parties or, failing that, by order of the competent court through summary proceedings.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Section 6. Sole ownership of shares Art. 60 : In the case of companies in which sole proprietorship is not allowed by this Uniform Act, the ownership of all the shares by a single person shall not entail the automatic dissolution of the company. Any party concerned may petition the president of the competent court for such dissolution where the situation is not regularized within a period of one year. The court may grant the company a maximum period of six months to regularize the situation. It may not order the dissolution where, on the date of ruling on the merits of the case, the situation has been regularized. CHAPTER 9. REGISTERED CAPITAL Section 1. General provisions Art. 61 : Every company shall have a registered capital which shall be indicated in its Articles of Association, in accordance with the provisions of this Uniform Act. Art. 62 : The registered capital shall represent the amount of capital contributions made by the partners to the company, plus, where necessary, capitalization of reserves, profits or issue premiums. Art. 63 : In return for the contributions, the company shall allot to each contributor, shares of a value equal to the value of his contributions. In return for the capitalization of reserves, profits and issue premiums, the company shall issue shares or raise the face value of existing shares. These two procedures may be carried out concurrently. Art. 64 : The registered capital shall be divided into shares or stocks, depending on the form of the company. Section 2. Amount of the registered capital Art. 65 : The amount of the registered capital shall be freely determined by the partners. However, this Uniform Act may fix a minimum registered capital according to the form or object of the company. Art. 66 : Where the capital of the company being formed is less than the minimum amount fixed by this Uniform Act, the company may not be validly formed. Where, after being formed, the company’s capital drops to an amount below the minimum fixed by this Uniform Act for that form of company, the company shall be dissolved, unless the capital is raised to an amount at least equal to the fixed minimum amount, under the conditions stipulated by this Uniform Act.

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International Arbitration and Corporate Law Section 3. Modification of the capital Art. 67 : The registered capital shall be fixed. However, it may be increased or reduced under the conditions laid down by this Uniform Act for the amendment of the Articles of Association of each form of company. Art. 68 : The registered capital may be increased where new contributions are made to the company or where reserves, profits and issued premiums are capitalized. Art. 69 : The registered capital may be reduced under the conditions laid down by this Uniform Act, by refunding part of the partners’ contributions or by imputing losses to the company. Art. 70 : Where this Uniform Act authorizes the reduction of capital by the refund of part of the partners’ contributions, this may be done either by a cash refund or by allotment of assets. Art. 71 : Reduction of capital shall be subject to the conditions stipulated in Articles 65 and 66 of this Uniform Act. CHAPTER 10. AMENDMENT OF THE ARTICLES OF ASSOCIATION Art. 72 : The Articles of Association may be amended under the conditions stipulated by this Uniform Act for each form of company. A partner’s commitments may, under no circumstances, be increased without his consent. CHAPTER 11. DECLARATION OF REGULARITY AND CONFORMITY OR NOTARIAL STATEMENT OF SUBSCRIPTION AND PAYMENT Art. 73 : The founders and first members of the management organs of the company, directors and managing directors shall deposit at the Trade and Personal Property Credit Register a declaration in which they describe all the actions carried out towards the regular formation of the company and by which they affirm that such formation has been carried out in conformity with this Uniform Act. This document shall be referred to as the “declaration of regularity and conformity”. It shall be presented under penalty of rejection of the application for registration of the company in the Trade and Personal Property Credit Register. The declaration shall be signed by its authors. However, it may be signed by one of the said persons or several of them provided they are empowered to do so. Art. 74 : The provisions of the preceding article shall not apply where a notarial statement of subscription and payment has been drawn up and deposited under the conditions stipulated by this Uniform Act and by the Uniform Act relating to General Commercial Law. 258

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group CHAPTER 12. NON-RESPECT OF FORMALITIES - RESPONSIBILITES Art. 75 : Where the Articles of Association do not contain all the information stipulated by this Uniform Act or where a formality prescribed by this Act for the formation of the company is neglected overlooked or is improperly fulfilled, any interested party may petition the competent court within whose area of jurisdiction the company’s registered office is located to order, under financial compulsion, the proper formation of the company. The public prosecutor may also initiate action to the same end. Art. 76 : The provisions of Articles 73 and 74 of this Uniform Act shall apply in the case of amendment of the Articles of Association. Art. 77 : The action for regularization shall lapse after a period of three years from the date of registration of the company or from the date of publication of the deed amending its Articles of Association. Art. 78 : The founders, as well as the first members of the management organs of the company, directors or managing director shall be jointly and severally liable for torts deriving either from the omission of a mandatory detail in the Articles of Association, or from the omission or improper fulfilment of a prescribed formality in the formation of the company. Art. 79 : In the event of amendment of the Articles of Association, the members of the management organs, directors or managing directors in office at the time shall incur the same liabilities as those laid down in the preceding article. Art. 80 : The liability action provided in Articles 78 and 79 of this Uniform Act shall lapse after five years from the date of registration of the company or of publication of the act to amend the Articles of Association, as the case may be. TITLE 4. PUBLIC CALLS FOR CAPITAL CHAPTER 1. SCOPE OF PUBLIC CALLS FOR CAPITAL Art. 81 : The following shall be deemed to be making a public call for capital: companies whose shares are listed on the stock exchange of a Contracting State, from the date of registration of such shares; companies which, in order to offer any type of shares to the public in a Contracting State, resort to credit establishments or stock brokers, or use any form of publicity or canvassing. There shall equally be a public call for capital where the shares are distributed beyond a radius of one hundred (100) persons. In determining this figure, each company or collective bodies investing transferable securities shall be considered as a single entity. 259

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International Arbitration and Corporate Law Art. 82 : It shall be forbidden for companies not authorized by this Uniform Act to launch public calls for capital by registering their securities on the stock exchange of a Contracting State or by investing their shares as part of an issue. Art. 83 : The share offer referred to in Article 81 of this Uniform Act shall mean the investment of shares either in the form of an issue or a transfer. Art. 84 : A company whose registered office is located in a Contracting State may invest its shares in one or more other Contracting States by making public offers. In such case, it shall be subject to the provisions of Articles 81 to 96 of this Uniform Act in the Contracting State of its registered office and in said other Contracting States. Where the public offer of shares is not made by the issuer, the company making the offer shall be subject to the provisions of Articles 81 to 96 of this Uniform Act in the Contracting State of the issuer and in the other Contracting States where the public offer is made. Art. 85 : Where a company whose registered office is located in one Contracting State launches a public issue in another Contracting State, one or more credit establishments in that other Contracting State shall guarantee the proper performance of the operation where the total amount of the offer is more than fifty million (50 000 000) CFA francs. Such a company shall, in any case, be required to have financial backing for the operation from one or more credit establishments in that other Contracting State. Where the total amount of the operation exceeds 50,000,000 (fifty million) CFA francs, the company shall designate, from the list of auditors in that other Contracting State, one or more auditors to verify the financial statements. The auditor(s) shall sign the information document provided in Article 86 of this Uniform Act, amended or supplemented, as the case may be, in accordance with the provisions of Article 90 of this Uniform Act. CHAPTER 2. INFORMATION DOCUMENT Art. 86 : Any company which makes public calls for capital shall, first of all, publish in the Contracting State of the registered office of the issuer and, where necessary, in every other Contracting State where the call for capital is launched, a document aimed at informing the public and dealing with the organization, financial situation, activity and prospects of the issuer as well as the rights attached to the securities being offered to the public. Art. 87 : Where a company makes public calls for capital in a Contracting State other than that of its registered office, the information document presented to the authorities referred to in Article 90 of this Uniform Act shall contain information specific to the market of that Contracting State.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Such information shall, in particular, deal with the income tax schedule, the establishments which provide financial backing to the issuer in that Contracting State, and the manner of publication of notices intended for investors. The information document shall contain a detailed presentation of the financial guarantors referred to in Article 85 of this Uniform Act, who, in turn, shall provide the same information as the company whose securities are being offered, with the exception of information relating to the shares to be offered to the public. Art. 88 : Some information may not be included in the information document where: (1) such information is of lesser importance and is unlikely to influence the appraisal of the assets, financial situation, performance or prospects of the issuer; (2) disclosure of such information is contrary to public interest; (3) disclosure of such information may cause serious harm to the issuer and where failure to publish same would not mislead the public; (4) the person making the offer is not the issuer and does not have access to such information. Art. 89 : The investment memorandum may refer to any other information document approved by the authorities referred to in Article 90 of this Uniform Act less than one year before where the said document was drawn up for securities of the same category and contains the latest approved annual financial statements of the issuer and all the information required under Articles 87 and 88 of this Uniform Act. The approved investment memorandum shall then be supplemented by an operation memorandum comprising: (1) information on the shares offered; (2) any accounting data published after the initial approval; (3) data on new significant events likely to influence the evaluation of the shares being offered. Art. 90 : The draft information document shall be submitted for the approval of the stock exchange control authority in the Contracting State of the issuer’s registered office and, where necessary, in the other Contracting States in which the public calls for capital are made. Where there is no such authority, it shall be submitted to the minister in charge of finance of the Contracting States for endorsement. The said authorities shall ensure that the operation does not contain any irregularities and does not entail acts contrary to the interests of investors in the Contracting States of the issuer’s registered office and, where necessary, in the other Contracting States in which the public call is made. The authorities shall indicate the statements to be corrected or details to be included. They may also request explanations or justification, particularly as concerns the situation,

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International Arbitration and Corporate Law activity and performance of the company. They may request that the auditors carry out further investigations at the expense of the company, or a review by an independent expert designated with their approval, where they feel the auditors are not diligent enough. They may request that a warning drafted by them be included in the information document. They may also ask for any appropriate guarantees in pursuance of Article 85 of this Uniform Act. The authorities referred to in this article shall grant the approval provided for in paragraph one within a period of one month following the date of acknowledgement of receipt of the information document. This time limit may be extended to two months where the authorities request further investigations. The acknowledgement of receipt of the information document shall be issued on the day the document is received. Where the stock exchange control authority or, failing this, the minister in charge of finance decides not to grant the approval, the company shall be notified of the reasons therefor within the same time limit. Art. 91 : Approval shall not be granted where the demands made by the stock exchange control authority or, failing this, the minister in charge of finance of the Contracting State of the issuer’s registered office and, where necessary, of the other Contracting States in which the public calls for capital are not met, or where the operation entails acts contrary to the interests of the investors in the Contracting State of the registered office or, where necessary, of the other Contracting States where the public call is made. Art. 92 : Where important new events likely to affect the evaluation of the public issue occur between the date of approval and the beginning of the planned operation, the issuer or the initiator of the offer shall draw up an additional updated document which, before circulation, shall be submitted for approval to the stock exchange control authority or, failing this, the minister in charge of finance of the Contracting State of the issuer’s registered office and, where necessary, of the other Contracting States in which the public issue is launched. Art. 93 : The information document shall be effectively circulated in the following forms in the Contracting State of the issuer’s registered office and, where necessary, in the other Contracting States where the public call is made: (1) publication in newspapers empowered to publish legal notices; (2) placement of a brochure at the disposal of any person wishing to consult it at the registered office of the issuer and in the institutions providing financial backing for the securities; a copy of the document shall be sent free of charge to any interested party. Art. 94 : Advertisements of the operation shall mention the existence of the approved information document and how to obtain one.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 95 : An information document shall not be required where: (1) the offer is intended for persons within the framework of their professional activities; (2) the total amount of the offer is less than fifty million (50,000,000) CFA francs; (3) the offer concerns shares or stock of collective bodies investing transferable securities other than closed-end ones; (4) the offer is intended as transferable securities in return for contributions made during a merger or as partial contributions of capital; (5) the issue concerns capital stock allotted freely during the payment of dividend or capitalization of reserves; (6) the transferable securities offered come from the exercise of a right over transferable securities whose issue gave rise to the drawing up of an information document; (7) the transferable securities are issued as a substitute for shares in the same company and their issue does not entail an increase of capital by the issuer. Art. 96 : The provisions of Articles 81 to 96 of this Uniform Act shall apply to any offer of security by public calls for capital, except the investment of securities by each Contracting State on its territory. TITLE 5. REGISTRATION - LEGAL PERSONALITY CHAPTER 1. GENERAL PROVISIONS Art. 97 : With the exception of Sleeping partnerships, all companies shall be registered in the Trade and Personal Property Credit Register. Art. 98 : All companies shall have a legal personality with effect from the date of registration in the Trade and Personal Property Credit Register, unless otherwise provided for in this Uniform Act. Art. 99 : The regular transformation of a company from one form of company into another shall not entail the creation of a new legal entity. The same shall apply to an extension of the existence of a company or any other amendments of the Articles of Association. CHAPTER 2. COMPANIES UNDER FORMATION AND FULLY FORMED BUT UNREGISTERED COMPANIES Section 1. Definitions Art. 100 : A company shall be deemed to be under formation where it has not yet been incorporated. Art. 101 : A company shall be deemed to be formed from the date of signature of its Articles of Association. Prior to its registration, the existence of the company shall not be 263

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International Arbitration and Corporate Law demurrable to third parties. However, third parties may avail themselves of the existence of the company. Art. 102 : All persons who actively participate in transactions leading to the formation of a company shall be deemed to be founders thereof. Their role shall begin with the first transactions or with the performance of the initial acts for the purpose of setting up the company. It shall end on the date on which the Articles of Association are signed by all the partners or the sole proprietor. Art. 103 : The founders of a company shall be domiciled on the territory of one of the Contracting States. Such domicile shall not consist solely in the possession of a postal address. It shall comprise an address or specific and adequate geographic indications. Art. 104 : From the date of signature of the Articles of Association, company executives shall take over from the founders. Company executives shall act on behalf of the company already formed but not yet entered in the Trade and Personal Property Credit Register. The powers and obligations of company executives shall be defined in accordance with the provisions of this Uniform Act and, where necessary, by the Articles of Association. Art. 105 : Between the date on which a company is formed and that on which it is entered in the Trade and Personal Property Credit Register, relations among the partners shall be governed by the Partnership deed and by general rules of law in matters of contracts and obligations. Section 2. Commitments made on behalf the company under formation prior to its incorporation Art. 106 : Acts done and commitments entered into by the founders on behalf of a company under formation, before it is incorporated, shall be brought to the attention of the partners before signature of the Articles of Association where the company does not make a public call for capital during the initial meeting of shareholders, where the contrary applies. Such acts and commitments shall be detailed in a statement referred to as “Statement of acts done and commitments made on behalf of the company under formation”, with indications, for each of them, of the nature and extent of the company’s liabilities should it decide to take them over. Article 107 : In the case of companies formed without a constituent meeting, the statement of acts and commitments referred to in Article 106 above shall be appended to the

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Articles of Association. Where the partners sign the Articles of Association and the statement, the company shall be deemed to have taken over the contracts and commitments described in the statement with effect from the date the company is entered in the Trade and Personal Property Credit Register. Article 108 : Acts done and commitments entered into on behalf of the company during its formation may also be taken over by the company after its incorporation provided they are approved at an ordinary meeting of shareholders, under the conditions laid down by this Uniform Act for each form of company, unless otherwise provided for by the Articles of Association. The meeting shall be fully informed of the nature and scope of each of the acts and commitments being proposed for take-over by the company. The persons who signed such acts and commitments shall not vote and their votes shall not be taken into account in determining the quorum and the majority. Article 109 : In the case of a company formed by a constituent meeting, the take-over of pre-incorporation acts and commitments shall be the subject of a special resolution taken during the constituent meeting, under the conditions laid down by this Uniform Act. Article 110 : Acts and commitments taken over by a duly constituted and registered company shall be deemed to have been made by the company from the origin. Acts and commitments not taken over by the company under the conditions laid down by this Uniform Act shall not be binding on the company and the persons who made them shall have unlimited liability for the obligations they entail. Section 3. Commitments made on behalf of a fully formed company prior to its registration Article 111 : The partners may, in the Articles of Association or in a separate deed, grant powers to one or more company executives, depending on the case, to enter into commitments on behalf of the company which, though fully formed, has not yet been entered in the Trade and Personal Property Credit Register, provided that such commitments are defined and their scope specified in the terms of reference. The subsequent registration of the company in the Trade and Personal Property Credit Register shall entail the taking over of such commitments. Article 112 : Any acts done beyond the scope of their terms of reference or are unrelated to such terms may be taken over by the company provided they have been approved by an ordinary meeting of shareholders under the conditions laid down by this Uniform Act for each type of company, unless otherwise provided by the Articles of Association. The partners involved in such acts shall not be entitled to vote and their votes shall not be taken into account for determining the quorum and the majority.

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International Arbitration and Corporate Law Art. 113 : The provisions of Article 110 of this Uniform Act shall apply. CHAPTER 3. UNREGISTERED COMPANIES Art. 114 : Notwithstanding the preceding provisions, the partners may agree not to register the company which shall then be referred to as “Sleeping partnership”. It shall not have a legal personality. Sleeping partnership shall be governed by the provisions of Articles 854 et seq. of this Uniform Act. Art. 115 : Where, contrary to the provisions of this Uniform Act, the Articles of Association or, where necessary, the unilateral deed of intent is not established in writing and, consequently, that the company cannot be registered, the company shall be referred to as a “de facto company”. It shall not have a legal personality. A de facto company shall be governed by the provisions of Articles 864 et seq. of this Uniform Act. CHAPTER 4. BRANCHES Art. 116 : A branch shall be 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. Art. 117 : The branch shall not have a separate legal personality distinct from that of the parent company or the natural person who owns it. The rights and obligations arising from its activities or its existence shall be part of the estate of the company or the natural person who owns it. Art. 118 : The branch may be an establishment of a foreign company or natural person. Subject to international agreements or laws to the contrary, the branch shall be governed by the law of the Contracting State in which it is located. Art. 119 : The branch shall be registered in the Trade and Personal Property Credit Register in accordance with the provisions organizing the said register. Art. 120 : Where the branch is owned by a foreigner, it shall be attached to a company in existence or to be created, governed by the laws of one of the Contracting States not later that two years after the branch is set up, unless this obligation is waived by order of the minister in charge of trade in the Contracting State in which the branch is located.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group BOOK 2. FUNCTIONING OF A COMMERCIAL COMPANY TITLE 1. POWERS OF COMPANY EXECUTIVES GENERAL PRINCIPLES Art. 121 : Members of the management organs of the company, directors and managing directors shall, within the limits provided by this Uniform Act for each form of company, have full powers to commit the company with respect to third parties without having to show proof of a special instrument granting such powers. Any limitation of their legal powers by the Articles of Association shall not be demurrable to third parties. Art. 122 : The company shall be bound by the acts of its managers, directors and administrators which are unrelated to the company’s object, unless it can prove that the third party was aware of this fact, or that, given the circumstances, the third party could not have overlooked it; publication of the Articles of Association shall not alone suffice to constitute such proof. Art. 123 : With respect to relations between partners and subject to specific legal provisions for each form of company, the Articles of Association may limit the powers of managers, directors and administrators. Such limitations shall not be demurrable to third parties acting in good faith. Art. 124 : The appointment, dismissal or resignation of company executives shall be published in the Trade and Personal Property Credit Register. TITLE 2. JOINT DECISIONS - GENERAL PRINCIPLES Art. 125 : Unless otherwise provided by this Uniform Act, each partner shall have a right to participate in taking joint decisions. Any contrary provisions in the Articles of Association shall be deemed to be unwritten. Art. 126 : A partner may be represented by an authorized person under conditions laid down by this Uniform Act and, where necessary, by the Articles of Association. Unless otherwise provided by this Uniform Act, such powers of attorney may be granted only to another partner. This Uniform Act or the Articles of Association may restrict the number of partners and the number of votes an authorized person may represent. Art. 127 : Unless otherwise provided by the Articles of Association, joint owners of shares or stocks shall be represented by a single authorized person chosen from among the joint owners. Where there is disagreement, the authorized person shall, at the request of the

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International Arbitration and Corporate Law earliest petitioner, be appointed by the competent court within whose jurisdiction the registered office is located. Art. 128 : Unless otherwise provided by the Articles of Association, where a share or stock is encumbered by usufruct, voting rights shall be exercised by the bare owner, except in the case of decisions on the sharing of profits where the voting rights are reserved for the beneficiary. Art. 129 : The voting rights of each partner shall be proportional to the company shares he holds, unless otherwise provided by this Uniform Act. Art. 130 : Joint decisions may be annulled for undue use of the majority powers and may commit the partners who voted for them vis-à-vis the minority shareholders. There shall be undue use of the majority powers when the majority shareholders vote in favour of a decision which serves solely their interests, goes contrary to the interests of the minority shareholders, and cannot be justified in terms of the company’s interests. Art. 131 : Minority partners may be liable in the event of undue use of minority powers. There shall be undue use of minority powers where, in voting, minority shareholders object to decisions which are necessary for the company’s interests and cannot show any legitimate interest in doing so. Art. 132 : There shall be two kinds of joint decisions: ordinary decisions and extraordinary decisions. Joint decisions shall be taken in accordance with conditions of form and substance provided for each form of company. Art. 133 : Under the conditions specified for each form of company, joint decisions may be reached either at a general meeting or by correspondence. Art. 134 : Meetings of partners shall be recorded in minutes which shall indicate the time and place of the meeting, the full names of the partners in attendance, the agenda of the meeting, documents and reports tabled for discussion, a summary of the discussions, the text of resolutions put to the vote and the outcome of such voting. The minutes shall be signed under the conditions provided by this Uniform Act for each form of company. In case of a written consultation, mention shall be made of that fact in the minutes to which shall be appended the reply of each partner and which shall be signed in accordance with the conditions laid down by this Uniform Act for each form of company.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 135 : Unless otherwise provided in this Uniform Act, the minutes referred to in Article 134 above shall be entered in a special register kept at the registered office and shall be numbered and initialled by the competent judicial authority. However, minutes may be recorded in serially numbered loose sheets of paper initialled as provided in the preceding paragraph and bearing the seal of the authority who initialled them. Once a sheet has been used , even partially, it shall be attached to the other used sheets. It shall be forbidden to add, expunge or invert the order of used sheets. Art. 136 : Minutes shall be filed at the company’s registered office. Copies or extracts of minutes of partners’ meetings shall be duly certified by the company’s legal representative, or where there are several, by only one of them. TITLE 3. ANNUAL SUMMARY FINANCIAL STATEMENTS ALLOCATION OF EARNINGS CHAPTER 1. ANNUAL SUMMARY FINANCIAL STATEMENTS Section 1. Principle Art. 137 : At the end of each financial year, the manager, the board of directors or the managing director, as the case may be, shall prepare and adopt summary financial statements in accordance with the provisions of the Uniform Act governing the organization and harmonization of accounting systems. Section 2. Approval of annual summary financial statements Art. 138 : The manager, board of directors or the managing director, as the case may be, shall prepare a management report in which he shall describe the situation of the company during the past financial year, prospects for continued company activity, the evolution of the cash situation and the financing plan. Art. 139 : The following shall be appended to the annual summary financial statements: (1) a statement on sureties, securities and guarantees granted by the company; (2) a statement of the secured debts offered by the company. Art. 140 : Annual summary financial statements and the management report of public limited companies and, where necessary, of private limited companies shall be forwarded to auditors at least forty-five days before the date of the ordinary general meeting. These documents shall be tabled before the general meeting of the company which shall examine the annual summary financial statements at a session which must hold within six months from the end of the financial year.

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International Arbitration and Corporate Law Art. 141 : Any changes in the presentation of summary financial statements or in the methods of evaluation, depreciation or provision in conformity with accounting rules and regulations shall be indicated in the management report and, where necessary, in the auditor’s report. CHAPTER 2. RESERVES - DISTRIBUTABLE PROFITS Art. 142 : The general meeting shall decide on the appropriation of income in compliance with the provisions of the law and of the Articles of Association. It shall make the necessary allocations for the legal reserve and for statutory reserves. Art. 143 : The distributable profits shall be the income of the trading year, to which shall be added income brought forward less past losses and appropriations for reserves in accordance with the provisions of the law or of the Articles of Association. The general meeting may, under the conditions set forth in the Articles of Association, decide to distribute all or part of the company’s reserve funds, provided such reserves are not classified undistributable by the law or the Articles of Association. In such case, the general meeting shall specify the reserve items from which funds shall be drawn. Except in the case of reduction of capital, no distribution of reserves to partners may be authorized where the equity capital is or may be following such distribution, lower than the capital plus reserves which may not be distributed according to the law or the Articles of Association. CHAPTER 3. DIVIDENDS Art. 144 : After approving the summary financial statements and ascertaining the availability of distributable funds, the general meeting shall also determine: - appropriations for optional reserves, where necessary; - the part of the profits to be allotted to shares and to stocks, as the case may be; - the amount to be carried forward, if any. - The amount of the profits allotted to each share or stock shall be referred to as dividend. - Any dividend distributed in violation of the rules set forth in this article shall be fictitious. Art. 145 : The Articles of Association may allow the allotment of a first dividend to be paid on company stocks where the general meeting establishes the existence of distributable profits, provided that such profits are sufficient to cover such payments. Dividend shall be calculated as interest on the amount of paid-up shares.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 146 : The conditions for the payment of dividends shall be laid down by the general meeting. The general meeting may delegate such power to the manager, the chairman and managing director, the general manager or the managing director, as the case may be. Notwithstanding the above provision, the payment of dividend shall be done within a maximum period of nine months following the end of the financial year. This deadline may be extended by the president of the competent court. CHAPTER 4. DISPUTES BETWEEN PARTNERS OR BETWEEN ONE OR MORE PARTNERS AND THE COMPANY Art. 147 : Any dispute between partners or between one or more partners and the company shall be brought before a competent court of law. Art. 148 : The dispute may be referred for arbitration either through an arbitration clause, which may be statutory or not, or by compromise. Where the parties so decide, the arbitrator or the arbitration tribunal, as the case may be, may pass a ruling as conciliator and without appeal. Art. 149 : The arbitration shall be regulated by the provisions of the Uniform Act on arbitration. TITLE 4. ALERT PROCEDURE CHAPTER 1. ALERT BY THE AUDITOR Section 1. Companies other than public limited companies Art. 150 : In companies other than public limited liability companies, the auditor may, by hand delivered letter against a receipt, or by registered letter with a request for acknowledgement of receipt, ask for explanations from the manager who shall be bound to respond, in accordance with the conditions and within the time limits set forth in the following articles, in respect of any matter likely to jeopardize the continued operation of the company and which the auditor noticed while examining documents forwarded to him or those he had access to in the performance of his duties. Art. 151 : The manager shall reply by hand-delivered letter against a receipt or by registered mail with a request for acknowledgement of receipt, within one month after receiving the auditor’s request. In his reply, the manager shall give an analysis of the situation and specify, where necessary the measures envisaged.

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International Arbitration and Corporate Law Art. 152 : In case of failure to comply with the provisions of Article 151 above, or where, in spite of the decisions taken, the auditor establishes that the continued operation of the company is still in jeopardy, he shall prepare a special report on the situation. He may request, by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt, that such special report be circulated to partners, or that it be tabled at the next general meeting. In such case, the manager shall circulate the said special report within eight days from the date of receipt of the auditor’s request. Section 2. Public Limited companies Art. 153 : In a public limited company, the auditor may, by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt, ask for explanations from the chairman of the board of directors the chairman and managing director or managing director, as the case may be, who shall be bound to reply under the conditions and within the time limits set forth in Article 154 below, on any matter likely to jeopardize the continued operation of the company and which the auditor noticed while examining documents forwarded to him or those to which he had access in the course of performing his duties. Art. 154 : The chairman of the board of directors, the chairman and managing director or the managing director, as the case may be, shall reply by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt, within one month after receiving the auditor’s request. In his reply he shall give an analysis of the situation and specify, where necessary, the measures envisaged. Art. 155 : Where there is no reply or where the reply is unsatisfactory, the auditor shall ask the chairman of the board of directors or the chairman and managing director as the case may be to convene a meeting of the board or the managing director to give an opinion on the matters raised. The invitation referred to in the preceding paragraph shall be in the form of a hand- delivered letter against a receipt or registered letter with a request for acknowledgement of receipt dispatched within fifteen days after receiving the reply of the chairman of the board of directors, the chairman and managing director, or the managing director, as the case may be, or the observation that there is no reply within the time limits provided in the preceding article. The chairman of the board of directors or the chairman and managing director, as the case may be, shall, within fifteen days from the date of receipt of the auditor’s letter, convene the board of directors to decide on the matters raised within one month following receipt of the auditor’s letter. The auditor shall be invited to the meeting of the board of directors. Where the company is administered by a managing director, he shall, within the same

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group time limit, invite the auditor to a meeting at which he shall give his opinion on the matters raised. An extract of the minutes of the board of directors’ meeting or of the meeting with the managing director, as the case may be, shall be forwarded to the auditor within one month following the meeting. Art. 156 : In case of failure to comply with the provisions of the preceding article, or where, in spite of the decisions taken, the auditor establishes that the continued operation of the company is still in jeopardy, he shall prepare a special report which shall be presented at the next general meeting or, in case of an emergency, at a general meeting of shareholders which the auditor himself shall convene to submit his findings if he fails to obtain the convening of the meeting by the board of directors or the managing director, by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt. Where the auditor convenes such a meeting, he shall prepare the agenda and may, for decisive reasons, choose a place for the meeting other than that provided in the Articles of Association. He shall, in a report presented at the meeting, explain why he convened the meeting CHAPTER 2. ALERT BY THE PARTNERS Section 1. Companies other than public limited companies Art. 157 : In companies other than public limited companies, any partner who is not a manager may, two times a year, send written questions to the manager on any matters likely to jeopardize the continued operation of the company. The manager shall reply to such questions in writing within one month, in accordance with the preceding paragraph. He shall forward copies of such questions and his reply within the same time limit to the auditor, if there is one. Section 2. Public limited companies Art. 158 : In a public limited company, any shareholder may, two times per year, question the chairman of the board of directors, the chairman and managing director or the managing director, as the case may be, on matters likely to jeopardize the continued operation of the company. The reply shall be forwarded to the auditor. The chairman of the board of directors, the chairman and managing director or the managing director, as the case may be, shall, within one month, reply to the question(s) in writing, in pursuance of the provisions of the preceding paragraph. He shall forward a copy of the question(s) and his reply to the auditor within the same time limit.

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International Arbitration and Corporate Law TITLE 5. MANAGEMENT EVALUATION Art. 159 : One or more partners holding at least one-fifth of the company’s authorized capital may, either individually or as a group formed in any manner, petition to the president of the competent court of the registered office of the company to designate one or more experts to make a report on one or more management operations. Art. 160 : Where such a request is granted, the judge shall determine the scope of the mission and the extent of the powers of the experts. The experts’ fees shall be borne by the company. The report shall be forwarded to the applicant and to the management, supervisory and administrative structures of the company. BOOK 3. THE CIVIL LIABILITY OF COMPANY EXECUTIVES TITLE 1. INDIVIDUAL SUITS Art. 161 : Without prejudice to subsequent liability of the company, each company executive shall be individually liable to third parties for torts committed in the performance of his duties. Where several company executives are involved in the commission of the tort, they shall be jointly and severally liable to third parties. However, as concerns the relations among the executives, the commercial court shall determine the share to be borne by each of them in apportioning damages to be paid. Art. 162 : An individual suit shall be an action for damages for an injury suffered by a third party or by a partner, where the latter suffers injury distinct from that which might be suffered by the company as a result of torts committed individually or collectively by company executives in the performance of their duties. Such action shall be instituted by the person who suffered the injury. Art. 163 : The filing of an individual suit shall not bar a partner or several partners from instituting an action in the interest of the company for damages for injury the company might have suffered. Art. 164 : The competent court handling such action shall be the one within whose jurisdiction the registered office of the company is located. Individual suits shall lapse after three years following the commission of the wrong, or following its disclosure where the wrong was hidden. For felonies, the prescription shall be ten years.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group TITLE 2. ACTIONS IN THE INTEREST OF THE COMPANY Art. 165 : Each company executive shall be individually liable to the company for torts committed in the performance of his duties. Where several company executives are party to the same wrongs, the commercial court shall determine the share to be borne by each executive in apportioning damages payable under the conditions provided by this Uniform Act for each form of company. Art. 166 : Actions in the interest of the company is action for damages suffered by the company as a result of a tort committed by a company executive or executives in the performance of their duties. Such action shall be instituted by the company executives under the conditions provided by this Uniform Act for each form of company. Art. 167 : One or more partners may institute action in the interest of the company of after serving a formal notice to the competent bodies to which they fail to react within a time limit of thirty days. The applicants have ability to sue for damages for injury suffered by the company. In the event of a sentence, damages shall be awarded to the company. Art. 168 : Any clause in the Articles of Association which subjects the institution of action in the interest of the company to the prior notification or authorization of the general assembly, the company’s management, supervisory or administrative structures, or which prescribes in advance a renunciation of the right to such action shall be deemed to be unwritten. This provision shall not bar a partner or partners who have instituted action from reaching an arrangement with the person or persons against whom action has been brought for the purpose of settling the dispute. Art. 169 : No decision of the meeting of partners, or of the company’s management, supervisory or administrative structure may extinguish a civil liability action brought against company executives for a tort committed in the performance of their duties. Art. 170 : The court before which the action shall be brought shall be one within whose jurisdiction the registered office of the company is situated. An action in the interest of the company shall be barred after three years following commission of the tort, or following its disclosure where the tort was hidden. For felonies, the prescription shall be ten years. Art. 171 : Charges and fees resulting from an action in the interest of the company shall be borne by the company where the action is brought by one or several partners.

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International Arbitration and Corporate Law Art. 172 : Institution of an action in the interest of the company shall not bar a partner from bringing action against the company for damages for an injury he might have personally suffered. BOOK 4. LEGAL LINKS BETWEEN COMPANIES TITLE 1. CONSORTIUMS Art. 173 : A consortium is a group formed by companies bound to one another by various relations which allow one of them to control the others. Art. 174 : To have control over a company shall mean to effectively hold decision-making power within the company. Art. 175 : A natural person or corporate body shall be deemed to have control over a company where: (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. TITLE 2. INVESTING IN ANOTHER COMPANY Art. 176 : Where a company holds not less than 10% of the capital of another company, the former shall, under this Uniform Act, be deemed to hold equity participation in the latter. Art. 177 : A public limited company or 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. Art. 178 : Where a company other than a public limited company or a private limited company has amongst its partners a public limited 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 public limited 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 public limited company or private limited company. 276

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group In the two cases provided under this article, where a company other than a public limited company or a private limited company already holds shares in the said public limited 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. TITLE 3. PARENT COMPANY AND SUBSIDIARY Art. 179 : A company shall be 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. Art. 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. BOOK 5. TRANSFORMATION OF A COMMERCIAL COMPANY Art. 181 : The transformation of a company shall be an operation whereby the company changes its legal form by decision of its partners. The normal transformation of a company shall not result in the creation of a new corporate body. It shall merely constitute an amendment of the Articles of Association and shall be subject to the same conditions of form and time limits as the company, subject to the provisions below. Nevertheless, the transformation of a company in which the partners’ liability is limited to their contributions into one in which their liability is unlimited shall be decided upon unanimously by the partners. All provisions to the contrary shall be deemed to be unwritten. Art. 182 : The transformation shall take effect from the day the decision to record it is taken. However, it may only be invoked against third parties after compliance with the publication formalities provided in Article 265 of this Uniform Act. Transformation shall have no retrospective effect. Art. 183 : The transformation of the company shall not entail the closing of accounts where it occurs in the course of the fiscal year, unless otherwise decided by the partners. The summary financial statements of the fiscal year during which the transformation took place shall be adopted and approved according to the rules governing the new legal form of the company. The same shall apply to the sharing of profits. 277

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International Arbitration and Corporate Law Art. 184 : The transformation decision shall put an end to the powers of the administrative or management organs of the company. Persons who were members of such organs may claim damages for the transformation, or the cancellation thereof only where such transformation was decided with the sole aim of infringes their rights. Art. 185 : The management report shall be prepared by the former and the new management organs, each for its own management period. Art. 186 : The rights and obligations contracted by the company under its old form shall remain valid under its new form. The same shall apply to guarantees, unless otherwise provided in the instrument providing the guarantees. In case of transformation of a company in which the partners’ liability is unlimited into one in which their liability is limited to their shares, creditors whose claims are prior to such transformation shall maintain their rights over the company and the partners. Art. 187 : The transformation of a company shall not terminate the duties of the auditor where the new corporate form requires the appointment of an auditor. However, where such an appointment is not required, the auditor’s duties shall end with the transformation, unless the partners decide otherwise. The auditor whose duties end pursuant to the provisions paragraph two of this article shall nevertheless report on his activities for the period between the beginning of the financial year and the date of cessation of his duties to the meeting of shareholders convened to adjudicate on the accounts of the fiscal year during which the transformation took place. Art. 188 : Where, after transformation, the company no longer has any of the corporate forms provided in this Uniform Act, it shall lose its legal personality where it engages in any commercial activity. BOOK 6. MERGER-SCISSION PARTIAL TRANSFER OF ASSETS Art. 189 : A merger shall be the operation whereby two companies merge to form a single company either by creating a new company or by one company acquiring the other. A company, even under liquidation, may be acquired by another company or may participate in the incorporation of a new company through a merger. A merger shall entail the universal transfer to the acquiring company or the new company, of the assets of the company or companies which cease to exist as a result of merger.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 190 : A scission shall be the operation whereby the assets of a company are shared among several existing or new companies. A company may transfer its assets through a scission to existing or new companies. A scission shall entail the universal transfer to existing or new companies of the assets of the company which ceases to exist as a result of the scission. Art. 191 : A merger or scission shall entail the dissolution without liquidation of the disappearing companies, and the universal transfer to the beneficiary companies of their assets in the state in which they are on the date of wrapping up of the operation. The operation shall simultaneously lead to the acquisition by partners of the disappearing companies of the status of partner in the beneficiary companies under conditions laid down in the merger or scission contract. The partners may eventually receive, in exchange for their contributions, a complementary financial payment which shall not exceed ten per cent of the exchange value of the shares or stocks allotted them. However, shares or stocks in the beneficiary company may not be exchanged for the shares or stocks of the disappearing company when such shares or stocks are held either by: (1) the beneficiary company or a person acting in his own name but on behalf of the said company; or (2) the dissolved company or a person acting in his own name but on behalf of the said company. Art. 192 : A merger or a scission shall take effect: (1) in case of the creation of one or more new companies, on the date of registration of the new company or of the last of the companies in the Trade and Personal Property Credit Register; each of the new companies shall be formed according to the rules governing the form of company adopted. (2) in other cases, on the date of the last general meeting which approved the operation, unless the contract provides that the operation shall take effect on another date, which shall not be later than the closing date of the current fiscal year of the beneficiary company or companies, or earlier than the closing date of the last fiscal year of the company or companies transferring their assets. Art. 193 : All the companies involved in a merger or a scission operation shall prepare a draft merger or scission document which shall be adopted by the board of directors, the managing director or the manager(s), as the case may be, of each of the companies involved in the operation. The said document shall contain the following information: (1) the form, name and registered office of all the participating companies; (2) the reasons and terms of the merger or scission;

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International Arbitration and Corporate Law (3) a description and an evaluation of the assets and liabilities to be transferred to the acquiring or new companies; (4) the terms of transfer of the shares or stocks and the date from which such shares or stocks give entitlement to profits, as well as any special conditions relating to such entitlement, and the date from which the operations of the acquired or split company shall be considered completed from the accounting standpoint by the companies receiving the contributions; (5) the dates on which the accounts of the companies concerned which were used to establish the terms of the operation were adopted; (6) the report on the exchange of company entitlements and, where necessary, the amount of the cash adjustment; (7) the projected amount of the merger or scission bonus; (8) the rights other than shares, the rights granted to partners having special rights, as well as special benefits, where necessary. Art. 194 : The draft merger or scission document shall be deposited at the registry of the commercial court of the registered offices of the said companies and shall be the subject of a notice from each of the companies involved in the operation published in a newspaper empowered to publish legal notices. Such notice shall contain the following information: (1) for each of the companies involved in the operation, the company name followed, where necessary, by its acronym, the form, registered office address, the amount of registered capital and the registration numbers in the Trade and Personal Property Credit Register; (2) the company name followed, where necessary, by its acronym , the form, registered office address and the amount of the registered capital of the new company or companies which will emerge from the operation or the capital of existing companies; (3) an evaluation of the assets and liabilities to be transferred to the acquiring or new companies; (4) the report on the exchange of company entitlements; (5) the projected amount of the merger or scission bonus. The deposit at the registry and publication provided for in this article shall take place not later than one month prior to the date of the first general meeting convened to decide on the operation. Art. 195 : The partial transfer of assets shall be an operation whereby a company transfers an autonomous branch of activity to a pre-existing or future company. The company transferring the assets shall not cease to exist as a result of such a transfer. Partial transfer of assets shall be subject to the rules governing scissions.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 196 : Unless otherwise provided for in this Uniform Act, mergers, scissions and partial transfers of assets may take place between companies of different forms. Art. 197 : Such transactions shall be decided, for each of the companies concerned, under the conditions stipulated for amendment of the Articles of Association and according to the procedures laid down for increase of capital and dissolution of a company. However, where the proposed transaction leads to an increase in the commitments of the partners or shareholders of one or more companies involved, it may only be decided unanimously by the said partners or shareholders. Art. 198 : Under penalty of being declared null and void, the companies taking part in a merger, scission or partial transfer of assets shall be required to deposit at the court registry a statement in which they review all the actions taken towards the conclusion of the transaction and by which they affirm that the transaction was carried out in conformity with this Uniform Act. Art. 199 : The merger, scission and partial transfer of assets may concern companies whose registered office is not located in the territory of one and the same Contracting State. In such case, each company concerned shall be subject to the provisions of this Uniform Act in the Contracting State of its registered office.

BOOK 7. DISSOLUTION - LIQUIDATION OF A COMMERCIAL COMPANY TITLE 1. DISSOLUTION OF THE COMPANY CHAPTER 1. CAUSES OF DISSOLUTION Art. 200 : A company shall come to an end : (1) on the expiry of the period for which it was formed ; (2) on the realization or extinction of its object ; (3) on the annulment of the company’s partnership deed ; (4) on the decision of the partners under the conditions provided for amending the Articles of Association ; (5) upon its premature dissolution pronounced by the competent court at the request of a partner for justified reasons, notably in the case of non-performance by a partner of his obligations or misunderstanding between partners hampering the normal functioning of the company ; (6) through a court judgement ordering the liquidation of the company’s assets ; (7) for any other reason provided by the Articles of Association.

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International Arbitration and Corporate Law CHAPTER 2. EFFECTS OF DISSOLUTION Art. 201 : Dissolution of a company shall have an effect on third parties only with effect from its publication in the Trade and Personal Property Credit Register. Dissolution of a multi-partner company shall as of right entail liquidation of the company. The legal personality of the company shall continue to exist for liquidation purposes until the liquidation procedure is completed. Dissolution of a company in which all the shares are held by one person shall entail a total transmission of the assets and liabilities of the company to such person without resorting to liquidation. Creditors may object to the liquidation before the competent court within a period of thirty days following its publication. The court shall reject the objection or order the settlement of debts or the provision of guarantees if the company offers any and if they are deemed sufficient. The transmission of the assets and liabilities and the winding up of the company shall be effective only after the expiry of the time limit for objection or where the objection has been declared inadmissible or if the settlement of debts has been effected or guarantees provided. Art. 202 : The dissolution shall be published through a notice in a newspaper empowered to publish legal notices of the place of the registered office by depositing the acts or reports deciding or recording the dissolution at the court registry and by an amendment of the entry in the Trade and Personal Property Credit Register. TITLE 2. LIQUIDATION OF A COMMERCIAL COMPANY CHAPTER 1. GENERAL PROVISIONS Art. 203 : The provisions of this chapter shall apply where liquidation of the company is effected out of court in accordance with the Articles of Association. They shall equally apply where liquidation is ordered by a court decision. However, they shall not apply where liquidation is effected within the framework of the provisions of the Uniform Act relating to the collective proceedings for the wiping up of debts. Art. 204 : The company shall be under liquidation as soon as it is dissolved for any reason whatsoever. The words “company under liquidation” as well as the name(s) of the liquidator(s) shall be included in all the acts and documents issued by the company to third parties, in particular on all letters, invoices, notices and various publications. Art. 205 : The company shall continue to exist as a corporate body for the purpose of ­liquidation until publication of completion of the liquidation process.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 206 : Where liquidation is decided upon by the partners, one or more liquidators shall be appointed : (1) unanimously by the partners in case of a private company ; (2) unanimously by the general partners and by the majority capital of partners in case of a sleeping partnership ; (3) by the majority capital of partners in case of a private limited company ; (4) under the quorum and majority conditions provided for extraordinary general meetings in case of a public limited company. Art. 207 : The liquidator may be chosen from among the partners or third parties. The liquidator may be a corporate body. Art. 208 : Where the partners are unable to appoint a liquidator, he may be designated by a court decision at the request of any interested party as provided for under Articles 226 and 227 of this Uniform Act. Art. 209 : Unless otherwise provided for by the appointment act, where several liquidators are appointed, they may exercise their duties separately. However, they shall prepare and present a joint report. Art. 210 : The fees of the liquidator shall be fixed by decision of the partners or of the court designating him. Art. 211 : The liquidator may be dismissed and replaced in accordance with the conditions provided for his appointment. However, any partner may petition to the court for the dismissal of the liquidator where such petition has legitimate grounds. Art. 212 : The act appointing the liquidator shall be published according to the conditions and time limits stipulated in Article 266 of this Uniform Act. The appointment and dismissal of the liquidator shall be demurrable to third parties only with effect from the date of publication. Neither the company nor third parties shall rely on irregularity of the appointment or dismissal of the liquidator to evade from their commitments once such act has been duly published. Art. 213 : Except upon the unanimous consent of the partners, the transfer of all or part of the assets of a company under liquidation to a person who has had in the company the capacity of partner in name, active partner, manager, member of the board of directors,

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International Arbitration and Corporate Law managing director or auditor may not take place except with the authorization of the competent court, the liquidator and the auditor after having been heard. Art. 214 : It shall be forbidden to transfer all or part of the assets of a company under liquidation to the liquidator, his employees or their spouses, ascendants or descendants. Art. 215 : The transfer of all the assets of a company or the assignment of the assets to another company, notably through a merger, shall be authorized : (1) in private companies, unanimously by the partners ; (2) in limited sleeping partnerships, unanimously by the general partners and by the majority capital of limited partners ; (3) in private limited companies, by the majority required to amend the Articles of Association ; (4) in public limited companies, under the conditions of quorum and majority required for extraordinary general meetings. Art. 216 : The liquidation shall be closed within a period of three years from the date of dissolution of the company. Failing this, the public prosecutor’s office or any interested party may bring an action before the competent court within whose jurisdiction the registered office of the company is located for the liquidation of the company or, where the liquidation has started, for it to be completed. Art. 217 : The partners shall be convened at the end of the liquidation to take a decision on the final accounts, the discharge of the liquidator in respect of the performance of his duties and of the terms of reference and to record the close of the liquidation. Failing this, any partner may petition to the president of the competent court, ruling in summary proceedings, to designate a representative to convene the members. Art. 218 : Where the meeting to close liquidation provided for in the preceding article fails to take decision or where it refuses to approve the liquidator’s accounts, the competent court shall rule on the accounts and, where necessary, on the close of the liquidation in place of the meeting or partners, at the request of the liquidator or any interested party. In such case, the liquidator shall submit his accounts at the registry of the commercial court where any interested party may examine them and obtain a copy thereof at his expense. Art. 219 : The final accounts drawn up by the liquidator shall be deposited at the registry of the court in charge of commercial matters, as an annex in the Trade and Personal Property Credit Register.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group The decision of the meeting of partners on the liquidation accounts, the discharge of the liquidator in respect of the performance of his duties and of the terms of reference, or, failing this, the court decision referred to in the preceding article shall be appended to the Trade and Personal Property Credit Register. Art. 220 : Upon justification of compliance with the formalities provided for in the preceding article, the liquidator shall request the removal of the company from the Trade and Personal Property Credit Register within a period of one month from the date of publication of the close of liquidation. Art. 221 : The liquidator shall be liable to the company as well as third parties for the actionable wrongs resulting from any errors made by him in the exercise of his duties. Liability action by the company or an individual against the liquidator shall lapse within a period of three years from the date of commission of the actionable wrong, or, where it was hidden, from the date of its disclosure. However, where the act amounts to a felony, the action shall lapse within a period often years. Art. 222 : Any action against partners who are not liquidators or their surviving spouses, next-of-kin or assigns shall lapse within a period of five years from the date of publication of the company’s dissolution in the Trade and Personal Property Credit Register. CHAPTER 2. PROVISIONS SPECIFIC TO COURT-ORDERED LIQUIDATION Art. 223 : In the absence of clauses in the Articles of Association or an express agreement between the parties, the liquidation of the dissolved company shall be carried out in accordance with the provisions of this chapter, without prejudice to the provisions of the preceding chapter. Furthermore, a competent court through in summary proceedings may order that the liquidation shall be carried out under the same conditions at the request of : (1) the majority of members in private companies ; (2) partnqers representing not less than one-tenth of the capital in the other forms of companies having legal personality ; (3) the company’s creditors ; (4) the representative of the bondholders’ group. The partners may agree that the provisions of Articles 224 to 241 of this Uniform Act shall be applicable where they decide on the liquidation of the company out of court. Art. 224 : The powers of the board of directors, the managing director or the executives shall end with effect from the court decision ordering the liquidation of the company.

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International Arbitration and Corporate Law Art. 225 : The dissolution of the company shall not put an end to the duties of the auditor. Art. 226 : The court decision ordering the liquidation of the company shall designate one or more liquidators. Art. 227 : The duration of the liquidator’s mandate may not exceed three years, renewable by court decision at the request of the liquidator. In his application for renewal, the liquidator shall state the reason why the liquidation has not been closed, the measures he intends to take and the time needed to complete the liquidation. Art. 228 : Within a period of six months from the date of his appointment, the liquidator shall convene a meeting of partners where he shall give a report on the assets and liabilities of the company, his execution of the liquidation exercise and the time needed to complete the exercise and shall also where necessary, request any authorizations he may need. The meeting shall take decisions under the conditions of quorum and majority provided for in this Uniform Act, for each form of company, for the amendment of the Articles of Association. The period within which the liquidator shall draw up his report may, at his request, be extended to twelve months by court decision. Failing this, the meeting shall be convened by a court-appointed representative at the request of any interested party. Art. 229 : Where it has been impossible for the general meeting to hold or to reach a decision, the liquidator shall petition to the court for the necessary authorizations to bring about the liquidation. Art. 230 : The liquidator shall represent the company which he shall commit for all liquidation proceedings. He shall have the widest powers possible to realize the assets, even out of court. Any restrictions to these powers in the Articles of Association or in the appointment deed shall not binding on third parties. Art. 231 : The liquidator shall be empowered to pay creditors and share the balance available among the partners. He may not pursue any ongoing affairs or start new ones for the purposes of the liquidation unless he has been so authorized by a court decision. Art. 232 : Within three months following the close of each fiscal year, the liquidator shall draw up annual summary financial statements from the inventory made of various

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group components of the assets and liabilities existing on that date and a written report in which he shall give an account of the liquidation exercise during the just-ended fiscal year. Art. 233 : Except in the case of a waiver by the president of the competent court through in summary proceedings, the liquidator shall convene, according to the procedure laid down in the Articles of Association, at least once a year and within a period of six months following the close of the fiscal year, a meeting of the partners which shall decide on the annual summary financial statements, grant the necessary authorizations and, as the case may be, renew the mandate of office of the auditor. Where the meeting has not taken place, the written report of the liquidator shall be deposited at the registry of the commercial court. Art. 234 : During the liquidation period, the members may receive the company documents under the same conditions as before. Art. 235 : The decisions referred to in Article 233 of this Uniform Act shall be taken : (1) unanimously by the partners in private companies ; (2) unanimously by the general partners and by the majority capital of partners in sleeping partnerships ; (3) by majority capital of partners in private limited companies ; (4) under the conditions of quorum and majority required for extraordinary general meetings in public limited companies. Where the required majority cannot be reached, the president of the competent court shall decide through summary proceedings at the request of the liquidator or any interested party. Where the decision entails amendment of the Articles of Association, it shall be taken under the conditions laid down by this Uniform Act for each form of company. Partners who are liquidators shall take part in the vote. Art. 236 : Where the company continues in business, the liquidator shall convene a meeting of partners under the conditions provided for in Article 233 of this Uniform Act. Failing this, any interested party may request for the convening of the meeting by the auditor or a representative designated by the president of the competent court through summary proceedings. Art. 237 : Unless otherwise provided in the Articles of Association, the sharing of shareholders’ equity subsisting after reimbursement of the face value of shares or company stocks shall be done among partners in the same proportions as their shares in the registered capital.

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International Arbitration and Corporate Law Art. 238 : Any decision to share funds shall be published in the newspaper empowered to publish legal notices in which the publication provided under Article 266 of this Uniform Act was made. The decision shall be notified individually to the holders of registered shares. Art. 239 : The sums allocated for sharing among the partners and creditors shall be deposited within a period of fifteen days following the decision to share the funds, in an account opened in a bank domiciled in the Contracting State of the registered office in the name of the company under liquidation. Where there are many liquidators, the sums may be signed out by one liquidator under his responsibility. Art. 240 : Where the sums allotted to the creditors or partners have not been paid out, they shall be deposited upon the expiry of a period of one year following the close of the liquidation in a receiver’s account opened in the Public Treasury. Art. 241 : The liquidator shall, subject to the rights of the creditors, decide on the advisability of distributing available funds in the course of the liquidation. Where formal notice to the liquidator to share the funds remains unheeded, any interested party may petition to the president of the competent court through summary proceedings to rule on the appropriateness of sharing of funds in the course of liquidation. BOOK 8. NULLITY OF A COMPANY AND COMPANY ACTS Art. 242 : Nullity of a company or of all acts, decisions or deliberations amending the Articles of Association may only result from an express provision of this Uniform Act or from the laws governing the nullity of contracts in general and the Articles of Association of companies in particular. Incomplete stating of the information which should be included in the Articles of Association shall not entail nullity of the company. Art. 243 : Nullity of private limited companies and public limited companies, may not arise from lack of consent or from incapacity of a partner, unless such incapacity affects all the founding partners. Art. 244 : Nullity of all acts, decisions or deliberations not amending the company’s Articles of Association may only arise from a mandatory provision of this Uniform Act, the laws governing contracts or the company’s Articles of Association. Art. 245 : In sleeping partnerships or private companies, compliance with the formalities of publication shall be compulsory under penalty of nullity of the company, acts, decisions

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group or deliberations, as the case may be, with no possibility for the members and the company to rely on the cause of the nullity as against third parties. However, the court shall have the option not to pronounce the nullity of the company where no fraud has been recorded. Art. 246 : An action for nullity shall be extinguished where the cause of nullity has ceased to exist on the day the court gives a ruling on the merits of the case at first instance, unless such nullity is based on the unlawfully nature of the company’s object. Art. 247 : The court before which an action for nullity is brought may, even automatically, fix a time limit to enable the nullity to be repaired. It may not pronounce the nullity in less than two months after the date of the writ bringing the action. Where, in order to repair a nullity, a meeting must be convened and where the normal convening of such meeting is justified, the court shall, by judgment, grant the time needed for the partners to take a decision. Where, on the expiry of the time limit provided for under the preceding paragraphs, no decision has been taken, the court shall give a ruling at the behest of the earliest petitioner. Art. 248 : In case of nullity of the company or its acts, decisions or deliberations founded on lack of consent or incapacity of a partner and where the nullity may be regularized, any person having an interest therein may give formal notice to the legally incapable partner or to the one whose consent has been vitiated to regularize or take action for annulment within a time limit of six months under penalty of foreclosure. The formal notification shall be made through an extra-judicial act, by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt. Notice thereof shall be given to the company. Art. 249 : The company or a partner thereof may submit to the court before which the action is brought within the time limit laid down in the preceding article any measure likely to obviate the applicant’s interest, notably by the redemption of its or his corporate rights. In such case, the court may either pronounce the annulment or make the proposed measures obligatory where they were previously adopted by the company under the conditions laid down for amendment of the Articles of Association. The partner whose rights are the subject of redemption shall not take part in the vote. Art. 250 : Where annulment of the acts, decisions or deliberations of the company is founded on the breach of publication regulations, any person interested in regularization may, by extra-judicial act, by hand-delivered letter against a receipt or by registered letter

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International Arbitration and Corporate Law with a request for acknowledgement of receipt, give notice to the company to regularize within a period of thirty days following such notice. Failing regularization within the time limit, any interested party may petition the president of the competent court through proceedings to designate an agent to comply with the formality. Art. 251 : Action for nullity of the company shall lapse after three years following registration of the company or publication of the instrument amending its Articles of Association unless the nullity is founded on the unlawfulness of the company’s object, subject to the foreclosure referred to in Article 248 of this Uniform Act. An action for annulment of the acts, decisions or deliberations of the company shall be barred at the end of three years from the day when the nullity was incurred, save where the nullity is founded on the unlawfulness of the object of the company and subject to the foreclosure referred to in Article 248 of this Uniform Act. However, action for annulment of a merger or a scission shall lapse after six months from the date of the last entry in the Trade and Personal Property Credit Register necessitated by the merger or scission transaction. Art. 252 : Opposition by a third party to the decisions pronouncing the nullity of a company shall only be entertained within a period of six months following publication of the said decisions in a newspaper empowered to publish legal notices at the seat of the court. Art. 253 : Where nullity of the company is pronounced, it shall put an end to the execution of the contract but shall have no retrospective effect. The company shall be dissolved forthwith and in the case of multi-partner companies, liquidation shall follow. Art. 254 : The decision pronouncing the annulment of a merger or a scission shall be published within one month from the day when the decision became final. It shall have no effect on obligations on or in respect of the companies to which the asset(s) are transferred between the date of entry into force of the merger or scission and the date of publication of the decision pronouncing the annulment. In case of a merger, the companies which took part in the transaction shall be jointly and severally liable for the execution of the obligations mentioned in the preceding paragraph to be borne by the acquiring company. The same shall apply, in case of a scission, to the company being split, for the obligations of the companies to which the assets are transferred. Each of the companies to which the assets are transferred shall be liable for the obligations to be borne by it between the date of entry into force of the scission and the date of publication of the decision pronouncing the annulment.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 255 : Neither the company nor its members may rely on a nullity as against third parties acting in good faith. However, nullity based on lack of consent or incapacity may be relied on, even against a third party acting in good faith, by a legally incapacitated person or his legal representative or by the person whose consent was vitiated. Art. 256 : The partners and company executives to whom the nullity is attributed may be declared jointly and severally liable for any damage suffered by third parties by the nullity of the company. The vicarious liability action founded on the nullity of the company or of the acts and deliberations subsequent to its formation shall be barred at the end of three years from the day when the annulment decision became final. The removal of the cause of the nullity shall not bar the institution of a civil responsibility action for damages caused by the defect in the company, the acts or deliberations. Such action shall lapse after three years from the day when the nullity was repaired. BOOK 9. FORMALITIES - PUBLICATION TITLE 1. GENERAL PROVISIONS Art. 257 : Shall be empowered to publish announcements, on the one hand, the Official Gazette and newspapers empowered by the competent authorities to publish them, and on the other hand, national news dailies in the Contracting State of the registered office of the company which show evidence of effective sales through subscriptions, depositaries or vendors, under the following additional conditions : (1) that they have been appearing for more than six months ; (2) that they are distributed nationwide. Art. 258 : Publication by deposit of deeds or documents shall be done at the registry of the commercial court of the place of the registered office of the company. Art. 259 : Publication formalities shall be carried out at the behest and under the responsibility of the legal representatives of the companies. Where the publication formality not concerning the formation of a company or the amendment of its Articles of Association has been omitted or has been improperly done and the company has not regularized the situation within a period of one month from the date of formal notice addressed to it, any interested party may petition the president of the competent court through summary proceedings to designate an authorized agent to comply with the publication formality.

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International Arbitration and Corporate Law Art. 260 : In all cases where this Uniform Act provides that the decision shall be by decree of the president of the competent court through summary proceedings, a copy of the said order shall be deposited at the court registry and appended to the company’s file and entered in the Trade and Personal Property Credit Register. TITLE 2. FORMALITIES FOR THE FORMATION OF A COMPANY Art. 261 : Where the formalities for the formation of a company have been accomplished within a period of fifteen days following registration, a notice shall be inserted in a newspaper empowered to publish legal notices in the Contracting State of the registered office of the company. Art. 262 : The notice, signed by the notary who received the company’s Articles of Association or by the founder(s) shall include the following information : (1) the name of the company, followed, as the case may be, by its acronym ; (2) the form of the company ; (3) the amount of the registered capital ; (4) the address of the registered office ; (5) a summary of the company’s object ; (6) the duration of the company ; (7) the amount of cash contributions ; (8) a brief description and an evaluation of contributions in kind (9) the usual full name and domicile of the partners with unlimited liability for the company’s debts ; (10) the full names and domicile of the first executives and the first auditors ; (11) the references of the deposit at the court registry of the incorporation documents ; (12) the references of the registration in the Trade and Personal Property Credit Register; (13) where necessary, the effective or proposed date of commencement of business. For public limited companies, the notice shall also include : (1) the number and face value of shares issued for cash ; (2) the number and face value of shares allotted in remuneration of each contribution in kind ; (3) the amount of the paid-up capital, where the capital is not fully paid up ; (4) the provisions of the Articles relating to the building up of reserves and the sharing of profits and bonus after liquidation ; (5) any special benefits provided for ; (6) the conditions of admission to shareholders’ meetings and of the exercise of voting rights, notably conditions relating to the granting of double voting rights ; (7) as the case may be, the existence of provisions relating to the approval of transferees of shares and the designation of the structure empowered to rule on applications for approval.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group TITLE 3. FORMALITIES FOR THE AMENDMENT OF THE ARTICLES OF ASSOCIATION Art. 263 : Where one of the details of the notice provided for in Article 262 of this Uniform Act is rendered null and void following an amendment of the Articles of Association or of all the acts, deliberations or decisions of the meetings of the company or of its structures, the amendment shall be inserted in the form of a notice in a newspaper empowered to publish legal notices in the Contracting State of the registered office of the company. The said notice, signed by the notary who received or drafted the instrument amending the Articles of Association or by the sole proprietor or the partners, shall include the following : (1) the name of the company, followed, where necessary, by its acronym ; (2) the form of the company ; (3) the amount of the registered capital ; (4) the address of its registered office ; (5) the registration number in the Trade and Personal Property Credit Register ; (6) the title, date, number of issue and place of publication of the newspaper in which the notices provided for in the two preceding articles were published ; (7) an indication of the amendments made. Art. 264 : In case of increase or reduction of capital, apart from the insertion referred to in Article 263 of this Uniform Act, the following formalities shall be complied with : (1) deposit at the registry of the court in charge of commercial matters of the place of the registered office of a certified true copy of the deliberations of the meeting which decided on or authorized the increase or reduction of capital, within one month from the holding of the said meeting ; (2) deposit, where necessary, of the decision of the board of directors, the managing director or the manager who effected the increase of capital ; (3) deposit at the court registry of a certified true copy of the notarial statement of subscription and payment appended to the Trade and Personal Property Credit Registry. TITLE 4. FORMALITIES FOR THE TRANSFORMATION OF A COMPANY Art. 265 : The transformation decision shall give rise to : (1) an insertion in a newspaper empowered to publish legal notices in the Contracting State of the registered office and, as the case may be, in the Contracting States where a public call for capital is made ; (2) deposit at the registry of the court in charge of commercial matters of the Contracting State of the registered office of two copies of the minutes of the meeting which decided on the transformation and of the decision to appoint the members of new organs of the company ;

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International Arbitration and Corporate Law (3) an entry of the amendments in the Trade and Personal Property Credit Register. The new Articles of Association, the declaration of regularity and conformity and, as the case may be, two copies of the report of the auditor responsible for assessing the value of the company’s assets shall equally be deposited at the court registry. Notice of the transformation shall be deposited at the office in charge of mortgages where the company is owner of one or more buildings subject to the publication of landed property transactions. TITLE 5. FORMALITIES FOR THE LIQUIDATION OF A COMPANY Art. 266 : The instrument appointing the liquidators, whatever its form, shall be published within one month from the date of the appointment in a newspaper empowered to publish legal notices in the Contracting State of the registered office. It shall include the following information : (1) the name of the company and, where necessary, its acronym ; (2) the form of the company, followed by the words “company under liquidation”; (3) the amount of the registered capital ; (4) the address of the registered office ; (5) the registration number in Trade and Personal Property Credit Register ; (6) the cause of liquidation ; (7) the common name and domicile of the liquidator(s) ; (8) where necessary, limitations to their powers ; (9) the place where correspondence should be sent and the place where deeds and documents concerning the liquidation should be notified ; (10) the court in charge of commercial matters whose registry shall be the depositary of the deeds and documents relating to the liquidation to be appended in the Trade and Personal Property Credit Registry. At the behest of the liquidator, the same details shall be brought to the notice of holders of registered shares and bonds by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt. Art. 267 : During the liquidation of the company, the liquidator shall be responsible for complying with the formalities of publication incumbent on the legal representatives of the companies. Art. 268 : The notice of close of liquidation, signed by the liquidator, shall be published at the behest of the liquidator in the newspaper wherein his appointment was published or, failing this, in a newspaper empowered to publish legal notices. It shall include the information referred to in Article 266 paragraphs (1), (2), (3), (4), (5) and (7) of this Uniform Act as well as :

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (1) the date and place of the session of the closing meeting, where the liquidation accounts were approved by it or the date of the decision of the competent court sitting and ruling in place of the meeting, as well as an indication of the court which pronounced it ; (2) an indication of the registry of the court in charge of commercial matters where the liquidators’ accounts are deposited. TITLE 6. SPECIAL FORMALITIES RELATING TO PUBLIC LIMITED COMPANIES Art. 269 : Public limited companies shall be required to deposit at the registry of the court, for annexation to the Trade and Personal Property Credit Register, within one month following approval by the general meeting of shareholders, the summary financial statements, namely the balance-sheet, the income statement, the statement of source and expenditure of funds and annexed statement of the just-ended financial year. Where approval of these documents is refused, a copy of the decision of the meeting shall be deposited within the same time limit. PART 2. SPECIAL PROVISIONS RELATING TO COMMERCIAL COMPANIES BOOK 1. PRIVATE COMPANIES TITLE 1. GENERAL PROVISIONS Art. 270 : A private company shall be a company in which all the partners are traders and have unlimited liability, for the company’s debts. Art. 271 : The company’s creditors may bring an action against a partner for the payment of private company’s debts only 60 days at least after unsuccessfully notifying the company of such claim through an extra-judicial act. This time limit may be extended by order of the president of the competent through summary proceedings without such extension exceeding 30 days. Art. 272 : The partnership shall be known by a company name which shall be immediately preceded or followed by the word “Private company” or by the abbreviation “P.C.”, written in legible characters. Art. 273 : The registered capital shall be broken down into shares of the same face value. Art. 274 : The private company shares may be transferred only with the unanimous consent of the partners. All provisions to the contrary shall be deemed to be unwritten. Where the partners fail to reach unanimity, the transfer shall not take place, but the company’s

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International Arbitration and Corporate Law Articles of Association may make provision for a redemption procedure to enable the transferring partner to withdraw. Art. 275 : The transfer of shares shall be evidenced in writing. It may be relied upon as against the company only after the fulfilment of one of the following formalities : (1) notification to the company of the transfer by means of a bailiff ’s writ ; (2) acceptance of the transfer by the company in a notarial deed ; (3) deposit of the original of the transfer deed at the registered office against issuance by the manager of an attestation of deposit. It shall not be binding on a third party except after compliance with the above formalities and after publication by way of an annexed deposit in the Trade and Personal Property Credit Register.

TITLE 2. MANAGEMENT CHAPTER 1. APPOINTMENT OF MANAGER Art. 276 : The Articles of Association shall organize the management of the company. They may appoint one or more managers who may be partners or not, natural persons or corporate bodies, or provide for such appointment in a subsequent instrument. Where the manager is a corporate body, its officials shall be subject to the same conditions and obligations and shall incur the same civil and criminal liability as if they were managers on their own account, notwithstanding the joint and several liability of the corporate body they are managing. Where the management is not organized by the Articles of Association, all the partners shall be deemed to be managers. CHAPTER 2. MANAGER’S POWERS Art. 277 : Where the manager’s powers are not defined by the Articles of Associations, the manager may, in his relations with partners, perform all acts of management in the company’s interest. In the event of several managers, each shall have the same powers as if he were the sole manager of the company, save the right to object to any transaction before it is concluded. In his relations with third parties, the manager shall commit the company by acts falling within the company’s objects. In the event of several managers, each of them shall have the same powers as if he were the sole manager of the company. Any objection made by a manager to the action of another manager shall have no effect with respect to third parties, unless it is established that they were aware of such objection. 296

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group The provisions of the Articles of Association limiting the powers of managers resulting from this article shall not be demurrable to third parties. CHAPTER 3. REMUNERATION OF THE MANAGER Art. 278 : Unless otherwise provided by the Articles of Association or by a meeting of partners, the manager’s remuneration shall be determined by the majority in number and capital of the partners. Where the manager whose remuneration is being determined is also a partner, the decision shall be taken by the majority in number and capital of the other partners. CHAPTER 4. DISMISSAL OF THE MANAGER Art. 279 : Where all the partners are managers or where a partner is appointed manager by the Articles of Association, the dismissal of one of them shall be effected only by unanimous decision of the other partners. The dismissal shall engender dissolution of the company, unless its continuation in business is provided for in the Articles of Association or the other partners unanimously decide to continue. Art. 280 : The managing partner dismissed may decide to withdraw from the company by applying for the refund of his rights in the company whose value shall be determined, failing an agreement between the parties, by an expert appointed by the competent court through summary proceedings. A manager who is not appointed by the Articles of Association, whether or not he be a partner, may be dismissed by decision of the majority in number and in capital of the other partners. Where the manager whose dismissal is submitted to the vote is himself a partner, the decision shall be taken by the majority in number and capital of the other partners. Art. 281 : Where the manager is dismissed for no just reasons, such dismissal may give rise to the payment of damages. Art. 282 : Any clause contrary to the provisions of the two preceding articles shall be deemed to be unwritten. TITLE 3. COLLECTIVE DECISIONS Art. 283 : Any decision not falling within the powers of the managers shall be taken unanimously by the partners. However, the Articles of Association may provide that certain decisions shall be taken by a majority which they shall determine. 297

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International Arbitration and Corporate Law Art. 284 : Collective decisions shall be taken at a general meeting or by written consultation where a general meeting is not requested by one of the partners. Art. 285 : The Articles of Association shall define the rules relating to the consultation procedure, quorums and majorities. Art. 286 : Where decisions are taken in a general meeting, such general meeting shall be convened by the manager(s) at least fifteen days before the meeting by hand-delivered letter against a receipt or by registered letter with request for acknowledgement of receipt. The convening notice shall indicate the date, venue and agenda of the meeting. Any improperly convened meeting may be annulled. However, the action for annulment shall be inadmissible where all the partners were present or represented. Art. 287 : The minutes shall be signed by each of the partners present. In the event of written consultation, mention thereof shall be made in the minutes to which shall be attached the response of each partner which shall be signed by the managers. TITLE 4. ANNUAL GENERAL MEETING Art. 288 : Each year, within a period of six months following the close of the fiscal year, an annual general meeting shall be held during which the management report, the inventory and the summary financial statements drawn up by the managers shall be submitted to the meeting of partners for approval. To this end, the documents referred to in the preceding paragraph, the proposed draft resolutions and, where necessary, the auditor’s report shall be sent to the partners at least fifteen days before the date of the meeting. Any decision taken in violation of the provisions of this paragraph may be annulled. The annual general meeting shall not validly hold unless a majority of the partners representing half of the registered capital are present. It shall be presided over by the partner who himself has or as a representative holds the greatest number of partnership shares. Any clause contrary to the provisions of this article shall be deemed to be unwritten. TITLE 5. CONTROL BY PARTNERS Art. 289 : Notwithstanding the above right of communication in respect of the annual general meeting, the floor members shall have the right to consult at the registered office, twice a year, all books and accounting documents as well as the minutes of meetings and collective decisions. They shall have the right to make copies thereof at their expense. They shall inform the managers of their intention to exercise this right at least fifteen days beforehand by a hand-delivered letter against a receipt or by registered letter with request for acknowledgement of receipt, by telex or telefax. 298

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group They shall have the right to seek the assistance of a professional accountant or an auditor at their expense. TITLE 6. TERMINATION OF A PRIVATE COMPANY Art. 290 : A private company shall terminate upon the death of one partner. However, the Articles of Association may provide that the private company shall continue either among surviving partners or among surviving partners and the rightful claimants or successors of the deceased partner with or without the approval of the surviving partners. Where it is provided that the private company shall continue only among surviving partners, or where the latter fail to accept the rightful claimants or successors of the deceased partner, or where they accept only some of them, the surviving partners shall buy back from the rightful claimants or successors of the deceased partner, or from those who were not approved, their partnership shares. In the event of continuation and where one or more of the rightful claimants or successors of the deceased partner are dependent minors, the latter’s liability for the company’s debts shall be up to the limit of their inherited shares. Moreover, the company shall, within one year of the death, be transformed into a sleeping partnership in which the minor will become a sleeping partner. Otherwise the private company shall be dissolved. Art. 291 : The private company shall also be dissolved when judgment to liquidate property, declare bankruptcy, or forbid the exercise of a commercial activity has been passed in respect of a partner, unless the company’s Articles of Association provide for continuation or the other partners unanimously decide in favour of continuation. Art. 292 : In case of refusal to approve the rightful claimants or successors or of the withdrawal of a partner, the value of partnership entitlements to be refunded to those concerned shall be fixed in accordance with the provisions of Article 59 of this Uniform Act. In the cases provided for in the preceding paragraph where the partners have to redeem the partnership shares, the partners shall be indefinitely and jointly and severally bound, for the payment of the shares. BOOK 2. SLEEPING PARTNERSHIP TITLE 1. GENERAL PROVISIONS Art. 293 : A sleeping partnership is a partnership in which one or more partners are indefinitely, jointly and severally liable for the company’s debts, referred to as “active partners”, coexist with one or more partners liable for the company’s debts up to the limit of their shares, referred to as “sleeping partners” and whose capital is broken down into partnership shares. 299

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International Arbitration and Corporate Law Art. 294 : A sleeping partnership shall be referred to by a name which shall be immediately preceded or followed by the words “sleeping partnership or by the abbreviation S.P.” The name of a sleeping partner shall under no circumstances be included in the partnership name, otherwise the latter shall be liable for the debts of the partnership without limit. Art. 295 : The Articles of Association of the sleeping partnership shall include the following information: (1) the amount or value of all the partners’ contributions ; (2) the fraction of this amount or value belonging to each active or sleeping partner ; (3) the overall share of the active partners and the share of each sleeping partner in the profit-sharing or in the bonus after liquidation. Art. 296 : Partnership shares may be transferred only with the consent of all the partners. However, the Articles of Association may stipulate : (1) that the shares held by the sleeping partners shall be freely transferable between partners ; (2) that the shares held by sleeping partners may be transferred to third parties outside the sleeping partnership with the consent of all the active partners and by a majority in number and capital of the sleeping partners ; (3) that an active partner may transfer part of his shares to a sleeping partner or to a third party outside the partnership with the consent of all the active partners and the majority in number and capital of the sleeping partners. Art. 297 : The transfer of shares shall be recorded in a written document. It may be binding on the company only after the following formalities have been fulfilled : (1) notification to the company of the transfer by means of a bailiff ’s writ ; (2) acceptance of the transfer by the company in a notarial deed ; (3) deposit of the original transfer deed at the registered office against an attestation of deposit issued by the manager. The transfer of shares may be demurrable to third parties only after the fulfilment of the above formalities and after publication by entry in the Trade and Personal Property Credit Register. TITLE 2. MANAGEMENT Art. 298 : A sleeping partnership shall 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.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 299 : A sleeping partner(s) may not perform any act of external management, even by virtue of a power of attorney. Art. 300 : In the event of violation of the prohibition mentioned in the preceding article, the sleeping partner(s) shall, be indefinitely, jointly and severally liable with the active partners for the company’s debts and commitments resulting from any administrative acts performed by them. Depending on the number and gravity of these acts, they may be liable for all commitments of the company or only for a few. Art. 301 : Opinions and advice as well as acts of control and supervision shall not commit the sleeping partners. TITLE 3. COLLECTIVE DECISIONS Art. 302 : All decisions beyond the powers of the managers shall be taken collectively by the partners. The Articles of Association shall organize collective decision-making by the partners, especially as regards the procedure of consultation either by means of meetings or by writing, quorums, and majorities. However, the meeting of all the partners shall be automatic where requested by a active partner or by one-quarter, in number and capital, of the sleeping partners. Art. 303 : Where decisions are taken in a general meeting, the said meeting shall be convened by the manager or one of the managers at least fifteen days before the meeting is held, by hand-delivered letter against a receipt or by registered letter with request for acknowledgement of receipt, by telex or by telefax. The convening notice shall indicate the date, venue and agenda of the meeting. Any general meeting convened improperly may be annulled. However, the action for annulment shall be inadmissible where all the partners were present or represented. Art. 304 : The minutes shall be signed by each of the partners present. In the event of written consultation, mention thereof shall be made in the minutes signed by the managers to which shall be appended the response of each partner. Art. 305 : Any amendments to the Articles of Association may be decided with the consent of all the active partners and the majority, in number and capital, of the sleeping partners. Any clauses stipulating stricter majority conditions shall be deemed to be unwritten.

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International Arbitration and Corporate Law TITLE 4. ANNUAL GENERAL MEETING Art. 306 : Each year, within six months following the close of the fiscal year, an annual general meeting shall be held during which the management report, the inventory and the summary financial statements drawn up by the managers shall be submitted to the meeting of partners for approval. To this end, the documents referred to above, the proposed draft resolutions and, where need be, the auditor’s report, shall be forwarded to the partners at least fifteen days before the meeting. Any meeting which holds in violation of the provisions of this paragraph may be annulled. The annual general meeting shall validly hold only where it is attended by a majority of the partners representing half of the registered capital. The said meeting shall be presided over by the partner representing, in his own capacity or as proxy, the majority of shares. Any clause contrary to the provisions of this article shall be deemed to be unwritten. TITLE 5. CONTROL BY PARTNERS Art. 307 : Sleeping partners and active partners who are not managers shall have the right, twice a year, of access to the company’s books and documents and to ask questions in writing on the management of the partnership. Answers to the questions shall also be in writing. TITLE 6. DISSOLUTION OF THE SLEEPING PARTNERSHIP Art. 308 : The sleeping partnership shall continue in spite of the death of a sleeping partner. Where there is provision that despite the death of one of the active partners, the company shall continue with his rightful claimants, the latter shall become sleeping partners where they are dependent minors. Where the deceased partner was the sole active partner and where his rightful claimants are dependent minors, he shall be replaced with a new active partner or the company shall be transformed within one year with effect from his death. Failing this, the company shall be dissolved as of right on the expiry of the period mentioned in the preceding paragraph. BOOK 3. PRIVATE LIMITED COMPANY TITLE 1. FORMATION OF A PRIVATE LIMITED COMPANY CHAPTER 1. DEFINITION OF A PRIVATE LIMITED COMPANY Art. 309 : A private limited company shall be a company in which the partners are liable for the company’s debts up to the limit of their contributions and their rights are represented by company shares. It may be formed by a natural person or a corporate body, or by two or more natural persons or corporate bodies.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 310 : It shall be referred to by a company name which must be immediately preceded or followed by the words “private limited company” or the abbreviation “Ltd” written in legible characters. CHAPTER 2. SUBSTANTIVE CONDITIONS Section 1. Registered capital Art. 311 : The registered capital of a private limited liability company shall be at least one million (1 000 000) CFA francs. It shall be divided into equal shares whose face value may not be less than five thousand (5 000) CFA francs. Section 2. Evaluation of contributions in kind Art. 312 : The Articles of Association shall contain the evaluation of each contribution in kind and a stipulation of special benefits. The evaluation shall be carried out by a shares auditor where the value of the contribution or the benefits in question, or the value of the overall contributions or benefits in question is more than five million (5 000 000) CFA francs. The shares auditor who shall be chosen from a list of auditors following the procedure laid down in Article 694 et seq. of this Uniform Act, shall be unanimously designated by the future partners or, failing this, by the president of the competent court, at the request of all or one of the company’s founders. The shares auditor shall draw up a report to be appended to the Articles of Association. In the absence of an evaluation made by a shares auditor or where such evaluation is disregarded, the partners shall, indefinitely, jointly and severally liable for the evaluation made of the contributions in kind and the special benefits stipulated for a period of five years. The obligation to provide guarantees shall concern only the value of contributions at the time the capital is being constituted or increased and not the maintenance of the said value. Section 3. Deposit and release of funds Art. 313 : Funds derived from the payment for shares shall be immediately deposited by the founder, against a receipt, in a bank account opened in the name of the company being formed or in a notary’s office. Art. 314 : The payment and deposit of funds shall be recorded by a notary within the jurisdiction of the court of the registered office by means of a notarial statement of subscription and payment indicating the list of subscribers with their full name and domicile, for natural persons, and company name, legal status and registered office, for corporate bodies, as well as the banks where those concerned are domiciled, where necessary, and the amounts paid by each of them.

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International Arbitration and Corporate Law The funds thus deposited shall be unavailable until the day of registration of the company in the Trade and Personal Property Credit Register. With effect from that day, they shall be put at the disposal of the managers duly appointed by the Articles of Association or by a subsequent instrument. In the event where the company is not registered in the Trade and Personal Property Credit Register within a period of six months from the initial deposit of the funds at the bank or at a notary’s office, the investors may either individually or collectively through an agent, request the president of the competent court to authorize withdrawal of the amount of their contributions. CHAPTER 3. CONDITIONS OF FORM Art. 315 : The partner(s) shall, under penalty of annulment of the company, participate in the Memorandum of Association in person or through their authorized agent with special powers. Art. 316 : The initial managers and the partners responsible for the nullity of the company shall be jointly and severally liable towards the other partners and third parties for the damage resulting from the nullity. Liability action shall be barred at the end of three years with effect from the date when the annulment decision became final. TITLE 2. FUNCTIONING OF A PRIVATE LIMITED COMPANY CHAPTER 1. TRANSACTIONS RELATING TO COMPANY SHARES Section 1. Transfer of company shares Sub-section 1. Share transfers inter vivos Paragraph 1. Form of transfer Art. 317 : The transfer of company shares inter vivos shall be established in a written document. Such transfer may be binding on the company only after compliance with one of the following formalities : (1) notification of the transfer to the company by extra-judicial act ; (2) acceptance of the transfer by the company in a notarial deed ; (3) deposit of an original copy of the transfer agreement at the company’s registered office against an attestation of deposit issued by the manager. The transfer shall be demurrable to third parties only after compliance with one of the above formalities, amendment of the Articles of Association and publication in the Trade and Personal Property Credit Register.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Paragraph 2. Terms of transfer Sub-paragraph 1. Transfer between partners Art. 318 : The Articles of Association shall freely define the conditions for the transfer of company shares between partners. Failing this, share transfers between partners shall be free. The Articles of Association may also define the conditions for the transfer of company shares between spouses, ascendants and descendants. Failing this, shares shall be freely transferable between the persons concerned. Sub-paragraph 2. Transfer to third parties Art. 319 : The Articles of Association shall freely define the conditions for the transfer of company shares against payment to third parties outside the company. Failing this, the transfer shall be possible only with the consent of the majority of non-transferor partners holding three-quarters of the company shares, excluding the shares of the transferor partner. The transferor partner shall notify the company and each of the other partners of his plan to transfer shares. Where the company does not make known its decision within a period of three months from the date of the last of the notifications provided for in the above paragraph, its consent to the transfer shall be deemed to be granted. Where the company refuses to consent to the transfer, the partners shall be liable, indefinitely, jointly and severally liable, within a period of three months following notification of the refusal to the transferor partner, to acquire the shares at a price which, failing an agreement between the parties, shall be fixed by an expert appointed by the president of the competent court, at the request of the earliest party. The three-month period stipulated above may be extended once only by order of the president of the competent court, provided that such an extension shall not exceed twenty days. In such case, the sums due shall bear interest at the legal rate. The company may also, with the consent of the transferor partner, decide within the same time limit to reduce the amount of the registered capital by the face value of the shares of the said partner and buy back such shares at a price fixed by mutual agreement between the parties or determined as provided for in paragraph 4 of this article. Art. 320 : Where, upon expiry of the time limit set in the preceding article, none of the solutions provided for in paragraphs 4 and 5 of the said article are implemented, the transferor partner may freely carry out the transfer initially planned or, where he deems it preferable, abandon the transfer and keep his shares.

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International Arbitration and Corporate Law Sub-section 2. Transfer due to death Art. 321 : The Articles of Association may provide that in case of the death of a partner, one or more of his rightful claimants or a successor may become partners only after they have been approved under the conditions laid down by the Articles of Association. Under penalty of nullity of such provision, the time limit granted the company for the approval shall not be longer than that provided for in Articles 319 and 320 of this Uniform Act and the required majority may not be more than the one provided for in Article 319. The approval decision shall be notified to each of the interested heirs or successor concerned by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt. In case of refusal of approval, the provisions of Articles 318 and 319 of this Uniform Act shall apply and where no solution provided for under this article is implemented within the prescribed time limits, the approval shall be deemed to be granted. The same shall apply where no notification has been sent to the persons concerned. Section 2. Pledging of company shares Art. 322 : Where the company consents to a plan to pledge company shares under the conditions governing the transfer of shares to third parties, such consent shall imply the approval of the transferee in case of the compulsory liquidation of regularly pledged company shares, unless the company prefers, after the transfer, to immediately redeem the said shares in order to reduce its capital. In order to implement the provisions of the above paragraph and for the pledge to be demurrable to third parties, the pledging of shares may be established by notarial deed or by private deed notified to the company and published in the Trade and Personal Property Credit Register. CHAPTER 2. MANAGEMENT Section 1. Organization of management Sub-section 1. Appointment of managers Art. 323 : A private limited company shall be managed by one or more natural persons, whether or not they are partners of the company. They shall be appointed by the partners in the Articles of Association or in a subsequent instrument. In the latter case, unless a provision in the Articles of Association requires a stronger majority, the decision shall be taken by a majority of the partners holding more than half of the registered capital. Sub-section 2. Term of office Art. 324 : In the absence of provisions in the Articles of Association, the manager(s) shall be appointed for four years. Their term of office shall be renewable. 306

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Sub-section 3. Remuneration Art. 325 : The duties of manager shall be gratuitous or shall be remunerated under the conditions laid down in the Articles of Association or in a collective decision of the partners. The determination of the remuneration shall not be subject to the scheme of regulated agreements provided for in Articles 350 et seq. of this Uniform Act. Sub-section 4. Removal from office Art. 326 : Manager(s) appointed in the Articles of Association or not may be removed from office by decision of the partners representing more than half of the company shares. Any provisions to the contrary shall be deemed to be unwritten. Where such removal from office is decided without any just reason, it may give rise to the payment of damages. Besides, the manager may be dismissed by the commercial court within whose jurisdiction the company’s registered office is located, for a just reason at the request of any partner. Sub-section 5. Resignation Art. 327 : The manager(s) may freely resign. However, where such resignation is not justified, the company may bring legal action to repair the damage suffered by it. Section 2. Powers of managers Art. 328 : In relations between partners and where the Articles of Association do not define the duties of the manager, the latter may perform all management acts in the interest of the company. Where there are several managers, they shall separately hold the powers provided for in this article, save the right for each of them to object to a transaction before it is concluded. The objection by one manager to the acts of another manager shall have no effect on third parties, unless it is established that they had knowledge thereof. Article 329 : In his relations with third parties, the manager shall be vested with the widest powers to act under all circumstances on behalf of the company, subject to the powers which this Uniform Act expressly confers on partners. The company shall be bound, even by those acts of the manager which do not fall within the scope of the company’s objects, unless it can prove that the third party knew that the acts were not within the scope of such objects or that he could not have been unaware of the fact under the circumstances, with the understanding that the mere publication of the Articles of Association shall not constitute such proof. The provisions in the Articles of Association limiting the powers of managers which result from this article shall not be demurrable to third parties. Section 3. Liability of managers Art. 330 : The managers shall be liable, severally or jointly and severally, as the case may be, to the company or third parties for violations of legal or statutory provisions applicable 307

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International Arbitration and Corporate Law to private limited companies, or for violations of the Articles of Association, or for mistakes made during their management. Where several managers jointly took part in the same acts, the court in charge of commercial matters shall determine the contribution of each in the repair of the damage. Art. 331 : Apart from legal action for damages suffered by individuals, partners representing one-quarter of the partners and one-quarter of company shares may, individually or as a group, bring an action suit in the company’s interest against the manager. The plaintiffs shall be empowered to seek redress for the whole damage suffered by the company for which damages may be awarded where necessary. Any clause in the Articles of Association subjecting action in the company’s interest to the prior opinion or authorization of the general meeting or which entails renunciation of such action in advance shall be deemed to be unwritten. No decision of the general meeting shall have the effect of extinguishing a liability suit against managers for wrongs committed during the performance of their duties. Art. 332 : The action suits provided for in the two preceding articles shall be barred after a period of three years from the date of commission of the tort or, where it was concealed, from the date of disclosure thereof. However, where the act amounts to a felony, action shall be barred after a period of ten years. CHAPTER 3. COLLECTIVE DECISIONS OF THE PARTNERS Section 1. Organization of collective decisions Sub-section 1. General principles Paragraph 1. Conditions Art. 333 : Collective decisions shall be taken at general meetings. However, the Articles of Association may provide that all or some decisions shall be taken by written consultation of the partners, except in the case of the annual general meeting. Paragraph 2. Representation of the partners Art. 334 : Each partner shall have the right to participate in decision-making and shall have a number of votes equal to the number of company shares that he holds. Where there is a sole proprietor, he alone shall take decisions falling within the competence of the general meeting. A partner may be represented by a spouse, unless the company is a partnership comprising the couple. Except where there are only two partners, a partner may be represented by another partner. He may be represented by another person only where this is allowed by the Articles of Association. 308

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 335 : The authority given to another partner or to a third party shall be valid for only one meeting or for several successive meetings having the same agenda. Art. 336 : A partner may not vote through a proxy for part of his shares and in person for the other part. All provisions repugnant to the provisions of Articles 334 and 335 of this Uniform Act and to those of this article shall be deemed to be unwritten. Sub-section 2. Convening of general meetings Paragraph 1. Right to convene meetings Art. 337 : Partners shall be convened to meetings by the manager or, failing this, by the auditor where there is one. One or more partners holding half of the company’s shares, or one-quarter of the company’s shares, where they represent at least one-quarter of the partners, may request the convening of a meeting. Furthermore, any partner may petition the court for the designation of an authorized agent responsible for convening a meeting and drawing up its agenda. Paragraph 2. Conditions for convening of meetings Art. 338 : Partners shall be convened at least fifteen days before the general meeting by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt. Under penalty of nullity, the letter of invitation shall indicate the agenda. In the case where the holding of the general meeting is requested by the partners, the manager shall convene the meeting with an agenda proposed by the requesting partners. The partners who shall be convened under the conditions and within the time limits provided for in the first paragraph of this article, shall be placed in a situation where they can exercise the right of communication provided for in Article 345 of this Uniform Act. Paragraph 3. Sanctions for improper convening of meetings Article 339 : Any meeting convened improperly may be annulled. However, the action for annulment shall be inadmissible where all the partners were present or represented. Sub-section 3. Consultations in writing Art. 340 : In the case of consultations in writing, the text of the proposed draft resolutions as well as the documents necessary for the information of the partners shall be forwarded to each of them under the same conditions as those provided for in Article 338, paragraph 1 of this Uniform Act. The partners shall have a minimum period of fifteen days from the date of reception of the draft resolutions to express their opinion.

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International Arbitration and Corporate Law Sub-section 4. Chairing of meetings Art. 341 : The general meeting of partners shall be chaired by the manager or one of the managers. Where none of the managers is a partner, the meeting shall be presided over by a partner, present and consenting, who holds the majority of company shares and, in case of equality, by the eldest member. Sub-section 5. Minutes of meetings Art. 342 : The deliberations of general meetings shall be recorded in the minutes indicating the time and venue of the meeting, the full names of the partners present, the documents and reports tabled for discussion, a summary of the proceedings, the text of the resolutions put to the vote and the result of the vote. The minutes shall be signed by each of the partners present. In case of consultation in writing, mention shall be made thereof in the minutes which shall be signed by the manager(s) and to which shall be appended the response of each of the partners. Art. 343 : Copies or extracts of the minutes of the partners’ deliberations shall be validly certified by a single manager. Section 2. Partners’ rights Sub-section 1. Principle Art. 344 : The partners shall have the right to be permanently informed on the affairs of the company. Prior to the holding of general meetings, they shall have the right of communication. Sub-section 2. Right of communication Art. 345 : With regard to the annual general meeting, the right of communication shall concern the summary financial statements of the fiscal year and the management report prepared by the manager, the text of the proposed resolutions and, where necessary, the auditor’s general report as well as the auditor’s special report relating to agreements signed between the company and a manager or partner. The right of communication shall be exercised during the fifteen days preceding the holding of the general meeting. From the date of communication of the above documents, any partner shall have the right to ask written questions which the manager shall be bound to answer during the general meeting. With regard to meetings other than the annual general meeting, the right of communication shall concern the text of the proposed resolutions, the manager’s report and, where necessary, the auditor’s report. All decisions taken in violation of the provisions of this article may be annulled. 310

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group A partner may, at any time, also obtain copies of the documents listed in paragraph one of this article for the last three fiscal years. Similarly, any partner who is not a manager may, twice in a fiscal year, ask written questions to the manager on any event likely to undermine the continuity of the company. The manager’s answer shall be forwarded to the auditor. Any clause repugnant to the provisions of this article shall be deemed to be unwritten. Sub-section 3. Right to dividend Art. 346 : Profit-sharing shall be done in accordance with the Articles of Association, subject to the mandatory provisions common to all companies. Under penalty of annulment of all decisions to the contrary to at least one-tenth of the profits of the fiscal year from which have been deducted past losses, where necessary, shall be deposited in a reserve fund known as “legal reserve “. This appropriation shall cease to be obligatory when the reserve attains one-fifth of the registered capital of the company. Dividends not corresponding to real profits shared to partners may be recovered from them. The recovery action shall be barred at the end of a period of three years from the date of commencement of distribution of the dividends. Section 3. Ordinary collective decisions Art. 347 : Ordinary collective decisions shall be those taken to review the summary financial statements of the previous financial year, to authorize management to carry out the transactions for which the Articles of Association provided for prior approval by the partners, to appoint or replace managers and, where necessary, the auditor, to approve agreements between the company and one of its managers or partners and, in general, to decide on all matters that do not entail amendment of the Articles of Association. Where the company is a sole proprietorship, the provisions of Articles 558 to 561 of the Uniform Act, excluding those of the second paragraphs of Articles 558 and 559 below, shall apply. The provisions of this Chapter which are not repugnant hereto shall also apply. Sub-section 1. The annual ordinary general meeting Paragraph 1. Periodicity Art. 348 : The annual ordinary general meeting shall hold within six months from the close of the fiscal year. The managers may apply to the president of the competent court for this time limit to be extended. Paragraph 2. Rules governing voting by the partners Art. 349 : In ordinary meetings or in ordinary written consultations, decisions shall be adopted by one or more partners representing more than half of the capital. 311

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International Arbitration and Corporate Law Failure to attain this majority, and unless otherwise stipulated by the Articles of Association, the partners shall once more be convened or consulted, as the case may be, and decisions shall be taken by a majority vote notwithstanding the share of the capital represented. However, in all cases, managers may not be dismissed unless by an absolute majority. Sub-section 2. Agreements between the company and one of its managers or partners. Paragraph 1. Regulated agreements Art. 350 : The ordinary general meeting shall decide on agreements concluded directly or through a third party between the company and one of its managers or partners. To this end, the manager(s) or the auditor, where there is one, shall present a report on the agreements concluded directly or through a third party between the company and one of its managers or partners to the annual ordinary general meeting or attach the said report to documents sent to partners. The same shall apply to : - agreements concluded with a separate company whose proprietor is also a manager or partner in the private limited company ; - agreements concluded with a company in which one partner with unlimited liability, a manager, director, general manager or secretary general is simultaneously manager or partner in the private limited company. Art. 351 : Where there is an auditor, the manager shall notify him of the agreements referred to in the preceding article within a period of one month from the date of conclusion of the said agreements. Where the implementation of agreements concluded during previous fiscal years has been carried over to the last fiscal year, the auditor shall be informed of the situation within a period of one month following the close of the financial year. Art. 352 : Authorization shall not be needed from the ordinary general meeting where the agreements concern routine transactions concluded under normal conditions. Routine transactions shall mean the transactions usually carried out by a company as part of its activities. Normal conditions shall mean the conditions that the company in question applies for similar agreements or, possibly, those applied by companies in the same sector. Art. 353 : The report presented by the manager or the auditor, where there is one, shall include : (1) a list of the agreements submitted for the approval of the meeting ;

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (2) the identity of the parties to the agreement and the names of the managers or partners concerned ; (3) the nature and object of the agreements ; (4) the main terms of these agreements, particularly the prices or rates applicable, the discounts and commissions allowed, the deadlines for payment granted, the stipulated interest rates, guarantees given and, as the case may by, all other information that may enlighten the partners on the need to conclude the agreements examined ; (5) the volume of materials supplied, services provided or amounts of settlements made or received during the fiscal year while executing agreements concluded during previous fiscal years and carried over to the last fiscal year. Art. 354 : The ordinary general meeting shall decide on the agreements as provided for under Articles 348 and 349 of this Uniform Act. The partner concerned shall not take part in the voting during the deliberations on the agreement, and his votes shall not count in determining the majority. Art. 355 : The agreements not approved by the general meeting shall still have effect. It shall be the responsibility of the contracting manager or partner, individually or jointly, as the case may be, to bear the consequences of the agreement that may be detrimental to the company. Civil liability action shall be instituted within three years from the date of conclusion of the agreement or, where it has been concealed, from its disclosure. Where the company is a sole proprietorship and the agreement has been concluded with the sole proprietor, this fact shall merely be entered in the record of deliberations. Paragraph 2. Prohibited agreements Art. 356 : It shall be prohibited, under penalty of nullity of the contract, for natural persons who are managers or partners, under any form whatsoever, to contract loans from the company, obtain an overdraft on a current account or otherwise from the company, or make the company endorse or guarantee their commitments towards third parties. This prohibition shall also apply to spouses, ascendants and descendants of the persons referred to in the first paragraph of this article, including any through which these p ­ ersons act. Section 4. Extraordinary collective decisions Art. 357 : Extraordinary collective decisions shall have as object the amendment of the Articles of Association. Where the company is a sole proprietorship, the provisions of Articles 558 to 561 of this Uniform Act shall apply, save those of the second paragraphs of Articles 558 and 559. The provisions of this chapter which are not repugnant hereto shall also apply.

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International Arbitration and Corporate Law Sub-section 1. General rules relating to voting by partners. Paragraph 1. Principle Art. 358 : Amendments to the Articles of Association shall be decided by partners representing at least three-quarters of the registered capital. Any clause repugnant hereto shall be deemed to be unwritten. Paragraph 2. Exceptions Art. 359 : A unanimous decision shall be required in the following cases : (1) increasing the commitments of partners ; (2) transforming the company into a private company ; (3) transferring the company’s registered office to a State other than a Contracting State. Sub-section 2. Decisions relating to a variation of capital. Paragraph 1. Increase of capital Art. 360 : Notwithstanding the provisions of Article 358 of this Uniform Act, the decision to increase capital through the capitalization of profits or reserves shall be taken by the partners controlling at least half of the share capital. Art. 361 : Where the capital is increased by shares issued for cash, the funds derived from the subscription shall be deposited at the bank or at a notary’s office in conformity with the provisions applicable during the formation of a company. The funds derived from the issue may be made available to the manager where he gives the depositary bank or notary a certificate from the Trade and Personal Property Credit Register showing that the modification following the increase of capital has been recorded. Art. 362 : Where the increase in capital has not been effected within six months from the initial deposit of funds derived from the issues, any subscriber may apply to the president of the competent court for authorization to withdraw the funds either personally or through an agent representing the subscribers collectively for refund to the subscribers. Art. 363 : Where the increase of capital has been effected either partially or wholly by contributions in kind, the partners shall designate a shares auditor where the value of each contribution or each special benefit received, or the value of total contributions or total special benefits exceeds five million (5 000 000) CFA francs. The shares auditor shall be designated under the same conditions as for the formation of the company. The shares auditor may also be appointed by the president of the competent court at the request of any partner, irrespective of the number of shares the said partner controls.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group He shall draw up a report on the assessment of the assets and special benefits as was made by the contributor and the company. The report shall be submitted to the meeting charged with deciding on the increase of capital. Art. 364 : The contributor in kind shall not take part in the vote to decide the approval of his contribution. His shares shall not be taken into account for the determination of the quorum or the majority. Art. 365 : In the absence of an assessment made by a shares auditor or where such assessment is disregarded, the partners shall be liable under the conditions laid down in Article 312 of this Uniform Act. However, the meeting shall not reduce the value of contributions or of special benefits except by unanimous decision of the subscribers and with the express consent of the contributor or the beneficiary mentioned in the minutes. Failing this, there shall be no increase of capital. Paragraph 2. Reduction of capital Art. 366 : In no case shall the reduction of capital affect the equality between partners. Art. 367 : Capital reduction may be achieved by reducing the face value of shares or by reducing the number of shares. Where there is an auditor, he shall be informed of the intended reduction of capital within thirty days prior to the holding of the extraordinary general meeting. He shall present his appraisal of the causes and conditions of the reduction to the meeting. In the case of written consultation, the intended reduction of capital shall be notified to the partners under the same conditions as those laid down in Article 340 above. It shall be forbidden for the company to purchase its own shares. However, the meeting which decided the reduction of capital not arising from losses may authorize the manager to purchase a specific number of shares to cancel them. Art. 368 : The reduction shall not have the effect of reducing capital below the legal minimum, unless the same meeting decides to make a corresponding increase in capital to raise it to at least the legal level. Art. 369 : In the event of infringement of the provisions of Article 368 of this Uniform Act, any interested party may, after giving the company’s representatives formal notice to redress the situation, institute action for the company to be wound up. The action shall be extinguished where the grounds for winding up cease to exist by the date the court is ruling on the merits of the case. Art. 370 : Where the meeting approves a reduction of capital not arising from losses, creditors with claims dating before the time the minutes of the deliberations were deposited 315

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International Arbitration and Corporate Law at the Trade and Personal Property Credit Register may object to the reduction of capital within a period of one month with effect from the date of deposit. The objection shall be notified to the company by an extra-judicial act. The president of the court may dismiss the objection or order the claims to be reimbursed, or the guarantees to be provided, where the company offers any and they are deemed adequate. The capital reduction operations may not begin during the period of time allowed for objection. Paragraph 3. Variation of shareholders’ equity Art. 371 : Should the losses recorded in the summary financial statements cause the shareholders’ equity in the company to fall below half of the registered capital, the manager or the auditor, as the case may be, shall, within a period of four months following the approval of the accounts that revealed the losses, consult the partners on the advisability of calling for a premature winding up of the company. Art. 372 : Where the company is not wound up, it shall, within a period of two years following the close of the fiscal year showing a deficit, re-constitute its shareholders’ equity up to a level where it is at least half of the registered capital. Failing this, it shall reduce its capital by an amount at least equal to the amount of losses which could not be charged to the reserves, provided that the reduction of capital shall not result in reducing the capital below the legal level. Art. 373 : Where the managers or the auditor cannot cause a decision to be taken, or where the partners could not validly deliberate, any interested party may petition the competent court to pronounce the dissolution of the company. The same shall apply where the shareholders’ equity is not reconstituted within the prescribed time limit. The action shall be extinguished where the grounds for winding up the company have ceased to exist by the date the competent court is ruling on the merits of the case. Sub-section 3. Transformation of the company Art. 374 : A private limited company may be transformed into another type of company. The transformation shall not give rise to a new corporate body. The company may not be effectively transformed unless, at the time of the proposed transformation, the shareholders’ equity in the private limited company is at least equal to its registered capital and where the company has drawn up the balance-sheets for its first two fiscal years and they have them approved by the partners. Art. 375 : The company may not be transformed unless on the basis of an auditor’s report certifying, under his responsibility, that the conditions laid down in Article 374 of this Uniform Act have been fulfilled. 316

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Where there is no auditor, the manager shall choose one under the conditions laid down in Articles 694 et seq. of this Uniform Act. Any transformation carried out contrary to these provisions shall be null and void. CHAPTER 4. AUDIT OF THE COMPANY Section 1. Appointment of an auditor Sub-section 1. Companies concerned Art. 376 : Private limited companies whose registered capital exceeds ten million (10 000 000) CFA francs or which fulfil either of the following two conditions : (1) the annual turnover exceeds two hundred and fifty million (250 000 000) CFA francs ; (2) the permanent staff exceeds 50 persons, shall be required to designate at least one auditor. For other private limited companies which do not fulfil these criteria, the appointment of an auditor shall be optional. However, the appointment of the auditor may be requested before the court by one or more partners controlling at least one-tenth (1/10) of the registered capital. Sub-section 2. The auditor Art. 377 : The auditor shall be chosen under the conditions laid down in Articles 694 et seq. of this Uniform Act. Sub-section 3. Incompatibilities Art. 378 : The following persons may not be appointed auditor : (1) managers and their spouses ; (2) contributors in kind and persons having special benefits ; (3) persons receiving from the company or from its managers periodic payments of any type, as well as their spouses. Sub-section 4. Term of office of the auditor Art. 379 : The auditor shall be appointed for three fiscal years by one or several partners controlling more than half of the registered capital. Where this majority is not obtained and unless otherwise stipulated by the Articles of Association, the auditor shall be chosen by a majority vote, irrespective the share capital represented. Sub-section 5. Penalties attendant on appointment or working conditions Art. 380 : Deliberations conducted without the due appointment of an auditor or on the report of an auditor who has been appointed or has remained in office contrary to the provisions of Article 379 of this Uniform Act shall be null and void. Action for annulment shall be extinguished where the deliberations have been formally approved by a meeting upon the report of a duly appointed auditor. 317

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International Arbitration and Corporate Law Section 2. Conditions governing the performance of the duties of auditor Art. 381 : The provisions relating to the powers, duties, obligations, liability, dismissal and remuneration of the auditor shall be specified in a specific instrument governing the profession of auditor. TITLE 3. MERGER-SCISSION Art. 382 : The provisions of Articles 672, 676, 679, 688 and 689 of this Uniform Act shall apply to mergers or scissions of private limited companies for the benefit of the same type of companies. Where the operation is realized contributions to existing private limited companies, the provisions of Article 676 of this Uniform Act shall also apply. Art. 383 : Where the merger is realized by contributions to a new private limited company, the new company may be formed with the contributions of the merging companies alone. Where the scissions involves contributions to new private limited companies, the new companies may be incorporated with the contributions of the split company alone. In this case, and where the shares of each of the new companies are distributed to the partners of the split company proportionately to their shares in the said company, there shall be no need for the report referred to in Article 672 of this Uniform Act to be drawn up. In the cases provided for in the two preceding paragraphs, the partners of the disappearing companies may act as of right as founders of the new companies and shall proceed in accordance with the provisions of this Book. TITLE 4. DISSOLUTION OF A PRIVATE LIMITED COMPANY Art. 384 : A private limited company may be dissolved for the same reasons applicable to all companies. A private limited company shall not be dissolved where one of the partners has been banned, is bankrupt or incapacitated. Unless otherwise stipulated by the Articles of Association, it shall not be dissolved following the death of a partner. BOOK 4. PUBLIC LIMITED COMPANY TITLE 1. GENERAL PROVISIONS SUB-TITLE 1. FORMATION OF A PUBLIC LIMITED COMPANY CHAPTER 1. GENERAL Section 1. Definition Art. 385 : A public limited company shall be a company in which the liability of each shareholder for the debts of the company is limited to the amount of shares he has taken and his rights are represented by shares. 318

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group A public limited company may have only a single shareholder. Art. 386 : A public limited company shall be known by a company name which shall immediately be preceded or followed in legible characters by the words: “public limited company” or the abbreviation: “plc” and the method of administration of the company as provided for in Article 414 below. Section 2. Authorized capital Art. 387 : The minimum authorized capital shall be fixed at ten million (10,000,000) CFA francs. It shall be divided into shares of a face value of not less than ten thousand (10,000) CFA francs. Art. 388 : The capital of a public limited company shall be fully subscribed before the date of signature of its Articles of Association or holding of the constituent general meeting. Art. 389 : At least one quarter of the face value of shares representing contributions in cash shall be paid up during capital subscription. The rest shall be paid up within a period of not more than three years from the date of registration of the company in the Trade and Personal Property Credit Register, in accordance with the terms and conditions laid down by the Articles of Association or by a decision of the board of directors or of the managing director. Shares representing contributions in cash which have not been fully paid up shall be registered shares. As long as the capital is not fully paid up, the company may neither increase its capital, unless such increase of capital is by contributions in kind, nor issue bonds. CHAPTER 2. FORMATION WITHOUT CONTRIBUTION IN KIND AND WITHOUT STIPULATION OF SPECIAL BENEFITS Section 1. Preparation of allotment letters Art. 390 : Subscription for shares representing contributions in cash shall be established by an allotment letter prepared by the founders of the company or by one of them and dated and signed by the subscriber or by his authorized agent who shall write out entirely in letters the number of shares subscribed. Art. 391 : The allotment letter shall be prepared in two original copies, one of which shall be for the company being formed and the other for the notary responsible for drawing up the statement of subscription and payment. Art. 392 : The allotment letter shall set out: (1) the name of the company to be formed, followed, where necessary, by its acronym; (2) the form of the company; 319

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International Arbitration and Corporate Law (3) the amount of the authorized capital to be subscribed, stating the share of capital represented by contributions in kind and the share to be subscribed in cash; (4) the address of the registered office; (5) the number of shares issued and their face value, indicating, where necessary, the various categories of shares created; (6) the terms and conditions of issue of shares subscribed in cash; (7) the name or business name and address of the subscriber and the number of shares subscribed and the payments made; (8) the indication of the depositary in charge of keeping the funds until the company is registered in the Trade and Personal Property Credit Register; (9) the indication of the notary in charge of drawing up the statement of subscription and payment; (10) the indication of handing over to the subscriber of a copy of the allotment letter. Section 2. Deposit of funds and notarial statement of subscription and payment Art. 393 : Funds derived from subscription for shares issued for cash shall be deposited by the persons who received them, on behalf of the company being formed, either with a notary or in a special account opened in the name of the company at a bank domiciled in the Contracting State of the registered office of the company being formed. The funds shall be deposited within eight days following the receipt thereof. The depositor shall hand over to the bank, at the time of depositing the funds, a list showing the identity of the subscribers and indicating, for each of them, the amount of money paid. The depositary shall be bound, until the funds are withdrawn, to communicate the list referred to in paragraph 3 above to every subscriber who, after showing proof of his subscription, so requests. The applicant may study the list and obtain, at his expense, delivery of a copy thereof. The depositary shall give to the depositor a certificate of deposit attesting the deposit of the funds. Article 394 : On presentation of allotment letters and, where necessary, a certificate issued by the depositary attesting the deposit of funds, the notary shall state in the act he shall draw up, referred to “notarial statement of subscription and payment,” that the amount of subscriptions declared corresponds to the amount appearing on the allotment letters and that the amount paid corresponds to the total sums of money deposited in his chambers or, where necessary, appearing on the certificate referred to above. The certificate issued by the depositary shall be appended to the notarial statement of subscription and payment. The notary shall make the statement available to subscribers who may examine it and obtain a copy thereof in his chambers. Section 3. Drawing up of the Articles of Association Art. 395 : The Articles of Association shall be drawn up in accordance with the provisions of Article 10 of this Uniform Act. 320

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 396 : The Articles of Association shall be signed by all the subscribers personally or by an authorized agent specially empowered for the purpose, after the statement of subscription and payment has been drawn up. Art. 397 : The Articles of Association shall contain the information provided for in Article 13, with the exception of item 6, above. They shall, in addition, mention: (1) the chosen method of administration and management; (2) as the case may be, either the full name, address, profession and nationality of natural persons who are members of the first board of directors of the company or permanent representatives of corporate bodies that are members of the board of directors, or the full name, address, profession and nationality of the managing director and of the first auditor and his alternate; (3) the business name, the amount of capital and the form of corporate bodies that are members of the board of directors; (4) the form of shares issued; (5) provisions relating to the composition, functioning and powers of the organs of the company; (6) where necessary, restrictions to the free negotiability and to the free transfer of shares, as well as the terms of approval and pre-emption of shares. Section 4. Withdrawal of funds Art. 398 : The withdrawal of funds derived from subscriptions in cash may take place only after registration of the company in the Trade and Personal Property Credit Register. Withdrawal shall be effected, depending on the case, by the chairman and managing director, the general manager or the managing director, on presentation to the depositary of the certificate issued by the court Registry attesting the registration of the company in the Trade and Personal Property Credit Register. Any subscriber may, six months after payment of funds, bring an action before the president of the competent court sitting in chambers for the appointment of an agent responsible for withdrawing the funds to give back to the subscribers, subject to the deduction of his distribution costs where, on that date, the company is not registered. CHAPTER 3. FORMATION WITH CONTRIBUTION IN KIND AND/OR STIPULATION OF SPECIAL BENEFITS Section 1. Principle Art. 399 : The formation of public limited companies shall, in addition to the provisions of the preceding chapter which are not to the contrary, be subject to the provisions of this chapter in case of contribution in kind and/or stipulation of special benefits. 321

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International Arbitration and Corporate Law Section 2. Intervention of shares auditor Art. 400 : Contribution in kind and/or special benefits shall be evaluated by a shares auditor. The shares auditor, who shall be chosen from the list of auditors according to the procedure laid down in Articles 694 et seq. of this Uniform Act, shall be designated unanimously by the future partners of the company or, failing this, by the president of the competent court, at the request of the founders of the company or of one of them. Art. 401 : The shares auditor shall be responsible for drawing up a report describing each of the contributions and/or special benefits, showing their value, stating the method of evaluation chosen and the reasons for the choice, and asserting that the value of the contributions and/or special benefits corresponds to at least the face value of the shares to be issued. Art. 402 : The shares auditor shall, in the accomplishment of his task, enlist the assistance of one or more experts of his choice. The fees of these experts shall be borne by the company, unless otherwise provided for in the Articles of Association. Art. 403 : The shares auditor’s report shall be deposited at the address of the registered office at least three days before the date of the constituent general meeting. It shall be made available to the subscribers who may examine it or obtain a complete or partial copy thereof at their expense. Section 3. Constituent general meeting Art. 404 : The constituent general meeting shall be convened by the founders after the notarial statement of subscription and payment of funds has been drawn up. Notice of the meeting shall be by hand delivered letter against acknowledgement of receipt or by registered letter with request for advice of delivery, indicating the agenda, venue, date and time of the meeting. Notice of the meeting shall be addressed to each subscriber at least fifteen days before the date of the meeting. Art. 405 : The proceedings of the meeting shall only be valid where the subscribers present or represented hold at least half of the shares issued. Where the quorum is not met, a second invitation shall be addressed to the subscribers no later than six days before the date fixed for the meeting. On the second invitation, the proceedings of the meeting shall be valid only where the subscribers present or represented hold at least one quarter of the shares issued. Where this latter quorum is not met, the meeting shall be held within two months from the date

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group fixed in the second invitation. The subscribers shall be convened at least six days before the date of the meeting. On the third invitation, the proceedings of the meeting shall be valid only where the quorum conditions referred to in the second paragraph above are met. Art. 406 : Decisions of the meeting shall be taken by a two-thirds majority of the votes of the subscribers present or represented, subject to the provisions of Articles 409 and 410 paragraph 2 of this Uniform Act. Blank votes shall not be taken into consideration in computing the majority. Art. 407 : The holding of the meeting shall be subject to the provisions of Article 529 et seq. of this Uniform Act that are not repugnant hereto, in particular as concerns the constitution of its bureau and the rules of representation and participation in the meeting. It shall be presided over by the shareholder with the highest number of shares or, failing this, by the oldest shareholder. Art. 408 : Each contribution in kind and each special benefit shall be the object of a special vote by the meeting. The meeting shall approve or disapprove the shares auditor’s report on the evaluation of contributions in kind and the grant of special benefits. The shares of the contributor or of the beneficiary of special benefits, even where he is also a cash subscriber, shall not be taken into account when computing the quorum and the majority and the contributor or the beneficiary of special benefits shall not vote either by himself or as authorized agent. Art. 409 : The meeting shall reduce the value of contributions in kind or of special benefits only unanimously by the subscribers and with the express consent of the contributor or the beneficiary. The consent of the contributor or of the beneficiary shall be mentioned in the minutes where the value given the goods contributed or the special benefits provided for is different from the value adopted by the shares auditor. The shareholders and the directors or the managing director, as the case may be, shall be jointly liable vis-à-vis third parties for a period of five years for the value given the contributions and/or the special benefits. Art. 410 : Furthermore, the constituent general meeting shall: (1) ascertain that the capital is fully subscribed and that the shares are paid up under the conditions laid down in Articles 388 and 389 of this Uniform Act; (2) adopt the Articles of Association of the company which it shall amend only unanimously by all the subscribers;

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International Arbitration and Corporate Law (3) appoint the first directors or managing director, as the case may be, as well as the first auditor; (4) take a decision on the acts done on behalf of the company being formed, in accordance with the provisions of Article 106 of this Uniform Act, upon a report drawn up by the founders; (5) give, where necessary, authority to one or more members of the board of directors or to the managing director, as the case may be, to enter into commitments on behalf of the company before its registration in the Trade and Personal Property Credit Register, under the conditions laid down in Article 111 of this Uniform Act. Art. 411 : The minutes of the meeting shall indicate the date and venue of the meeting, the type of meeting, the method of convening it, the agenda, the quorum, the resolutions put to vote and, where necessary, the quorum and voting conditions for each resolution and the result of voting for each of them. The minutes shall be signed, as the case may be, by the session Chairman and by one other member, or by the sole member, and shall be filed at the registered office, together with the attendance sheet and its appendices. They shall indicate, where necessary, the acceptance of their appointments by the first members of the board of directors or by the managing director, as the case may be, as well as by the first auditor. Art. 412 : Any constituent general meeting irregularly convened shall be cancelled under the conditions laid down in Articles 242 et seq. of this Uniform Act. However, no action for nullity of the meeting shall be admissible where all the shareholders were present or represented. Art. 413 : The founders of the company responsible for the nullity of the constituent general meeting and the directors or the managing director, as the case may be, in office at the time when the nullity was pronounced may be declared jointly liable for damage suffered by third parties as a result of the nullity of the company. SUB-TITLE 2. ADMINISTRATION AND MANAGEMENT OF A PUBLIC LIMITED COMPANY CHAPTER 1. GENERAL PROVISIONS Art. 414 : The method of administration of each public limited company shall be clearly defined by its Articles of Association which shall choose between: - a public limited company with a board of directors; or - a public limited company with a managing director.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group A public limited company may, during its life, change at any time its method of administration and management. The decision shall be taken by an extraordinary general meeting of shareholders which shall amend the Articles of Association accordingly. The amendments shall be entered in the Trade and Personal Property Credit Register.

CHAPTER 2. PUBLIC LIMITED COMPANY WITH BOARD OF DIRECTORS Art. 415 : A public limited company with a board of directors shall be managed either by a chairman and managing director or by a chairman of the board of directors and a general manager. Section 1. Board of directors Sub-section 1. Composition of board of directors Paragraph 1. Number and appointment of directors Art. 416 : A public limited company may be administered by a board of directors comprising not less than three and not more than twelve members. Art. 417 : Not more than one-third of the members of the board shall be non shareholders of the company. Directors who are not shareholders of the company shall be subject to the provisions of Articles 416 to 434 of this Uniform Act. Art. 418 : The number of directors of a public limited company may be temporarily exceeded, in case of a merger with one or more companies, by up to the total number of directors who have been in office for more than six months in the companies merged; the number of directors shall however not exceed twenty-four. Directors who are dead, dismissed or who have resigned may not be replaced and new directors may not be appointed, save during a new merger and as long as the number of directors in office has not been reduced to twelve. Art. 419 : The first directors shall be designated by the Articles of Association or, where necessary, by the constituent general meeting. During the existence of the company, the directors shall be nominated by the ordinary general meeting. However, in case of a merger, an extraordinary general meeting may appoint new directors. Any appointment in violation of the provisions of this article shall be null and void.

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International Arbitration and Corporate Law Paragraph 2. Term of office of directors Art. 420 : The term of office of directors shall be freely fixed by the Articles of Association, but shall not exceed six years in case of appointment during the existence of the company and two years in case of nomination by the Articles of Association or by the constituent general meeting. Paragraph 3. Nomination of the permanent representative of a corporate body that is member of the board of directors and his term of office Art. 421 : A corporate body may be appointed director. It shall, on its appointment, nominate, by hand-delivered letter with acknowledgement of receipt or by registered letter with acknowledgement of receipt addressed to the company, a permanent representative for his term of office. Although the permanent representative so nominated is not personally a director of the company, he shall be subject to the same conditions and obligations and shall incur the same civil and criminal liabilities as if he were director in his own name, without prejudice to the joint and several liability of the corporate body that he represents. A permanent representative may or not be a shareholder of the company. Art. 422 : The permanent representative shall perform his duties during the term of office of the corporate body that he represents. The corporate body shall, each time its term of office is renewed, state whether it maintains the same physical person as its permanent representative or nominate, on the spot, another permanent representative. Art. 423 : Where a corporate body terminates the appointment of its permanent representative, it shall be bound to immediately notify the company, by hand-delivered letter with acknowledgement of receipt or by registered letter with acknowledgement of receipt delivery, of such termination as well as of the identity of his new permanent representative. The same shall apply in the event of death or resignation of the permanent representative or for any reason that may prevent him from performing his duties. Paragraph 4. Elections Art. 424 : The conditions for the election of directors shall be freely laid down in the Articles of Association which may provide for the distribution of the offices of director according to the categories of shares. However, and subject to the provisions of this Uniform Act, such distribution shall neither deprive the shareholders of their eligibility to the board of directors nor a category of shares of its representation on the board. The directors shall be eligible for re-election unless otherwise provided for in the Articles of Association. Any appointment made in violation of the provisions of this article shall be null and void.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 425 : A natural person who is director in his own name or permanent representative of a corporate body that is director shall not at the same time be a member of more than five boards of directors of public limited companies having their registered office on the territory of the same Contracting State. Any natural person who, on taking up a new term of office, infringes the provisions of the preceding paragraph shall, within a period of three months following his appointment, resign from one of the boards of directors. At the expiry of this deadline, he shall be deemed to have given up the new term of office and shall refund all remuneration received in whatever form, without the validity of proceedings in which he took part being called into question. Art. 426 : Unless otherwise provided for in the Articles of Association, a worker of a company may be appointed director where his contract of employment corresponds to an effective job. Likewise, a director may conclude a contract of employment with the company where such contract corresponds to an effective job. In this case, the contract shall be subject to the provisions of Articles 438 et seq. of this Uniform Act. Art. 427 : The appointment of directors shall be registered in the Trade and Personal Property Credit Register. The nomination of a permanent representative shall be subject to the same registration formalities as if he were a director in his own name. Art. 428 : Decisions taken by an irregularly constituted board of directors shall be null and void. They shall be disposed of in accordance with the provisions of Articles 242 et seq. of this Uniform Act. Paragraph 5. Vacancy on the board of directors Art. 429 : In the event of one or more vacancies on the board of directors due to death or resignation, the board may co-opt, between two meetings, new directors. Where the number of directors is below the statutory minimum or where the number of directors who are shareholders of the company is less than two-thirds of the members of the board, the board of directors shall, within a period of three months following the vacancy, appoint new directors to complete the number. Decisions taken by the board during this period shall be valid. Where the number of directors falls below the legal minimum, the remaining directors shall immediately convene an ordinary general meeting to complete the number of members of the board of directors. Where the board fails to make the required appointments, or to convene a general meeting for this purpose, any party concerned may, by petition addressed to the president of the

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International Arbitration and Corporate Law competent court, request the nomination of an agent charged with convening an ordinary general meeting to make the appointments provided for in this article or to ratify them. The vacancy and appointments of new directors shall only take effect after the session of the board of directors held for this purpose. Appointments by the board of directors of new directors shall be submitted to the very next ordinary general meeting for ratification. Where the ordinary general meeting refuses to ratify the new appointments, the decisions of the board of directors shall nevertheless be valid and shall have all their effects with respect to third parties. Paragraph 6. Remuneration Art. 430 : The directors may not, apart from the sums of money paid them under a contract of employment, receive, for their duties, any remuneration, whether or not permanent, other than those referred to in Articles 431 and 432 of this Uniform Act. The provisions of this article shall not apply to dividends that are regularly shared among shareholders. Any statutory clause to the contrary shall be considered unwritten. Similarly, any decision to the contrary shall be null and void. Art. 431 : The ordinary general meeting may grant the directors, as remuneration for their activities, a fixed annual duty allowance which it shall freely determine. Directors who are shareholders shall take part in voting by the meeting and their shares shall be taken into account in computing the quorum and the majority. Unless otherwise provided for in the Articles of Association, the board of directors shall freely share the duty allowances among its members. Art. 432 : The board of directors may also grant its members special remuneration for the missions and tasks entrusted to them, or authorize the reimbursement of travel and subsistence costs and expenses incurred in the interest of the company, subject to the provisions of Articles 438 et seq. of this Uniform Act. Such remuneration and costs shall be the object of a special report of the auditor to the meeting. Paragraph 7. End of the duties of director Art. 433 : Save in the case of resignation, dismissal or death, the duties of the directors shall end at the close of the ordinary general meeting held in the year during which their term of office expires to adjudicate upon the accounts of the fiscal year. The directors may be dismissed at any time by the ordinary general meeting.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 434 : The resignation or dismissal of a director shall be entered in the Trade and Personal Property Credit Register. Sub-section 2. Powers of the board of directors Paragraph 1. Scope Art. 435 : The board of directors shall have the widest powers to act in all circumstances on behalf of the company. It shall exercise its powers within the limits of the objects of the company and subject to those expressly conferred by this Uniform Act to meetings of shareholders. The board of directors shall, in particular: (1) define the company’s objectives and guidelines for its administration; (2) control, on a permanent basis, the management of the chairman and managing director or of the general manager, depending on the method of management adopted; (3) adopt the accounts of each fiscal year. The provisions of the Articles of Association or the decisions of the general meeting restricting the powers of the board of directors shall not be demurrable to third parties. Art. 436 : The decisions of the board of directors, including those that do not relate to the objects of the company, shall be binding on the company in its relations with third parties, under the conditions and within the limits stipulated in Article 122 of this Uniform Act. Art. 437 : The board of directors may entrust to one or more of its members any special tasks for one or more specific objects. Paragraph 2. Regulated agreements Art. 438 : All agreements between a public limited company and any of its directors, general managers or assistant general managers shall be subject to the prior authorization of the board of directors. The same shall apply to agreements indirectly involving a director or general manager or assistant general manager, or in which he deals with the company through a third party. Agreements between a company and an enterprise or a corporate body shall also be subject to the prior authorization of the board of directors where one of the directors or a general manager or an assistant general manager of the company is owner of the enterprise or a partner indefinitely liable, manager, director, managing director, assistant managing director, general manager or assistant general manager of the contracting corporate body. Art. 439 : Authorization shall not be necessary where the agreements concern ordinary transactions concluded under normal conditions.

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International Arbitration and Corporate Law Ordinary transactions shall be transactions habitually carried out by a company as part of its activities. Normal conditions shall be conditions that are applied, for similar agreements, not only by the company in question, but also by the other companies in the same sector of activity. Art. 440 : The director concerned shall be bound to inform the board of directors as soon as he is aware of an agreement subject to authorization. He shall not take part in voting on the authorization applied for. The chairman of the board of directors or the chairman and managing director shall inform the auditor, within one month following their conclusion, of all agreements authorized by the board of directors and shall submit them for the approval of the ordinary general meeting adjudicating on the accounts of the past fiscal year. The auditor shall submit a special report on these agreements to the ordinary general meeting which shall give a decision on the report and approve or disapprove the agreements authorized. The report shall contain a list of agreements submitted for the approval of the ordinary general meeting, the name of the directors concerned, the nature and object of the agreements, their essential terms notably an indication of the price or rates in force, rebates or commissions granted, securities provided and, where necessary, any other information that would enable shareholders assess the interest in concluding the agreements examined. It shall also make mention of the quantity of supplies delivered and services rendered, as well as the sums of money paid or received during the fiscal year, in implementation of the agreements referred to in the third paragraph of this article. The party concerned shall not take part in voting and his shares shall not be taken into consideration when computing the quorum and the majority. Where the implementation of the agreements concluded and authorized during preceding fiscal years is continued during the last fiscal year, the auditor shall be informed of such situation within one month following the close of the fiscal year. Art. 441 : The auditor shall be responsible for ensuring compliance with the provisions of Articles 438 to 448 of this Uniform Act and shall denounce any infringement thereof in his report to the general meeting. Art. 442 : The auditor shall prepare and submit the special report provided for by Articles 438 and 448 of this Uniform Act to the registered office of the company no later than fifteen days before the session of the ordinary general meeting. Art. 443 : Agreements approved or disapproved by the ordinary general meeting shall have their effects with respect to co-contractors and third parties except where such agreements are cancelled for fraud. 330

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group However and even where there is no fraud, the harmful consequences on the company of agreements disapproved by the general meeting may be borne by the director concerned and, eventually, by the other members of the board of directors. Art. 444 : Without prejudice to the liability of the director concerned, the agreements referred to in Article 438 of this Uniform Act which are concluded without the prior authorization of the board of directors shall be cancelled where they have had harmful consequences on the company. Art. 445 : Action for cancellation shall lapse after three years following the date of conclusion of the agreement. However, where the agreement had been concealed, the time limit shall start running from the day the agreement was uncovered. Art. 446 : Action for cancellation may be instituted by the organs of the company or by any shareholder acting individually. Art. 447 : The nullity may be avoided by a special vote of the ordinary general meeting upon a special report by the auditor stating the reasons why the authorization procedure was not followed. The director or the general manager concerned shall not take part in the voting and his shares shall not be taken into consideration in computing the quorum and the majority. Art. 448 : The provisions of Articles 438 to 448 of this Uniform Act shall be applicable to the general manager and the assistant general manager. Paragraph 3. Securities, guarantees and sureties Art. 449 : Securities, guarantees, sureties and on-demand sureties given by the company for commitments entered into by third parties shall be the object of prior authorization of the board of directors. The board of directors may authorize the chairman and managing director or the general manager, as the case may be, to give securities, guarantees, sureties and on-demand sureties for a total amount to be fixed by the Board. The authorization may also fix, per commitment, an amount above which the security, guarantee, surety or on-demand surety of the company may not be given. Where a commitment exceeds either of the amounts so fixed, the authorization of the board of directors shall be required in each case. The duration of the authorization provided for in the preceding paragraph shall not be more than one year no matter the duration of the commitments for which security, guarantee or surety has been given. 331

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International Arbitration and Corporate Law Notwithstanding the provisions of the preceding paragraphs, the chairman and managing director or the general manager, as the case may be, may be authorized to give, with respect to tax and customs services, securities, guarantees, sureties or on-demand sureties of an unlimited amount on behalf of the company. The chairman and managing director or the general manager, according to the circumstances, may delegate his powers in pursuance of the preceding paragraphs. Where the securities, guarantees, sureties or on-demand sureties have been given for a total amount exceeding the maximum fixed for the current period, it shall not affect third parties who are unaware of this fact unless the amount of the commitment in question alone exceeds one of the maximum fixed by decision of the board of directors taken in pursuance of the provisions of this article. Paragraph 4. Forbidden agreements Art. 450 : Directors, general managers and assistant general managers, as well as their spouse, ascendants or descendants and through other third parties shall, under penalty of the agreement being declared null and void, be forbidden to contract, in any form whatsoever, loans from the company, to have it grant them a current account overdraft or otherwise, and to have the company provide security or guarantee for their commitments towards third parties. This prohibition shall not apply to corporate bodies that are members of the board of directors. However, their permanent representative, when acting in his personal interest, shall also be subject to the provisions of the first paragraph of this article. Where the company runs a banking or financial institution, such prohibition shall not apply to ordinary transactions concluded under normal terms. Paragraph 5. Other powers of the board of directors Art. 451 : The board of directors may decide to transfer the registered office of the company to a different place within the territory of the same Contracting State and amend the Articles of Association accordingly, subject to ratification of the decision by the very next ordinary general meeting. Such decision shall entail powers to amend the Articles of Association. The registration formalities referred to in Articles 263 and 264 of this Uniform Act shall be applicable to the decision. Where the transfer of the registered office is not ratified by the general meeting, the decision of the board of directors shall be void. New publicity formalities shall therefore be performed in order to inform third parties of the return to the former registered office. Art. 452 : The board of directors shall adopt the summary financial statements and the progress report of the company which shall be submitted to the ordinary general meeting for approval. 332

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Sub-section 3. Functioning of the board of directors Paragraph 1.Convening and proceedings of the board of directors Art. 453 : The Articles of Association shall, subject to the provisions of this Uniform Act, lay down the rules governing the convening and the proceedings of the board of directors. The board of directors shall, on the invitation of its chairman, meet as often as possible. However, where the board of directors has not met for more than two months, it may be convened by at least one third of its members who shall indicate the session’s agenda. The proceedings of the board of directors shall only be valid if all its members were duly invited to the meeting. Art. 454 : The proceedings of the board of directors shall be valid only where at least half of its members are present. Any clause to the contrary shall be deemed unwritten. Decisions of the board of directors shall be taken by a majority of the members present or represented, unless the Articles of Association provide for a higher majority. In case of a tie, the session chairman shall have the casting vote, unless otherwise provided for in the Articles of Association. Any decision taken in violation of the provisions of this article shall be null and void. Art. 455 : Directors as well as any person invited to take part in meetings of the board of directors shall be bound by secrecy regarding information of a confidential nature considered as such by the session chairman. Art. 456 : Except where there is a clause to the contrary in the Articles of Association, a director may give, by letter, telex or telefax, a power of attorney to another director to represent him at a session of the board of directors. Each director shall have, during the same session, only one single power of attorney. The provisions of this article shall be applicable to permanent representatives of corporate bodies. Art. 457 : Sessions of the board of directors shall be presided over by the chairman of the board of directors. Where the chairman of the board of directors is unable to attend, sessions of the board shall be chaired by the director with the highest number of shares or, in case of equality, by the oldest director, unless otherwise provided for by the Articles of Association. Paragraph 2. Report of the board of directors Art. 458 : Minutes of the proceedings of the board of directors shall be entered in a special register kept at the registered office of the company. It shall be numbered and initialled by the judge of the competent court. 333

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International Arbitration and Corporate Law However, minutes may be taken on loose-leaves which shall be numbered serially, initialled under the conditions laid down in the preceding paragraph and stamped by the authority that initialled them. Once a leaf has been filled, even partially, it shall be attached to the previously used leaves. Any addition, removal, substitution or inversion of leaves is forbidden. The minutes shall mention the date and venue of the board meeting and shall indicate the name of the directors present, represented or absent and not represented. They shall equally mention the presence or absence of persons invited to the meeting of the board of directors by virtue of a legal provision and the presence of any other person who attended all or part of the meeting. Art. 459 : Minutes of the board of directors shall be certified as true by the session chairman and by at least one director. Where the session chairman is unable to attend, they shall be signed by at least two directors. Art. 460 : Copies of or extracts from minutes of the board of directors shall be validly certified by the board chairman, the general manager or, failing this, by an attorney- in-fact duly appointed to do so. Where the company is being wound up, the copies of or extracts from the minutes shall be validly certified by the liquidator. Art. 461 : Minutes of the deliberations of the board of directors shall be authentic until the contrary is proved. The production of a copy of or an extract from these minutes shall be sufficient proof of the number of directors in office as well as their presence or their representation at a session of the board of directors. Section 2. Chairman and Managing Director Paragraph 1. Appointment and term of office Art. 462 : The board of directors shall appoint a chairman and managing director from among its members. Under penalty of his appointment being declared null, the chairman and managing director shall be a natural person. Art. 463 : The term of office of the chairman and managing director shall not exceed his term of office as director. The chairman and managing director’s mandate shall be renewable.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 464 : No person shall hold simultaneously more than three offices as chairman and managing director of public limited companies having their registered office on the territory of the same Contracting State. Likewise, a term of office as chairman and managing director shall not be held concurrently with more than two appointments as managing director or general manager of public limited companies having their registered office on the territory of the same Contracting State. The provisions of paragraphs 2 and 3 of Article 425 of this Uniform Act relating to the plurality of offices as director shall be applicable to the chairman and managing director. Paragraph 2. Duties and remuneration of the chairman and managing director Art. 465 : The chairman and managing director shall preside over the meetings of the board of directors and the general meetings of shareholders. He shall ensure the general management of the company and represent same in its relations with third parties. He shall, for the performance of his duties, be given the widest possible powers which he shall 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 the laws and regulations in force. The company shall, in its relations with third parties, be bound even by the acts of the chairman and managing director which do not fall within the scope of the objects of the company, under the conditions and within the limits laid down in Article 122 of this Uniform Act. The provisions of the Articles of Association, the decisions of general meetings or of the board of directors restricting the powers of the chairman and managing director shall not be demurrable to third parties acting in good faith. Art. 466 : The chairman and managing director may be bound to the company by a contract of employment concluded under the conditions laid down in Article 426 of this Uniform Act. Art. 467 : The terms and amount of remuneration of the chairman and managing director shall be determined by the board of directors under the conditions laid down in Article 430 of this Uniform Act. Benefits in kind granted him, where necessary, shall be fixed in the same manner as for his remuneration. The chairman and managing director shall receive no other remuneration from the company.

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International Arbitration and Corporate Law Paragraph 3 : Impediment and dismissal of the chairman and managing director Art. 468 : In the event of the chairman and managing director being temporarily prevented from attending to his duties, the board of directors may delegate the duties of chairman and managing director to another director. In the case of death, resignation or dismissal of the chairman and managing director, the board shall appoint a new chairman and managing director or delegate the duties of chairman and managing director to a director. Art. 469 : The chairman and managing director may be dismissed at any time by the board of directors. Paragraph 4. Assistant managing director Art. 470 : The board of directors may, on the proposal of the chairman and managing director, appoint one or more natural persons to assist the chairman and managing director as assistant managing director. Art. 471 : The board of directors shall freely fix the term of office of the assistant managing director. Where he is a director, his term of office shall not exceed his term of office as director. The mandate of the assistant managing director shall be renewable. Art. 472 : The board of directors shall, in agreement with the chairman and managing director, determine the scope of powers to be delegated to the assistant managing director. The assistant managing director shall, in his relations with third parties, have the same powers as those of the chairman and managing director. He shall commit the responsibility of the company by his acts, including those which do not fall within the scope of the objects of the company, under the conditions and within the limits laid down in Article 122 of this Uniform Act. The provisions of the Articles of Association, the decisions of the board of directors or of general meetings restricting the powers of the assistant managing director shall not be demurrable to third parties. Art. 473 : The assistant managing director may be bound to the company be a contract of employment concluded under the conditions laid down in Article 426 of this Uniform Act. Art. 474 : The terms and the amount of the assistant managing director’s remuneration shall be determined by the board of directors which appoints him. Art. 475 : The board of directors may, in agreement with the chairman and managing director, dismiss the assistant managing director at any time. 336

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 476 : The appointment of the assistant managing director shall normally end at the expiry of his term of office. However, in the case of death, resignation or dismissal of the chairman and managing director, the assistant managing director shall stay in office until a new chairman and managing director is appointed, unless otherwise decided by the board of directors. Section 3. Chairman of the board of directors and general manager Sub-section 1. Chairman of the board of directors Paragraph 1. Appointment and term of office of the chairman of the board of directors Art. 477 : The board of directors shall appoint a chairman from among its members. He shall be a natural person. Art. 478 : The mandate of the chairman of the board of directors shall not exceed his term of office as director. The term of office of the chairman of the board of directors shall be renewable. Art. 479 : No person shall hold simultaneously more than three offices as chairman of the board of directors of public limited liability companies having their registered office on the territory of the same Contracting State. Likewise, an office as chairman of the board of directors shall not be held concurrently with more than two appointments as managing director or general manager of public limited companies having their registered office on the territory of the same Contracting State. The provisions of paragraphs two and three of Article 425 of this Uniform Act relating to the plurality of offices as director shall be applicable to the chairman of the board of directors. Paragraph 2 : Duties and remuneration of the chairman of the board of directors Art. 480 : The chairman of the board of directors shall preside over the meetings of the board of directors and the general meetings of shareholders. He shall ensure that the board of directors assures control of the management of the company entrusted to the general manager. The chairman of the board of directors shall, at any period of the year, carry out the verifications that he deems necessary and may request all the documents that he considers relevant for the accomplishment of his mission to be submitted to him. Art. 481 : The chairman of the board of directors may be bound to the company by a contract of employment concluded under the conditions laid down in Article 426 of this Uniform Act. 337

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International Arbitration and Corporate Law Art. 482 : The board of directors shall determine the terms and amount of remuneration of its chairman, under the conditions laid down in Article 430 of this Uniform Act. Benefits in kind granted him, where necessary, shall be fixed in the same manner as for his remuneration. Paragraph 3. Impediment and dismissal of the chairman of the board of directors Art. 483 : In the event of the chairman being temporarily prevented from attending to his duties, the board of directors may delegate the duties of chairman to one of its members. In the case of death, resignation or dismissal of the chairman, the board of directors shall appoint a new chairman or delegate the duties of chairmen to a director. Art. 484 : The board of directors may dismiss its chairman at any time. Any provision to the contrary shall be deemed unwritten. Sub-section 2. General Manager Paragraph 1. Appointment and term of office of the general manager Art. 485 : The board of directors shall appoint, from among its members or outside, a general manager who shall be a natural person. The board of directors may, on the proposal of the general manager, appoint one or more natural persons to assist the general manager in the capacity of assistant general manager, under the conditions laid down in Articles 471 to 476 of this Uniform Act. Art. 486 : The board of directors shall freely fix the term of office of the general manager. The general manager’s mandate shall be renewable. Paragraph 2. Duties and remuneration of the general manager Art. 487 : The general manager shall ensure the general management of the company. He shall represent the company in its relations with third parties. He shall, for the performance of his duties, be given the widest possible powers which he shall exercise within the limits of the objects of the company and subject to the powers expressly conferred to the general meetings or specially reserved for the board of directors by the laws and regulations in force. Art. 488 : The company shall, in its relations with third parties, be bound by even the acts of the general manager which do not fall within the scope of the objects of the company, under the conditions and within the limits laid down in Article 122 of this Uniform Act. The provisions of the Articles of Association, the decisions of general meetings or of the board of directors restricting the powers of the general manager shall not be demurrable to third parties acting in good faith. 338

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 489 : The general manager may be bound to the company by a contract of employment concluded under the conditions laid down in Article 426 of this Uniform Act. Art. 490 : The terms and the amount of the remuneration of the general manager shall be determined by the board of directors which appoints him. Benefits in kind granted him, where necessary, shall be fixed in the same manner as for his remuneration. Paragraph 3. Impediment and dismissal of the general manager Art. 491 : In the event of the general manager being temporarily or permanently prevented from attending to his duties, the board of directors shall immediately replace him by appointing, on the proposal of its chairman, a new general manager. Art. 492 : The general manager may be dismissed at any time by the board of directors. Art. 493. Except in the case of death, resignation or dismissal, the appointment of the general manager shall normally end at the expiry of his term of office. CHAPTER 3. PUBLIC LIMITED COMPANY WITH MANAGING DIRECTOR Section 1. General provisions Art. 494 : Public limited liability companies with not more than three shareholders may not form a board of directors and may appoint a managing director who shall be responsible for administering and managing the company. In this case, the provisions of the first paragraph of Article 417 shall not apply. Section 2. Appointment and mandate of the managing director Art. 495 : The first managing director shall be designated by the Articles of Association or appointed by the constituent general meeting. During the existence of the company, the managing director shall be appointed by the ordinary general meeting. He shall be chosen from among the shareholders or outside. Art. 496 : The term of office of the managing director shall be freely determined by Articles of Association. It shall not be more than six years in the case of appointment during the existence of the company and two years in the case of designation by the Articles of Association or appointment by the constituent general meeting. His mandate shall be renewable. Art. 497 : No person shall hold simultaneously more than three offices as managing director of public limited companies having their registered office on the territory of the same Contracting State. 339

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International Arbitration and Corporate Law Likewise, an office as managing director shall not be held concurrently with more than two appointments as chairman and managing director or general manager of public limited companies having their registered office on the territory of the same Contracting State. A director who, on appointment to a new office, infringes the provisions of the first and second paragraphs of this article shall, within three months of his appointment, resign from one of his offices. He shall, at the expiry of this deadline, be deemed to have resigned from his new office and shall refund all remuneration received, in any form whatsoever, without the validity of decisions taken by him being called into question because of such resignation. Section 3. Duties and remuneration of the managing director Art. 498 : The managing director shall be responsible for ensuring the administration and general management of the company. He shall represent the company in its relations with third parties. He shall convene and preside over general meetings of shareholders. He shall be given the widest possible powers to act in all circumstances on behalf of the company, which powers he shall exercise within the limits of the objects of the company and subject to the powers expressly conferred on general meetings of shareholders by this Uniform Act and, where appropriate, by the Articles of Association. The company shall, in its relations with third parties, be bound even by the acts of the managing director which do not fall within the scope of the objects of the company, under the conditions and within the limits laid down in Article 122 of this Uniform Act. The provisions of the Articles of Association or the resolutions of the general meeting of shareholders restricting the powers of the managing director shall not be demurrable to third parties acting in good faith. Art.499 : The managing director may be bound to the company by a contract of employment, on condition that such contract corresponds to an effective job. The contract of employment shall be subject to prior authorization by the general meeting of shareholders. Art.500 : The managing director shall not, apart from the sums of money paid him under a contract of employment, receive for his duties remuneration, permanent or otherwise, other than that referred to in Article 501 of this Uniform Act. Any statutory clause to the contrary shall be deemed unwritten. Likewise, any decision to the contrary taken by the general meeting of shareholders shall be null and void. Art. 501 : The ordinary general meeting of shareholders may grant the managing director a fixed annual duty allowance as remuneration for his activities.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group The meeting may also grant the managing director special remuneration for missions and tasks entrusted to him, or authorize the reimbursement of travel and subsistence costs and expenses incurred in the interest of the company. Benefits in kind granted him, where necessary, shall be fixed in the same manner as for his remuneration. Section 4. Regulated agreements Art. 502 : The managing director shall submit to the ordinary general meeting of shareholders adjudicating on the summary financial statements of the past fiscal year a report on the agreements he has concluded with the company, directly or indirectly, or through third parties and on the agreements signed with a corporate body of which he is the owner, a partner indefinitely liable or, in general, the manager. The provisions of this article shall not be applicable to agreements relating to ordinary transactions concluded under normal terms as described in Article 439 above. Art. 503 : The managing director shall inform the auditor of the said agreements within a period of one month following the conclusion thereof and, in any case, no later than fifteen days before the date of the annual ordinary general meeting of shareholders. The auditor shall submit a report on these agreements to the ordinary general meeting of shareholders. The report shall mention the number of agreements submitted for the approval of the meeting, state the type of agreements, mention the products or services that are the object of the agreements, their essential terms, notably an indication of the prices and rates imposed, rebates or commissions granted, sureties given and, where appropriate, all other information that would enable the shareholders to assess the interest in concluding the agreements. Art. 504 : Agreements approved or disapproved by the general meeting shall have all their effects with regard to co-contractors and third parties. However, any prejudicial consequences of agreements disapproved by the general meeting on the company may be borne by the managing director. Art. 505 : The provisions of Articles 502 and 503 of this Uniform Act shall not apply where the managing director is the sole shareholder of the public limited company. The provisions of Articles 502 to 504 of his Uniform Act shall be applicable to the managing director and the assistant managing director. Section 5. Securities, guarantees and sureties Art. 506 : Securities, guarantees, sureties or on-demand sureties given by the managing director or by the assistant managing director shall be demurrable to the company only

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International Arbitration and Corporate Law where they were authorized in advance by the ordinary general meeting of shareholders either as a general or special measure. However, such restriction shall not apply to securities, guarantees and sureties given by the managing director or by the assistant managing director acting on behalf of the company, to customs and taxation services. Section 6. Forbidden agreements Art. 507 : The managing director or the assistant managing director, as well as their spouses, ascendants, descendants and by third parties shall, under penalty of the agreement being declared null and void, be forbidden to contract, in any form whatsoever, loans from the company, to have it grant them a current account overdraft or otherwise, as well as to have the company provide security or guarantee for their commitments towards third parties. However, where the company is a banking or financial institution it may grant its managing director or its assistant managing director, in whatever form, a loan, a current account overdraft or otherwise, a security, a guarantee or any other surety where the agreements relate to ordinary transactions concluded under normal terms. Section 7. Impediment and dismissal of the managing director Art. 508 : In the even of the managing director being temporarily prevented from attending to his duties, they shall be performed temporarily by the assistant managing director. Where an assistant managing director has not been appointed, the duties of the managing director shall be performed temporarily by any person that the ordinary general meeting of shareholders deems appropriate to appoint. In the case of death or resignation of the managing director, his duties shall be performed by the assistant managing director until the appointment, by the very next ordinary general meeting of shareholders, of a new managing director. Art. 509 : The managing director may be dismissed at any time by the general meeting of shareholders. Any clause to the contrary shall be deemed unwritten. Section 8. Assistant managing director Art. 510 : The general meeting of shareholders may, on the proposal of the managing director, appoint one or more natural persons to assist the managing director as assistant managing director. Art. 511 : The meeting shall freely fix the term of office of the assistant managing director. The mandate of the assistant managing director shall be renewable. 342

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 512 : The general meeting of shareholders shall, in agreement with the managing director, determine the powers to be delegated to the assistant managing director. Statutory clauses or decisions of the general meeting of shareholders restricting the powers of the assistant managing director shall not be demurrable to third parties. Art. 513 : The assistant managing director may be bound to the company by a contract of employment, on condition that such employment is effective. The contract of employment shall be submitted to the ordinary general meeting of shareholders for prior authorization. Art. 514 : The terms and amount of the remuneration of the assistant managing director as well as the benefits in kind to be granted him shall be determined by the ordinary general meeting of shareholders. Art. 515 : The ordinary general meeting of shareholders may, on the proposal of the managing director, dismiss the assistant managing director at any time. SUB-TITLE 3. GENERAL MEETINGS CHAPTER 1. RULES COMMON TO ALL MEETINGS OF SHAREHOLDERS Section 1. Convening of the meeting Art. 516 : The meeting of shareholders shall be convened by the board of directors or by the managing director, as the case may be. Failing this, it may be convened: (1) by the auditor, after he has, in vain, requested the board of directors or the managing director, as the case may be, by hand-delivered letter with acknowledgement of receipt or by registered letter with notification of reception, to convene the meeting. Where the auditor convenes a meeting, he shall determine the agenda and may, for vital reasons, choose a venue for the meeting other than the one, if any, provided for by the Articles of Association. He shall state the reasons for the invitation in a report read to the meeting; (2) by an agent appointed by the president of the competent court giving a summary judgment, at the request of either any party concerned in the case of an emergency or of one or more shareholders representing at least one- tenth of the company’s capital in the case of a general meeting or one-tenth of the shares of the category concerned in the case of a special meeting; (3) by the liquidator. Art. 517 : Except otherwise provided for in the Articles of Association, meetings of shareholders shall be held at the registered office of the company or at any other place on the territory of the Contracting State of the registered office. 343

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International Arbitration and Corporate Law Art. 518 : Subject to the provisions of this article, the Articles of Association of the company shall lay down the rules of convening meetings of shareholders. Meetings shall be convened by a convening notice which shall be inserted in a newspaper empowered to publish legal notices. Where all the shares are registered, the insertion provided for in the preceding paragraph may be replaced by an invitation, at the expense of the company, by hand-delivered letter with acknowledgement of receipt or by registered letter with notification of reception. The invitation shall include the agenda of the meeting. Shareholders shall receive or be informed of the invitation no later than fifteen days before the date of the meeting in the case of a first invitation and, where necessary, no later than six days before the date of the meeting for subsequent invitations. Where the meeting is convened by an agent appointed by the court, the judge may fixed a different deadline. Art. 519 : The convening notice shall indicate the name of the company followed, where appropriate, by its acronym, form and authorized capital, the address of its registered office, its registration number in the Trade and Personal Property Credit Register, the day, time and venue of the meeting, as well as the nature (ordinary, extraordinary or special) and the agenda of the meeting. The notice shall, where necessary, indicate where bearer shares or the certificate of deposit of the said shares are to be deposited in order to give entitlement to participate in the meeting, as well as the date on which such deposit shall be effected. Co-owners of joint shares, legal owners and beneficiaries of shares shall be convened according to the forms mentioned above. Any meeting irregularly convened may be cancelled. However, action for cancellation instituted under the conditions laid down in Article 246 of this Uniform Act shall not be admissible where all the shareholders were present or represented. Art. 520 : The agenda of the meeting shall be prepared by the party convening the meeting. However, where the meeting is convened by an agent appointed by the court, the agenda shall be prepared by the president of the competent court that appointed him. Also, one or more shareholders may request the inclusion of a draft resolution in the agenda of the general meeting of shareholders where they represent: (1) 5% of the company’s capital, where such capital is less than one thousand million (1,000,000,000) CFA francs; (2) 3% of the company’s capital, where such capital is between one thousand million (1,000,000,000) and two thousand million (2000,000,000)CFA francs. (3) 0.5% of the capital, where the capital is more than two thousand million (2,000,000,000) CFA francs. 344

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group The request shall include: (1) the draft resolution together with a short explanatory statement; (2) proof of ownership or representation of the percentage of capital stipulated in this article; (3) where the draft resolution concerns the presentation of a candidate for the post of director or managing director, the information stipulated in Article 523 of this Uniform Act. Art. 521 : Draft resolutions shall be addressed to the registered office of the company by hand-delivered letter with acknowledgement of receipt, by registered letter with notification of reception, by telex or by telexfax at least ten days before the date of the general meeting for them to be submitted to the vote of the meeting. The proceedings of the general meeting shall be null and void where the draft resolutions forwarded in accordance with the provisions of this article are not submitted to the vote of the meeting. Art. 522 : The general meeting of shareholders shall not consider an issue not included in its agenda. However, it may, during an ordinary session, dismiss one or more members of the board of directors or, where necessary, the managing director or the assistant managing director and replace them. Art. 523 : Where the agenda of the general meeting of shareholders concerns the presentation of candidates for the post of director or managing director, as the case may be, mention shall be made of their identity, their professional profile and their professional activities during the past five years. Art. 524 : The agenda of the meeting shall not be amended on the second invitation or, where necessary, for extraordinary general meetings, on the third invitation. Section 2. Communication of documents Art. 525 : Concerning the annual ordinary general meeting, every shareholder shall have the right by himself or through the agent designated to represent him at the meeting, to examine at the registered office: (1) the inventory, summary financial statement and the list of directors of the company where a board of directors has been put in place; (2) reports of the auditor and of the board of directors or the managing director submitted to the meeting; (3) where necessary, the explanatory statement of resolutions proposed, as well as information concerning candidates for the board of directors or for the post of managing director; 345

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International Arbitration and Corporate Law (4) the list of shareholders; (5) the sum total, certified by the auditor, of remuneration paid to the ten or five best remunerated managers and workers, depending on whether or not the company employs more than two hundred workers. Except for the inventory, the shareholder’s right to examine the documents referred to above shall entail the right to have copies of the documents at his expense. The right to examine the said documents shall be exercised within fifteen days preceding the date of the meeting. With regard to meetings other than the annual ordinary general meeting, the right to examine documents shall concern the text of resolutions proposed, the report of the board of directors or of the managing director, as the case may be, and, where necessary, the report of the auditor or the liquidator. Art. 526 : In addition, every shareholder may at any time examine and receive a copy of: (1) the company’s documents referred to in the preceding article concerning the last three fiscal years; (2) minutes and attendance lists of meetings held during the last three years; (3) any other documents, where the Articles of Association so provide. Likewise, every partner of the company may, twice every fiscal year, forward written questions to the chairman and managing director, the general manager or the managing director on all issues likely to undermine the running of the company. The answer to these questions shall be communicated to the auditor. Art. 527 : The right to communication provided for in Articles 525 and 526 of this Uniform Act shall also be exercised by each of the co-owners of joint shares and the legal owner and beneficiary of shares. Art. 528 : Where the company refuses to communicate all or part of the documents referred to in Articles 525 and 526 of this Uniform Act, the president of the competent court shall, upon an action instituted by the shareholder, give a summary judgment on such refusal. The president of the competent court may order the company, under financial compulsion, to communicate the documents to the shareholder, under the conditions laid down in Articles 525 and 526 of this Uniform Act. Section 3. Holding of the general meeting Art. 529 : The general meeting of shareholders shall be presided over as the case may be, by the chairman and managing director, the chairman of the board of directors or the

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group managing director or, in their absence and unless there be a statutory provision to the contrary, by the member having or representing the highest number of shares or, in the case of equality, by the oldest member. Art. 530 : The two shareholders representing the highest number of shares by themselves or as agents shall be appointed scrutineers, subject to their acceptance. Art. 531 : A secretary shall be appointed by the meeting to take down the minutes of the proceedings. He may be chosen from among members who are not shareholders. Art. 532 : An attendance list shall be kept at each meeting. It shall contain the following information: (1) the full name and domicile of each shareholder present or represented, the number of shares that he holds as well as the number of votes attaching to the shares; (2) the full name and domicile of each authorized agent, the number of shares that he represents as well as the number of votes attaching to the shares; Art. 533 : The attendance list shall be signed by the shareholders present and by the agents at the beginning of the session. Powers of attorney shall be appended to the attendance list at the end of the meeting. Art. 534 : The scrutineers shall be responsible for certifying the attendance list. Art. 535 : The minutes of the proceedings of the meeting shall mention the date and venue of the meeting, the nature of the meeting, the method of convening it, the agenda, the composition of the bureau, the quorum, the text of the resolutions submitted to the vote of the meeting and the result of voting for each resolution, the documents and reports presented to the meeting and a summary of the proceedings. The minutes shall be signed by the members of the bureau and kept at the registered office together with the attendance list and its appendices, in accordance with the provisions of Article 135 of this Uniform Act. Art. 536 : The copies of or extracts from minutes of meetings shall be validly certified, ­according to the circumstances, by the chairman and managing director, by the chairman of the board of directors, by the managing director or by any other person duly authorized to do so. In the case of liquidation, they shall be certified by one liquidator only.

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International Arbitration and Corporate Law Art. 537 : The following may attend general meetings: - the shareholders or their representatives, under the conditions laid down in this Uniform Act or in accordance with the provisions of the Articles of Association; - any person authorized to attend by a legal provision or by a provision of the Articles of Association of the company. Persons who are not members of the company may also attend general meetings where they are authorized to do so by the president of the competent court, by decision of the bureau of the general meeting or by the general meeting itself. Section 4. Representation of shareholders and voting rights Art. 538 : Any shareholder may be represented by an attorney of his choice. Any shareholder may receive powers from other shareholders to represent them at a general meeting, without any restriction other than those resulting from legal or statutory provisions fixing the number of votes that the same person may have in his own name and as agent. The power of attorney shall bear: (1) the full name and domicile as well as the number of shares and the agent’s voting rights; (2) an indication of the type of meeting for which the power of attorney is given; (3) the signature of the agent preceded by the indication “Good for power of attorney” and the date of the power of attorney. The power of attorney shall be given for one meeting only. It may however be given for two meetings, one ordinary and the other extraordinary, held on the same day or within a period of seven days. A power of attorney given for a meeting shall be valid for successive meetings convened with the same agenda. Clauses contrary to the provisions of the preceding paragraphs shall be deemed unwritten. Art. 539 : Directors who are not shareholders may attend all meetings of shareholders in an advisory capacity. Art. 540 : Voting rights attached to a secured share shall be exercised by the owner of the share. A mortgagee shall, at the request of his debtor and at the latter’s expense, deposit the shares he holds as security where they are bearer shares. The depositing of the shares shall be carried out under the conditions laid down in Article 541 of this Uniform Act. Art. 541 : The right to attend meetings may be subject to the prior entry of shareholders in the company’s registered shares register, to the depositing of bearer shares at a place specified by the convening notice or to the production of a certificate of deposit of bearer shares issued by the banking or financial institution that is depositary of the said shares.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group The registration of shareholders, depositing of shares or the production of a certificate of deposit shall be done no later than five days before the holding of the general meeting. Art. 542 : Shares redeemed by the company in accordance with the provisions of Articles 639 et seq. of this Uniform Act shall have no voting rights attached to them. They shall not be taken into account when calculating the quorum. Art. 543 : Voting rights attached to capital shares or dividend shares shall be proportional to the percentage of the capital that they represent and each share shall give entitlement to one vote. However, the Articles of Association may restrict the number of votes which each shareholder shall have in the meetings, provided that such restriction is imposed on all the shares without distinction of category. Art. 544 : The Articles of Association or a subsequent meeting may grant all fully paid-up shares, which have been entered in the registered shares register for at least two years in the name of a shareholder, voting rights twice those granted to the other shares, considering the quota of the registered capital that they represent. Furthermore, in the case of an increase of capital by the incorporation of reserves, profits or issue premiums, double voting rights may be granted to registered shares given free of charge as soon as they are issued to a shareholder in proportion to the old shares for which he enjoyed such voting rights. Art. 545 : Any share converted into a bearer share or transferred as property shall lose the double voting rights that may be attached to it. However, transfer as a result of succession, dissolution of the joint estate of husband and wife or disposition inter vivos in favour of one spouse or one parent shall capable of inheritance not entail the loss of acquired voting rights. A merger of the company shall have no effect on double voting rights which may be exercised within the acquiring company where its Articles of Association so provide. CHAPTER 2. ORDINARY GENERAL MEETING Section 1. Powers Art. 546 : The ordinary general meeting of shareholders shall take all decisions apart from those that are expressly reserved by Article 551 of this Uniform Act for extraordinary general meeting of shareholders and by Article 555 of this Uniform Act for special meetings of shareholders.

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International Arbitration and Corporate Law It shall in particular be empowered to: (1) adjudicate on summary financial statements of the fiscal year; (2) decide on the allocation of income; under penalty of any decision to the contrary being declared null and void, an allowance equal to at least one-tenth of the fiscal year’s profits after deduction, where necessary, of previous losses, shall be allocated for the formation of a reserve fund referred to as “legal reserve”. Such allowance shall no longer be compulsory where the reserve fund amounts to one-fifth of the company’s registered capital; (3) appoint the members of the board of directors or the managing director and, where necessary, the assistant managing director, as well as the auditor; (4) approve or refuse to approve agreements concluded between the company’s managers and the company; (5) issue bonds; (6) approve the auditor’s report provided for by Article 547 of this Uniform Act. Art. 547 : Where the company buys, within a period of two years following its registration, property belonging to a shareholder at a cost of not less than 5,000,000 (five million) CFA francs, the auditor shall, at the request of the chairman and managing director, the chairman of the board of directors or the managing director, according to the circumstances, draw up a report on the value of the property. The report shall be submitted to the very next ordinary general meeting for approval. The report shall describe the property to be bought, indicate the criteria used in fixing the price and assess the relevance of such criteria. The auditor shall draw up the report and deposit same at the registered office of the company at least fifteen days before the date of the ordinary general meeting. The general meeting shall take a decision on the evaluation of the property under penalty of the sale being declared null and void. The seller shall not take part either personally or as an agent in the vote of the resolution on the sale, and his shares shall not be taken into account in calculating the quorum and the majority. Section 2. Meeting, quorum and majority Art. 548 : The ordinary general meeting of shareholders shall hold at least once a year within a period of six months following the close of the fiscal year, subject to the extension of this deadline by a court decision. The Articles of Association may require a minimum number of shares, which shall not be more than ten, for entitlement to attend ordinary general meetings. Several shareholders may come together to obtain the minimum number of shares provided for by the Articles of Association and be represented by one of them.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 549 : The proceedings of the ordinary general meeting shall be valid on the first invitation only where the shareholders present or represented hold at least one quarter of the company’s shares with voting rights. On the second invitation, no quorum shall be required. Art. 550 : The decisions of the ordinary general meeting shall be taken by a majority of the votes cast. In the case of voting, blank votes shall not be taken into account. CHAPTER 3. EXTRAORDINARY GENERAL MEETING Section 1. Powers Art. 551 : The extraordinary general meeting of shareholders shall alone be empowered to amend all the provisions of the Articles of Association of the company. Any clause to the contrary shall be deemed unwritten. The extraordinary general meeting shall also be empowered to: (1) authorize mergers, scissions, transformations and partial contributions of assets; (2) transfer the registered office to any other town of the Contracting State where it is located or to the territory of another Contracting State; (3) winding up the company prematurely or extend the duration of its life. However, the extraordinary general meeting may increase the commitments of shareholders above their contributions only with the consent of each shareholder. Section 2. Meeting, quorum and majority Art. 552 : Any shareholder may attend extraordinary general meetings without limitation of votes. Any clause to the contrary shall be deemed unwritten. Art. 553 : The proceedings of an extraordinary general meeting shall be valid only where the shareholders present or represented hold at least half of the company’s shares, on the first invitation and one quarter of the shares, on the second invitation. Where the quorum is not met, the meeting may be convened a third time within a period of not more than two months from the date fixed by the second invitation. The quorum shall remain fixed at one quarter of the shares. Art. 554 : The decisions of the extraordinary general meeting shall be taken by a twothirds majority of the votes cast. In the event of voting, blank votes shall not be taken into account The decision to transfer the registered office of the company to the territory of another Contracting State shall be taken unanimously by the members present or represented.

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International Arbitration and Corporate Law CHAPTER 4. SPECIAL MEETING Section 1. Powers Art. 555 : The special meeting shall bring together holders of shares of a given category. The special meeting shall approve or disapprove the decision of general meetings where such decisions modify the rights of its members. The decision of a general meeting to modify the rights relating to a category of shares shall be final only after approval by the special meeting or shareholders of that category. Section 2. Meeting, quorum and majority Art. 556 : The proceedings of a special meeting shall be valid only where the shareholders present or represented hold at least half of the company’s shares, on the first invitation, and one quarter of the shares, on the second invitation. Where the last quorum is not met, the meeting shall hold within a period of two months from the date fixed by the second invitation. The quorum shall remain fixed at one quarter of shareholders present or represented holding at least one quarter of the company’s shares. Art. 557 : The decisions of the special meeting shall be taken by a two-thirds majority of the votes cast. Blank votes shall not be taken into account. CHAPTER 5. SPECIAL CASE OF A PUBLIC LIMITED COMPANY WITH A SINGLE SHAREHOLDER Art. 558 : Where a public limited company has only one shareholder, the decisions to be taken at a meeting, be they decisions falling within the jurisdiction of the extraordinary general meeting or those falling within the jurisdiction of the ordinary general meeting, shall be taken by that shareholder. The provisions of Articles 516 to 577 of this Uniform Act that are not contrary to the provisions of this article shall apply. Art. 559 : The single shareholder shall, within a period of six months following the close of the fiscal year, take all the decisions falling within the jurisdiction of the annual ordinary general meeting. The decisions shall be taken upon the reports of the managing director and of the auditor who attend general meetings in accordance with the provisions of Article 721 of this Uniform Act. Art. 560 : Decisions taken by the single shareholder shall be in the form of minutes which shall be filed in the records of the company.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 561 : All decisions taken by the single shareholder which would have been published in a newspaper carrying legal notices if they had been taken by a general meeting shall be published in the same manner. SUB-TITLE 4. VARIATION OF CAPITAL CHAPTER 1. GENERAL PROVISIONS Section 1. Conditions for increase of capital Art. 562 : The registered capital of a company shall be increased either by issuing new shares or by increasing the face value of existing shares. The new shares shall be paid up either in cash, or by set-off with unquestionable, liquid and due claims on the company, or incorporation of reserves, profits or issue premiums, or by contributions in kind. The increase of capital by raising the face value of shares shall be ordered only with the unanimous consent of shareholders, save where it is effected by incorporation of reserves, profits or issue premiums. Art. 563 : The new shares shall be issued either at their face value or at such value plus an issue premium. Art. 564 : Only the extraordinary general meeting shall be competent to decide or, where necessary, authorize an increase of capital upon a report of the board of directors or of the managing director, as the case may be, and upon a report of the auditor. Art. 565 : Where an increase of capital is made by incorporation of reserves, profits or issue premiums, the general meeting shall reach a decision under the quorum and majority conditions laid down in Articles 549 and 550 of this Uniform Act concerning ordinary general meetings. Art. 566 : The right to bonus shares as well as rights equivalent to fractional shares that shareholders may claim due to an increase of capital by incorporation of reserves, profits or issue premiums shall be negotiable and transferable. However, the extraordinary general meeting may, under the quorum and majority conditions laid down in Article 565 of this Uniform Act, expressly order that rights equivalent to fractional shares shall not be negotiable and that the corresponding shares shall be sold. Proceeds of the sale shall be allocated to the holders of the fractional shares no later than thirty days after the date of entry against their name of the whole number of shares allotted.

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International Arbitration and Corporate Law Art. 567 : The general meeting may authorize the board of directors or the managing director, as the case may be, to determine the terms of sale of rights equivalent to fractional shares. Art. 568 : The general meeting may delegate to the board of directors or to the managing director, as the case may be, the necessary powers to increase the capital one or more times, to lay down all or part of the conditions for such increase and ensure that it is effected and to amend the Articles of Association accordingly. Art. 569 : Any clause to the contrary granting the board of directors or the managing director, as the case may be, the power to order an increase of capital shall be deemed to be unwritten. Art. 570 : The report of the board of directors or of the managing director, as the case may be, shall contain all relevant information on the reasons for the increase of capital proposed and on the situation of the company since the beginning of the current fiscal year and, where the ordinary general meeting which is to adjudicate on the accounts of the company has not yet held, during the previous fiscal year. Art. 571 : The increase of capital shall be effected within a period of three years following the general meeting that ordered or authorized it. The increase of capital shall be deemed effected from the day the notarial statement of subscription and payment is drawn up. Art. 572 : The capital shall be fully paid up before any issue of new shares to be paid up in cash, under penalty of the operation being declared null and void. Section 2. Pre-emptive right of subscription Art. 573 : Shares shall carry a pre-emptive right of subscription for increases of capital. Shareholders shall, proportionately to the amount of their shares, have a pre-emptive right of subscription for shares issued for cash for an increase of capital. This right shall be irreducible. Any clause to the contrary shall be deemed to be unwritten. Art. 574 : During subscription, a pre-emptive right of subscription shall be negotiable where it is detached from the shares which are themselves negotiable. Otherwise, such right shall be transferable under the same conditions as for the share. Art. 575 : The shareholders shall, where the general meeting so expressly decides, also have a pre-emptive right to apply for excess new shares for which they would not have applied as of right.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 576 : Excess shares shall be allotted to shareholders who subscribed for a number of shares higher than the number of new shares they would have subscribed for as of right. In any case they shall not be allotted more shares than they applied for. Art. 577 : The period of time allowed shareholders to exercise their pre-emptive right of subscription shall not be less than twenty days. Time shall start running from the date of commencement of subscription. Art. 578 : The abovementioned period shall end as soon as all applications as of right for new shares and, where necessary, applications for excess shares have been filed or as soon as the increase of capital has been fully subscribed after renunciation of their right of subscription by the shareholders who have not subscribed for shares. Art. 579 : Where applications as of right for new shares and, where necessary, applications for excess shares have not covered the total increase of capital: (1) the amount of the capital increase may be limited to the amount of subscriptions made provided that such amount is at least [frac34] of the increase provided by the general meeting which ordered or authorized the increase of capital and that such option was expressly provided for by the meeting during the issue; (2) the shares not subscribed may be freely allotted, in whole or in part, unless otherwise decided by the meeting; (3) the shares not subscribed for may be offered to the public in whole or in part where the meeting expressly provides for such possibility. Art. 580 : The board of directors or the managing director, as the case may be, may use, in the order which it shall determine, the options provided for in Article 579 of this Uniform Act or some of them only. The increase of capital shall not be made where, after exercising these options, the amount of subscriptions received does not cover the totality of the increase of capital or, in the case provided for in paragraph 1) of Article 579 of this Uniform Act, [frac34] of such increase. However, the board of directors or the managing director, as the case may be, may on its own initiative and in all the cases, limit the increase of capital to the amount reached where the shares subscribed represent 97% of the increase of capital. Any decision of the board of directors to the contrary shall be deemed unwritten. Paragraph 1. Usufruct Art. 581 : Where the old shares have a usufruct attached to them, the beneficiary and the bare owner of the shares may freely determine the conditions for the exercise of the preemptive right of subscription for and allotment of the new shares.

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International Arbitration and Corporate Law Where the parties fail to reach an agreement, the provisions of Articles 582 to 585 of this Uniform Act shall apply. These provisions shall also apply, where the parties fail to act, in the case of allotment of bonus share. Art. 582 : The beneficiary shall be entitled to the pre-emptive right of subscription attached to the old shares. Where the bare owner sells his rights of subscription, the proceeds of the sale or the property acquired as a result of the re-investment of such money shall be subject to the usufruct. Art. 583 : Where the bare owner fails to exercise his pre-emptive right of subscription, the beneficiary may take his place and subscribe for the new shares or sell the rights of subscription. Where the beneficiary sells the rights of subscription, the bare owner may demand that the proceeds of the sale be re-invested. The property so acquired shall be subject to the usufruct. Art. 584 : The bare owner of shares shall, vis-à-vis the beneficiary, be considered as having failed to exercise the pre-emptive right of subscription for the new shares issued by the company where he has neither subscribed for new shares nor sold the rights of subscription at least eight days before the expiry of the deadline for subscription accorded to shareholders. Art. 585 : The new shares shall belong to the bare owner for ownership without usufruct and to the beneficiary for the usufruct. However, in case of payment of funds by the bare owner or the beneficiary to make or complete a subscription, the new shares shall belong to the bare owner and to the beneficiary only up to the amount of the rights of subscription; the excess of the new shares shall belong, as freehold, to the party who paid the funds. Paragraph 2. Withdrawal of pre-emptive right of subscription Art. 586 : The general meeting which orders or authorizes an increase of capital may withdraw the pre-emptive right of subscription of one or more beneficiaries designated by name for all of the increase of capital or for one or more portions of such increase. Art. 587 : The beneficiaries, where they are shareholders, shall not take part in the vote neither by themselves nor as agents and their shares shall not be taken into consideration when calculating the quorum and the majority. Section 3. Issue price and report Art. 588 : The price of issue of new shares or the conditions governing the determination of such price shall be laid down by the extraordinary general meeting upon the report of the board of directors or the managing director as the case may be, and that of the auditor.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 589 : The report of the board of directors or by the managing director provided for in Article 588 of this Uniform Act shall specify: (1) the maximum amount of and the reasons for the proposed increase of capital; (2) the reasons for the proposal to withdraw the pre-emptive right of subscription; (3) the name of persons allotted new shares, the number of shares allotted to each of them and the issue price together with the reason therefor. Art. 590 : Where all the conditions of increase of capital are determined by the meeting, the report referred to in Article 588 of this Uniform Act shall also mention the impact of the proposed issue on the situation of shareholders, in particular as concerns its share of the shareholders’ equity at the close of the last fiscal year. Where the close of the fiscal year precedes the planned operation by more than six months, such impact shall be appraised upon the production of a mid-term financial report on the last six months prepared using the same methods and in the same form as the annual balance-sheet. Art. 591 : The auditor shall express his opinion on the proposal to withdraw the preemptive right of subscription, on the choice of data for calculating the issue price and on its amount, as well as on the impact of the issue on the situation of shareholders in relation to the company’s equity. He shall verify and certify the accuracy of data from the company’s accounts on which his opinion is based. Art. 592 : Where the general meeting has delegated its powers under the conditions stipulated in Article 568 of this Uniform Act, the board of directors or the managing director, as the case may be, shall draw up, when exercising its powers, an additional report describing the final conditions of the operation defined in accordance with the powers conferred by the meeting. The report shall also comprise the data provided for in Article 589 of this Uniform Act. The auditor shall verify in particular that the conditions of the operation are in conformity with the powers conferred by the meeting and the information provided to the latter. He shall also express his opinion on the choice of information for the calculation of the issue price and on the final amount of the price, as well as on the impact of the issue on the financial situation of the shareholder in particular as concerns his share of the company’s equity at the close of the last fiscal year. These additional reports shall immediately be placed at the disposal of shareholders at the registered office within fifteen days following the date of the board of directors’ meeting or the decision of the managing director and notified to them at the very next meeting.

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International Arbitration and Corporate Law Section 4. Renunciation of the pre-emptive right of subscription Art. 593 : Shareholders may individually renounce their pre-emptive right of subscription in favour of designated persons. They may also renounce such right without mentioning any beneficiaries. Art. 594 : A shareholder who renounces his pre-emptive right of subscription shall inform the company by hand-delivered letter against acknowledgement of receipt or by registered letter with notification of reception before the expiry of the period of subscription. Art. 595 : Renunciation without indication of beneficiaries shall be accompanied, as concerns bearer shares, by corresponding coupons or a certificate issued by the depositary of the shares establishing the shareholder’s renunciation of his right. Renunciation in favour of designated beneficiaries shall be accompanied by the acceptance of the said beneficiaries. Art. 596 : New shares renounced by a shareholder without indication of beneficiaries may be subscribed for as excess shares under the conditions laid down in Article 576 of this Uniform Act or, where necessary, allotted to the shareholders or offered to the public under the conditions laid down in Article 579 of this Uniform Act. However, where such renunciation has been notified to the company no later than on the date of the decision to increase the capital, the corresponding shares shall be placed at the disposal of other shareholders to enable them to apply as of right for new shares and, where necessary, for excess shares. Art. 597 : Where the shareholder renounces to subscribe for the increase of capital in favour of designated persons, his rights of subscription for new shares and, where necessary, for excess shares shall be transferred to the latter. Section 5. Publicity prior to subscription Art. 598 : Shareholders shall be informed about the issue of new shares and the conditions of subscription therefor by a notice containing inter alia the following information: (1) the company name and, where necessary, its acronym; (2) the form of the company; (3) the amount of the registered capital; (4) the registered office address; (5) the registration number of the company in the Trade and Personal Property Credit Register; (6) the number and the face value of the shares and the amount of increase of capital;

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (7) the price of issue of the shares to be subscribed for and the global amount of the issue premium, where necessary; (8) the place and dates of commencement and close of subscription; (9) the existence, for shareholders, of a pre-emptive right of subscription; (10) the sum of money immediately payable per subscribed share; (11) mention of the bank or the notary to receive the funds; (12) where necessary, a brief description of the evaluation and the method of remuneration of contributions in kind to the increase of capital, with an indication of the provisional nature of such evaluation and method of remuneration. Art. 599 : Shareholders shall be informed of the notice provided for in Article 598 by hand-delivered letter against acknowledgement of receipt or by registered letter with notification of reception at least six days before the date of subscription begins at the instance, as the case may be, of agents of the board of directors, the managing director or any other person authorized to do so. Art. 600 : Where the general meeting has decided to abolish shareholders’ pre-emptive right of subscription, the provisions of Article 598 of this Uniform Act shall not apply. Section 6. Preparation of an allotment letter Art. 601 : A subscription contract shall be established by an allotment letter prepared in two copies, one of which shall be for the company and the other for the notary responsible for drawing up the statement of subscription and payment. Art. 602 : The allotment letter shall be dated and signed by the subscriber or his authorized agent who shall write out entirely in letters the number of shares subscribed. A copy of the allotment letter written out on a loose-leaf shall be handed over to him. Art. 603 : The allotment letter shall set out: (1) the name of the company followed, where necessary, by its acronym; (2) the form of the company; (3) the amount of the authorized capital; (4) the address of the registered office; (5) the registration number of the company in the Trade and Personal Property Credit Register; (6) the amount and conditions of increase of capital; the face value of shares and the issue price; (7) where necessary, the amount to be subscribed for shares issued for cash and the amount paid up by contributions in kind;

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International Arbitration and Corporate Law (8) the name or company name and address of the person receiving the funds; (9) the full name and domicile of the subscriber and the number of shares subscribed; (10) an indication of the bank or the notary responsible for receiving the funds; (11) mention of the notary responsible for drawing up the statement of subscription and payment; (12) mention of handing over to the subscriber a copy of the allotment letter. Section 7. Paying up of shares Art. 604 : At least a quarter of the face value of shares subscribed to in cash and, where necessary, the full issue premium shall be compulsorily paid up during subscription. Art. 605 : The rest shall be paid up in one or more instalments on demand by the board of directors or the managing director, as the case may be, within a period of three years from the day of increase of capital. Art. 606 : Shares subscribed to in cash entailing both cash payments and incorporation of reserves, profits or issue premiums shall be fully paid up during subscription. Art. 607 : Funds derived from subscription for shares issued for cash shall be deposited by the company executives, on behalf of the company, in a bank domiciled in the Contracting State of the registered office or in the chambers of a notary. The funds shall be deposited within a period of eight days following the receipt thereof. Art. 608 : The depositor shall hand over to the bank or, where necessary, to the notary, at the time of depositing the funds, a list showing the identity of the subscribers and indicating, for each of them, the amount of money paid. Art. 609 : The depositary shall be bound, until the funds are withdrawn, to communicate the said list to any subscriber who, after showing proof of his subscription, so requests. The applicant may examine the list and obtain, at his expense, a copy thereof. Art. 610 : The depositary shall issue the depositor a certificate attesting the deposit of funds. Art. 611 : Where shares are paid up by set-off of claims on the company, such claims shall be the object of a statement of accounts prepared, as the case may be, by the board of directors or by the managing director and certified as true by the auditor.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Section 8. Notarial statement of subscription and payment Art. 612 : Subscriptions and payments shall be established by a statement by the managers of the company made in a document certified by a notary referred to as “notarial statement of subscription and payment”. Art. 613 : On presentation of allotment letters and, where necessary, a certificate issued by the depositary attesting the deposit of funds, the notary shall state in the act he draws up that the amount for subscriptions declared corresponds to the amount appearing on the allotment letters and that the amount of payments declared by the company executives corresponds to the amount of money deposited at his chambers or, where necessary, appearing on the certificate referred to above. The certificate issued by the depositary shall be appended to the notarial statement of subscription and payment. The notary shall make the statement available to subscribers who may examine it and obtain a copy thereof in his chambers. Art. 614 : Where the increase of capital is made by set-off with unquestionable, liquid and due claims, the notary shall ascertain that the shares issued for cash have been paid up on presentation of the statement of accounts certified by the auditor referred to in Article 611 of this Uniform Act. The statement shall be appended to the notarial statement of subscription and payment. Section 9. Withdrawal of funds Art. 615 : The withdrawal of funds derived from subscription in cash may take place only after the increase of capital has been carried out. Withdrawal shall be effected by an authorized agent of the company, on presentation to the depositary of the notarial statement of subscription and payment. Art. 616 : The increase of capital by issue of shares to be paid up in cash shall be considered effected on the date the notarial statement of subscription and payment is drawn up. Art. 617 : Any subscriber may, six months after the payment of funds, bring an action before the president of the competent court sitting in chambers for the appointment of an agent responsible for withdrawing the funds to refund to the subscribers, subject to the deduction of his distribution costs where, on that date, the increase of capital has not been effected. Art. 618 : The increase of capital shall be published under the conditions stipulated in Article 264 of this Uniform Act.

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International Arbitration and Corporate Law CHAPTER 2. SPECIAL PROVISIONS RELATING TO INCREASES OF CAPITAL BY CONTRIBUTIONS IN KIND AND/OR BY SPECIAL BENEFITS Art. 6119 : Contributions in kind and/or special benefits shall be evaluated by a shares auditor appointed by the president of the competent court of the place of the registered office at the request of the board of directors or the managing director, as the case may be. Art. 620 : The shares auditor shall be subject to the incompatibilities provided for in Articles 697 and 698 of this Uniform Act. He may be the auditor of the company. Art. 621 : The shares auditor shall be responsible for assessing the value of contributions in kind and special benefits. He may be assisted in the performance of his task by one or more experts of his choice. The experts’ fees shall be borne by the company. Art. 622 : The shares auditor’s report shall be deposited at least eight days before the date of the extraordinary general meeting at the registered office and shall be made available to shareholders who may study it and obtain, at their expense, a complete or partial copy thereof. It shall also be deposited, within the same time limit, at the registry of the court in charge of commercial matters of the place of the registered office. Art. 623 : The shares of the contributor or the beneficiary shall not be taken into account in the calculation of the quorum and the majority when the extraordinary general meeting is reaching a decision on the approval of a contribution in kind or the grant of a special benefit. The contributor or the beneficiary shall not be entitled to vote either by himself or as an agent. Art. 624 : Where the meeting approves the evaluation of contributions and the grant of special benefits, it shall ascertain that the increase of capital has been effected. Art. 625 : Where the meeting reduces the evaluation of contributions or the remuneration of special benefits, the express approval of the modifications by the contributors, the beneficiaries or their agents duly authorized to do so shall be necessary. Failing this, the increase of capital shall not be effected. Art. 626 : Initial shares shall be fully paid up as soon as they are issued. CHAPTER 3. REDUCTION OF CAPITAL Art. 627 : The registered capital of a company shall be reduced by decreasing either the face value or the number of shares. 362

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 628 : The reduction of capital shall be authorized or ordered by the extraordinary general meeting which may delegate all the necessary powers to the board of directors or the managing director, as the case may be, to effect the reduction. The meeting shall, under no circumstances, undermine the equality of shareholders, except with the express consent of the disadvantaged shareholders. Art. 629 : The draft instrument on the reduction of capital shall be communicated to the auditor at least forty-five days before the date of the extraordinary general meeting which shall order or authorize the reduction of capital. Art. 630 : The auditor shall table before the extraordinary general meeting a report in which he shall set out his assessment of the reasons for and condition of the reduction of capital. Art. 631 : Where the board of directors or the managing director, as the case may be, carries out the reduction of capital upon delegation of powers by the general meeting, he shall draw up a report thereon which shall be subject to publicity and shall amend the Articles of Association of the company accordingly. Art. 632 : The creditors of the company may not object to the reduction of capital where it is justified by losses. Art. 633 : Creditors of the company with claim prior to the depositing at the registry of the court in charge of commercial matters the minutes of the proceedings of the general meeting which ordered or authorized the reduction of capital as well as debenture holders, may object to the reduction of the capital of the company where such reduction is not justified by losses. Art. 634 : The time limit for lodging objection by creditors to the reduction of capital shall be thirty days from the date of depositing at the registry of the minutes of the proceedings of the general meeting which ordered or authorized the reduction of capital. Art. 635 : The objection shall be lodged by an extrajudicial act and brought before the competent court giving summary judgment. Art. 636 : The capital reduction operations may not commence during the period of objection, or where necessary, before a court judgement at first instance is given on the objection. 363

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International Arbitration and Corporate Law Art. 637 : Where the objection is admitted, the capital reduction procedure shall be suspended until the claims are reimbursed or until guarantees are provided for the creditors where the company offers such guarantees and where they are considered adequate. Art. 638 : The reduction of capital shall be subject to publicity formalities as provided for in Article 264 of this Uniform Act. CHAPTER 4. SUBSCRIPTION - PURCHASE ACCEPTANCE BY THE COMPANY OF ITS OWN SHARES AS SECURITY Art. 639 : Subscription to or purchase by the company of its own shares, either directly or by a person acting in his own name but on behalf of the company, shall be forbidden. Similarly, the company may not grant advances or loans or provide security for subscription to or purchase of its own shares by a third party. However, the ordinary general meeting which has ordered a reduction of capital not justified by losses may authorize the board of directors or the managing director, as the case may be, to buy a specific number of shares with a view to cancelling them. The founders or, in the case of an increase of capital, the members of the board of directors or the managing director shall be bound, under the conditions laid down in Articles 738 and 740 of this Uniform Act, to pay up the shares subscribed to or acquired by the company in violation of the provisions of the first paragraph of this article. Similarly, where shares are subscribed to or acquired by a person acting in his own name but on behalf of the company, such person shall be bound to pay up the shares jointly with the founders or, as the case may be, the members of the board of directors or the managing director. The subscriber shall also be considered as having subscribed to shares on his own account. Art. 640 : The provisions of the first paragraph of Article 639 of this Uniform Act notwithstanding, the extraordinary general meeting may authorize the board of directors or the managing director, as the case may be, to acquire a specific number of shares in order to allot them to workers of the company. In such case, the shares shall be allotted within a period of one month from the date of their acquisition. The company may not hold, directly or through a person acting in his own name but on behalf of the company, more than ten per cent of the total number of its own shares. The shares acquired shall be registered and fully paid up at the time of acquisition. The founders or, in the case of an increase of capital, the members of the board of directors or the managing director shall be bound, under the conditions laid down in Articles 738 and 740 of this Uniform Act, to pay up the shares subscribed to or acquired by the company in pursuance of the provisions of the first paragraph of this article.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Similarly, where shares are subscribed to or acquired by a person acting in his own name but on behalf of the company, such person shall be bound to pay up the shares jointly with the founders or, as the case may be, the members of the board of directors or the managing director. The subscriber shall also be considered as having subscribed to shares on his own account. The acquisition of shares may not lead to the reduction of the shareholders’ equity to an amount lower than the amount of the capital plus non-allocated reserves. Shares held by the company shall not give entitlement to dividend. Art. 641 : The provisions of Article 639 of this Uniform Act shall not be applicable to shares fully paid up acquired by a universal transfer of assets or by a decision of a court. However, the shares shall be transferred within two years following the date of subscription or acquisition thereof; after this time limit they shall be cancelled. Art. 642 : The acceptance of the company’s own shares as security, directly or through a person acting in his own name but on behalf of the company, shall be forbidden. The shares accepted by the company as security shall be refunded to their owner within a period of one year. The shares shall be refunded within a period of two years where the transfer of the security to the company is the result of a universal transfer of assets or a decision of a court; failing this, the security contract shall be automatically void. The prohibition provided for in this article shall not apply to the ordinary transactions of credit enterprises. Art. 643 : Where the company decides to purchase its own shares with a view to cancelling them and reducing its capital by the same amount, it shall make the purchase offer to all the shareholders. For this purpose, it shall insert in a newspaper empowered to publish legal notices of the place of the registered office of the company a notice containing the following information: (1) the name of the company; (2) the form of the company; (3) the address of the registered office; (4) the amount of the registered capital; (5) the number of shares to be purchased; (6) the price offered per share; (7) the method of payment; (8) the period of offer. The period of offer may not be less than thirty days from the date of insertion of the notice in the newspaper; (9) place of acceptance of offer.

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International Arbitration and Corporate Law Art. 644 : Where all the shares are registered, the notice provided for in Article 643 of this Uniform Act may be replaced by a notification containing the same information addressed to each shareholder by hand-delivered letter with acknowledgement of receipt or by registered letter with notification of reception. The cost of notification shall be borne by the company. Art. 645 : Where the shares offered for purchase exceed the number of shares to be purchased, the number of shares offered by each shareholder selling shares shall be reduced proportionately to the number of shares owned or held by him. Art. 646 : Where the shares offered for purchase are fewer than the number of shares to be bought, the registered capital shall be reduced to the amount of shares bought. However, the board of directors or the managing director, as the case may be, may decide to repeat the operation under the conditions laid down in Articles 643 and 644 of this Uniform Act until the number of shares initially fixed is completely sold, on condition that the operation is repeated within the period stipulated by the general meeting that authorized the reduction of capital. Art. 647 : The provisions of Articles 643 and 646 of this Uniform Act shall not apply where the general meeting has authorized, in a bid to facilitate an increase of capital, a merger or a scission, the board of directors or the managing director, as the case may be, to buy a large number of shares representing not more than 1% of the amount of registered capital with a view to cancelling them. Likewise, these provisions shall not apply in case of redemption by the company of shares whose transferee has not been approved. The auditor shall express his opinion on the advisability and conditions of the planned purchase of shares in his report on the projected operation. Art. 648 : Where a usufruct is attached to the shares, the purchase offer shall be to the bare owner. However, the purchase of shares shall be final only where the beneficiary has expressly consented to the transaction. Except otherwise agreed upon between the bare owner and the beneficiary, the purchase price of the shares shall be shared between them proportionately to the value of their respective rights to the shares. Art. 649 : The shares purchased by the company which issued them in order to effect a reduction of capital shall be cancelled within a period of fifteen days following the expiry of the period of the purchase offer mentioned in the notice provided for in Article 643 of this Uniform Act.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Where the purchase is made in order to facilitate an increase of capital, a merger or a scission, the time limit provided for the cancellation of the shares shall run from the day the shares were purchased. Shares acquired or held by the company in violation of the provisions of Articles 639 and 640 of this Uniform Act shall be cancelled within a period of fifteen days from the date of their acquisition or, where necessary, at the expiry of the period of one year referred to in the first paragraph of Article 640 above. Art. 650 : The cancellation of bearer shares shall be established by the indication “cancelled” made on the share. Where the shares are registered, the same indication shall be made on the company’s registered shares as well as on the registered shares certificate and on the counterfoil of the register from which the certificate was extracted, where necessary. CHAPTER 5. REDEMPTION OF CAPITAL Section 1. Conditions of redemption Art. 651 : Redemption of capital is the operation by which the company reimburses the shareholders all or part of the face value of their shares, as an advance on the proceeds of the future liquidation of the company. Art. 652 : The redemption of capital shall be ordered by the ordinary general meeting where it is provided for in the Articles of Association. Where there is no provision in the Articles of Association to this effect, it shall be ordered by the extraordinary general meeting. Art. 653 : Shares may be totally or partially redeemed. Shares totally redeemed are referred to as dividend shares. Art. 654 : Redemption shall be effected by equal reimbursement for each share of the same category and shall not lead to the reduction of capital. Art. 655 : The sums of money used for the reimbursement of shares shall be deducted from profits or withdrawn from the non-statutory reserves. The money may not be withdrawn from the legal reserve or, except otherwise decided by the extraordinary general meeting, from the statutory reserves. The reimbursement of shares may not lead to the reduction of shareholders’ equity to an amount lower than the amount of the authorized capital plus reserves that the law or the Articles of Association do not permit to be distributed.

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International Arbitration and Corporate Law Section 2. Rights attached to redeemed shares and conversion of redeemed shares into capital shares Art. 656 : Shares totally or partially redeemed shall retain all their rights with the exception, however, of the right to the first dividend provided for in Article 145 of this Uniform Act and the reimbursement of the face value of shares which they shall lose proportionately. Art. 657 : The extraordinary general meeting may decide to convert redeemed shares totally or partially into capital shares. The conversion decision shall be taken under the quorum and majority conditions laid down for the amendment of the Articles of Association. Art. 658 : The conversion of shares shall be effected by a compulsory deduction, up to the redeemed amount of shares to be converted, from the portion of profits of one or more fiscal years allocated to these shares after payment, for partially redeemed shares, of the first dividend or the interest accruing from the shares. Similarly, the extraordinary general meeting may authorize the shareholders, under the same conditions, to pay back to the company the amount of their shares redeemed plus, where necessary, the first dividend or the statutory interest for the past period of the current fiscal year and, eventually, of the preceding fiscal year. Art. 659 : The decisions provided for in Article 658 of this Uniform Act shall be submitted for ratification by the special meetings of each of the categories of shareholders having the same rights. Art. 660 : The sums of money deducted from the profits or paid by the shareholders in pursuance of Article 658 of this Uniform Act shall be paid into a reserve account. Where the shares are totally redeemed, a reserve account shall be opened for each of the categories of shares totally redeemed. Art. 661 : The conversion shall be effected where the amount of a reserve account constituted by deductions from the profits of the company is equivalent to the amount of shares redeemed or of the corresponding category of shares. The board of directors or the managing director, as the case may be, shall be empowered to make the necessary amendments to the clauses of the Articles of Association in so far as the said amendments correspond materially to the results of the operation. Art. 662 : Where the conversion is carried out by payments made by shareholders, the board of directors or the managing director, as the case may be, shall be empowered to

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group make, no later than at the close of each fiscal year, amendments to the Articles of Association corresponding to the conversions made during the said fiscal year. Art. 663 : Partially redeemed shares whose conversion into capital shares has been ordered shall be entitled, for each fiscal year and until such conversion is carried out, to the first dividend or to the interest in lieu thereof calculated on the basis of the amount of the shares paid up but not redeemed. Furthermore, totally or partially redeemed shares whose conversion has been ordered by deductions from the company’s profits shall, for each fiscal year and until the conversion is finally carried out, be entitled to the first dividend calculated on the basis of the amount, at the close of the preceding fiscal year, of the corresponding reserve account. SUB-TITLE 5. VARIATION OF SHAREHOLDERS’ EQUITY Art. 664 : Where, owing to losses recorded in the summary financial statements, the shareholders’ equity of the company falls below half of the company’s authorized capital, the board of directors or the managing director, as the case may be, shall be bound, within four months following the approval of the accounts that showed the losses, to convene the extraordinary general meeting to take a decision as to whether or not the company should be wound up prematurely. Art. 665 : Where the winding up of the company is not ordered, the company shall be bound, no later than at the close of the second fiscal year following the one during which the losses were recorded, to reduce its capital by an amount at least equal to the amount of the losses that have not been charged to the reserves where, within such time limit, the shareholders’ equity has not been reconstituted up to a value at least equal to half of the registered capital. Art. 666 : The decision of the extraordinary general meeting shall be deposited at the registry of the court responsible for commercial matters of the place of the registered office and entered in the Trade and Personal Property Credit Register. The decision shall be published in a newspaper empowered to publish legal notices of the place of the registered office. Art. 667 : Where the session of the meeting does not hold and where the meeting fails to deliberate validly upon the last invitation, any party concerned may bring an action before the court for the winding up of the company. Similarly, any party concerned may petition the court for the winding up of the company where the provisions of Article 665 of this Uniform Act have not been applied.

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International Arbitration and Corporate Law Art. 668 : The competent court before which an action is brought for the winding up of the company may grant the company a maximum period of six months to regularize the situation. The court shall not order the winding up of a company where such regularization is made on the day it is examining the case on its merits. Art. 669 : The provisions of Articles 664 to 668 of this Uniform Act shall not apply to companies under legal redress or under liquidation of property. SUB-TITLE 6. MERGER, SCISSION AND TRANSFORMATION CHAPTER 1. MERGER AND SCISSION Section 1. Merger Art. 670 : The transactions referred to in Articles 189 to 199 of this Uniform Act which are carried out solely between public limited companies shall be subject to the provisions of this chapter. Art. 671 : The merger shall be ordered by the extraordinary general meeting of each of the companies taking part in the transaction. The merger shall, where necessary, be subject, in each of the companies taking part in the transaction, to ratification by the special meetings of shareholders referred to in Article 555 of this Uniform Act. The board of directors of each of the companies participating in the transaction shall draw up a report which shall be placed at the disposal of the shareholders. The report shall explain and justify the project in detail from a legal and economic standpoint, in particular concerning the exchange ratio of shares and the evaluation methods used which shall be the same for the companies concerned as well as the specific difficulties of evaluation, if any. Art. 672 : One or more merger auditors appointed by the president of the competent court shall be responsible for preparing a written report on the terms of the merger. They may obtain all the relevant documents from each company and carry out all necessary verifications. They shall be subject, with respect to the participating companies, to the incompatibilities provided for in Article 698 of this Uniform Act. The merger auditor(s) shall ascertain that the relative values given to the shares of the companies participating in the transaction are fair and reasonable and that the exchange ratio is equitable. The report(s) of the merger auditors shall be placed at the disposal of shareholders. They shall mention: (1) the method(s) of determination of the proposed exchange ratio; (2) whether this or these method(s) are adequate in the case in point and the values to which each of these methods leads; an opinion shall be expressed on the relative importance given this or these method(s) in the determination of the value adopted; (3) specific evaluation difficulties, if any. 370

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 673 : Merger or scission auditor(s) shall be appointed and they shall perform their task under the conditions laid down in Article 619 et seq. of this Uniform Act. Where only one report is established for the whole transaction, the auditor(s) shall be appointed at the joint request of all the participating companies. Art. 674 : Any public limited company participating in a merger or scission transaction shall place the following documents at the disposal of its shareholders at the registered office at least fifteen days before the date of the general meeting to take a decision on the proposed merger or scission: (1) the proposed merger or scission; (2) the reports referred to in Articles 671 and 672 of this Uniform Act; (3) the summary financial statements approved by the general meetings as well as the management reports of the last three fiscal years of the companies participating in the transaction; (4) an accounting report drawn up using the same methods and according to the same presentation as the last annual balance-sheet adopted on a date which, where the last summary financial statements are on a fiscal year the close of which precedes by more than six months the date of the proposed merger or scission, shall precede by less than three months the date of the proposal. Any shareholder may obtain at his expense, on a mere request, a complete or partial copy of the documents referred to above. Art. 675 : The extraordinary general meeting of the company acquiring the others shall take a decision on the approval of contributions in kind, in accordance with the provisions of Articles 619 et seq. of this Uniform Act. Art. 676 : Where, from the time of deposit at the registry of the court in charge of commercial matters of the proposed merger up to the time the transaction is carried out, the company acquiring the others permanently holds all the capital of the acquired company or companies, there shall be no need for the approval of the merger by the extraordinary general meeting of the acquired companies or for the preparation of the reports referred to in Articles 671 and 672 of this Uniform Act. Art. 677 : Where the merger is realized by the setting up of a new company, such company may be formed without other contributions apart from those of the merging companies. In any case, the draft Articles of Association of the new company shall be approved by the extraordinary general meeting of each of the disappearing companies. The approval of the transaction by the general meeting of the new company shall not be necessary. 371

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International Arbitration and Corporate Law Art. 678 : The proposed merger shall be submitted to the meetings of debenture holders, unless the said debenture holders are offered the possibility of reimbursement of their debentures on a mere request by them. Where debentures are reimbursable on a mere request, the acquiring company shall become the debtor of the debenture holders of the acquired company. The offer of reimbursement of debentures on a mere request by debenture holders provided for above shall be published in a newspaper empowered to publish legal notices of the Contracting State. Any debenture holder who has not applied for reimbursement within the time limit fixed shall retain his status in the acquiring company, under the conditions laid down by the merger contract. Art. 679 : The acquiring company shall be the debtor of the creditors, who are not debenture holders, of the acquired company instead of the latter, without such substitution entailing a novation on their part. The creditors, who are not debenture holders, of the companies participating in the merger transaction, including the lessors of premises hired by the acquired companies, whose claim is prior to the publicity given the proposed merger may lodge objection to the proposal within a period of thirty days from the date of such publicity before the competent court. The president of the competent court shall reject the objection or order either the reimbursement of the debts or the provision of guarantees where the company can offer such guarantees and where they are considered adequate. Failing reimbursement of the debts or provision of the guarantees ordered, the merger shall not have effect vis-à-vis this creditor. The objection lodged by a creditor may not lead to the suspension of the merger transaction. Art. 680 : The provisions of Article 679 of the Uniform Act shall not prevent the implementation of agreements authorizing a creditor to demand the immediate reimbursement of his claim in the case of a merger of the debtor company with another company. Art. 681 : The proposed merger shall not be submitted to the meetings of debenture holders of the acquiring company. However, the general meeting of debenture holders may authorize the representatives of the general body of the debenture holders to object to the merger under the conditions and effects provided for in Articles 679 and 680 of this Uniform Act. Art. 682 : The objection of a creditor to the merger or the scission under the conditions laid down in Articles 679 and 681 of this Uniform Act shall be lodged within a period of thirty days from the date of the insertion prescribed by Article 265 of this Uniform Act.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 683 : The objection of the representatives of the general body of the debenture holders to the merger or scission provided for in Article 681 of this Uniform Act shall be lodged within the same period. Section 2. Scission Art. 684 : The provisions of Articles 670 to 683 of this Uniform Act shall apply to a scission. Art. 685 : Where the scission shall be carried out by contribution to new public limited companies, each of the new companies may be formed without any other contribution apart from the contribution of the split company. In this case and where the shares of each of the new companies are allotted to the shareholders of the split company proportionately to their rights in the capital of the company, it shall not be necessary to draw up the report referred to in Article 672 of this Uniform Act. In any case, the draft Articles of Association of the new companies shall be approved by the extraordinary general meeting of the split company. There shall be no need for the approval of the transaction by the general meeting of each of the new companies. Art. 686 : The proposed scission shall be submitted to the meetings of the debenture holders of the split company, unless the possibility of reimbursement of debenture stocks on a mere request on their part is offered them. Where reimbursement by a mere request is possible, the companies receiving contributions resulting from the scission shall be joint debtors of the debenture holders who apply for reimbursement. Art. 687 : The proposed scission shall not be submitted to the meetings of shareholders of the companies to which the property has been transferred. However, the meeting of debenture holders may authorize the representatives of the general body of the debenture holders to object to the scission, under the conditions and the effects laid down in Article 681 of this Uniform Act. Art. 688 : The beneficiary companies of the contributions resulting from the scission shall be the joint debtors of the debenture holders and the creditors who are not debenture holders of the split company, instead of the latter, without such substitution entailing a novation on their part. Art. 689 : The provisions of Article 688 of this Uniform Act notwithstanding, it may be stipulated that the companies receiving contributions resulting from the scission shall be liable only for part of the liabilities of the split company to be borne by them severally.

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International Arbitration and Corporate Law In this case, the creditors who are not debenture holders of the participating companies may object to the scission, under the conditions and the effects stipulated in Article 679 paragraph 2 et seq. of this Uniform Act. CHAPTER 2. TRANSFORMATION Art. 690 : Any public limited company may be transformed into another form of company where, at the time of transformation, it has been incorporated for at least two years and where it has drawn up the balance sheet of its first two fiscal years of operation and has had them approved by its shareholders. Art. 691 : The decision to transform the company shall be taken upon a report of the auditor of the company. The report shall attest that the company’s net assets are at least equal to its registered capital. The transformation shall, where necessary, be submitted for approval by the meeting of debenture holders. The transformation decision shall be subject to publicity, under the conditions laid down in Articles 263 and 265 of this Uniform Act for the amendment of the Articles of Association. Art. 692 : The transformation of a public limited company into a partnership shall be ordered unanimously by the shareholders. In this case, Articles 690 and 691 of this Uniform Act shall not apply. Art. 693 : The transformation of a public limited company into a private limited company shall be ordered under the conditions laid down for the amendment of the Articles of Association of companies of that form. SUB-TITLE 7. AUDIT OF PUBLIC LIMITED COMPANIES CHAPTER 1. CHOICE OF AUDITOR AND HIS ALTERNATE Art. 694 : Each public limited company shall be audited by one or more auditors. The duties of auditor shall be performed by natural persons or by companies incorporated by natural persons, under one of the forms provided for by this Uniform Act. Art. 695 : Where there exists an association of chartered accountants in the Contracting State of the registered office of the company to be audited, only the chartered accountants approved by the association of chartered accountants may perform the duties of auditor.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 696 : Where there is no association of chartered accountants, only the chartered accountants entered before hand on a list drawn up by a committee holding at a Court of Appeals in the Contracting State of the registered office of the company to be audited may perform the duties of auditor. The committee shall comprise four members as follows: (1) a judge at the Court of Appeals who shall chair the committee and shall have the casting vote; (2) a lecturer of law, economics or management; (3) a judge at the competent court hearing commercial matters; (4) a representative of the Public Treasury. Art. 697 : The duties of auditor shall be incompatible with: (1) any activity or act of a nature to compromise his independence; (2) any paid job. However, an auditor may give a course of instruction relating to the exercise of his profession or take up a paid job with an auditor or a chartered accountant; (3) any commercial activity, whether such activity is carried on directly or by a third person. Art. 698 : The following may not be auditors: (1) the founders, contributors, beneficiaries of special benefits, managers of the company or of its subsidiaries, as well as their spouse; (2) the relatives and connections, up to the fourth degree inclusive, of the persons referred to in paragraph 1) of this article; (3) the managers of companies holding one-tenth of the company’s capital or in which the latter holds one-tenth of the capital, as well as their spouse; (4) the persons who, directly or indirectly or through third parties, receive either from the persons figuring in paragraph 1) of this article or from any company referred to in paragraph 3) of this article, a salary or any remuneration for a permanent activity other than that of auditor; the same shall apply to the spouses of the said persons; (5) auditors’ companies one of whose members, shareholders or managers is in one of the situations referred to in the preceding paragraphs; (6) auditors’ companies one of whose managers, members or shareholders performing the duties of auditor has a spouse who is in one of the situations referred to in paragraph 5) of this article. Art. 699 : An auditor may not be appointed director, managing director, assistant managing director, general manager or assistant general manager of the companies which he audits less than five years after cessation of his duties as auditor of the said companies. The same prohibition shall be applicable to the members of an auditors’ company.

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International Arbitration and Corporate Law He may not, during the same period, perform the duties of auditor in the companies holding one-tenth of the capital of the company audited by him or in the companies in which the company audited by him holds one-tenth of the capital after cessation of his duties as auditor of the said companies. Art. 700 : Persons who have been directors, managing directors, assistant managing directors, general managers or assistant general managers, managers or workers of a company may not be appointed auditors of the company less than five years after cessation of their duties in the said company. They may not, during the same period, be appointed auditors in the companies holding 10% of the capital of the company in which they were performing their duties or in the companies in which the latter hold 10% of the capital after cessation of their duties. The prohibition provided for in this article for the persons mentioned in the first paragraph of the article shall apply to auditors’ companies of which the said persons are members, shareholders or managers. Art. 701 : Decisions taken in the absence of duly appointed substantive auditors or on the report of the substantive auditors appointed or on duty contrary to the provisions of Articles 694 to 700 of this Uniform Act shall be null and void. The action for nullity shall cease where the said decision are expressly confirmed by a general meeting, upon the report of the duly appointed auditors. CHAPTER 2. APPOINTMENT OF THE AUDITOR AND HIS ALTERNATE Art. 702 : Public limited companies which do not launch a public issue shall be bound to appoint an auditor and an alternate auditor. Public limited companies which launch a public issue shall be bound to appoint at least two auditors and two alternate auditors. Art. 703 : The first auditor and his alternate shall be designated in the Articles of Association or appointed by the constituent general meeting. During the existence of the company, the auditor and his alternate shall be appointed by the ordinary general meeting. Art. 704 : The term of office of the auditor designated in the Articles of Association or appointed by the constituent general meeting shall be two fiscal years. Where he is appointed by the ordinary general meeting, his term of office shall be six years.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 705 : The mandate of the auditor shall expire at the end of the general meeting that adjudicates either on the accounts of the second fiscal year where he is designated in the Articles of Association or appointed by the constituent general meeting, or on the accounts of the sixth fiscal year where he is appointed by the ordinary general meeting. Art. 706 : An auditor appointed by the meeting of shareholders in replacement of another auditor shall hold office until the expiry of the mandate of his predecessor. Art. 707 : Where, at the expiry of the mandate of an auditor, it is proposed to the meeting not to renew his mandate, the auditor may, at his request, be heard by the meeting. Art. 708 : Where the meeting fails to elect a substantive auditor or his alternate any shareholder may bring action before the president of the competent court sitting in chambers for the designation of an auditor - substantive or alternate - with the president of the board of directors, the chairman and managing director or the managing director duly summoned to the proceedings. The mandate thus conferred on the auditor shall expire when the general meeting appoints an auditor. Art. 709 : Where the meeting fails to renew the mandate of an auditor or to replace him at the expiry of his mandate and, except where the auditor expressly declines the appointment, his mandate shall be extended until the very next annual ordinary general meeting. CHAPTER 3. TASK OF THE AUDITOR Section 1. Obligations of the auditor Art. 710 : The auditor shall certify that the summary financial statements are regular and accurate and give a fair image of the result of operations of the past fiscal year as well as the financial situation and the estate of the company at the end of the said fiscal year. Art. 711 : The auditor shall declare in his report to the ordinary general meeting: - to have certified the regularity and accuracy of the summary financial statement; - or to have expressed reservations in his certification or to have refused such certification specifying the reasons for such reservations or refusal. Art. 712 : The permanent task of the auditor shall, excluding any interference in the management of the company, be to audit the assets and the accounting documents of the company and to check compliance of its accounting operations with the rules in force.

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International Arbitration and Corporate Law Art. 713 : The auditor shall verify the accuracy and the agreement with the summary financial statements of the information given in the management report of the board of directors or of the managing director, as the case may be, and in the documents on the financial situation and the summary financial statements of the company addressed to the shareholders. He shall set out his observations in his report to the annual general meeting. Art. 714 : Lastly, the auditor shall ascertain that the equality of the members of the company is respected, in particular that all the shares of the same category have the same rights. Art. 715 : The auditor shall prepare a report in which he shall inform the board of directors or the managing director of: (1) the audits and verifications that he carried out and the various investigations that he conducted as well as their results; (2) the items of the balance-sheet and other accounting documents to which amendments have been made, making all the relevant observations on the evaluation methods used in the preparation of the said documents; (3) the irregularities and inaccuracies which he discovered; (4) the conclusions of the above observations and amendments on the results of the fiscal year compared to those of the past fiscal year. The report shall be made available to the chairman of the board of directors or the managing director before the meeting of the board of directors or the decision of the managing director who adopts the accounts of the fiscal year. Art. 716 : The auditor shall report to the very next general meeting on the irregularities and inaccuracies he discovered in the performance of his task. In addition, he shall disclose to the public prosecutor’s office any offence he discovers in the performance of his task, without committing himself by such disclosure. Art. 717 : The auditor as well as his assistants shall, subject to the provisions of Article 716 of this Uniform Act, be bound to professional secrecy regarding the facts, acts and information they have knowledge of in the performance of their duties. Section 2. Rights of the auditor Art. 718 : The auditor shall, at any time of the year, carry out any verifications and audits which he deems appropriate and may have placed before him, on the spot, all documents he considers relevant to the performance of his task, in particular all contracts, books, accounting documents and minutes registers.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group The auditor may, in conducting such audits and verifications, enlist, under his responsibility, the assistance or representation of any experts or collaborators of his choice whom he shall make known by name to the company. The experts or collaborators so chosen shall have the same rights of investigation as those of the auditor. The investigations referred to in this article may be conducted at the company as well as at the parent companies or subsidiaries within the meaning of Articles 178 to 180 of this Uniform Act. Art. 719 : Where many auditors are appointed, they may carry out their investigations and audits separately but they shall draw up a joint report. In case of disagreement among the auditors, the report shall indicate the different opinions expressed. Art. 720 : The auditor may also collect all the relevant information for the performance of his task from third parties who carried out transactions on behalf of the company. However, this right of information may not cover the communication of documents, contracts and other documents of any nature kept by third parties, unless the auditor is authorized to obtain such contracts and documents by a decision of the president of the competent court giving a summary judgment. Professional secrecy may not be relied upon against an auditor save by auxiliary officers of justice. Art. 721 : The auditor shall compulsorily be convened to all meetings of shareholders, no later than at the time of convening the shareholders themselves, by hand-delivered letter with acknowledgement of receipt or by registered letter with notification of reception. Art. 722 : The auditor shall compulsorily be convened to the meeting, as the case may be, of the board of directors or of the managing director adopting the accounts of the fiscal year, as well as, where necessary, to any other meeting of the board or of the managing director. The invitation shall be forwarded to the auditor no later than at the time of convening the members of the board of directors or, where the company is managed by a managing director, at least three days before the meeting by hand-delivered letter with acknowledgement of receipt or by registered letter with notification of reception. Art. 723 : The fees of the auditor shall be borne by the company. The amount of the fees shall be fixed globally, no matter the number of auditors who shall share the fees among themselves.

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International Arbitration and Corporate Law Art. 724 : Travel and subsistence expenses incurred by the auditors in the discharge of their duties shall be borne by the company. Likewise, the company may grant the auditor a special remuneration where he: (1) carries out an additional professional activity, on behalf of the company, abroad; (2) carries out special audits of accounts of companies in which the audited company holds a share or intends to hold a share; (3) performs temporary tasks entrusted to him by the company at the request of a public authority. CHAPTER 4. LIABILITY OF THE AUDITOR Art. 725 : The auditor shall be liable, to both the company and third parties, for the torts, and negligences of which he is guilty in the exercise of his duties. However, his responsibility may not be committed for information he gives or the facts divulged by him in the performance of his task, in accordance with the provisions of Article 153 of this Uniform Act. Art. 726 : The auditor shall not be liable for damages resulting from by offences committed by the members of the board of directors or by the managing director, as the case may be, unless, where he has knowledge of them, he fails to disclose them in his report to the general meeting. Art. 727 : Liability action against the auditor shall lapse after a period of three years from the date of commission of the tort or, where such tort was hidden, from the date of its discovery. Where such deed is described as a felony, the action shall lapse after a period of ten years. CHAPTER 5. TEMPORARY OR PERMANENT IMPEDIMENT OF THE AUDITOR Art. 728 : In case of the impediment, resignation or death of the auditor, his duties shall be performed by the alternate auditor until the auditor is available or, where he is permanently absent, until the expiry of the mandate of the indisposed auditor. Where the impediment ceases, the indisposed auditor shall resume duty after the next ordinary general meeting which approves the accounts. Art. 729 : Where the alternate auditor is called upon to perform the duties of the substantive auditor, a new alternate shall be appointed during the very next ordinary general meeting. The mandate of the alternate so appointed shall expire automatically when the indisposed auditor resumes duty. Art. 730 : The public prosecutor’s office may bring an action before the court for objection entered against auditors appointed by the ordinary general meeting.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Where the court accedes to its request, a new auditor shall be appointed by the court. He shall hold office until the assumption of duty by the auditor to be appointed by the meeting of shareholders. Art. 731 : One or more shareholders representing at least one-tenth of the company’s capital, the board of directors or the managing director, as the case may be, the ordinary general meeting or the public prosecutor’s office may bring an action before the court for the dismissal of the auditor in case of misconduct on his part or impediment. Art. 732 : The action for objection to or the dismissal of the auditor shall be brought before the president of the competent court who shall give a summary judgment. The writ shall be issued against the auditor and the company. The action for objection to the auditor shall be lodged within a period of 30 days from the date of the general meeting which appointed the auditor. Art. 733 : Where the action is initiated by the public prosecutor’s office, it shall be lodged in the form of a petition. Parties other than the representative of the public prosecutor’s office shall be summoned at the instance of the court registrar by handdelivered letter with acknowledgement of receipt or by registered letter with notification of reception. Art. 734 : The time limit for lodging an appeal against the decision of the president of the competent court shall be 15 days from the date of notification of the said decision to the parties. SUB-TITLE 8. WINDING-UP OF PUBLIC LIMITED LIABILITY COMPANIES Art. 735 : The provisions of Articles 736 and 737 of this Uniform Act shall not apply to companies under legal redress or liquidation of property. Art. 736 : A public limited company shall be wound up for reasons common to all companies under the conditions and effects stipulated in Articles 200 to 202 of this Uniform Act. A public limited company shall also be wound up in case of partial loss of its assets under the conditions laid down in Articles 664 to 668 of this Uniform Act. Art. 737 : Shareholders may pronounce the premature winding up of the company. The decision shall be taken at the extraordinary general meeting of shareholders.

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International Arbitration and Corporate Law SUB-TITLE 9. CIVIL LIABILITY CHAPTER 1. LIABILITY OF FOUNDERS Art. 738 : The founders of the company who are responsible for the nullity of the company and the directors or managing director in office at the time when the nullity of the company occurred may be declared jointly and severally liable for damage suffered by shareholders or third parties as a result of the nullity of the company. Shareholders whose contributions or benefits have not been audited and approved may also be jointly and severally liable. Art. 739 : Action for liability on grounds of nullity of the company shall lapse under the conditions laid down in Article 256 of this Uniform Act. CHAPTER 2. LIABILITY OF DIRECTORS Art. 740 : The directors or the managing director, according to the circumstances, shall be severally or jointly liable to the company or to third parties either for offences against the laws and regulations applicable to public limited companies or for violation of the provisions of the Articles of Association or for offences committed in their management. Where many directors took part in the commission of the same acts, the competent court shall determine the contribution of each of them in the award of the damages. Art. 741 : Besides the action for the award of personal damages, the shareholders may, either individually or collectively, institute proceedings in the company’s interest against the directors or the managing director, as the case may be. The shareholders may, where they represent at least one-twentieth of the registered capital, entrust, in their common interest and at their expense, one or more shareholders to represent them in sustaining and defending the action in the company’s interest both at the time of institution and defence. The withdrawal of one or more of the said shareholders in the course of the action either voluntarily or because of loss of their status as shareholders shall have no effect on the continuation of the said action. The plaintiffs shall be competent to institute proceedings for the award of damages for all damages suffered by the company to which, where necessary, damages can be awarded. Art. 742 : Any clause of the Articles of Association subjecting the institution of the action in the company’s interest to a prior notice or to the authorization of the general meeting, or imposing in advance renunciation of the institution of such action shall be considered as unwritten. No decision of the general meeting may extinguish an action against the directors or the managing director, as the case may be, for an offence committed in the performance of their duties. 382

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 743 : An action against the directors or the managing director, both in the company’s interest and individual interest, shall lapse after three years from the date of commission of the tort or, where it was hidden, from the date of disclosure thereof. However, where the act is termed crime, the action shall lapse after ten years. TITLE 2. TRANSFERABLE SECURITIES CHAPTER 1. COMMON PROVISIONS Section 1. Definition Art. 744 : Public limited companies shall issue transferable securities whose form, scheme and characteristics shall be listed in this Title. Transferable securities shall confer similar rights per category and shall give access directly or indirectly to a percentage of the capital of the issuing company or to a general claim on its property. They shall be joint with respect to the issuing company. The issue of partnership or founder’s shares shall be forbidden. Section 2. Form of securities Art. 745 : Shares and bonds shall either be negotiable instruments or registered securities whether they are issued against contributions in kind or contributions in cash. However, the form of registered securities only may be imposed by the provisions of this Uniform Act or by the Articles of Association. Art. 746 : The owner of securities which are part of an issue comprising negotiable instruments shall have the option, notwithstanding any clause to the contrary, to convert his negotiable instruments into registered securities and vice-versa. Section 3. Pledging of securities Art. 747 : Subject to the provisions of Articles 772 and 773 of this Uniform Act, the pledging of transferable securities put on account shall be carried out, with respect to both the issuing corporate body and third parties, by a statement dated and signed by the holder of the securities. The statement shall contain the amount of money due as well as the amount and nature of the securities pledged. The secured bonds shall be transferred into a special account opened in the name of the holder of the securities and kept by the issuing corporate body or the financial broker, as the case may be. A certificate of pledge shall be issued to the pledgee. In case of a joinder of actions for wiping up of accounts payable of the financial broker who keeps the account, the holders of the securities put in the account shall have all their rights transferred into an account kept by another financial broker or by the issuing corporate body. 383

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International Arbitration and Corporate Law The competent court shall be informed of such transfer. Where the entries in the account are insufficient, the holders of the securities shall make a declaration thereof to the representatives of the creditors for their rights to be complemented. The pledging of registered securities provided for in Article 764 1) below shall be carried out by registration in the transfer registers of the company. The same shall apply in the case of sequestration of goods. CHAPTER 2. PROVISIONS RELATING TO SHARES Section 1. Different forms of shares Art. 748 : Shares issued for cash shall be shares whose amount is paid up in cash or by set-off of unquestionable, liquid and due claims on the company, shares which are issued following the incorporation of reserves, profits or issue premiums and shares whose amount is made up in part of an incorporation of reserves, profits or issue premiums and in part of an issue for cash. Shares issued for cash shall be fully paid up during subscription. All the other shares shall be initial shares. Art. 749 : A share issued for cash shall be a registered share until it is fully paid up. An initial share shall be convertible into a bearer bond only after a period of two years. Art. 750 : The face value of shares or share denominations may not be lower than ten thousand (10 000) CFA francs. Section 2. Rights attached to shares Paragraph 1. Voting rights Article 751 : Each share shall have voting rights proportional to the fraction of capital it represents and shall give right to at least one vote. Art. 752 : A voting right twice the right conferred on other shares may, in view of the fraction of capital represented, be conferred by the Articles of Association or the extraordinary general meeting on fully paid-up registered shares where there is justification that the shares have been registered for at least two years in the name of the same shareholder. Similarly, where share capital has been increased through capitalization of reserves, profits or share premiums, double voting rights may, from the time of issue, be conferred on registered shares freely allotted to a shareholder in proportion to the number of his old shares which already enjoy this right. Art. 753 : Any share converted into a bearer share shall lose the double voting right.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Paragraph 2. Right to dividend Art. 754 : Each share shall have a right to dividend proportional to the fraction of capital it represents. The Articles of Association or the extraordinary general meeting may grant shares a right to the first dividend. Art. 755 : Notwithstanding the provisions of Article 754 of this Uniform Act, during the formation of a company or during its existence, preference shares may be launched. Such shares shall have priority rights in relation to all the other shares. These benefits may be notably a bigger share in the profits or bonus after liquidation, a preferential right to profits and cumulative dividends. Art. 756 : Notwithstanding any clause to the contrary in the Articles of Association of the issuing company, the totality of interest, dividends or other periodic revenue accruing to shares for a specific company fiscal year shall be paid in a lump-sum. The date of payment of the lump-sum shall be fixed by the general meeting of shareholders. The general meeting may, however, request the board of directors to fix the said date. Paragraph 3. Pre-emptive right of subscription. Art. 757 : Shareholders shall have proportionately to the amount of their shares, a preemptive right of subscription for shares issued for cash in order to increase capital. This right shall be negotiable under the same conditions as the share itself during the subscription period. Art. 758 : The application of the provisions of Article 757 of this Uniform Act may only be set aside by the general meeting sitting under the conditions of quorum and majority of an extraordinary meeting, and the deliberations shall not be valid unless the board of directors or the managing director, as the case may be, indicates in their report to the general meeting the reasons behind the increase of capital and the persons to whom the new shares shall be allotted, together with the number of shares allotted to each person, the issue price and the basis on which such price was determined. Section 3. Negotiability of shares Art. 759 : Shares shall be negotiable only after registration of the company in the Trade and Personal Property Credit Register or registration of the statement of amendment following an increase of capital. Art. 760 : Negotiation of a promise of shares shall be forbidden unless it concerns shares still to be launched in case of an increase of capital for a company whose existing shares are already registered on the securities list of a stock exchange of one or more

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International Arbitration and Corporate Law Contracting States. In such case, negotiation shall not be valid unless it is conditioned on the realization of the increase of capital. Failing an express statement, this condition shall be presumed. Art. 761 : Shares issued for cash shall not be negotiable until they have been fully paid up. Art. 762 : Shares shall remain negotiable after the winding up of the company and until the close of liquidation. Art. 763 : The winding up of a company or of a share issue shall not imply nullity of the negotiations which took place before the decision to dissolve, where the form of the shares is in order. However, a purchaser may take action against the vendor on the guarantee. Section 4. Transfer of shares. Art. 764 : In principle, shares shall be freely transferable. The transfer of shares shall be carried out according to the following procedure : (1) for companies not launching a public issue : (2) by transfer on the registers of the company, for registered shares; the holder’s rights result from the single registration on the company’s registers ; (3) by simple delivery for bearer shares. The bearer of the share shall be deemed to be the owner ; (4) for companies launching a public issue : (5) besides the above procedure whether for registered or bearer shares, the shares may be represented by registration in an account opened in the name of their proprietor and held either by the issuing company or a financial intermediary approved by the Minister in charge of the Economy and Finance. In such case the transfer shall take place by transfer from one account to another. Section 5. Limitations to the transfer of shares. Art. 765 : Notwithstanding the principle of free transferability stated in Article 764 of this Uniform Act, the Articles of Association may lay down certain limitations to the transfer of shares under the following conditions : (1) the limitation clauses shall not be valid in a company unless all its shares are registered ; (2) the Articles of Association may provide that the transfer of shares to a third party who is an outsider to the company either free of charge or for payment shall be subject to approval by the board of directors or the ordinary general meeting of shareholders ; (3) limitations to the transfer of shares may not operate in case of succession, liquidation of the community of property between spouses or of transfer to a spouse or an ascendant or a descendant.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 766 : Where approval is given by the meeting, the transferor shall not take part in the vote and his shares shall be deducted when calculating the quorum and the majority. The same shall apply where the transferor is a director, and the approval is given by the board of directors. Art. 767 : Where an approval clause is applicable, the transferor shall attach to his application for approval addressed to the company by hand-delivered letter against a receipt, or by registered letter with a request for acknowledgement of receipt, by telex or fax, the full name, capacity and address of the proposed transferee, the number of shares earmarked for transfer and the price offered. Art. 768 : Approval shall result from notification or from failure to reply within a time limit of three months from the date of the application. Art. 769 : Where the company does not approve the proposed transferee, the board of directors or the managing director, as the case may be, shall, within a period of three months from notification of the refusal, cause the shares to be acquired by a shareholder, a third party, or, with the consent of the transferor, by the company with a view to a reduction of capital. Art. 770 : Failing an agreement between the parties, the transfer price shall be determined by an expert designated by the president of the competent court at the request of the earliest petitioner. Art. 771 : Where at the expiry of the three-month period, the purchase has not taken place, the approval shall be deemed to be granted. However, where an expert has been designated by the president of the competent court to fix the price, the time limit may be extended for a period not exceeding three months by the court which designated the expert. Section 6. Pledging of shares Art. 772 : Where the company has given its consent for a plan to pledge shares, such consent shall mean approval of the transferee in case of compulsory sale of the pledged shares, unless the company prefers to buy back the shares without delay with a view to reducing its capital. A plan to pledge shares shall not be invoked against the company unless it was approved by the organ designated for that purpose by the Articles of Association to approve the transfer of shares. Art. 773 : The pledging plan shall first have been sent to the company by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt, by telex or fax, stating the full name and the number of shares to be pledged.

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International Arbitration and Corporate Law Agreement shall result from acceptance of the pledge notified in the same form as the application for approval of the pledge, or from failure to reply within the time limit of three months from the date of the application. Section 7. Failure to pay up shares Art. 774 : At least one quarter of the value of shares shall be paid up on subscription ; the balance shall be paid up as the board of directors makes calls within a maximum period of three years from the date of subscription. Art. 775 : In case of non-payment of the balance on the shares that have not been fully paid up at the time fixed by the board of directors or the managing director, as the case may be, the company shall send a formal notice to the defaulting shareholder by handdelivered letter against a receipt or by registered letter with a request for acknowledgement of receipt. One month after such formal notice has gone unheeded, the company shall on its own initiative take charge of the sale of the shares. With effect from the same date, shares for which the amount owed has not been paid shall cease to give right to votes in shareholders’ meetings and shall be deducted when calculating the quorum and the majority. Upon the expiry of the time limit of one month, the right to dividend and the pre-emptive right of subscription to increases of capital attaching to such shares shall be suspended until the sums owed are paid. Art. 776 : In the case referred to in Article 775, paragraph 2 of this Uniform Act, the sale of quoted shares shall take place on the stock exchange, whereas the sale of unquoted shares shall take place at a public auction conducted by a stockbroker or a notary. Before carrying out the sale referred to in the preceding paragraph, the company shall publish in a newspaper empowered to publish legal notices, thirty days following the formal notice provided for in Article 775 of this Uniform Act, the number of the shares on sale. The company shall notify the debtor and, where necessary, his co-debtors of the sale by hand-delivered letter against a receipt or by registered mail with acknowledgement of receipt bearing an indication of the date and number of the newspaper in which publication was made. The actual sale of shares may not take place less than 15 (fifteen) days after the despatch of the hand-delivered letter against a receipt or the registered letter with acknowledgement of receipt. The defaulting shareholder shall remain debtor or benefit from the balance. The defaulting shareholder shall foot any costs incurred by the company in carrying out the sale. Art. 777 : The defaulting shareholder, successive transferees and subscribers shall be jointly and severally liable for the unpaid amount of the share.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group The company may take action against them before or after the sale, or at the same time, to obtain the sum owed and a refund of the costs incurred. Any person who pays off the company shall be entitled to take action for the entire sum against successive holders of the share. The final charge on the debt shall fall to the last of such holders. Section 8. Redemption of shares Art. 778 : Redemption of shares by the casting of lots shall be forbidden notwithstanding any legislative, statutory or contractual provisions to the contrary. CHAPTER 3. PROVISIONS RELATING TO BONDS Section 1. General provisions Paragraph 1. Definition. Art. 779 : Bonds shall be negotiable instruments which, for one and the same issue, shall confer the same rights to a claim for the same face value. Paragraph 2. Conditions of issue. Art. 780 : The issue of bonds shall only be allowed for public limited companies and economic interest groups made up of public limited companies, which have existed for two years and have drawn up two balance-sheets duly approved by the shareholders. Art. 781 : The issue of bonds shall be forbidden for companies whose capital is not fully paid up. Art. 782 : The issue of lottery bonds shall be forbidden. Art. 783 : The general meeting of shareholders shall have the sole prerogative to decide on or authorize the issue of bonds. It may delegate to the board of directors or the managing director, as the case may be, the necessary powers to issue bonds in one or more instalments within a period of two years and to lay down the conditions thereof. Art. 784 : Any bonds redeemed by the issuing company and bought back shall be cancelled and may not be re-floated. Paragraph 3. Group of bondholders Art. 785 : Holders of bonds issued at the same time shall as of right be grouped together to defend their interests in an organization having legal personality. However, where bonds are issued successively and a clause in each contract of issue so provides, the company may bring together bondholders having identical rights into a single group.

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International Arbitration and Corporate Law Art. 786 : The group shall be represented, according to the decision taken by the general meeting of bondholders which elected them, by one to three representatives. Art. 787 : The mandate of representative of the group may be conferred only on natural persons or corporate bodies resident in the Contracting State of the head office of the debtor company. The following may not be chosen to represent the group : (1) the debtor company ; (2) companies having a share in the debtor company ; (3) companies which have guaranteed all or part of the commitments of the debtor company ; (4) managers or directors of the debtor company or of any company having a share in its capital, as well as their ascendants, descendants or spouses ; (5) employees of the companies referred to above ; (6) the auditor of the companies referred to above ; (7) persons who have forfeited their right to direct, administer or manage a company in any capacity whatsoever. Art. 788 : In emergency cases, representatives of the group may be designated by the president of the competent court at the request of any interested party. Art. 789 : Representatives of the group may be removed from their duties by the general meeting of bondholders. Art. 790 : Representatives of the group shall, unless otherwise restricted by the general meeting of bondholders, have the power to carry out in the name of the group and of all the bondholders any acts of management to defend the common interests of the bondholders. Art. 791 : Representatives of the group may not interfere in the management of the company. They may take part in the meetings of shareholders but in an advisory capacity. They shall have the right to be served any documents available to shareholders and in the same conditions as the shareholders. Art. 792 : In case of liquidation of the property or judicial redress of the company, the representatives of the group of bondholders shall be competent to act in the company’s name. Under the liabilities column of the liquidation of the property or judicial redress of the company, they shall declare for all the bondholders of the group the amount of the capital and interest owed by the company to the bondholders of the group.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group They shall not be required to produce the titles of the bondholders of the group to justify their declaration. In case of difficulty, any bondholder may petition the president of the competent court to appoint an attorney-in-fact to make the said declaration and represent the group. Art. 793 : In case of closure because of insufficient assets, the group representative or designated management representative shall recover the rights of the bondholders. The costs incurred in representing the bondholders during the process of liquidation of assets or judicial redress of the company shall be borne by the company and shall be considered as receivership expenses. Art. 794 : Remuneration of the group representatives shall be determined by the general meeting or by the contract of loan. It shall be borne by the debtor company. Where the said remuneration is not fixed, or where the amount is challenged, it shall be determined by the president of the competent court. Section 2. General meeting of bondholders. Paragraph 1. Convening Art. 795 : The general meeting of bondholders of the same group may meet at any time. Art. 796 : The general meeting shall be convened by the representatives of the group of bondholders or, where necessary, by the board of directors or the managing director, as the case may be, or by the liquidator during a liquidation. The general meeting may also be convened at the request of bondholders representing at least one-thirtieth of bonds by group representatives or by an attorney-in-fact designated by the president of the competent court. Art. 797 : The convening of the meeting of bondholders shall be done under the same conditions of form and time limit as for shareholders’ meetings. The same shall apply for communicating to bondholders the draft resolutions to be proposed and the reports to be presented at the meeting. Paragraph 2. Compulsory information Art. 798 : The convening notice to the meeting shall include the following information : (1) an indication of the loan subscribed to by the bondholders for which the group is convened ; (2) the full name and domicile of the person who took the initiative to convene the meeting and the capacity in which he is acting ;

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International Arbitration and Corporate Law (3) where necessary, the date of the court decision designating the representative responsible for convening the meeting. Art. 799 : Any meeting convened irregularly may be annulled. However, the action for annulment shall not be entertained where all the bondholders of the group concerned are present or represented. Paragraph 3. Agenda Art. 800 : The agenda shall be drawn up by the convenor. However, one or more bondholders representing at least one-thirtieth of the company’s bonds shall have the option of requesting that draft resolutions be included on the agenda. The draft resolutions shall be included on the agenda and submitted to the meeting by the chairman for approval. The meeting may not deliberate on any matter which is not included on the agenda. On the second invitation, the agenda may not be amended. Paragraph 4. Representation Art. 801 : Every bondholder shall be entitled to participate in the meeting or to be represented by any person of his choice. Persons who may not represent the group by virtue of Article 787 of this Uniform Act may not represent bondholders in the meeting. Paragraph 5. Conduct of meetings Art. 802 : The meeting shall be presided over by a representative of the group. Where there are several representatives and there is disagreement among them, the meeting shall be presided over by a bondholder in attendance representing the highest number of bonds. Where the meeting is convened by an attorney-in-fact, it shall be presided over by him. The rules governing the conduct of shareholders’ meetings shall apply, where appropriate, to bondholders’ meetings. Art. 803 : The ordinary meeting of bondholders shall deliberate on the appointment of the group’s representatives, their term of office, a determination, where necessary, of their remuneration, their replacement, their convening and any other measure intended to ensure the defence of bondholders and the execution of the loan contract, on the management expenditure that such measures could incur and, in general, on all measures of a protective or administrative nature. Art. 804 : The extraordinary meeting of bondholders shall deliberate on every recommendation likely to modify the loan contract, in particular the following : (1) the change of object or form of the company ; (2) its merger or scission ;

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (3) any proposal of compromise or settlement of rights in dispute or rights which have been the subject of a court decision ; (4) the total or partial modification of guarantees or extension of due date ; (5) change of registered office ; (6) winding up of the company. Paragraph 6. Voting rights Art. 805 : Voting rights attached to bonds shall be proportionate to the fraction of the amount of the loan which they represent. Each bond shall give right to at least one vote. Bondholders may vote by correspondence under the same conditions and form as shareholders in shareholders’ meetings. Art. 806 : A company holding at least 10% of the capital of the debtor company may not vote during the meeting using the bonds it holds. Art. 807 : In case of dismemberment of ownership of the bonds, the voting right shall belong to the bare owner, unless otherwise provided by the parties. Paragraph 7. Decisions of the meeting Art. 808 : The meetings may neither increase the responsibility of bondholders nor practise unequal treatment between bonds of the same issue. Art. 809 : Failing approval by the general meeting of bondholders of the proposals made by the company relating to an alteration of its form or objects, the company may proceed to redeem the bonds before implementing the change of its form and objects. Art. 810 : Where the general meeting of bondholders fails to approve the company’s proposals regarding its scission or split, the company may proceed further and the bondholders shall maintain their title as bondholders in the acquiring company or in the new company arising from the merger or in the companies arising from the scission, as the case may be. Where the company decides to ignore the refusal of approval by the general assembly of bondholders, the chairman and managing director, the general manager or the managing director, as the case may be, shall inform the representative of the bondholders’ group thereof by hand-delivered letter against a receipt or by registered letter with a request for acknowledgement of receipt. The group of bondholders may lodge an objection to the merger or scission with the president of the competent court.

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International Arbitration and Corporate Law The said president shall reject the objection or order a refund of the bonds or a provision of guarantees if the acquiring company or the company being split offers any which are deemed to be sufficient. Art. 811 : In case of winding up of the company without any threat of merger or split, refund of the bonds shall be immediately due. Art. 812 : Legal redress of the company shall not put an end to the functioning or the role of the general assembly of bondholders. Paragraph 8. Individual bondholders’ rights Art. 813 : Bondholders may not exercise individual control over the company’s transactions or be sent company documents. They shall have the right, at their own expense, to obtain from the company a copy of the report and attendance lists of bondholders’ meetings of the group to which they belong. Art. 814 : In the absence of special clauses in the contract of loan, the company may not force the bondholders to accept a prepayment of the bonds. Paragraph 9. Guarantees granted to bonds. Art. 815 : The general meeting of shareholders which decides to issue bonds may decide that the bonds will be secured. The meeting shall determine what securities to offer or shall delegate to the board of directors or the managing director, as the case may be, the power to determine it. Art. 816 : The securities shall be formed by the company before issue in a special deed for the benefit of the group of bondholders being formed. The formalities of publishing the securities shall be complied with before any subscription of bonds takes place. Art. 817 : The acceptance of the guarantee shall be evidenced only by subscription. It shall be retroactive on the date of registration for securities subject to registration and on the date of their subscription for the other securities. Art. 818 : Within a period of six months from the opening of subscription, the result of the subscription shall be recorded in a notarial deed at the instance of the legal representative of the company. Within a period of thirty days from the date of preparation of the deed, the results of the subscription shall be entered on the margin of the guarantee.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Where the issue of bonds is not realized because there is little or no subscription, the registration shall be cancelled. Art. 819 : Renewal of the security shall be done at the expense of the company, under the responsibility of its legal representatives. The representatives of the group shall be responsible for ensuring compliance with the provisions relating to renewal of registration. Art. 820 : Release of the mortgage may only be done by the group’s representatives and on condition that the loan has been repaid in full and that all the interest has been paid. In addition, it shall be necessary for the representatives to be expressly authorized to release the mortgage by the general assembly of bondholders of the group. Art. 821 : Any guarantees provided after the issue of bonds shall be conferred by the legal representatives of the company either upon the authorization of the ordinary general meeting of shareholders or, where the articles so provide, by the board of directors or the managing director. They shall be expressly accepted by the group. CHAPTER 4. OTHER TRANSFERABLE SECURITIES Art. 822 : During the issue of securities representing claims on the issuing company or giving right to subscribe or acquire a transferable security representing claims, it may be provided that the said transferable securities shall only be redeemed after the other creditors have been paid off, excluding holders of equity-type loans. TITLE 3. PROVISIONS SPECIFIC TO PUBLIC LIMITED COMPANIES CALLING FOR PUBLIC CAPITAL CHAPTER 1. GENERAL PROVISIONS Art. 823 : Without prejudice to the provisions which may govern the stock exchange and the acceptance of transferable securities on the exchange, incorporated companies or those in the process of calling a public capital by way of prospectus shall fall under the general rules governing public limited companies and the special provisions of this title. The provisions of this title shall override the general provisions governing the form of public limited companies in case of incompatibility between the two sets of rules. Art. 824 : The minimum capital of a company whose shares are listed on the stock exchange of one or more Contracting States or one calling for public capital for the sale of

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International Arbitration and Corporate Law its shares in one or more Contracting States shall be one hundred million (100 000 000) CFA francs. The registered capital may not be lower than the amount stipulated in the preceding paragraph unless the company changes into another form of company. In case of failure to comply with the provisions of this article, any interested party may petition the court for the winding up of the company. Such winding up may not be pronounced where, on the day the court is ruling on the merits of the case, the matter has been regularized. CHAPTER 2. FORMATION OF A COMPANY Art. 825 : The founders shall publish, before the start of application for shares, a prospectus in newspapers empowered to publish legal notices in the Contracting State of the registered office of the company and, as the case may be, in the Contracting States where a call for the capital is made. Art. 826 : The prospectus referred to in the preceding article shall bear the following details : (1) the name of the company being formed, followed, where necessary, by its acronym ; (2) the form of the company ; (3) the registered capital ; (4) the company’s object ; (5) the address of the registered office ; (6) the duration of the company ; (7) the number of shares subscribed to, for cash and the amount immediately due comprising, as the case may be, the agio on issue; (8) the face value of the shares to be issued, with a distinction made, where necessary, between each category of shares ; (9) a summary description of contributions in kind, their total valuation and their mode of remuneration, with an indication of the provisional nature of the said evaluation and the mode of remuneration ; (10) the special benefits stipulated in the draft Articles of Association in the interest of any person ; (11) the conditions of admittance to shareholders’ meetings and of exercising the voting rights with an indication, where necessary, of the provisions relating to the granting of the double voting right ; (12) where necessary, the clauses relating to the approval of transferees of shares ; (13) the provisions relating to the sharing of profits, the building up of reserves and the sharing of the bonus after liquidation ;

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (14) the full name and address of the domicile of the notary or the corporate name and registered office of the bank in which the funds from the subscription shall be deposited ; (15) the time limit open for subscriptions with an indication of the possibility of early closing in case the full subscriptions are made before the expiry of the said time limit ; (16) the procedure for convening the constituent general meeting. The prospectus shall be signed by the founders and it shall indicate : (17) in case of natural persons, their usual full name, domicile and nationality ; (18) in case of corporate bodies, their name, form, registered office and, as the case may be, the amount of the registered capital. Art. 827 : To inform the public about the forthcoming issue of shares, circulars shall be written reproducing the details of the prospectus provided for in Article 826 of this Uniform Act. The circulars shall make mention of the insertion of the prospectus in the newspapers empowered to publish legal notices where the said prospectus has been published. They shall make reference to the publication number of the prospectus in the newspapers. The circulars shall, in addition, make known the plans of the founders regarding the application of funds derived from the payments of the shares subscribed. Posters and notices in newspapers shall reproduce the same information or at least extracts from such information with reference to the prospectus and an indication of the number of the newspapers empowered to publish legal notices in which the prospectus was published. CHAPTER 3. FUNCTIONING OF THE COMPANY Section 1. Administration of the company. Art. 828 : Companies calling for public capital in order to sell their shares in one or more Contracting States or whose shares are listed on the stock exchange of one or more Contracting States shall be bound to have a board of directors. Art. 829 : The board of directors of the companies referred to in Articles 828 to 853 of this Uniform Act shall, as of necessity, comprise at least three members and at most fifteen members where its shares are listed on the stock exchange. However, in case of a merger involving one or more companies whose shares are quoted on the stock exchange of one or more Contracting States, the number fifteen may be exceeded to include the total number of directors in office for more than six months in the merged companies, but without exceeding twenty.

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International Arbitration and Corporate Law They shall neither appoint new directors nor replace directors who are deceased, dismissed or have resigned shall be replaced as long as the number of directors has not been reduced to fifteen where the shares of the company are quoted on the stock exchange of one or more Contracting States. Where a company quoted on the stock exchange of one or more Contracting States is struck off from those stock exchanges, the number of directors shall be reduced to twelve as soon as possible. Within the various limits fixed above, the number of directors shall be freely determined in the Articles of Association. Art. 830 : The chairman and managing director, the general manager of a company whose shares are quoted on the stock exchange of one Contracting State and the natural persons or corporate bodies performing the duties of director in the company shall be required, within the time limit fixed in the second paragraph of this article, to obtain registered status for the shares belonging to them proper or those belonging to their unemancipated minor children issued by the company itself, by its subsidiaries, by the company of which it is a subsidiary or by the other subsidiaries of such company, where the shares are quoted on the stock exchange of one or more Contracting States. The time limit referred to in the preceding paragraph shall be one month from the date on which the persons concerned acquire the capacity in which they are subject to the provisions stipulated by the preceding paragraph. The time limit shall be twenty days from the date of entry into possession where the persons concerned acquire the shares referred to in the first paragraph of this article. The preceding provision shall apply to the permanent representatives of corporate bodies performing the duties of director in the companies whose shares are quoted on the stock exchange of one or more Contracting States as well as to the spouses, who are not separated from bed and board, of all the persons referred to in this article. Failure to obtain the registered status for the shares, the persons concerned shall deposit them in a bank or with a stock broker. Section 2. Shareholders’ meetings Art. 831 : Before the meeting of shareholders, companies calling for public capital to sell their shares or whose shares are registered in one or more Contracting States shall be required to publish in newspapers empowered to publish legal notices of the Contracting State hosting the registered office and, where necessary, of the other Contracting States where a public call for capital issue is made, a notice bearing : (1) the commercial name followed, where necessary, by the acronym of the company ; (2) the form of the company ; (3) the amount of its capital ;

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (4) the address of its registered office ; (5) the agenda of the meeting ; (6) the text of the draft resolutions which shall be presented to the assembly by the board of directors ; (7) the place where the shares should be deposited ; (8) except where the company sends out to shareholders a form for voting by correspondence, the places and conditions under which the said forms may be obtained. Section 3. Modification of registered capital Art. 832 : Shareholders and investors shall be informed of the issue of new share and the conditions thereof either by a notice inserted in the prospectus published in newspapers empowered to publish legal notices in the Contracting State of the head office and, as the case may be, of the other Contracting States in which a call for public capital is made or by hand-delivered letter against a receipt or by registered letter with a request for advice of delivery where the shares of the company are registered. Art. 833 : The prospectus bearing the company’s seal, and the hand-delivered letter against a receipt or by registered letter with a request for advice of delivery shall contain the following information : (1) the name of the company followed, if need be, by its acronym ; (2) the form of the company ; (3) a summary of the company’s objects ; (4) the amount of the registered capital ; (5) the address of the registered office ; (6) the registration number of the company in the Trade and Personal Property Credit Register ; (7) the normal expiry date of the company ; (8) the amount of increase of capital ; (9) the dates of commencement and close of subscription ; (10) the full name or commercial name, the address of domicile or registered office of the depositary ; (11) the categories of shares issued and their characteristics ; (12) the face value of the shares to be subscribed for in cash and, where necessary, the amount of the agio on issue; (13) the amount immediately due per share subscribed ; (14) the existence for the benefit of shareholders of the pre-emptive right of subscription to new shares as well as the conditions for exercising the said right ; (15) the special benefits stipulated by the Articles of Association in favour of any person ; (16) as the case may be, the statutory clauses restricting the free transfer of shares ;

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International Arbitration and Corporate Law (17) the provisions relating to the sharing of profits, the building up of reserves and the sharing of bonus after liquidation ; (18) the unredeemed amount of the other bonds issued before and the guarantees covering them ; (19) the amount at the time of issue of the bond issues guaranteed by the company and, where appropriate, the guaranteed fraction of the said issues ; (20) where necessary, a summary description, assessment and mode of remuneration of contributions in kind within the increase of capital, with an indication of the provisional nature of the assessment and mode of remuneration. Art. 834 : A copy of the last balance-sheet, certified true by the legal representative of the company, shall be published in the annex to the prospectus referred to in Article 833 of this Uniform Act. Where the last balance-sheet has been published in a newspaper empowered to publish legal notices, a copy of the said balance-sheet may be replaced with an indication of the reference to the previous publication. Where a balance-sheet has not yet been drawn up, the prospectus shall so indicate. Art. 835 : The circulars informing the public about the issue of shares shall reproduce the details of the prospectus referred to in Article 833 of this Uniform Act and shall contain a mention that the said prospectus has been inserted in newspapers empowered to publish legal notices together with the reference number in which it was published. The notices and posters in the newspapers shall reproduce the same information or at least an extract from such information with reference to the prospectus and an indication of the newspapers empowered to publish legal notices in which it was published. Art. 836 : An increase of capital by public call which takes place less than two years after the formation of a company without such public call shall be preceded, under the conditions laid down in Article 619 et seq. of this Uniform Act, by an audit of the assets and liabilities and, where necessary, of the special benefits granted. Art. 837 : A public call without pre-emptive right of subscription to new shares which confer on their holders the same rights as old shares shall be subject to the following conditions: (1) the call shall be realized within a period of three years from the date of the meeting which authorized it ; (2) for companies whose shares are listed on the stock exchange, the call price shall be at least equal to the average price recorded for those shares for twenty consecutive days chosen from the forty days preceding the day call begins, after adjusting the average to take into account the difference in the date of enjoyment;

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (3) for companies other than those referred to in paragraph (2) of this article, the issue price shall, at the company’s choice, with account being taken of the difference in the date of enjoyment, be at least equal to the part of stockholders’ equity per share as deduced from the last balance-sheet approved by the date of issue, or at a price fixed by an expert designated by the competent court giving a summary judgment. Art. 838 : A public call without pre-emptive right of subscription to new shares which do not confer on their holders the same rights as old shares shall be subject to the following conditions : (1) the call shall be realized within a period of two years from the date of the general meeting which authorized it ; (2) the issue price or conditions for fixing such price shall be determined by the extraordinary general meeting upon the report of the board of directors and the special report of the auditor. Where the issue is not realized on the date of the annual general meeting following the decision, an extraordinary general meeting shall decide, upon the report of the board of directors and the special report of the auditors, on the maintenance or adjustment of the issue price or on the conditions for determining such price, failing which, the decision of the first meeting shall lapse. Art. 839 : The general meeting which decides on the increase of capital may, in the interest of one or more persons designated by name or not, cancel the pre-emptive right of subscription. Beneficiaries of this provision may not, under penalty of the decision being declared void, take part in the vote. The required quorum and majority shall be calculated after deducting the shares they own. The issue price or the conditions for fixing such price shall be determined by the extraordinary general meeting upon the report of the board of directors and the auditor. Art. 840 : An increase of capital shall be deemed to have been carried out where one or more credit establishments, within the meaning of the law regulating banking activities, irrevocably guarantee its successful end. Payment of the paid-up fraction of the face value and of the totality of the agio on issue shall take place no later than the thirty-fifth day following the expiry of the time limit for subscription. Section 4. Investment of bonds Art. 841 : Where an investment of bonds is carried out by public issue in one or more Contracting States, the issuing company shall fulfil in the Contracting States before the

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International Arbitration and Corporate Law opening of subscription and prior to any other publicity measures, the formalities specified in Articles 842 to 844 of this Uniform Act. Art. 842 : The company shall publish in newspapers empowered to publish legal notices a prospectus bearing the following information : (1) the name of the company followed, where necessary, by its acronym ; (2) the form of the company ; (3) the address of the registered office ; (4) the amount of the registered capital ; (5) the company’s registration number in the Trade and Personal Property Credit Register ; (6) a summary of the company’s objects ; (7) the normal expiry date of the company ; (8) the undepreciated amount of bonds issued earlier and the guarantees attached to them ; (9) the amount, during the issue, of the bond issues guaranteed by the company and, where necessary, the guaranteed fraction of such issues ; (10) the amount of the issue ; (11) the face value of the bonds to be issued ; (12) the rate and mode of calculation of the interest and other proceeds, as well as the method of payment ; (13) the period and conditions of possible repayment as well as the conditions of redemption of the bonds ; (14) the guarantees provided, where necessary, for the bonds. The prospectus shall bear the signature of the company. Art. 843 : The following shall be appended to the prospectus referred to in Article 842 of this Uniform Act : (1) a copy of the last balance-sheet approved by the general meeting of shareholders, certified by the legal representative of the company ; (2) where the balance-sheet was closed on a date more than ten months before the start of issue, a statement of the company’s assets and liabilities dating not more than ten months, drawn up under the responsibility of the board of directors or managers, as the case may be ; (3) information on the progress of the company’s business since the beginning of the current fiscal year and, where appropriate, on the preceding fiscal year where the ordinary general assembly required to adjudicate on the summary financial statements has not yet met. Where no balance-sheet has yet been drawn up, the prospectus shall make mention thereof. The annexes provided for in paragraphs (1) and (2) of this article may be replaced, depending on the case, by the reference to the publication in newspapers empowered to

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group publish legal notices of the last balance-sheet or the interim financial statement of the balance-sheet drawn up on a date not more than ten months prior to the date of issue, where the balance-sheet or statement has already been published. Art. 844 : The circulars informing the public about the issue of bonds shall reproduce the information in the prospectus referred to in Article 842 of the Uniform Act, indicating the issue price and bearing a statement about the insertion of the said prospectus in a newspaper empowered to publish legal notices, with reference to the number in which the prospectus was published. The posters and notices in newspapers shall reproduce the same information or at least an extract from the said information with reference to the prospectus and an indication of the number of the newspapers empowered to publish legal notices in which it was published. Section 5. Bondholders’ meetings Art. 845 : Before the session of the meeting of bondholders, the notices convening the bondholders published in newspapers empowered to publish legal notices of the Contracting State of the registered office and, where necessary, of the other Contracting States where a public issue is launched shall contain : (1) the company’s name followed, where necessary, by its acronym; (2) the form of the company ; (3) the amount of the company’s capital ; (4) the address of the registered office ; (5) the registration number of the company in the Trade and Personal Property Credit Register ; (6) the agenda of the meeting ; (7) the day, time and venue of the meeting ; (8) where necessary, the place or places where the bonds shall be submitted in order to obtain the right to take part in the meeting ; (9) an indication of the loan subscribed to by the bondholders whose group is convened for the meeting ; (10) the name and domicile of the person who took the initiative to convene the meeting and the capacity in which he acted ; (11) where appropriate, the date of the court decision designating the representative responsible for convening the meeting. Section 6. Publicity Art. 846 : The provisions of this section shall apply to companies whose shares are listed partially or wholly in the stock exchange of one or more Contracting States.

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International Arbitration and Corporate Law Sub-section 1. Annual publicity Art. 847 : The companies whose shares are listed on the stock exchange shall publish in a newspaper empowered to publish legal notices within a period of four months from the close of the fiscal year and no later than fifteen days before the date of the annual general meeting of shareholders, under a heading clearly showing that the publication concerns drafts not verified by the auditors : (1) the summary financial statements (balance-sheet, profit and loss account, statement of source and expenditure of funds and annexed statement) ; (2) the proposed allocation of income ; (3) for companies with subsidiaries or holdings, the consolidated summary financial statements, where available. Art. 848 : Companies whose shares are listed on the stock exchange shall publish in a newspaper empowered to publish legal notices within a period of forty-five days following the approval of the summary financial statements by the ordinary general meeting of shareholders the following documents : (1) the approved summary financial statements, bearing the certificate of the auditors ; (2) the decision on the allocation of income ; (3) the consolidated summary financial statements bearing the certificate of the auditors. However, where these are exactly identical to those published in pursuance of Article 765 of this Uniform Act, only one notice making reference to the first publication and bearing the certificate of the auditor shall be published in a newspaper empowered to publish legal notices. Sub-section 2 . Publicity at the end of the first half of the year Art. 849 : Companies whose shares are listed on the stock exchange of one or more Contracting States shall, within a period of four months following the end of the first half of the fiscal year, publish in a newspaper empowered to publish legal notices of the Contracting States a statement of operations and income as well as a half-yearly progress report accompanied by a certificate from the auditor on the authenticity of the information provided. Art. 850 : The statement of operations and income shall show the net amount of the turnover and income from the ordinary operations of the company before tax. Each item on the statement shall show the figure of the corresponding item during the previous fiscal year and the first half of that year. Art. 851: The half-yearly progress report of its activity shall annotate the data on the turnover and the income of the first half of the year. It shall also describe the company’s operations during this period and provide a forecast of the development of the operations up to the close of the fiscal year. Any important events which happened during the just-ended half year shall also be included in the report. 404

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 852 : Companies drawing up consolidated summary financial statements shall be required to publish their statements on operations and income and their half-yearly progress reports in consolidated form accompanied by a certificate from the auditor on the authenticity of the information provided. Sub-section 3. Publicity - Subsidiaries of listed companies Art. 853 : Companies not listed on the stock exchange, half of whose shares are held by one or more listed companies having : (1) a balance-sheet above two hundred million (200 000 000) CFA francs ; or (2) a share portfolio with an inventory value or stock exchange value exceeding eighty million (80 000 000) CFA francs, shall, within a period of forty-five days following the approval of the summary financial statements the meeting of shareholders, publish in a newspaper empowered to publish legal notices the documents, approved summary financial statements bearing the certificate of the auditors, and the decision to allocate the income. BOOK 5. THE JOINT VENTURE TITLE 1. GENERAL PROVISIONS Art. 854 : A joint venture shall be an entity whose partners agree not to register it in the Trade and Personal Property Credit Register and not to give it a corporate personality. It shall not be subject to publicity. The existence of a joint venture may be proved by any means. Art. 855 : The partners shall freely agree on the object, duration, conditions of functioning, rights of partners and termination of the joint venture, subject to there being no derogation from the mandatory rules of the provisions common to companies, with the exception of those relating to corporate personality. TITLE 2. RELATIONS AMONG PARTNERS Art. 856 : Unless a different organization has been provided for, the relations between partners shall be governed by the provisions applicable to private companies. Art. 857 : The assets necessary for the company’s activity shall be placed at the disposal of the manager of the company. However, each partner shall remain owner of the assets he places at the disposal of the company. Art. 858 :The partners may agree to put certain assets in joint ownership or that one of the partners, in relation to third parties, shall be owner of all or part of the assets he acquires with a view to the realization of the company’s object. 405

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International Arbitration and Corporate Law Art. 859 : The assets acquired by application of funds or re-investment of joint earnings shall be deemed to be joint holdings throughout the duration of the company, as well as assets which were joint before being placed at the disposal of the company. The same shall apply to assets which the partners may have agreed to put into joint ownership. Art. 860 : Unless otherwise provided for by the articles, no partner may request the sharing of joint assets as long as the company is not wound up. TITLE 3. RELATIONS WITH THIRD PARTIES Art. 861 : Each partner shall contract in his personal name and shall be solely liable to third parties. However, where the partners act expressly in their capacity as partners towards third parties, each of those who acted shall be liable for the commitments of the others. Any bonds subscribed to under these conditions shall commit them indefinitely, jointly and severally. The same shall apply to a partner who, by interference, has made the contracting partner believe that he intended to commit himself on the partner’s behalf and it is proved that he reaped profit from the enterprise. TITLE 4. WINDING UP OF THE COMPANY Art. 862 : A joint venture shall be dissolved by the same events which terminate a private company. The partners may, however, agree in the Articles of Association or in a subsequent deed that the company will continue in business in spite of such events. Art. 863 : Where the company is of an unspecified duration, its winding up may come at any time after notification, by hand-delivered letter against a receipt or by registered letter with acknowledgement of receipt, from one partner to all the others, provided that the notification shall be in good faith and not at the wrong moment. BOOK 6. DE FACTO PARTNERSHIP Art. 864 : A de facto partnership shall exist where two or more natural persons or corporate bodies act as partners without having formed between themselves one of the companies recognized by this Uniform Act. Art. 865 : Where two or more natural persons or corporate bodies form between themselves a company recognized by this Uniform Act but have not fulfilled the constituent

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group legal formalities, or have formed between them a company not recognized by this Uniform Act, a de facto partnership shall exist. Art. 866 : Any interested party may petition the competent court of the principal place of activity of a de facto partnership for a recognition of a de facto partnership between two or more persons ; He shall produce the identity or the commercial name of the partnership. Art. 867 : The existence of a de facto partnership shall be proved by any means. Art. 868 : Where the existence of a de facto partnership is recognized by the judge, the rules governing private companies shall apply to the partners. BOOK 7. THE ECONOMIC INTEREST GROUP TITLE 1. GENERAL PROVISIONS Art. 869 : An economic interest group shall be one which has the exclusive object of putting in place for a specified duration all the means necessary to facilitate or develop the economic activity of its members and to improve or increase income from the said activity. Its activity shall mainly be connected with the economic activity of its members and shall not be of an auxiliary nature in relation thereto. Art. 870 : The economic interest group shall not by itself give rise to the realization or sharing of profits. It may be formed without capital. Art. 871 : Two or more natural persons or corporate bodies, including persons exercising a liberal profession governed by a legislative or statutory instrument or whose title is protected, may form between them an economic interest group. The rights of members of the group may not be represented by negotiable instruments. Any clause to the contrary shall be deemed to be unwritten. Art. 872 : An economic interest group shall have corporate personality and full capacity with effect from registration in the Trade and Personal Property Credit Register. Art. 873 : The members of the economic interest group shall be liable for the debts of the group on their assets proper. However, a new member may, where the contract permits, be exempted from the debts contracted before he joined the group. The exoneration decision shall be published.

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International Arbitration and Corporate Law The members of the economic interest group shall be jointly and severally liable for payment of the debts of the group, unless otherwise agreed with a contracting third party. Art. 874 : The creditors of the group may take action for the settlement of debts against a partner only after unsuccessfully notifying the group by an extra-judicial act. Art. 875 : An economic interest group may issue bonds under the general conditions of issue of such bonds where the group exclusively comprises companies authorized to issue bonds. Art. 876 : Subject to the provisions of this Uniform Act, a contract shall determine the organization of the economic interest group and shall freely lay down the contribution of each member to the debts of the group. Failing this, each member shall bear an equal part of the debt. During its existence, the group may accept new members under the conditions laid down by contract. Any member may withdraw from the group under the conditions laid down in the contract, subject to having fulfilled his obligations. The contract shall be in writing and shall be subject to the same conditions of publicity as the companies concerned by this Uniform Act. It shall in particular contain the following details : (1) the name of the economic interest group ; (2) the name, trade name or corporate name, legal form, address of the domicile or head office and, as the case may be, the registration number in the Trade and Personal Property Credit Register of each member of the economic interest group ; (3) the duration for which the economic interest group is formed ; (4) the object of the economic interest group ; (5) the address of the registered office of the economic interest group. Any amendments to the contract shall be drawn up and published under the same conditions as the contract itself. They shall be demurrable to third parties from the date of such publicity. The deeds and documents emanating from the economic interest group intended for third parties, in particular letters, invoices, various notices and publications shall clearly show the name of the group, followed by the words “economic interest group” or the acronym “E.I.G.” Any violation of the provisions of the above paragraph shall be punished with penalty for simple offences. Art. 877 : The general meeting of members of the economic interest group shall be competent to take any decision, including premature winding up or extension of the existence of the group under the conditions laid down in the contract.

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group The contract may provide that all or some decisions shall be taken under the conditions of quorum and majority it shall determine. Where the contract is silent, decisions shall be taken unanimously. The contract may also allocate to each member of the economic interest group a number of votes different from that allocated to others. Failing this, each member shall have one vote. Art. 878 : The meeting shall meet as of right at the request of at least one quarter of the members of the economic interest group. TITLE 2. ADMINISTRATION Art. 879 : The economic interest group shall be administered by one or more natural persons or corporate bodies, provided that in the case of a corporate body, such corporate body shall designate a permanent representative, who shall incur the same civil and criminal liabilities as if he were a director in his own name. Subject to this reserve, the contract or, failing that, the general meeting of members of the economic interest group shall freely organize the administration of the group and appoint the directors whose duties, powers and conditions of dismissal it shall determine. In relations with third parties, a director shall commit the economic interest group for any act connected with the object of the group. No limitation of powers may be invoked against third parties. TITLE 3. AUDIT Art. 880 : The audit of management and of the summary financial statements shall be carried out under the conditions laid down by the contract. However, where an economic interest group issues bonds under the conditions provided for in Article 874 of this Uniform Act, the management audit shall be carried out by one or more natural persons appointed by the meeting. Their term of office and powers shall be determined by the contract. The audit of the summary financial statements shall be conducted by one or more auditors chosen from the official list of auditors and appointed by the meeting for a term of six fiscal years. Subject to the regulations proper to the economic interest group, the auditor shall have the same status, duties and responsibilities as the auditor of a public limited company. Art. 881 : In case of issue of bonds by the economic interest group, the punishment of offences relating to the obligations provided for in this Uniform Act shall be applicable to the executives of the economic interest group as well as to natural persons managing the

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International Arbitration and Corporate Law member companies or permanent representatives of the corporate bodies managing these companies. TITLE 4. TRANSFORMATION Art. 882 : Any company or association whose object corresponds to the definition of the economic interest group may be transformed into an economic interest group. It shall not be necessary to wind up the company or to set up a new corporate body. An economic interest group may be transformed into a private company without having to wind up the group or to set up a new corporate body. TITLE 5. DISSOLUTION Art. 883 : The economic interest group shall be dissolved : (1) by the end of the term ; (2) by the realization or extinction of its object ; (3) by decision of its members under the conditions laid down in Article 877 of this Uniform Act ; (4) by court decision, for justifiable reasons ; (5) by death of a natural person or dissolution of a corporate body which is member of the economic interest group, unless otherwise provided for in the contract. Art. 884 : Where one of the members becomes incapacitated, personally bankrupt or is banned from directing, managing, administering or controlling an enterprise, whatever its form or object, the economic interest group shall be dissolved, unless its continuation is provided for in the contract or the other members so decide unanimously. Art. 885 : The dissolution of the economic interest group shall entail its liquidation. The personality of the group shall subsist for the purposes of the liquidation. The liquidation shall be carried out in accordance with the provisions of the contract. Failing this, a liquidator shall be appointed by the general meeting of the members of the economic interest group or, where the meeting is unable to make such appointment, by decision of the president of the competent court. After settlement of the debts, the surplus of assets shall be shared among the members under the conditions laid down by the contract. Failing this, the sharing shall be done in equal parts. PART 3. PENAL PROVISIONS TITLE 1. OFFENCES RELATING TO THE FORMATION OF COMPANIES Art. 886 : A criminal offence shall be committed where the founders, chairman and managing director, general manager, managing director or assistant managing director of a

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group public limited company issue shares before registration of the company or at any time whatsoever where registration is obtained by fraud or the company is irregularly formed. Art. 887 : Whoever— (1) knowingly, by the establishment of the notarial statement of subscription and payment or of the depositary’s certificate, certifies as true and authentic subscriptions he knows are fictitious or declares that the funds which have not been placed definitely at the disposal of the company have been effectively paid ; or (2) hands over to the notary or to the depositary a list of shareholders or statements of subscription and payment bearing fictitious subscriptions or payment of funds which have not been definitely made available to the company ; or (3) knowingly, by fictitious subscriptions or payments or by publication of non-existent subscriptions or payments or by any other false acts obtains or attempts to obtain subscriptions or payments ; or (4) knowingly, in order to obtain subscriptions or payments, publishes the names of persons falsely designated as being or expected to be linked to the company in any capacity whatsoever; fraudulently, causes a contribution in kind to be given an assessment above its real value— shall incur a punitive sanction. Art. 888 : Whoever knowingly negotiates— (1) registered shares which have not remained in the registered form until they were fully paid up ; or (2) initial shares before the expiry of the time limit during which they are not negotiable; or (3) shares issued for cash for which payment of a quarter of the face value has not been made— shall incur a punitive sanction. TITLE 2. OFFENCES RELATING TO THE MANAGEMENT, ADMINISTRATION AND DIRECTING OF COMPANIES Art. 889 : Any company executives who, in the absence of an inventory or by means of a fraudulent inventory, knowingly share fictitious dividends among shareholders or partners of the company, shall incur a punitive sanction. Art. 890 : Any company executives who, knowingly, even without any sharing of dividends, publish or present to the shareholders or partners, with a view to hiding the true situation of the company, summary financial statements not showing, for each fiscal year, an accurate picture of the transactions of the year, of the financial situation and of the

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International Arbitration and Corporate Law situation of the estate of the company at the expiry of the said period, shall incur a punitive sanction. Art. 891 : Any manager of a private limited company, directors, chairman and managing director, general manager, managing director or assistant managing director who, in bad faith, use the assets or credit of the company in a way they know is against the interests of the company, for personal, material or moral ends, or in favour of another corporate body in which they have an interest directly or indirectly, shall incur a punitive sanction. TITLE 3. OFFENCES RELATING TO GENERAL MEETINGS Art. 892 : Whoever, knowingly, prevents a shareholder or a partner from participating in a general meeting shall incur a punitive sanction. TITLE 4. OFFENCES RELATING TO VARIATION OF THE CAPITAL OF PUBLIC LIMITED COMPANIES CHAPTER 1. INCREASE OF CAPITAL Art. 893 : Any directors, chairman of the board of directors, chairman and managing director, general manager, managing director or assistant managing director of a public limited company who, on the occasion of an increase of capital, issue shares or share denominations— (1) before the establishment of the depositary’s certificate ; or (2) without due compliance with the preliminary formalities for an increase of capital ; or (3) without the previously subscribed capital of the company having been fully paid up ; or (4) without the new initial shares having been fully paid-up before the registration of the amendment in the Trade and Personal Property Credit Register ; or (5) without one quarter of the face value of the new shares having been paid up at the time of subscription ; or (6) where necessary, without the total agio on issue having been fully paid up at the time of subscription— shall incur a punitive sanction. Penalties shall also be applied against persons referred to in this article who fail to maintain the shares issued for cash in registered form until they are fully paid up. Art. 894 : Any company executives who, at the time of an increase of capital— (1) fail to enable shareholders to benefit, proportionately to the amount of their shares, from the pre-emptive right of subscription for shares issued for cash where such right has not been repealed by the general meeting and where the shareholders have not renounced it ; or

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (2) fail to reserve a deadline of at least twenty days for shareholders from the opening of subscription, unless such deadline has expired prematurely ; or (3) fail to allot the shares which become available, because of insufficient number of subscriptions as of right, to shareholders who have subscribed for excess shares which outnumber the shares they subscribed for as of right, proportionately to the rights which they enjoy ; or (4) fail to reserve the rights of holders of subscription certificates— shall incur punitive sanctions. Art. 895 : Any company executives who, knowingly, give or confirm incorrect information in the reports presented to the general meeting convened to decide on the repeal of the pre-emptive right of subscription, shall incur a punitive sanction. CHAPTER 2. REDUCTION OF CAPITAL Art. 896 : Any directors, chairman and managing director, general manager, managing director or assistant managing director who, knowingly, carry out a reduction of capital— (1) without respecting the equality of shareholders ; or (2) without communicating the proposed reduction of capital to the auditors forty-five days before the holding of the general meeting convened to decide on the reduction of capital— shall incur a punitive sanction. TITLE 5. OFFENCES RELATING TO THE AUDIT OF COMPANIES Art. 897 : Any company executives who fail to have auditors appointed for the company or not to convene them to the general meetings of shareholders, shall incur a punitive sanction. Art. 898 : Whoever, in his own name or as a member of an auditors company, knowingly accepts, performs or maintains the duties of auditor, notwithstanding legal incompatibilities, shall incur a punitive sanction. Art. 899 : Any auditor who, either in his own name or as a member of an auditors’ company, knowingly gives or confirms false information on the situation of the company or fails to reveal to the public prosecutor’s office any offences which may have come to his knowledge, shall incur a punitive sanction. Art. 900 : Any company executives or any person in the service of a company who knowingly, obstruct verifications or audit by auditors or refuse to communicate to them on the spot, all the documents needed for the performance of their duty, in particular all

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International Arbitration and Corporate Law contracts, books, accounting documents and minutes registers, shall incur a punitive sanction. TITLE 6. OFFENCES RELATING TO THE DISSOLUTION OF COMPANIES Art. 901 : Any company executives who, knowingly, fail, where the shareholders’ equity of the company falls below half the registered capital due to losses recorded in the summary financial statements to— (1) have an extraordinary general meeting convened, within a period of four months following the approval of the summary financial statements in which the losses appear to order, where necessary, the premature dissolution of the company ; or (2) file at the registry of the court responsible for commercial matters, register in the Trade and Personal Property Credit Register and publish in a newspaper empowered to publish legal notices the premature dissolution of the company— shall incur punitive sanctions. TITLE 7. OFFENCES RELATING TO THE LIQUIDATION OF COMPANIES Art. 902 : Any liquidator of a company who, knowingly— (1) fails within a time limit of one month from the date of his appointment, to publish in a newspaper empowered to publish legal notices of the place of the registered office of the company, the document appointing him liquidator and to enter the decisions pronouncing the dissolution of the company in the Trade and Personal Property Credit Register ; or (2) fail to convene the members of the company at the end of liquidation to adjudicate on the final liquidation account, the final discharge of his management and of his terms of reference and to record the close of the liquidation ; or (3) fails, in the case provided for in Article 219 of this Uniform Act, to deposit final accounts at the registry of the court responsible for commercial matters of the place of the registered office, or to petition the court for the approval of the accounts— shall incur a punitive sanction. Art. 903 : Any liquidator who, where liquidation is ordered by a decision of a court, knowingly— (1) fails to present, within a period of six months of his appointment, a report on the situation of the assets and liabilities of the company under liquidation and on the pursuit of liquidation transactions, or to apply for the authorizations needed to end them ; or (2) fails to establish, within a period of three months following the close of each financial year, the summary financial statements upon the inventory and a written report in which he gives account of the liquidation transactions during the just-ended financial year ; or

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group (3) fails to enable the members of the company to exercise, during the liquidation period, their right to receive the company’s documents under the same conditions as before ; or (4) fails to convene the members of the company, at least once a year, to give them an account of the summary financial statements in the case where the company continues in business ; or (5) fails to deposit in a bank account opened in the name of the company under liquidation, within a time limit of fifteen days following the decision to share the sums allocated for the partners and the creditors of the company ; or (6) fails to deposit in a deposit account opened in the accounts of the Treasury, within a time limit of one year from the close of the liquidation, the sums allocated to the creditors or partners of the company but not claimed by them— shall incur a punitive sanction. Art. 904 : Any liquidator who, in bad faith— (1) uses the assets or credit of a company under liquidation in a way he knows is contrary to the interests of the company, for personal ends or in the interest of another corporate body in which he has a stake directly or indirectly ; or (2) transfers all or part of the assets of a company under liquidation to a person who has had in the company the status of partner in name, active partner, manager, member of the board of directors, managing director or auditor, without having obtained the unanimous consent of the partners or failing this, the authorization of the competent court— shall incur a punitive sanction. TITLE 8. OFFENCES RELATING TO PUBLIC CALL FOR CAPITAL Art. 905 : Any chairmen, directors or general managers of companies who issue transferable securities offered to the public— (1) without a notice being inserted in a newspaper empowered to publish legal notices before any publication measure ; or (2) without prospectuses and circulars reproducing the information in the notice referred to in paragraph (1) of this article and bearing a mention of the insertion of such notice in a newspaper empowered to publish legal notices with reference to the number under which it was published ; or (3) without posters and notices in newspapers reproducing the same information in or at the very least an extract of the information with reference to the said notice and indications of the number of the newspaper empowered to publish legal notices in which it was published ; or

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International Arbitration and Corporate Law (4) without posters, prospectuses and circulars mentioning the signature of the person or the representative of the company making the offer and specifying whether the securities are quoted or not and, where quoted, on which stock exchange— shall incur a punitive sanction. The same penalty shall be applicable to persons who act as an accessory in the transfer of transferable securities in violation of the provisions of this article. PART 4. FINAL AND TRANSITIONAL PROVISIONS BOOK 1. MISCELLANEOUS PROVISIONS Art. 906 : The CFA franc shall, within the meaning of this Uniform Act, be the basic currency of OHADA. The exchange rate in the national currency of Contracting States which do not have the CFA franc as their monetary unit, shall initially be the one determined by application of the parity in force between the CFA franc and the national currency of the said Contracting States on the date of adoption of this Uniform Act. The exchange rate shall be rounded up to the next higher unit where the conversion shows a decimal number. The Council of Ministers of the Contracting States to the Treaty on the Harmonization of Business Law in Africa, on the proposal of the Finance Ministers of the Contracting States, shall, as and when necessary, examine and, where necessary, revise the amounts in this Uniform Act expressed in CFA francs, depending on the economic and monetary developments in the said Contracting States. The exchange rate in the national currency shall, where necessary, be that determined by application of the parity in force between the CFA franc and the national currency of the said Contracting States on the day of adoption of the revised amounts in this Uniform Act. BOOK 2. TRANSITIONAL AND FINAL PROVISIONS Art. 907 : This Uniform Act shall be applicable to companies and economic interest groups which shall be formed on the territory of one of the Contracting States from the date of its entry into force in the said Contracting State. However, any formalities towards the formation of a company accomplished prior to the entry into force of this Uniform Act shall not be repeated. Art. 908 : Companies and economic interest groups formed prior to the entry into force of this Uniform Act shall be subject to its provisions. They shall be required to harmonize their Articles of Association with the provisions of this Uniform Act within a period of two years following its entry into force. Partnerships limited by shares existing regularly in one of the Contracting States shall be transformed, within the same time limit of two years, into public limited companies, under penalty of being dissolved as of right on the expiry of the said time limit. 416

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Annex 1  Uniform Act Relating to Commercial Companies and Economic Interest Group Art. 909 : The purpose of harmonization shall be to repeal, amend and replace, where necessary, the provisions of the Articles of Association contrary to the mandatory provisions of this Uniform Act and to include therein the supplements warranted by this Uniform Act. Art. 910 : Harmonization may be carried out through amendment of the old Articles of Association or through adoption of redrafted Articles of Association. Harmonization may be decided upon by the meeting of shareholders or of partners sitting under the conditions of validity of ordinary decisions, notwithstanding any legal or statutory provisions to the contrary, provided there shall be amendment in substance of only those clauses which are incompatible with the new law. Art. 911 : Transformation of the company or an increase of its capital by any means other than incorporation of reserves, profits or agio on issue may only be carried out under the conditions normally required for the amendment of the Articles of Association. Art. 912 : Where, for any reason whatsoever, the meeting of shareholders or of partners has been unable to reach a valid decision, the proposed harmonization of the articles shall be submitted for the approval of the president of the competent court sitting at the request of the legal representatives of the company. Art. 913 : Where harmonization is unnecessary, the fact shall be duly noted by the meeting of shareholders or of partners whose decision shall be subject to the same publication as for the decision to amend the Articles of Association. Art. 914 : Where private limited companies and public limited companies fail to increase their registered capital by at least the minimum amount stipulated respectively in Articles 311 and 387 of this Uniform Act, they shall, where their capital is below the said amounts, pronounce, before the expiry of the time limit specified in Article 908 of this Uniform Act, their dissolution or be transformed into another form of company for which this Uniform Act does not require minimum capital above the existing capital. Companies which do not comply with the provisions of the preceding paragraph shall be dissolved as of right upon the expiry of the stipulated time limit. Art. 915 : Where the Articles of Association of a company are not harmonized with the provisions of this Uniform Act within a period of two years from the date of entry into force, the clauses of the articles repugnant to these provisions shall be deemed to be unwritten.

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International Arbitration and Corporate Law Art. 916 : This Uniform Act shall not repeal laws applicable to companies subject to a special scheme. The clauses of the articles of such companies which conform to the provisions repealed by this Uniform Act but which are repugnant to the provisions of this Uniform Act and which are not provided for by the special scheme of the said companies, shall be harmonized with the provisions of this Uniform Act under the conditions laid down in Article 908 of this Uniform Act. Art. 917 : This Uniform Act shall not derogate from the laws relating to the minimum amount of company shares issued by the companies formed prior to its entry into force. Art. 918 : Partnership shares or founder’s shares issued before the entry into force of this Uniform Act shall remain governed by the instruments concerning them. Art. 919 : All laws repugnant to the provisions of this Uniform Act shall be repealed, subject to their application transitionally for a period of two years from the date of entry into force of this Uniform Act to the companies which have not harmonized their Articles of Association with the provisions of this Uniform Act. However, notwithstanding the provisions of Article 10 of this Uniform Act, each Contracting State may, during a transitional period of two years from the date of entry into force of this Uniform Act, maintain its national law applicable for the procedure of establishing the Articles of Association Art. 920 : After consideration, the Council of Ministers of the Contracting States present and voting, in accordance with the provisions of the Treaty of 17 October 1993 on the Organization for the Harmonization of Business Law in Africa, hereby adopts unanimously this Uniform Act. This Uniform Act shall be published in the Official Gazette of OHADA and of the Contracting States. It shall enter into force on 1 January 1998. Done at Cotonou on 17 April 1997.

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Annex 2 Uniform Act on the Arbitration Law Within the Framework of OHADA Treaty Act adopted on 11 March 1999. OHADA Official Journal n° 10; 15 May 1999 Chapter 1. Scope of Application (art. 1 to 4) ……………………………………………… Chapter 2. Composition of the Arbitral Tribunal (art. 5 to 8)……………………………… Chapter 3. Arbitral Proceedings (art. 9 to 18)……………………………………………… Chapter 4. Arbitral Award (art. 19 to 24) …………………………………………………. Chapter 5. Recourse against Arbitral Award (art. 25 to 29) ………………………………... Chapter 6. Recognition and Enforcement of Arbitral Award (arts. 30 to 34)……………… Chapter 7. Final Provisions …………………………………………………………….……

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International Arbitration and Corporate Law The Council of Ministers of the Organization for the Harmonization of Business Law in Africa (OHADA); Having regard to the Treaty on the Harmonization of Business Law in Africa, and articles 2 and 5 to 12 thereof in particular; Having regard to the report from the Permanent Secretary and the observations of the Signatory States; Having regard to the opinion of the Common Court of Justice and Arbitration dated 3 December 1998; After deliberating thereon, hereby adopts the Uniform Act, as set out below, on a unanimous vote of the Signatory States here represented: CHAPTER 1. SCOPE OF APPLICATION Art. 1: The present Uniform Act shall apply in all arbitral proceedings where the seat of arbitration is situated in any of the Member States. Art. 2: Any natural or legal person may resort to arbitration in accordance with their rights. States, local or regional authorities and public institutions may be parties to arbitration, without recourse to their right to challenge the arbitrability of a dispute, their ability to enter into arbitration or the validity of the arbitration agreement. Art. 3: The arbitration agreement is independent of the principal contract. Its validity is not affected by the nullity of the principal contract and is to be viewed in light of the common intention of the parties, without any required reference to national law. Parties can mutually decide to enter into an arbitration agreement at any time, even if proceedings have already been initiated in any national court. CHAPTER 2. COMPOSITION OF THE ARBITRAL TRIBUNAL Art. 4: The arbitrators are to be appointed, revoked or replaced in accordance with the agreement of the parties. In the absence of an arbitration agreement or in case of insufficiency of such arbitration agreement; Where the proceedings are to be conducted by three arbitrators, each party shall appoint one arbitrator, who in turn will choose the third arbitrator. If a party fails to appoint an arbitrator within a period of thirty days from the receipt of request to do so by the other party or where the two arbitrators do not agree upon the choice of the third arbitrator within thirty days of their appointment, such appointment can be made by a competent judge of a Member State upon the request of either party. Where the proceedings are to be conducted by a sole arbitrator and the parties cannot agree upon the appointment, it can be made by a competent court of a Member State upon the request of either party. 420

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Annex 2  Uniform Act on the Arbitration Law Within the Framework of OHADA Treaty Art. 5: Only a natural person may be appointed as an arbitrator. The arbitrator is to be allowed full enjoyment of his or her duly accorded rights and must act it an independent and impartial manner with respect to the parties to the dispute. Art. 6: The acceptance of the appointment by an arbitrator must be duly notified in writing to both parties. In case the arbitrator foresees a ground for challenge, he or she is compelled to disclose this to the parties. In such case, the arbitrator cannot continue in their role without unanimous and express consent by the parties to the dispute. Where proceedings have been initiated in a national court of a Member State and the parties have not resolved the proceedings related to the challenge of the arbitrator, a competent judge of such national court will decide the matter. Such decision shall be final and binding. Parties must raise any likely grounds for challenge of the arbitrator without any delay. The disqualification of an arbitrator is permitted solely for reasons that have come to light after his or her appointment. Art. 7: The arbitral tribunal shall comprise of a sole arbitrator or three arbitrators. If the parties appoint an even number of arbitrators, the tribunal shall be completed in accordance with the wishes of the parties. If no consensus can be reached between them, such appointment may be made by the appointed arbitrators; failing which, the appointment shall be made by a competent court of a Member State. The same applies in case of challenge to the appointment, inability, death, resignation or termination of an arbitrator. CHAPTER 3. ARBITRAL PROCEEDINGS Art. 8: Parties must be given equal footing and each party must be allowed full exercise of its rights. Art. 9: Where parties decide to opt for institutional arbitration, they are bound by the arbitral rules and regulations of the institution unless expressly decided otherwise by the parties. Arbitral proceedings commence as soon as one of the parties seizes a tribunal in accordance with the provisions of the arbitration agreement. In the absence of such provisions in the agreement, arbitral proceedings commence once any of the parties initiate proceedings to constitute an arbitral tribunal. Art.10: The arbitral tribunal shall have the power to rule on its own jurisdiction, including any objections relating to the existence and the validity of the arbitral tribunal. Any challenge to the competence of the tribunal must be raised before substantive defenses are presented except if the challenge is based on facts revealed after such time. 421

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International Arbitration and Corporate Law The arbitral tribunal may rule on its own jurisdiction either in the award on the merits of the dispute or in a partial award that is subject to annulment. Art. 11: If the arbitration agreement is silent on the matter, the mandate of an arbitrator may not exceed six months from the date of his or her appointment. The statutory or conventional duration may be extended upon mutual consent of the parties or upon an express request made to this effect by either party or the Tribunal itself by a competent court of a Member State. Art. 12: When a national court of a Member State is seized with regards to a dispute for which an arbitral tribunal has been constituted in accordance with an arbitration agreement, it shall declare of its own motion that it has no jurisdiction. Even if an arbitral tribunal has not yet been constituted, the court must declare that it has no jurisdiction so long as the arbitration agreement is not manifestly invalid. In any event, the national court cannot automatically find that the arbitral tribunal is incompetent. The existence of an arbitration agreement does not however prevent a national court of a Member State from granting urgent interim or conservatory measures upon such request made by a party or where such interim measures need to be enforced in a state which is not a Member State of the Ohada, insofar as these measures do not require an examination of the merits of the case for which it is the arbitral tribunal that is solely competent. Art. 13: The parties can directly or by reference to a particular set of procedural rules of arbitration, decide the procedural aspects of the arbitration. They may also choose their own set of procedural rules to decide upon the matter. Failing such choice, the arbitral tribunal may upon its discretion apply the procedural rules it deems appropriate. Each party must present their own claims and must discharge the burden of bringing forward evidence in support of these claims. The tribunal may allow parties to present facts in support of their claims using any legally permissible means and bring forward evidence necessary for the resolution of the dispute. The tribunal may pronounce its decision only on the basis of the evidence and documents submitted by the parties that have been proven by adversarial means. The tribunal may not pronounce its decision on the basis of evidence brought forward by it ex officio without first having invited the parties to present their comments and observations on it. The tribunal may of its own accord or upon request of the parties, seek court procedures as are available in relation to legal proceedings to secure the attendance before the tribunal of a witness in order to give oral testimony or to produce documents or other material evidence from a competent court of a Member State. 422

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Annex 2  Uniform Act on the Arbitration Law Within the Framework of OHADA Treaty Where a party is aware of any irregularities in the proceedings, yet fails to bring it forward in a timely manner and participates in the continuing proceedings, shall be deemed to have waived its right to raise an objection. Unless otherwise agreed between the parties, the tribunal has the power to to decide on the issue of the veracity of a document. Art. 14: The tribunal must resolve the dispute in strict accordance with the rules of law designated by the parties as applicable to the substance of the dispute. Where no choice has been made, the tribunal shall decide the appropriate law in accordance with the dispute and take into account the usages prevalent in international trade. The arbitral tribunal may decide as amiable compositor only if the parties have expressly authorized it to do so. Art. 15: The arbitral proceedings shall terminate in accordance with the arbitration agreement between the parties unless the duration has been extended by an agreement between the parties or an order by the tribunal. It may also terminate upon acquiescence to the demand, withdrawal from proceedings, settlement between the parties or rendering of the final award. Art. 16: The tribunal shall fix a date on which it shall deliberate upon the dispute. After this date, parties cannot by any means raise or present additional demands. Unless the tribunal makes an express request in writing, the parties cannot furnish any further comments or evidence after the aforementioned date. Art. 17: The deliberations of the tribunal are held in secret. CHAPTER 4. THE AWARD Art. 18: The award is to be made in accordance with the procedure and form as agreed upon by the parties. In the absence of such agreement, a majority shall make the decision if the tribunal consists of three members. Art. 19: The award must contain the following: – the full names of all members of the arbitral tribunal, – the date on which it was rendered, – the seat of the arbitration, – full names and identification details of the parties, their permanent addresses or registered place of business, – full names of the legal representatives of their parties and their advocates, where the identification details of the parties themselves are unavailable, and 423

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International Arbitration and Corporate Law – a summary of the arguments and claims presented by both parties along with the procedural steps followed by the tribunal. – The award must be reasoned. Art. 20: The award is to be signed by the arbitrator(s). In arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated. Art. 21: The mandate of the tribunal terminates with the rendering of the award. This does not however prejudice the power of the arbitrator to interpret the award or correct any errors or omissions made. A party may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award. If the arbitral tribunal considers the request to be justified, it shall make the additional arbitral award within forty-five days from the receipt of such request. If the tribunal is prevented, by any reason, from convening again, a competent judge from a national court of a Member State shall make the additional award. Art. 22: The arbitral award shall be final and binding on the parties and persons claiming under them with respect to the specific dispute it relates to. Art. 23: The tribunal may make a ruling for or against the provisional enforcement of the award if requested by a party. Such decision must also be reasoned. CHAPTER 5. CHALLENGING THE AWARD Art. 24: The award rendered by the tribunal cannot be subjected to any challenge or appeal. Parties may only bring an action to set aside or annul the award to a competent judge of a national court in a Member State. An appeal against the abovementioned decision of the competent judge may only be brought before the OHADA Common Court of Justice and Arbitration. An application for revision of the award can be made to the Tribunal upon the discovery of any material evidence that could affect the decision of the tribunal so long as either the Tribunal or the party demanding revision was not aware of it earlier. Art. 25: An appeal against the award of the Tribunal can only be made in the following cases: – if the Tribunal was constituted on the basis of an invalid arbitration agreement; or – the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties ; or 424

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Annex 2  Uniform Act on the Arbitration Law Within the Framework of OHADA Treaty – the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration ; or – the right to a fair hearing of either party was not respected; or – the Tribunal violated any principle of international public policy of the Member States of the Treaty; or – the award is not reasoned. Art. 26: An appeal is admissible once the award has been rendered. It however ceases to be admissible if not made within the month of rendering of the exequatur. Art. 27: Unless the Tribunal orders the provisional execution of the award, an appeal against the award suspends the execution of the award until the competent court in the Member State has ruled. This court shall also be competent to rule on any dispute regarding the provisional execution of the award. Art. 28: In case the award is annulled, it is the duty of either party, if they wish to do so, to commence new arbitral proceedings in accordance with the provisions of the present Uniform Act. CHAPTER 6. RECOGNITION AND ENFORCEMENT OF AWARDS Art. 29: The arbitral award is automatically enforceable by virtue of an exequatur rendered by a competent court of a Member State. Art. 30: A party seeking the recognition and enforcement of an award must establish the existence of such award. In order to obtain the recognition and enforcement mentioned in the preceding article, the party seeking it shall, at the time of the application, supply the duly authenticated original award or a duly certified copy thereof; and the original arbitral agreement between the parties or a duly certified copy thereof. In case the abovementioned documents are not in French, the party producing them must provide a translated copy certified by a registered translator from the list of experts established in the competent jurisdictions. The recognition and enforcement of the award shall be refused if it is manifestly in contradiction of international public policy of the Member States. Art. 31: An appeal against an order refusing the recognition and enforcement of the award can only be brought before the OHADA Common Court of Justice and Arbitration. An order allowing the recognition and enforcement of the award cannot be challenged. 425

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International Arbitration and Corporate Law However, the annulment of an award implies an appeal against the decision granting the exequatur upon referral to the competent court of the Member State. Art. 32: The dismissal of an appeal against the award implies the validity of the award itself as well as that of the order granting execution. Art. 33: Arbitral awards rendered on the basis of different rules than those provided for by the present Uniform Act are recognized in all Member States as long as they fulfill the conditions provided in relevant international treaties. In the absence of such international treaties, they must fulfill the conditions provided in the present Uniform Act. CHAPTER 7. FINAL PROVISIONS Art. 34: The present Uniform Act replaces the law relating to arbitration of the Member States. It shall only bind arbitral proceedings that commence after its entry into force. Art. 35: The present Uniform Act shall be published in the OHADA Official Journal. It shall enter into force in accordance with the provisions of Art. 9 of the Treaty on Organization for the Harmonization of Business Law in Africa.

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Annex 3 The Rules of Arbitration of the Common Court of Justice and Arbitration Act adopted on 11 March 1999. OHADA Official Journal; 15 May 1999, p.9 The Council of Ministers of the Organization for the Harmonization of Business Law in Africa (OHBLA); Mindful of the Treaty on the Harmonization of Business Law in Africa, in particular articles 8 and 26 thereof; Mindful of the rules of procedure of the Common Court of Justice and Arbitration, notably article 54; Mindful of the opinion of the Common Court of Justice and Arbitration dated 9 December 1998. The contracting States present and voting have deliberated upon and unanimously adopted the arbitration rules of the Common Court of Justice and Arbitration set out below: CHAPTER ONE: THE FUNCTIONS 0F THE COMMON COURT 0F JUSTICE AND ARBITRATION IN MATTERS OF ARBITRATION ARTICLE 1: Exercise by the Court of its functions 1.1: The Common Court of Justice and Arbitration hereafter referred to as “the Court” shall perform the functions of administering arbitrations within the domain devolved upon it by article 21 of the Treaty under the conditions hereafter defined. The decision it takes with a view to ensuring the proper setting in motion and satisfactory termination of arbitral proceedings and those linked to the scrutiny of the award are of administrative nature. These decisions shall be devoid of any res judicata, without recourse, and no reasons shall be given. They shall be made by the Court under the conditions fixed by the general meeting on the proposal of the president. The Chief Court Registrar shall perform functions of Secretary General of administrative composition of the Court. 1.2: The Court shall perform the jurisdictional functions conferred upon it by article 25 of the Treaty in matters of res judicata and exequatur of awards made, in its ordinary contentious composition and in conformity with the procedure provided for this purpose. 1.3: The administrative functions defined in 1.1 above for the follow up of arbitral proceedings shall be assured under the conditions provided in chapter II below. The jurisdictional functions of the Court provided in 1.2 above are defined and regulated in chapter III above and the rules of procedure of the Court. 427

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International Arbitration and Corporate Law CHAPTER TWO: PROCEDURE FOLLOWED IN THE COMMON COURT 0F JUSTICE AND ARBITRATION ARTICLE 2: Assignment of the Court 2.1: The assignment of the Court shall be to procure in conformity with these arbitration rules, arbitral solution when a dispute is of contractual nature in application of an arbitration clause or compromise submitted to it by any party to a contract either when one of the parties has his residence or is habitually resident in one of the member States, or, when the contract has been performed or is to be performed, wholly or partially, on the territory of one or several member States. 2.2: The Court shall not itself settle disputes. It shall appoint or confirm arbitrators, shall be informed about the development of the arbitral proceedings, and shall examine the draft awards. It shall rule on the exequatur of these awards where it is requested and, where it is seized of disputes arising from the res judicata of these awards. 2.3: The Court shall deal with questions related to arbitral proceedings supervised by it within the framework of the Treaty and article I of these arbitration rules. 2.4: The Court shall establish internal arbitration rules if it deems it necessary. The Court may, according to the modalities provided by these internal arbitration rules, delegate to a limited composition of its members the power to take decisions subject to the Court being informed of decisions taken in the next hearing. These internal rules shall be deliberated upon and adopted in the general meeting. It shall become enforceable after its approval by the Council of Ministers ruling under the conditions provided in article 4 of the Treaty. 2.5: In urgent cases, the President of the court may take decisions necessary for the putting into place and proper functioning of arbitral proceedings, subject to informing the Court in the next meeting, to the exclusion of decisions requiring an order of the Court. He may delegate this power to a member of the Court under the same conditions. ARTICLE 3: Appointment of arbitrators 3.1: A dispute may be settled by a sole arbitrator or by three arbitrators. In these arbitration rules, the arbitral Tribunal may equally be designated by the wording “the arbitrator” When the parties have agreed that the dispute shall be settled by a sole arbitrator, they may appoint him by mutual agreement for confirmation by the Court. If the parties fail to agree within thirty (30) days of notification of the request for arbitration by the other party, the Court shall appoint the arbitrator. In arbitration with three arbitrators, each party in the request for arbitration or in the answer to the request shall appoint one independent arbitrator for confirmation by the Court. If one of the parties abstains from making the appointment, the Court shall make the appointment. The third arbitrator who shall 428

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Annex 3  The Rules of Arbitration of the Common Court of Justice and Arbitration assume the presidency of the arbitral Tribunal, shall be appointed by the Court, unless the parties had provided that the arbitrators they chose would choose the third arbitrator within a given time limit. In this case, the Court shall confirm the third arbitrator. If at the expiration of the time limit fixed by the parties or prescribed by the Court, the arbitrators appointed by parties have not reached an agreement, the third arbitrator shall be appointed by the Court. If the parties have not mutually agreed on the number of arbitrators, the Court shall appoint a sole arbitrator, unless the dispute appears to it to justify the appointment of three arbitrators. In this case, the parties shall have a time limit of fifteen (15) days to appoint the arbitrators. Where several parties, either as claimants or defendants, have to submit to the Court joint proposals for the appointment of an arbitrator and they do not agree within the prescribed time limit, the Court may appoint all the members of the arbitral Tribunal. 3.2: The arbitrators may be chosen from the list of arbitrators established by the Court and updated yearly. The members of the Court cannot be registered on the list. 3.3: To appoint arbitrators, the Court shall take into consideration the nationality of the parties, their residence, residence of their legal advisers and arbitrators, the language of the parties, the nature of the claim and possibly the choice of laws of the parties to govern their relationship. With a view to making these appointment and establishing the list of arbitrators provided in article 3.2, the Court, when it deems it necessary, may first take into consideration the opinion of experts whose competence are known in the area of international commercial arbitration’s. ARTICLE 4: Independence, challenge and replacement of arbitrators 4.1: Any arbitrator appointed by the Court shall be and shall remain independent of the parties involved in the arbitration. He shall perform his assignment to the end. Before his appointment or confirmation by the Court, the arbitrator who is approached and has been given information concerning the dispute shall in his reply, if he accepts, disclose to the Secretary general of the Court, in writing, the facts or circumstances which are likely to give rise to doubts as to his independence in the minds of the parties. As soon as this information is received, the Secretary general of the Court shall inform the parties in writing and shall give them a time limit to make known their possible remarks. The arbitrator shall immediately, in writing, disclose to the Secretary general of the Court and parties the same facts and circumstances which may occur between his appointment or confirmation by the Court and the notification of the final award. 4.2: An application to challenge based on an allegation of lack of independence or any other reason, shall be introduced by dispatching to the Secretary general of the Court, a statement stating the facts and circumstances on which the application is based. Under 429

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International Arbitration and Corporate Law the penalty of foreclosure, this application shall be forwarded by the party either within thirty (30) days of receipt by him of the notification of the appointment or confirmation of the arbitrator by the Court, or within thirty (30) days following the date on which the party introducing the challenge had been informed of the facts and circumstances that he invokes to support his application to challenge, if this date is subsequent to the receipt of the aforementioned notification. The Court shall rule on the admissibility of the request, the merits of the application to challenge, after the Secretary general must have requested the arbitrator concerned, the parties and other members of the arbitral Tribunal, where there are any, to give their remarks, in writing, within the prescribed time limit. 4.3: An arbitrator shall be replaced on death, when the Court allows a challenge against him or when the Court has accepted his resignation. Where the Court does not accept the resignation of an arbitrator and the arbitrator nevertheless refuses to pursue his assignment, he shall be replaced if he is a sole arbitrator or the President of the arbitral Tribunal. In other cases, the Court shall assess whether there is need for replacement taking into consideration the advanced stage of the proceedings and the opinion of the two arbitrators who have not resigned. If the Court sees that there is no need for replacement, proceedings shall continue and the award could still be made in spite of the refusal of the arbitrator whose resignation was not accepted, to take part in the proceedings. The Court shall make a ruling in accordance, notably, with the provisions of article 28 (2) below. 4.4: The Court shall equally replace an arbitrator when it establishes that there is a de jure or de facto impediment for him to accomplish his assignment, or that he does not perform his functions in conformity with Part IV of the Treaty or the arbitration rules or within the prescribed time limits. Where, on information before it, the Court envisages the application of the preceding subsection, it shall rule on the replacement after the Secretary general of the Court has communicated, in writing, this information to the arbitrator concerned, the parties and other members of the arbitral tribunal, if there are any, and has requested them to make their remarks, in writing, within a prescribed time limit. In case of replacement of an arbitrator who does not perform his functions in accordance with Part IV of the Treaty, these arbitration rules, or within prescribed time limit, the appointment of a new arbitrator shall be made by the Court on the recommendation of the party who had appointed the arbitrator to be replaced without the Court being obliged to respect the recommendation thus expressed. Where the Court is informed that in an arbitral Tribunal with three persons, one of the arbitrators other than the President is not participating in the arbitration even though he had no tendered his resignation, the Court may, as indicated in 4.3,subsections 3 and 4 above, not replace the

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Annex 3  The Rules of Arbitration of the Common Court of Justice and Arbitration said arbitrator when the two other arbitrators accept to pursue the arbitration in spite of the non-participation of one of the arbitrators. 4.5: Once reconstituted, the Tribunal shall fix, after inviting the parties to make known their remarks, in what manner the prior proceedings shall be repeated. 4.6: As indicated in article 1 .1 above, the Court shall rule without recourse on the appointment, confirmation, challenge or replacement of an arbitrator. ARTICLE 5: Request for arbitration Any person wishing to resort to arbitration instituted in article 2.1 above (article 21 of the Treaty) and whose modalities are fixed by these arbitration rules, shall forward his request to the Secretary general for arbitration by the Court. This request shall contain: (a) The full names, qualities, commercial name and address of the parties, with indication of the election of residence for the continuation of the procedure, as well as an indication of the amount of his claim; (b) The arbitration agreement concluded by the parties as well as contractual or non-contractual documents likely to establish clearly the circumstances of the claim; (c) A summary statement of the claim of the claimant and the arguments produced in support thereof. (d) Any useful indications and proposals concerning the number and choice of arbitrators, in accordance with the provisions of article 2.3 above. (e) Where there is one, the agreement concluded by the parties: −  On the seat of the arbitration; −  On the language of the arbitration; −  On the law applicable:   −  To the arbitration agreement   −  To the arbitral proceedings To the substance of the claims and failing such agreement, the wishes of the applicant for arbitration on the different points expressed; (f) The request must be accompanied by the amount of fees for bearings in accordance with the rate of Court charges. The claimant shall, in his request, mention that he has sent a copy of the request with all appended exhibits to the defendants. The Secretary general shall notify the defendant or defendants of the date of the receipt of the request at the Secretariat, shall attach to this notification a copy of the arbitration rules and acknowledge receipt of his request to the claimant. The date of receipt of the request for arbitration by the Secretary general in

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International Arbitration and Corporate Law conformity with this article shall constitute the date of the introduction of the arbitral proceedings. ARTICLE 6: Answer to the request The defendant or defendants shall, within forty-five (45) days of receipt of the notification of the Secretary general, forward their answer to the Secretary general with justification that a similar dispatch has been made to the applicant. In the case mentioned in article 3.1 (2) above, the parties must agree within the time limit of thirty (30) days provided in the said article. The answer shall contain: (a) Confirmation or non-confirmation of his full names, commercial name and address as has been given by the applicant, with election of residence for the continuation of the proceedings; (b) Confirmation or non-confirmation of the existence of an arbitration agreement between the parties referring to the arbitration instituted in Part IV of the Treaty on the Harmonization of Business Law in Africa; (c) A summary exposé of the claims and the position of the defendant on the claims made against him with an indication of the arguments and documents on which be intends to base his defence. (d) A statement of defence on every point treated in the request for arbitration in columns (d) and (e) of article 5 above. ARTICLE 7 If the defendant has introduced a counter-claim in his statement of defence the claimant may, within thirty (30) days of receipt of his defence, present a supplementary note on the issue. ARTICLE 8 After receipt of the request for arbitration, answer and possibly the supplementary note mentioned in articles 5, 6 and 7 above, or when the time limit for receiving them has lapsed, the Secretary general shall seize the Court to determine the advance towards the costs of arbitration, setting up the arbitration and, if there is need, determine the place of arbitration. The file shall be sent to the arbitrator when the arbitration Tribunal is set up and when the decision taken in application of article 11.2 for the payment of costs has been satisfied. ARTICLE 9: Absence of an arbitration agreement Where, prima facie, there is no arbitration agreement between the parties referring to the application of these arbitration rules, if the defendant declines the arbitration of the Court or does not respond within the forty-five (45) days time limit stated above in article 6, the claimant shall be informed by the Secretary general that he intends to seize the Court of 432

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Annex 3  The Rules of Arbitration of the Common Court of Justice and Arbitration the matter with a view to have it rule that the arbitration cannot take place. The Court shall rule with due regard to the remarks of the claimant submitted within the next thirty (30) days, where the latter thinks it necessary to present them. ARTICLE 10: Effects of an arbitration agreement 10.1: When the parties have agreed to resort to arbitration by the Court, they shall by the same agreement subject themselves to the provisions of Part IV of the OHBLA Treaty, these arbitration rules, the internal rules of the Court, their appendixes and costs of arbitration rates, in their draft in force at the time of the introduction of the arbitral proceedings indicated in article 5 above. 10.2: If one of the parties refuses or abstains from participating in the arbitration, the arbitration shall take place notwithstanding the refusal or abstention. 10.3: When one party raises one or several arguments relative to the existence, validity or the scope of the arbitration agreement, the Court, having prima facie established the existence of the agreement, may decide without prejudicing the admissibility or merits of these arguments, that the arbitration shall take place. In this case, it shall be for the arbitrator to rule on his own jurisdiction. 10.4: Except otherwise stipulated, if the arbitrator considers that the arbitration agreement is valid and that the contract binding the parties is void or non-existent, the arbitrator is competent to determine the respective rights of the parties and rule on their statements of claims and defence. 10.5: Except otherwise stipulated, the arbitration agreement shall make the arbitrator competent to rule on any interim or provisional claim in the course of the arbitral proceedings. Awards made within the framework of the preceding subsection are subject to immediate exequatur applications, if the exequatur is necessary for the enforcement of these interim or provisional awards. Before handing the dossier to the arbitrator and exceptionally after the banding over, in case where the urgency of the interim or preventive measure requested is such that the arbitrator will not be able to make a ruling in time, the parties may apply to the competent judicial authority for such measures. Such requests as well as measures taken by the judicial authority shall without delay, are brought to the notice of the Court, which shall inform the arbitrators. ARTICLE 11: Deposits in respect of costs of arbitration 11.1: The Court shall, in determining the amount of deposit, take into consideration the costs of arbitration resulting from the claims of which it is seized such as are defined in article 24.2 a) above. This deposit shall later be adjusted if the amount of the claim is later 433

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International Arbitration and Corporate Law modified by at least one-quarter or if new elements make the adjustment necessary. Distinct deposits for the principal claim and counter-claim may be determined if one party requests for it. 11.2: The deposit shall be in equal shares by the claimant or claimants and defendant or defendants. However, this payment can be made in full by each of the parties for the principal claim and the counter-claim, where the other party abstains from making the deposit. The deposit thus determined shall be paid in full to the secretary general of the Court before the dossier is handed to the arbitrator: for the three quarters at most, their payment may be guaranteed by a satisfactory bank surety. 11.3: The arbitrator may only be seized of claims, which have entirely satisfied the requirements of paragraph 11.2 above. When a supplementary deposit has been rendered necessary, the arbitrator shall suspend his work until the supplementary deposit has been paid to the Secretary general. ARTICLE 12: Notification, communication and time limit 12.1: Memoranda, correspondences and written communications by the parties, as well as all appended exhibits, shall be furnished in as many copies as there are other parties plus one for each arbitrator and one for the Secretary general of the Court. It is not necessary to forward exhibits to the Secretary general unless he specifically asks for them. 12.2: Memoranda, correspondences and communications from the Secretariat, arbitrator or parties are validly made: – If they are handed against a receipt, or – Dispatched by registered letter to the address or last known address of the addressee, as given by him or the other part, depending on the case, or – By any means of communication with written proof the original document considered as proof, in case of dispute. 12.3: Notification or communication validly made is considered as done when the interested party or his representative has received it. 12.4: The time limit prescribed by these arbitration rules or by the Court in application of these arbitration rules or its internal rules starts running from the day following that which the notification or communication is considered as made, in accordance with the preceding paragraph. When in the country where the notification or communication has been considered as made at a certain date, the day following is a public holiday or a nonworking day, time shall start running on the following first working day. Public holidays

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Annex 3  The Rules of Arbitration of the Common Court of Justice and Arbitration and non-working days are included in the calculation of time limit and do not prolong them. If the last day of the time limit given, in the country where the notification or communication has been considered as made, is a public holiday or a non-working day, the time limit shall expire at the end of the following first working day. ARTICLE 13: Seat of the arbitration The seat of the arbitration shall be determined by the arbitration agreement or by a later agreement of the parties. Where this is not done, a Court ruling taken before the handing of the file to the arbitrator shall determine it. After consultation with the parties, the arbitrator may decide to hold bearing in any other place. In case of disagreement, the Court shall rule on the matter. Where circumstances make it possible or difficult to hold the arbitral hearings at the place where it was to hold, the Court may, at the request of the parties or any of them or the arbitrator, choose another seat. ARTICLE 14: Confidentiality of arbitral proceedings The arbitral proceedings shall be confidential. The works of the Court concerning the arbitral proceedings are subject to this confidentiality as well as the meeting of the Court for administering the arbitration. Confidentiality also concerns documents submitted to the Court or established by the Court during the proceedings it initiates. Subject to any agreement to the contrary by all the parties, the parties and their legal advisers, arbitrators, experts and any person implicated in the arbitral proceedings are under the duty to respect the confidentiality of the information and documents produced during these proceedings. Confidentiality shall extend, under the same conditions, to awards. ARTICLE 15: Report establishing the subject matter of arbitration and determining the progress of arbitral proceedings 15.1: After receipt of the dossier by the arbitrator, he shall convene the parties or their duly authorized representatives and legal advisers, to a meeting, which shall be held as soon as it is possible and latest, within sixty (60) days of receipt of the file. This meeting shall aim at: (a) Establishing that the arbitrator has been seized and the claim on which be shall have to rule. A list of the claims as they appear in the memoranda submitted respectively by the parties on that date shall be made, with a summary indication of the reasons for the claims and the arguments invoked in their support, to establish their right. (b) Establishing whether or not the parties agree on the issue enumerated in articles. In the absence of such an agreement the arbitrator shall establish that the award shall have to rule on the issue. The language to be used during the arbitration shall be decided immediately by the arbitrator following the statements of the parties on the issue and, taking into consideration the circumstances. Where there is need,

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International Arbitration and Corporate Law the arbitrator shall interrogate the parties to know whether they intend to confer upon him, the power of amiable compositeur. The reply of the parties shall be taken down. (c) Making arrangements that appear appropriate for the conduct of the arbitral proceedings that the arbitrator intends to apply, as well as the modalities for their application. (d) Fixing the projected calendar of the arbitral proceedings, specifying the dates for handing of respective memoranda deemed necessary, as well as the date of bearing during which the debates shall be declared closed. (e) The date of bearing shall be determined by the arbitrator for not later than six months after the meeting except with the consent of the parties. 15.2: The arbitrator shall establish a report of the meeting provided in article 15.1 above. The arbitrator shall sign this report. The parties or their representatives shall equally be invited to sign the report. If one of the parties refuses to sign the report or gives his reservations about it, the said report shall be submitted to the Court for approval. A copy of the report shall be sent to the parties and their legal advisers, as well as to the Secretary general of the Court. 15.3: The projected provisional calendar for arbitration appearing in the report provided in article 15.2 may, in case of necessity, be modified by the arbitrator, at his initiative after the parties have made their remarks, or in their request. 15.4: This modified calendar shall be sent to the Secretary general of the Court, for him to communicate the Court. 15.5: The arbitrator shall draw up and sign the award within 90 days latest following the closure of the debate. The Court at the request of the arbitrator may extend this time limit if he is unable to respect it. 15.6: When the award made does not terminate the arbitral proceedings, a meeting shall be arranged soon thereafter, to determine, in the same conditions, a new calendar for an award that shall terminate completely the dispute. ARTICLE 16: Rules applicable to the proceedings The rules applicable to the proceedings before the arbitrator are those contained in these arbitration rules and where the latter are silent, those which the parties or failing which, the arbitrator, determines either by referring or not referring to an internal procedural law applicable to the arbitration.

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Annex 3  The Rules of Arbitration of the Common Court of Justice and Arbitration ARTICLE 17: Law applicable to the substance The parties are free to determine the rules of law that the arbitrator shall apply to the substance of their dispute. Failing an indication by the parties of the applicable rules of law, the arbitrator shall apply the law designated by the conflict of laws rule which he sees appropriate in the circumstance. In any case, the arbitrator shall take into account the stipulations of the contract and the trade usages. The arbitrator shall have the powers of amiable compositeur if the parties have consented to it in their arbitration agreement or later. ARTICLE 18: New claims In the course of the proceedings the parties shall] be free to make new arguments to support claims they have made. They may also present new claims, counter-claims or not, if these claims remain within the framework of the arbitration agreement and, unless the arbitrator considers that he must not authorize such an extension of his assignment by reason, notably, of the fact that the extension has been requested late. ARTICLE 19: Establishing the facts of the case 19.1: The arbitrator shall establish the facts of the case within the earliest possible time by every means appropriate. After examining the written documents of the parties and exhibits submitted by them for the debates, the arbitrator shall bear both parties in an adversary procedure if any party requests for it; failing which, he may on his own, decide to hear them. The parties shall appear either in person or by their duly authorized representatives. Legal advisers may assist them. The arbitrator may decide to bear the parties separately if be thinks it necessary. In this case, the hearing of each party shall take place in the presence of the legal advisers of the two parties. The hearing of the parties shall] take place on a day and place determined by the arbitrator. If one of the parties, although regularly summoned does not appear, the arbitrator, after assuring himself that the summons was duly received by him, has the power, where there is no valid excuse, to nevertheless proceed with his assignment, the debate being considered as one with arguments from both parties. A copy of the report of the hearing of the parties, duly signed, shall be sent to the Secretary general of the Court. 19.2: The arbitrator may rule on documents if the parties request or so accept. 19.3: The arbitrator may appoint one or several experts, define their assignment, receive their reports and hear them in the presence of the parties or their legal advisers. 19.4: The arbitrator shall regulate the progress of the hearings. The arguments from bath sides shall be heard. Except with the consent of the arbitrator and the parties, they shall not be open to persons not concerned with the proceedings.

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International Arbitration and Corporate Law ARTICLE 20: Awards by consent If the parties reach a settlement during the arbitral proceedings, they may request the arbitrator that this agreement be established in the form of an award made by consent of the parties. ARTICLE 21: Plea of lack of jurisdiction 21.1: If one of the parties intends to challenge the jurisdiction of the arbitrator to hear all or part of the claim, for whatever reason, he shall raise the challenge in the memoranda provided in articles 6 and 7 above, and latest, during the meeting prescribed in article 15.1 above. 21.2: At any time during the hearing the arbitrator may on his own, examine his jurisdiction for reasons of public policy on which the parties shall be invited to make their remarks. 21.3: The arbitrator may rule on the challenge for lack of jurisdiction either by a preliminary award or in a final or partial award after examination on the substance. When the Court is seized on the jurisdictional plan in conformity with the provisions of chapter III below, to rule on jurisdiction or lack of jurisdiction of an arbitrator making a preliminary award, the arbitrator may nevertheless continue with the proceedings without waiting for the Court to decide on the matter. ARTICLE 22: Arbitral award 22.1: Except otherwise agreed upon by the parties, and subject to such agreement being admissible with regard to the applicable law, reasons shall be given for all awards. 22.2: They shall be considered to have been made at the seat of the arbitration and on the day of their signature after scrutiny of the Court. 22.3: They shall be signed by the arbitrator, with regard to, where necessary, the provisions of articles 4.3 and 4.4 above. If three arbitrators have been appointed, the award shall be made by majority vote. Where there is no majority, the President of the arbitral Tribunal shall rule alone. The three members of the arbitral shall sign the award, depending on the case Tribunal, or by the President alone. In the case where the award is made by majority vote, the refusal to sign of the arbitrator in the minority shall not affect the validity of the award. 22.4: Any member of the arbitral Tribunal may give his individual opinion to the President of the Tribunal, to be attached b the award.

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Annex 3  The Rules of Arbitration of the Common Court of Justice and Arbitration ARTICLE 23: Scrutiny of award by the Court 23.1: The draft awards projects on jurisdiction, partial awards terminating certain claims of the parties, and final awards, shall be submitted to the scrutiny of the Court before signature. Other awards shall not be submitted for security but shall only be forwarded to the Court for information. 23.2: The Court may only propose purely modifications of form. It shall, in addition give the arbitration indications necessary for the assessment of costs of arbitration notably; it shall determine the fees of the arbitrator. Other awards are not submitted for scrutiny but only forwarded to the Court for information. ARTICLE 24: Ruling on costs of arbitration 24.1: Besides a ruling on the substance, the final award by the arbitrator shall determine the costs of the arbitration and shall decide which of the parties shall bear the costs or, in what proportions it shall be shared between them. 24.2: The costs of arbitration shall include: (a) The fees of the arbitrator and administrative expenses determined by the Court, possible expenses of the arbitrator, costs of the functioning of the Tribunal, fees and expenses of experts in case of expert evidence. The fees of arbitrators and administrative expenses, be Court shall be fixed in accordance with the rate established by the general meeting of the Court all approved by the Council of Ministers of OHBLA, ruling under the conditions provided in article 4 of the Treaty. (b)  Normal costs incurred by the parties for their defence as determined by the arbitrator to whom the claim of the parties are forwarded. 24.3: Where the circumstances of the case make it exceptionally necessary, the Court may fix the fees of the arbitrator at an amount more or less than that of the normal rate. ARTICLE 25: Notification of award 25.1: The award made, the Secretary general shall notify the parties of the text signed by the arbitrator after the costs of arbitration provided in article 24.2(a) above have been fully paid to the Secretary general by the parties or any of them. 25.2: Supplementary copies certified true by the Secretary general of the Court shall at any time, be delivered to parties who request for it and to them only. 25.3: Through the notification thus made, the parties waive any other notification or deposit at the initiative of the arbitrator.

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International Arbitration and Corporate Law ARTICLE 26: Correction and interpretation of award Any application for correction of clerical errors affecting the award, or for interpretation of the award, or to complement the award for which there bad been an omission to rule on the claim submitted to the arbitrator, shall be addressed to the Secretary general of the Court within 45 days of notification of the award. The Secretary general shall communicate, on receipt, the request to the arbitrator and the opposite party and grant them a time limit of 30 days to forward theirs remarks to the claimant and the arbitrator. In cases where the Secretary general, for any reason, is unable to transmit the request to the arbitrator who ruled on it, the Court shall appoint another arbitrator, after the remarks of the parties. After examining the arguments of both parties and exhibits they have possibly submitted, the draft award shall be forwarded for the scrutiny provided for in article 23 within 30 days from the date the arbitrator is seized. Except in the case provided in subsection 3, no fees shall be paid for the preceding procedure. As for costs, where there are any, they shall be home by the party making the request, if the request is rejected in its entirety. Where the contrary is true, costs shall be shared between the parties in proportions fixed for costs of arbitration in the award, object of the request. ARTICLE 27: Res judicata Awards made in conformity with the provisions of these arbitration rules are binding in respect of the claim on the territory of each member state, as if they were ruling, made by Courts in the state. They may be the object of compulsory enforcement on the territory of any one of the member states. ARTICLE 28: Others The original copy of any award made in conformity with these arbitration rules shall be deposited with the Secretary general of the Court. In all other cases not expressly mentioned in these arbitration rules, the Court and arbitrator shall act in the spirit of these arbitration rules and shall endeavour to make sure that the award is enforceable at law. CHAPTER III: RECOGNITION AND COMPULSORY ENFORCEMENT OF AWARDS ARTICLE 29: Challenge of validity 29.1: If one party intends to challenge the recognition of the award and its res judicata effect pursuant to article 27 above, be shall seize the Court of the matter by petition which be shall serve the opposing party. 29.2: The challenge of the validity of the award is only admissible if the parties have not excluded it in the arbitration agreement. It may only be based on one or several grounds enumerated hereafter in article 30.6 authorizing opposition to exequatur. 440

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Annex 3  The Rules of Arbitration of the Common Court of Justice and Arbitration 29.3: The petition may be lodged as soon as the award is made. It shall not be admissible if it is not lodged within two months from the notification of the award provided for in article 25 above. 29.4: The Court shall inquire on the petition and rule under the conditions prescribed by its rules of procedure. 29.5: If the Court rejects the recognition and res judicata of the award referred to it, it shall annul the award. It shall evoke and rule on the substance if the parties request for it. If the parties have not requested the evocation, the proceedings shall be taken over at the request of the earliest party as from, where necessary, the last act of arbitral proceedings recognised as valid by the Court. ARTICLE 30: Exequatur 30.1: The exequatur is requested by petition addressed to the Court. 30.2: The exequatur is granted by order of the President of the Court or judge delegated for this purpose and shall confer on the award an enforceable character in all the members States. This procedure is not adversarial. 30.3: The exequatur shall not be granted if the Court bad already been seized, for the same award, by a petition made in pursuance of article 29 above. In such case, the two petitions shall be consolidated. 30.4: Where the exequatur is refused for another reason the petitioner may seize the Court with its application, within fifteen days from the refusal of such application. 30.5: When the order of the President of the Court or judge delegated has granted the exequatur, the applicant shall notify the opposing party of this order. The opposing party may, within fifteen days from such notification make an opposition which shall be beard at one of the jurisdictional ordinary sessions of the Court in an adversary procedure in accordance with its rules of procedure. 30.6: The exequatur may only be refused and opposition to the exequatur may only be initiated in the following cases: (1) If the arbitrator ruled without an arbitration agreement or on an agreement that is void or has expired; (2) If the arbitrator ruled without conforming to the assignment be bad been conferred; (3) When the principle of adversary procedure has not been respected; (4) If the award is contrary to international public policy. 441

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International Arbitration and Corporate Law ARTICLE 31: Executory clause 31.1: The Secretary general of the Court shall deliver to the party who requests it, a copy of the award certified true to the original deposited in conformity with article 28, on which shall figure the exequatur attestation. The application shall state that the exequatur has been granted to the award, as the case may be, either by an order of the President of the Court regularly served and which has become final in the absence of opposition made within the time limit of fifteen days mentioned above or by a Court judgment rejecting such an opposition, or by a Court judgment invalidating a refusal of exequatur. The national authority appointed by the State for which the exequatur was requested may, relying himself on the true copy of the award covered by the attestation of the Secretary general of the Court, attach an executory clause such as is in force in the said State. ARTICLE 32: Recourse to revision Recourse to revision against awards and Court judgments when the Court has ruled on the substance in accordance with article 29.5 (1) above shall be initiated in the cases and under the conditions provided in article 49 of the rules 0f procedure of the Court. ARTICLE 33: Opposition by third party Third party opposition against awards and Court judgments when the Court has ruled on the substance in according with article 29.5 subsection I above, shall be, in the cases and under the conditions provided in article 47 of the rules of procedure. ARTICLE 34: Final provisions These arbitration rules shall enter into force thirty (30) days after its signature. It shall be published in the Official Gazette of OHBLA. It shall equally be published in the Official Gazette of the Member States or by any other appropriate means. Done at Ouagadougou, on 11 March 1999.

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Annex 4 Extracts from the Uniform Act relating to General Commercial Law under OHADA Act adopted on 15 December 2010, OHADA Official Journal n°1; 15 May 2011 Preliminary Chapter: Scope …………………………………………………………………. BOOK I: STATUS OF TRADER…………………………………………………………….. Chapter 1. Definition Of Trader And Commercial Transactions…………………………… Chapter 2. Capacity To Trade ………………………………………………………………. Chapter 3. Accounting Obligations Of The Trader…………………………………………. Chapter 4. Limitation Period ……………………………………………………………….. BOOK II: TRADE AND PERSONAL PROPERTY CREDIT REGISTER …………………. PART I: GENERAL PROVISIONS ………………………………………………………….. Chapter 1. Mission of the Trade and Personal Property Credit Register ……………………. Chapter 2. Organization of the Trade and Personal Property Credit Register ……………… PART II: REGISTRATION IN THE TRADE AND PERSONAL PROPERTY CREDIT REGISTER ………………………………………………………………………. Chapter 1. Registration Conditions ………………………………………………………… Chapter 2. Effects of Registration and Disputes …………………………………………….

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International Arbitration and Corporate Law The Council of Ministers of the Organization for the Harmonization of Business Law in Africa (OHADA), –Mindful of the Treaty on the Harmonization of Business Law in Africa, signed in Port Louis on 17 October 1993, as revised at Quebec on 17 October 2008, in particular Articles 2, 5, to 10, 11 and 12 thereof; –Mindful of the report of the Permanent Secretariat and the observations of the Contracting States; –Mindful of the opinion N° 001/2010 of the Common Court of Justice and Arbitration dated 30 June 2010; The Contracting States present have deliberated upon and unanimously adopted the Uniform Act set out below. Preliminary Chapter: Scope Article 1: Every trader, whether a natural or legal person, including all commercial companies of which a State or a person governed by public law is a member, as well as every economic interest group, whose place of business or registered office is situated in the territory of one of the Contracting States to the Treaty on the Harmonization of Business Law in Africa, (hereinafter referred to as “Contracting States”), shall be subject to the provisions of this Uniform Act. All natural persons opting for the status of “entrepreneur” are also submitted, except otherwise provided, to the present Uniform Act and to the conditions as defined below. Moreover, every trader shall be subject to the laws that are not contrary to the provisions of this Uniform Act applicable in the Contracting State of his place of business or registered office. Natural persons or corporate bodies, and economic interest groups, set up or being formed on the date of entry into force of this Uniform Act must harmonize the conditions under which they carry on their activity with this new legislation within a period of two years from the date of publication of this Uniform Act in the Official Gazette. After this time limit, any party concerned may bring an action before the court of competent jurisdiction for such regularization to be ordered, where necessary, under financial compulsion. BOOK I: STATUS OF TRADER CHAPTER 1. DEFINITION OF TRADER AND COMMERCIAL TRANSACTIONS Article 2: Traders are persons whose regular occupation is to carry out commercial transactions.

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Annex 4  Extracts from the Uniform Act relating to General Commercial Law under OHADA Article 3: A commercial transaction by nature, is one by which any person involves himself/herself in the circulation of goods which he/she produces or buys or by which he/she furnishes the provision of services with the intent to make a financial profit. The following are, notably, by nature commercial transactions: –the purchase of movable or immovable property for resale; –banking, stock-exchange, currency exchange, brokerage and transit transactions; –contracts between traders for business purposes; –the industrial exploitation of mines, quarries and any natural resource deposit; –rental of personal property; –manufacturing, transportation and telecommunication operations; –middlemen’s business transactions such as commission, brokerage and agency, as well as middleman’s operations relating to the purchase, underwriting, sale or rental of immovable property, businesses, shares in commercial companies or building societies; and –transactions carried out by commercial companies. Article 4: A bill of exchange, a promissory note, and a warrant shall, by virtue of their form, also be considered as commercial transactions. Article 5: Proof of commercial transactions can be given by any means, including electronic means, with respect to traders. Every commencement of proof made in writing allows the trader to prove by all means as against a non-trader. Trade books maintained in accordance with the provisions of this Uniform Act are permissible by the judge, as evidence in the manner provided above. Trade books and summary financial statements constitute means of proof. In the course of a dispute, the representation of the trade books and of financial statements may be ordered by the court, of its own accord, to the effect of extracting the relevant parts from the dispute. CHAPTER 2. CAPACITY TO TRADE Article 6: No person shall engage in trading as an occupation unless he has the legal capacity to trade. Article 7: A minor shall not have the status of trader or engage in trading unless he is emancipated. The spouse of a trader shall not have the status of trader unless he or she carries out the transactions referred to under Articles 3 and 4 above as an occupation and separately from those of his or her spouse.

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International Arbitration and Corporate Law Article 8: No person shall engage in a commercial activity if he is accorded a status that establishes a particular incompatibility. Such incompatibility shall not exist unless it is expressly provided for by a legal text. The person invoking the incompatibility shall be bound to provide proof of it. Any transaction carried out by a person with such status of incompatibility, shall nevertheless be valid with respect to third parties acting in good faith. Third parties may, where they so desire, benefit from transactions carried out with a person who is in a situation of incompatibility, however the latter cannot do the same. Article 9: The exercise of a commercial activity shall be incompatible with the exercise of the following duties or occupations: –civil servants and staff of public entities and state-owned enterprises; –Court officials and Auxiliary officers of Justice: Barrister, Bailiff, Auctioneer, Stock Exchange Broker, Notary, Court Registrar, Legal Administrator, and Liquidator; –approved Chartered Accountant and approved Accounting Officer, Auditor, Consulting Lawyer, Ship-broker; –and, generally, any occupation the exercise of which is subject to regulations forbidding the exercise of such activity concurrently with a commercial occupation. Article 10: No person shall carry on a commercial activity, directly or through an intermediary, where he is subject to: –a permanent or temporary general ban imposed by a court of one of the Contracting States, whether the said ban is imposed as a principal or accessory penalty; –a ban imposed by a professional court; in this case, the ban shall apply only to the commercial activity concerned; –a definite sentence of imprisonment for an ordinary law offence or a non suspended sentence of not less than three months imprisonment for a misdemeanour against property or an offence of an economic or financial nature. Article 11: A temporary ban of more than 5 years as well as a permanent ban may be lifted, at the request of such person, by the court that imposed the ban. Such request shall be admissible only after the expiration of a period of 5 years from the day the decision pronouncing the ban became irrevocable. The ban shall end upon discharge, under the conditions and forms provided for in the Uniform Act regarding the organization of the collective procedures for the wiping up of payable accounts. Article 12: Without prejudice to other sanctions, transactions carried out by a banned person shall not be demurrable to third persons acting in good faith.

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Annex 4  Extracts from the Uniform Act relating to General Commercial Law under OHADA There shall be a presumption of good faith. However, such transaction shall be demurrable to the banned person. CHAPTER 3. ACCOUNTING OBLIGATIONS OF THE TRADER Article 13: Every corporate body or natural person who is a trader shall keep all trade books in compliance with the accounting principles provided in the Uniform Act relating to the organization and the harmonization of the companies’ accountings. In addition, it should comply with, as the case may be, the provisions provided by the Uniform Act relating to the organization and the harmonization of the companies’ accountings and to the Uniform Act relating to the trading companies and economic interest grouping. Article 14: The trade books shall mention the registration number in the Trade and Personal Property Credit Register. Article 15: Every corporate body engaged in trading shall also draw up, each year, a summary of its financial statements, in accordance with the provisions of the Uniform Act relating to the organization and harmonization of business accounting, and to the Uniform Act relating to commercial companies and economic interest groups. CHAPTER 4. LIMITATION PERIOD Article 16: Obligations resulting from trade between traders or between traders and nontraders shall be barred after a period of five years where they are not subject to shorter limitation periods. This extinctive limitation period is subject to the law governing the legislation if affects. TITLE II STATUS OF THE SOLE PROPRIETOR CHAPTER I DEFINITION OF THE SOLE PROPRIETOR Article 30: A sole proprietor is a natural person conducting business activity of civil, commercial, artisanal or agricultural nature, and who makes a declaration as provided for by the present Uniform Act. A sole proprietorship retains its status as such if the annual revenue generated by its activity for two consecutive years does not exceed the fixed threshold as per the minimum cash system under the Uniform Act on Organizing and Harmonizing of Undertakings’ Accounting Systems. In case of sole proprietors conducting activities of commercial or artisanal nature, the annual revenue pertains to, on the one hand, revenue arising from the sale of goods, merchandise or provision of food or housing and other supplies, or on the other hand, from

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International Arbitration and Corporate Law its supply of services. In the case of sole proprietors involved in agriculture, it pertains to revenue arising from their production activities. Over two consecutive years, upon its revenue exceeding the threshold fixed by the Member State within which the activity is conducted, the sole proprietorship loses its status, and is required to, from the first day of the following year and before the end of the third quarter, meet all expenses and obligations applicable to an individual entrepreneur. It loses its status of sole proprietorship and no longer benefits from the special legislation applicable to it. It must thereafter comply with the regulations applicable to its activities. The undertaking, which is exempt from registration in the Trade Register and the Property Credit Register, must report its activities as provided in the Uniform Act. Member States must implement measures promoting sole proprietors, in particular those related to taxation and social costs. Chapter II Accounting Obligations of Sole Proprietor Article 31: In the course of business, a sole proprietor is required to establish a day-to-day record containing the source and amount of resources, distinguishing cash payments and other payments on one hand and the purpose and its use of these resources on the other. This record must be preserved for a minimum period of five years. Article 32: Furthermore, a sole proprietor conducting activities relating to the sale of goods, supplies, merchandise and food or relating to the provision of housing must maintain a register, summarized yearly, containing particulars of the transactions, detailing the mode of payment and referencing the supporting documents thereof. BOOK II: TRADE AND PERSONAL PROPERTY CREDIT REGISTER PART I: GENERAL PROVISIONS CHAPTER 1. DUTIES OF THE TRADE AND PERSONAL PROPERTY CREDIT REGISTER Article 35: The purpose of the Trade and Personal Property Credit Register shall be: 1) to receive the applications for the registration of, notably: - natural persons having the status of trader, within the meaning of this Uniform Act; - commercial companies; - civil companies by their form and commercial by their object; - economic interest grouping; - branches within the meaning of the Uniform Act relating to commercial companies law and economic interest grouping; - all grouping with legal personality subject to registration to this Register by law;

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Annex 4  Extracts from the Uniform Act relating to General Commercial Law under OHADA - all natural person practicing a professional activity subject to registration to this Register by law; - public institutions having an economic activity and benefiting from financial and legal autonomy; Registration gives rise to the allocation, from the time of deposit of the application by the subject, of a registration number that is unique to every registered person. 2) To receive the entrepreneur’s declaration of activity, to deliver to such entrepreneur, from the deposit of the declaration, a declaration of activity number, to receive the declarations of amendment and to receive declarations of cessation of activity; 3) to receive the deposit of acts and exhibits and present the information, provided by the provisions of the present Uniform Act, by those of the Uniform Act relating to commercial companies and economic interest grouping, by the Uniform Act relating to the organization and harmonization of the companies’ accountings and by any other legal provision; 4) to receive applications of amendments, both complementary and secondary; 5) to receive requests for cancellation of entries made; 6) to receive all applications of registration of securities provided by the Uniform Act relating to the organization of securities and by all legal provisions. It also receives registration of lease-purchase contracts; 7) to receive all applications of amendment of securities registrations provided by the Uniform Act relating to the organization of securities and by all legal provisions; 8) to receive all requests of cancellation of registration provided by the Uniform Act relating to the organization of securities and by all legal provisions; 9) to deliver, at any time, the necessary documents to establish the execution by the subjects of the formalities provided by the Uniform Acts and by all legal provisions; 10) to provide to the public the information appearing on the form provided by the article 39 and 40 below in accordance with the provisions of article 66 of the Uniform Act relating to the organization of securities, subject to legal restrictions existing in the State Party.

CHAPTER 2. ORGANIZATION OF THE TRADE AND PERSONAL PROPERTY CREDIT REGISTER Article 36: The Trade and Personal Property Credit Register shall be kept by the Registry of the court of competent jurisdiction or of the competent organ in the State Party, under the supervision of the President with said jurisdiction or a Judge with powers delegated for this purpose or of the competent authority in the State Party. Information entered in each Trade and Personal Property Credit Register shall be centralized in a National Card-Index.

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International Arbitration and Corporate Law Information entered in each National Card-Index shall be centralized in a Regional CardIndex kept at the Common Court of Justice and Arbitration. Information appearing in the forms submitted to the Registry or at the competent organ in the State Party and in the Registers and the directories of the Trade and Personal Property Credit Register are intended for the information of the public. Article 39: All declarations of the entrepreneur or registration application is made on the form provided for this purpose by the Registrar or the competent organ in the State party, unless in case of use of electronic means. The form shall bear the signature of the declarant, or of his authorized agent who shall provide proof of his identity and, unless he is a Barrister, Bailiff, Notary or Receiver, shall possess a power of attorney signed by the declarant. The duly completed form is kept by the Registrar or by any other competent organ in the State Party. The Registrar or other competent organ of the State Party immediately delivers to the declarant or to the applicant, an acknowledgement of registration with indication of the date and description of the formality accomplished and according to the case, the number of the declaration of activity or the registration number. A copy of this form with the individual file composed of the certified and consistent evidence is addressed within a period of one month to the Registrar or to the head of the competent organ in the State Party, for transmission, within the same time, a copy of this form and an extract of the file to the Regional Card-Index. Article 43: In addition, the following shall automatically be mentioned in the Trade Register: 1) decisions handed down in individual bankruptcy proceedings or in collective proceedings for the judicial settlement, legal redress or liquidation of property; 2) decisions handing down patrimonial sanctions against managers of corporate bodies; 3) discharge decisions or amnesty orders lifting forfeitures or bans. The Registrar or the competent organ in the State Party that pronounced any decision, must provide the transcript of such decision to the Trade and Personal Property Credit Register which will provide a signed copy of this decision as soon as possible to the Registrar or other competent organ in the State Party under whose jurisdiction the formalities must be completed. Any interested person can also procure the transcript of the decision from the concerned Trade and Personal Property Credit Register(s). Any person who intends to rely on a decision for which an official transcript is compulsory, has to establish that this decision has been properly transcribed, and is required to ask for such from the competent Trade and Personal Property Credit Register.

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Annex 4  Extracts from the Uniform Act relating to General Commercial Law under OHADA PART II: REGISTRATION IN THE TRADE AND PERSONAL PROPERTY CREDIT REGISTER CHAPTER 1. REGISTRATION CONDITIONS Section 1. Registration of natural persons Article 44: Every natural person whose registration is required by law shall, within the first month of operation of his business, apply to the Registry of the competent court or the competent organ in the State Party within whose jurisdiction the business is operated for registration in the Trade and Personal Property Credit Register. The application for registration made in the form provided by article 39 above shall indicate: 1) the full name and domicile of the applicant; 2) his date and place of birth; 3) his nationality; 4) where applicable, the name under which he runs the business and the sign used; 5) the activity or activities carried out, and the form of operation; 6) the date and place of marriage, the type of marriage property option adopted, clauses demurrable to third persons restricting the free disposal of property of the spouses or the absence of such clauses, actions for separation of property; 7) the full name, date and place of birth, domicile and nationality of persons with power to commit by their signature the responsibility of the applicant; 8) the address of the principal place of business and, where applicable, the address of each of the other subsidiaries or branches operated on the territory of the Contracting State; 9) where applicable, the nature and the place of operation of the activity of the last subsidiaries previously operated with an indication of their registration number (s) in the Trade and Personal Property Credit Register; 10) the date of commencement, by the applicant, of the operation of the principal business and, where applicable, the other subsidiaries; 11) any other indication required by specific legislations. Article 45: The applicant shall be required to furnish the following documents in proof of his declarations, in whatever form or manner: 1) a copy of his birth certificate, or any administrative document proving his identity; 2) a copy of his marriage certificate, where necessary; 3) a sworn statement signed by the applicant attesting that he is not under any restriction provided for by article 10 above. This sworn declaration is completed within 75 days from the registration by an extract of its criminal record or by default by the equivalent document;

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International Arbitration and Corporate Law 4) a residence permit; 5) a copy of the title deed or lease of the principal place of business, and where applicable, of the other subsidiaries; 6) in case of purchase of the business or management lease, a copy of the purchase certificate or the management lease deed; 7) where necessary, a prior authorization to operate the business; 8) where necessary, by other evidence required by specific legislations. Article 46: The corporate bodies referred to in the Uniform Act relating to the Law on commercial companies and economic interest groups shall apply for registration in the Trade and Personal Property Credit Register, within a month of their formation, to the Registry of the court or to the competent organ of the State Party within whose jurisdiction their registered office is located. The application shall mention: 1) the corporate name or the company name or the designation depending on the case 2) if required, acronym or sign; 3) the activity or activities carried out; 4) the form of the corporate body; 5) if required, the amount of the registered capital with indication of the amount of contributions in cash and an evaluation of contributions in kind; 6) the address of the registered office, and where applicable, that of the principal place of business and of each of the other subsidiaries; 7) the duration of the company or the corporate body as fixed by its articles of association or by the founding text; 8) the full name and domicile of business partners who have unlimited liability vis-à-vis the company’s debts, with an indication of their date and place of birth, nationality, date and place of marriage, the type of marriage property option adopted and clauses demurrable to third persons restricting the free disposal of property of the spouses or the absence of such clauses, as well as actions for the separation of property; 9) the full name, date and place of birth, and domicile of managers, administrators or business partners with general power to commit the responsibility of the company or corporate body or the grouping; 10) the full name, date and place of birth and domicile of Auditors where their designation is provided for by the Uniform Act relating to the Law on commercial companies and economic interest groups; 11) or any other indication required by specific legislation. Article 47: The following supporting documents shall, under the penalty of rejection, be attached to the application, whatever their form or support:

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Annex 4  Extracts from the Uniform Act relating to General Commercial Law under OHADA 1) a certified true copy of the articles of association or of the founding act; 2) the validity and conformity certificate or of a certified true copy of a certificate of payment of shares; 3) the certified list of managers, administrators or business partners having an unlimited liability vis-à-vis the company’s debts or with power to commit the company; 4) a sworn statement signed by the applicant attesting that it is not under any restriction provided by article 10 above. This sworn declaration is completed within 75 days from the registration by an extract of its criminal record or by default by the equivalent document. 5) where necessary, a prior authorization to operate the business. Article 48: Every natural person or corporate body not subject to registration in the Trade and Personal Property Credit Register because of the location of his registered office or the location of its activity, shall within a month of the setting up of a branch as defined in the Uniform Act relating to the law of the trade companies and of the economic interest grouping or subsidiary on the territory of one of the Contracting States, apply for registration of such business. The application, made in the form as required by article 39 above, shall be deposited at the Registrar of the court or with the competent organ in the State Party within whose jurisdiction such branch or subsidiary will be established, and shall indicate: 1) where necessary, its trade name, acronym or sign 2) the company name or the name of the branch or the establishment; 3) the activity or activities carried out; 4) the name of the foreign company that owns the said branch or subsidiary; its commercial name, acronym or sign; the activity or activities carried out; the form of the company or corporate body; its nationality; the address of its registered office; where applicable, the full name and domicile of the business partners having an unlimited liability vis-à-vis the company’s debts; 5) the full name, date and place of birth of the natural person resident on the territory of the Contracting State with power to represent and manage the branch. Section 3. Common provisions for the registration of natural persons and corporate bodies Article 49: Registration shall be personal, whether the trader is a natural person or a corporate body. No person shall be principally registered in several registers or in the same register under several numbers. Once the applicant’s application is complete, the court Registry or the competent organ of the Sate Party shall assign him a registration number and shall mention it on the form given to him.

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International Arbitration and Corporate Law The Registrar or the competent organ of the Sate Party has three months to exercise its powers as provided by article 66 of the Uniform Act and where necessary, to notify to the interested party of the withdrawal of its registration and to proceed to its cancellation. Article 51: Where the place of operation of a business or the registered office of a corporate body is transferred, an application shall be filed for: –such business or corporate body to be struck off the Trade and Personal Property Credit Register of the court within whose jurisdiction they were registered; –a new registration in the Trade and Personal Property Credit Register of the court within whose jurisdiction the place of operation of the business or registered office has been transferred; such registration shall only be final after the verification provided for under paragraphs 4 and 5 above. To this effect, the applicant shall furnish information and documents in accordance with Articles 44 and 48 above. The applicant must accomplish these formalities within one month of the transfer. The Registry responsible for the Trade and Personal Property Credit Register within whose jurisdiction the trader has transferred his business or where the company has transferred its registered office shall, within one month of the new registration, ensure that the business or corporate body is struck off the Register by requiring that the latter produce an attestation issued by the Registry of the place of the previous registration. Where the applicant fails to act, the Registry shall automatically effect the change at the expense of the applicant. Section 4. Supplementary and secondary modifying entries Article 52: Where the situation of a person subject to registration subsequently undergoes changes, which require that the information entered in the Trade and Personal Property Credit Register be amended or supplemented, such person shall, within thirty days of the changes, file an application for such amendment or supplement. Any change concerning particularly the civil status, the marriage property option, the legal capacity and activity of a natural person subject to registration, or particularly any change concerning the articles of association of a corporate body, shall be entered in the Trade and Personal Property Credit Register. The partial termination of activity shall also be mentioned in the Trade and Personal Property Credit Register. Every application for a supplementary or secondary change to the Register shall be signed as indicated in the article 39 above. The Registrar or the competent organ in the State Party delivers an acknowledgement of registration indicating the formality accomplished and the date. Article 53: Every natural person or corporate body subject to registration in the Trade and Personal Property Credit Register shall be bound, where he is operating secondary 454

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Annex 4  Extracts from the Uniform Act relating to General Commercial Law under OHADA commercial businesses or branches within the jurisdiction of other courts, to apply for secondary registration within one month from the beginning of the operation. Such application shall mention, in addition to the reference to the principal registration, the information required: –for natural persons, by Article 44 above ; –for corporate bodies, by Article 46 above. Article 54: The application shall be filed at the Registry of the court within whose jurisdiction the secondary business is located. The Registrar or the competent organ in the State Party in charge of the Register shall forward within one month of the secondary registration, a copy of the application for secondary registration to the court Registry in charge of the Register where the principal registration was affected. All registration of a secondary location where the activity is carried out gives rise to a registration number. Section 5. Striking off the register Article 55: Every registered natural person shall, within one month of cessation of his commercial activity, apply for removal from the Trade and Personal Property Credit Register. This formality shall also be accomplished for branches and establishments. In the event of death of a registered natural person, his rightful claimants must, within a period of three months from the date of his death, apply for the cancellation of the registration in the Register, or for its modification, where they themselves have to continue to operate the business. Where the application for striking off is not filed within the time-limit referred to in the two preceding paragraphs of this article, the court Registry or the competent organ in the State Party shall strike off the business following a decision of the competent court before which the matter is brought at the request of the Registry or of any party concerned. The Registrar or the head of the competent organ in the State Party, in charge of the Trade and Personal Property Credit Register delivers an acknowledgment of registration indicating the formality accomplished and the date. Article 58: The dissolution of a corporate body for any reason whatsoever shall be declared, so that it should be entered in the Trade and Personal Property Credit Register within a period of one month at the Registry of the competent court where the corporate body is registered. The same shall apply in the case of nullity of the company, with effect from the date the decision pronouncing it is handed down. The company shall be struck off the Register at the request of the liquidator made within one month of the closure of liquidation operations. 455

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International Arbitration and Corporate Law Where the request is not made within the prescribed deadline, the Registry of the competent court seized shall of its own or at the behest of any party concerned, and upon the decision of the court seized, strike off the company from the register. Every removal from the Register shall be inserted in a newspaper empowered to publish legal notices. CHAPTER 2. EFFECTS OF REGISTRATION AND DISPUTES Section 1. Effects of registration Article 59: Any person registered in the Trade and Personal Property Credit Register shall be presumed, save proof to the contrary, to have the status of trader within the meaning of this Uniform Act. However, such presumption shall not be invoked with respect to economic interest groups whose registration to the Trade and Personal Property Credit Register is required by law, and corporate body that are not reputed traders under this Uniform Act, the Uniform Act relating to trade companies and economic interest grouping or any other legal requirement. Every natural person or corporate body registered in the Trade and Personal Property Credit Register shall be bound to indicate on its invoices, order forms, tariffs and commercial documents, as well as on every correspondence its number and place of registration in the Register. Article 60: Natural persons and corporate bodies subject to registration in the Trade and Personal Property Credit Register who have not applied for registration within the prescribed deadline, shall not claim, until they are duly registered, the status of trader. Any corporate body subject to registration on the Trade and Personal Property Credit Register that did not make an application for registration within the prescribed time limit, cannot claim legal personality until its registration. However, they shall not rely on their failure to have themselves registered in the Register in order to avoid the liabilities and obligations inherent in that status. Article 61: Persons subject to registration in the Trade and Personal Property Credit Register may, in their commercial activities, rely on the deeds and documents subject to registration as against third parties and public services, which may however rely on them, only if such deeds and documents have been published in the Register. This provision shall not apply where the persons subject to registration establish that, at the time of the transaction, the third parties and services in question had knowledge of the deeds and documents concerned.

456

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Annex 4  Extracts from the Uniform Act relating to General Commercial Law under OHADA Section 2. Disputes relating to registration Article 66: The court Registry in charge of the Trade and Personal Property Credit Register shall have the responsibility of ensuring that applications are complete and ascertaining the conformity of the information they provide to the supporting documents attached thereto. Where the Registry notices inaccurate information or experiences difficulties in the accomplishment of its task, it shall refer the matter to the competent court. Disputes between the applicant and the Registry shall also be referred to the said court. Article 68: Where the corporate body or natural person who is a trader fails to apply for registration within the prescribed time-limit, the competent court may, automatically or at the request of the Registry in charge of the Trade and Personal Property Credit Register, or any other applicant, take a decision ordering the party concerned to have his registration effected. The competent court may, under the same conditions, order any natural person or corporate body registered in the Trade and Personal Property Credit Register to have either: –information added to or amended in the Register; –necessary information added or amendment made to the Register in case of an incorrect or incomplete declaration; –its removal from the Register effected. Article 69: Any person required to fulfill any of the formalities prescribed in this part but who fails to do so or who fulfills a formality under false pretenses, shall be punished with the penalties provided by the national criminal law or, where applicable, by the special criminal law enacted by the Contracting State pursuant to this Uniform Act.

457

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Bibliography Note: The jurisprudence emanating from the Uniform Act and the doctrine thereto are both available on the website of the OHADA (). On this website, documents are classified under the heading titled “OHADATA”. This method of referencing has been utilized in this entire book, thereby facilitating easy research of decisions, scholarly articles or other documents on the OHADA website. I General Reference Beguin J., Bourdeaux G., Couret A., Le Bars B., Mainguy D., Menjucq M., Ruiz-Fabri H., Sorel J.-M., Seraglini C., Sous la direction de Beguin J. et Menjucq M., Droit du commerce international, Litec, 2005, p. 1119. Cozian M., Viandier A. et Deboissy F., Droit des sociétés, Litec, 22nd ed., 2009, p. 725. Kraakman r., Armour J., Davies P., Enriques L., Hansmann H., Hertig G., Hopt K., Kanda H. et Rock E., The Anatomy of Corporate Law: A Comparative and Functional Approach, Oxford University Press, 2nd ed., 2009, p. 321. Le Cannu P. et Dondero B., Droit des sociétés, Montchrestien, 3rd ed., 2009, p. 1087. II Specialized Reference and Research Series General Reference on the OHADA Issa-Sayegh J., Répertoire quinquennal OHADA 2000-2005, Association pour l’unification du droit en Afrique, p. 815. Martor B., Pilkington N., Sellers D.S. et Thouvenot S., Business law in Africa – OHADA and the Harmonization Process, Kogan Page, Eversheds, 2002, p. 355. Martor B., Pilkington N., Sellers D.S. et Thouvenot S., Le droit uniforme africain des affaires issu de l’OHADA, Litec, 2nd ed., 2009, p. 381. Simo Tumnde M., Melong J. et Monteh Tumnde P., Execution of Court Judgements, Under the OHADA Uniform Act on Simplified Recovery Procedures and Measures of Execution, PUA, 1st ed., 2013.

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Bibliography Arbitration Aka N., ‘La pratique arbitrale des institutions d’arbitrage en Afrique: le cas de la Côte d’Ivoire’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 155 et s. Amoussou-Guenou R., Le droit et la pratique de l’arbitrage commercial international en Afrique Subsaharienne, thèse sous la direction de Fouchard P., université Panthéon-Assas, Droit, Économie et Sciences sociales, 1995. Amoussou-Guenou R., ‘L’état du droit de l’arbitrage interne et international en Afrique avant l’adoption des instruments OHADA’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 9 et s. Ancel J.P., ‘Le contrôle de la sentence’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 189 et s. Bourdin R., ‘À propos du Règlement de la cour commune de justice et d’arbitrage’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 151. Dieng A., ‘La pratique arbitrale et les institutions d’arbitrage en Afrique: le cas du Sénégal’, L’OHADA et les perspectives de l’arbitrage en Afrique, coll. Droit uniforme africain, Bruylant, Bruxelles, 2000, p. 163 et s. Dossou R., ‘La pratique de l’arbitrage en Afrique’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 125 et s. Feneon A., Le droit de l’arbitrage, Commentaire de l’Acte Uniforme de l’OHADA, EDICEF, 2000. Gelinas P., ‘L’Afrique et l’arbitrage de la CCI’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 167 et s. Hascher D., ‘Les rapports entre le juge étatique et l’arbitre’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 209 et s. Jacquet J.M., ‘Le droit applicable au fond du litige dans l’arbitrage OHADA’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 101 et s.

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Bibliography Kamto M., ‘La participation des personnes morales africaines de droit public à l’arbitrage OHADA’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 89 et s. Leboulanger P., ‘Présentation générale des actes sur l’arbitrage’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 63 et s. Malle A., ‘La coopération du juge lors de la procédure arbitrale’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 185 et s. Meyer P., OHADA – Droit de l’arbitrage, Bruylant, Bruxelles, 2002, p. 284. Pougoue P.G., ‘Le système d’arbitrage de la Cour commune de justice et d’arbitrage’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 129 et s. Pougoue P.G., Tchakoua J.M. et Feneon A., Droit de l’arbitrage dans l’espace OHADA, coll. Droit uniforme, Presses universitaires d’Afrique, Yaoundé, 2000, p. 506. Sawadogo F.M., ‘Le droit OHADA de l’arbitrage’, In Mélanges Guyon, Aspects actuels du droit des affaires, Dalloz, 2003, p. 963. Sorieul R., ‘Convergences entre la CNUDCI et l’OHADA’, L’OHADA et les perspectives de l’arbitrage en Afrique, Bruylant, Bruxelles, 2000, p. 43 et s. Collection Procedures for the Settlement of Liabilities Sawadogo F.M., Acte Uniforme portant organisation des procédures collectives d’apurement du passif – Commentaires, EDICEF/Éditions FFA, 2000, p. 169. Sawadogo F.M., Droit des entreprises en difficulté, Coll. Droit uniforme africain, Bruylant, Bruxelles, 2002, p. 444. Corporations and Economic Interest Groups Anoukaha F., Cisse A, Diouf N, Nguebou Toukam J, Pougoue P.G. et Samb M., OHADA, Sociétés commerciales et du Groupement d’Intérêt Économique OHADA, coll. Droit uniforme africain, Bruylant, Bruxelles, 2002, p. 589. Ernst & Young, Droit des sociétés commerciales et du GIE – Commentaires, EDICEF/ Éditions FFA, 1998, p. 328.

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Bibliography Fidafrica – Pricewaterhousecoopers, Droit des sociétés commerciales et du groupement d’intérêt économique, Mémento, 1998, p. 376. Pougoue P.G., Anoukaha F. et Nguebou J., Le droit des sociétés commerciales et du Groupement d’Intérêt Économique OHADA, Coll. Droit uniforme, Presses universitaires d’Afrique, Yaoundé, 1998, p. 630. Sambe O. et Diallo M.I., Guide pratique des sociétés commerciales et du GIE – OHADA (schémas didactiques, modèles de statuts, de procès-verbaux et autres formulaires), Éditions comptables et juridiques, Dakar, Sénégal, 1998, p. 498. III Articles Arbitration Agboyibor P.K., ‘Présentation du Règlement et de l’Acte Uniforme relatif à l’arbitrage’, Revue de droit des affaires internationales, 1999, n 3, p. 340 et s. Amoussou-Guenou R., ‘L’arbitrage dans le Traité relatif à l’harmonisation du droit des affaires’, Revue de droit des affaires internationales, 1996, n 3, p. 321 et s. Amoussou-Guenou R., ‘L’Acte Uniforme et son environnement juridique’, Revue camerounaise de l’arbitrage, numéro spécial, October 2001, p. 11 et s. Assi Assepo E., ‘L’ordre public international dans l’acte uniforme de l’OHADA relatif à l’arbitrage’, Revue de l’arbitrage, 2007, n 4, (Ohadata D-09-02). Aurillac M., ‘L’exécution de la pratique et ses difficultés contre une partie africaine’, Revue camerounaise de l’arbitrage, 1998, n 2, p. 3 et s. Bamba A., ‘La procédure d’arbitrage devant la Cour commune de justice et d’arbitrage’, Penant, numéro spécial 833 OHADA, mai-août 2000, p. 147 et s. Bourdin R., ‘Le Règlement d’arbitrage de la cour commune de justice et d’arbitrage’, Revue camerounaise de droit, April-June 1999, n 5, p. 10 et s. Dieng A., ‘Le nouveau droit de l’arbitrage en Afrique’, Revue camerounaise de l’arbitrage, numéro spécial, October 2001, p. 20 et s. Epie A., ‘Recognition and Enforcement of International Arbitration Awards: A Comparative analysis of the New York Convention, the UNCITRAL Model Law on International Commercial Arbitration and the OHADA Regimes’ (Ohadata D-09-38). 462

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Bibliography Feneon A., ‘Un nouveau droit de l’arbitrage en Afrique (De l’apport de l’Acte Uniforme relatif au droit de l’arbitrage dans l’espace OHADA)’, Penant, numéro spécial 833 OHADA, May-August 2000, p. 126 et s. Feneon A. et Delabriere A., ‘La constitution du tribunal arbitral et le statut de l’arbitre dans l’Acte Uniforme OHADA’, Penant, numéro spécial 833 OHADA, May-August 2000, p. 155 et s. Feviliye-Dawey C.I., ‘Le dessaisissement d’une Cour suprême au profit de la Cour commune de justice et d’arbitrage’, Observations sur l’Arrêt de la Cour Commune de Justice et d’Arbitrage (CCJA) n 004/2007 du 1er février 2007, Affaire Mambo Serge c/ société SAGA-CI, Revue Congolaise de Droit et des Affaires, October-December 2009, n 1, p. 32, (Ohadata D-10-10). Hoguie C., ‘L’arbitrage et la conciliation : quels intérêts pour les entreprises?’, Mot d’introduction du Président au dîner-débat de la CACI du 11 July 2003, Actualités ­Juridiques n 64-65/2009, p. 324, (Ohadata D-10-23). Issa-Sayegh J., ‘Réflexions dubitatives sur le droit de l’arbitrage OHADA’, Revue camerounaise de l’arbitrage, numéro spécial, October 2001, p. 22 et s. Kenfack-Douajni G., ‘L’incidence du système OHADA sur le droit camerounais de l’arbitrage’, Revue camerounaise de l’arbitrage, 1998, n 1, p. 3 et s. Kenfack-Douajni G., ‘Le cadre juridique de l’arbitrage au Cameroun’, Revue camerounaise de l’arbitrage, 1999, n 4, p. 3 et s. Kenfack-Douajni G., ‘L’arbitrage CCJA’, Revue camerounaise de l’arbitrage, 1999, n 6, p. 3 et s. Kenfack-Douajni G., ‘Les mesures provisoires et conservatoires dans l’arbitrage OHADA’, Penant, numéro spécial 833 OHADA, May-August 2000, p. 137 et s. Kenfack-Douajni G., ‘La portée abrogatoire de l’Acte Uniforme relatif au droit de l’arbitrage’, Revue camerounaise de l’arbitrage, October 2001, p. 28 et s. Kenfack-Douajni G., ‘Le juge étatique dans l’arbitrage OHADA’, Revue camerounaise de l’arbitrage, 2001, n 12, p. 3 et s. Kenfack-Douajni G., ‘L’exécution forcée contre les personnes morales de droit public’, Revue camerounaise de l’arbitrage, n 18, July-August-September 2002, p. 3 et s. 463

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Bibliography Kenfack-Douajni G. et Imhoos C., ‘L’Acte Uniforme relatif au droit de l’arbitrage dans le cadre du traité OHADA’, Revue camerounaise de l’arbitrage, 1999, n 5, p. 3 et s. Kenfack-Douajni G. et Imhoos C., ‘Le Règlement d’arbitrage de la Cour Commune de Justice et d’Arbitrage de l’OHADA’, Revue de droit des affaires internationales, 1999, n 7, p. 825 et s. Khouma M., ‘Le règlement du contentieux des affaires du droit OHADA’ (Ohadata D-10-06). Lauriol T., ‘Le centre d’arbitrage OHADA: formation et effets de la convention d’arbitrage’, Revue de droit des affaires internationales, n 8, 2000, p. 99 et s. Lauriol T., ‘La langue de l’OHADA’, Revue camerounaise de l’arbitrage, Numéro spécial, October 2001, p. 28 et s. Lauriol T., ‘La naissance d’un nouveau droit de l’arbitrage en Afrique’, Revue camerounaise de l’arbitrage, numéro spécial, October 2001, p. 7 et s. Le Bars B., ‘Arbitrer un litige de droit des sociétés en droit OHADA’, Bulletin Joly Société, November 2009, n 11, p. 1036. Le Bars B., ‘Commentaire de l’arrêt n 06/0778 du 31 juin 2008 – Société Ivoirienne de Raffinage c/ Société Teekay Shipping Norway As et autres’, Revue Camerounaise d’arbitrage, 2008, n 44, p. 11 et s. Leboulanger P., ‘L’arbitrage et l’harmonisation du droit des affaires en Afrique’, Revue de l’arbitrage, 1999, p. 541 et s. Leboulanger P., ‘La reconnaissance et l’exécution des sentences arbitrales’, Penant, numéro spécial 833 OHADA, May-August 2000, p. 166 et s. Maidagi M., ‘La cohabitation des hautes juridictions communautaires en Afrique francophone (Cour commune de justice et d’arbitrage (CCJA) de l’OHADA, Cour de justice de la CEMAC et Cour de justice de l’UEMOA)’, Revue congolaise de droit et des affaires, n 1, October-December 2009, p. 23 (Ohadata D-10-11). M’bosso J., ‘Le fonctionnement du centre d’arbitrage et le déroulement de la procédure arbitrale’, Revue camerounaise de l’arbitrage, numéro spécial, October 2001, p. 42 et s. Meyer P., ‘L’Acte Uniforme OHADA sur le droit de l’arbitrage’, Revue de droit des affaires internationales, n 6, 1999, p. 629 et s. 464

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Bibliography Meyer P., ‘L’intervention des juridictions nationales et de la Cour commune: une meilleure articulation est-elle possible?’, (Ohadata D-10-04). Mouloul A., ‘L’arbitrage dans l’espace OHADA’, Conférence Internationale sur le Droit des Affaires de l’OHADA, Maison du Droit Vietnamo-Française, Hanoï (Vietnam), le 28 January 2010 (Ohadata D-10-12). Seck T.A., ‘L’effectivité de la pratique arbitrale de la CCJA et les réformes nécessaires à la mise en place d’un cadre juridique et judiciaire favorable aux investissements privés internationaux’, Penant, numéro spécial 833 OHADA, May-August 2000, p. 188. Tchakoua J.M., ‘L’arbitrabilité des différends dans l’espace OHADA’, Penant, January-April 2001, n 835. Tchakoua J.M., ‘L’espace dans le système d’arbitrage de la Cour commune de justice et d’arbitrage de l’OHADA’, Penant, April-June 2003, n 842, p. 59 et s. Tsakadi K., ‘Quelle place pour les MARC (modes alternatifs de règlement des conflits) dans l’harmonisation du droit des contrats ?’, Revue de droit uniforme, UNIDROIT, 2008, n 1/2, p. 511 (Ohadata D-09-34). Collection Procedures for the Settlement of Liabilities Assogbavi K., ‘Les procédures collectives d’apurement du passif dans l’espace OHADA’, Penant, n 832, January-April 2000, p. 55 et s. Brou K.M., ‘La protection des vendeurs de biens avec clause de réserve de propriété dans les procédures collectives: l’apport du traité OHADA’, Revue de la recherche juridique – Droit prospectif, 2001-1, p. 273 et s. Makanda L.N., ‘La liquidation des entreprises publiques en droit camerounais’, Penant, n 835, January-April 2001. Nguihe Kante P., ‘Réflexions sur la notion d’entreprise en difficulté dans l’acte Uniforme portant organisation des procédures collectives d’apurement du passif ’, Penant, n 838, p. 5 et s. Onana Etoudi F., ‘Questions pratiques liées à la suspension des poursuites individuelles dans la procédure de règlement préventif en droit OHADA’, Actualités juridiques, n 51, 2005, p. 321 (Ohadata D-09-51). 465

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Bibliography Corporations and Economic Interest Groups Agboyibor P.K., ‘Nouveau droit uniforme des sociétés’, Revue de droit des affaires internationales, n 6, 1998, p. 673 et s. Agboyibor P.K., ‘OHADA – Droit des affaires en Afrique, Chronique sur l’Avis n° 02/2000/ EP du 26 avril 2000 de la Cour Commune de Justice et d’Arbitrage’, Revue de droit des affaires internationales, 2000, n 7, p. 914 et s. Blanc G., ‘Prévenir et traiter les difficultés’, Acte du colloque sur la sécurisation des investissements des entreprises en Afrique francophone : le droit OHADA, organisé par le Centre de droit économique de l’Université Paul-Cézanne d’Aix-en-Provence le 20 mars 2009, Revue Lamy Droit civil, January 2010, n 67, p. 65, (Ohadata D-10-18). Boisseau Chartrain O., ‘Quel avenir pour les succursales des sociétés étrangères dans l’OHADA?’, Revue de droit des affaires internationales, 2000, n 3, p. 358 et s. Feneon A., ‘La mise en harmonie des statuts des sociétés anonymes en Côte d’Ivoire’, Penant, September 1999, p. 324 et s. Feneon A., ‘Les droits des actionnaires minoritaires dans les sociétés commerciales de l’espace OHADA’, Penant, April-June 2002, n 839, p. 153 et s. Feneon A. et de Chassey S., ‘La mise en harmonie des statuts des sociétés anonymes au Burkina Faso’, Revue burkinabé de droit, 1999, n 35, p. 7 et s. Homman-Ludiye L. et Djedje P., ‘Le contrôle de la gestion des SA et des SARL’, Cahiers juridiques et fiscaux de l’exportation, CFCE, 1998, n 2, p. 317 et s. Homman-Ludiye L. et Epesse H., ‘La société anonyme unipersonnelle et le Groupement d’Intérêt Économique - Deux nouvelles formes originales’, Cahiers juridiques et fiscaux de l’exportation, CFCE, 1998, n 2, p. 303 et s. Homman-Ludiye L. et Missainhoun J.E., ‘La gestion des SA et des SARL’, Cahiers juridiques et fiscaux de l’exportation, CFCE, 1998, n 2, p. 309 et s. Issa-Sayegh J., ‘Le caractère d’ordre public des dispositions de l’acte uniforme relatif au droit des sociétés commerciales et du groupement d’intérêt économique (AUSCGIE)’, Penant, n 869, p. 393 (Ohadata D-09-39).

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Bibliography Issa-Sayegh J., ‘Le sort des travailleurs dans les entreprises en difficulté (droit OHADA)’, Penant, January-March 2010, n 870, p. 80. Lecerf M., ‘La procédure d’alerte - Un nouveau moyen de prévention des difficultés de l’entreprise’, Cahiers juridiques et fiscaux de l’exportation, CFCE, 1998, n 2, p. 325 et s. Lecerf M., ‘La nouvelle réglementation de la diminution des capitaux propres: de la perte des trois quarts du capital social à la perte de la moitié du capital’, Cahiers juridiques et fiscaux de l’exportation, CFCE, 1998, n 2, p. 333 et s. Lecerf M., ‘Comment interpréter les dispositions transitoires de l’Acte Uniforme relatif au droit des sociétés commerciales et du Groupement d’Intérêt Économique?’, Cahiers juridiques et fiscaux de l’exportation, CFCE, 1998, n 2, p. 343 et s. Loukakou D., ‘Les valeurs mobilières dans l’acte Uniforme relatif au droit des sociétés commerciales de l’espace OHADA’, Penant, n 844, July-September 2003, p. 261. Martor B. et Thouvenot S., ‘La fusion des sociétés issues du droit OHADA’, Revue de droit des affaires internationales, n 1, 2002, p.47 et s. Martor B. et Thouvenot S., ‘Les acteurs des marchés financiers et l’appel public à l’épargne dans la zone OHADA’, Revue de droit des affaires internationales, n 7, 2002, p. 749 et s. Mba-Owono C., ‘Société de fait et société créée de fait : une distinction empreinte de confusion en droit uniforme OHADA, Des contrats civils et commerciaux aux contrats de consommation’, Mélanges en l’honneur du doyen Bernard Gross, p. 467 (Ohadata D-10-19). Ngnintedem J.-C., ‘Le bail commercial à l’aune du droit OHADA des entreprises en difficulté’, Revue UNIDROIT, NS, Vol. XIV/2009, p. 181 (Ohadata D-10-26). Tapin D., ‘Droit des sociétés commerciales et du GIE en Afrique’, Penant, May-August 1998, n 827, p. 186 et s. Toe Jean Y., ‘La problématique actuelle de l’harmonisation du droit des affaires’, Revue de droit uniforme, UNIDROIT, 2008, n ½, p. 23. Sambe I. et Diakhate M., ‘Regards croisés sur l’intervention du juge dans la vie des sociétés commerciales’, Revue sénégalaise de droit des affaires, January-June 2003, n 1, p. 111.

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Index

(The numbers correspond to paragraph numbers)

A

– Arbitrator, see Arbitral Tribunal – Authority to bind, 309 – Autonomy of the Agreement, 229, 261, 303 – Award • Scrutiny of, 283 • Enforcement, 251 • Exequatur, 252 • Formal Aspects, 242 • Interpretation, 244 • Correction, 285 • Recognition, 254, 255 • Signature, 284 – CCJA, 256 s. – Competence-Competence (principle), 239 – Duration, 241 – Eligible Individuals/Capacity, 223, 224 – Enforcement • Forced, 289 • Provisional, 243 – Exequatur, 252, 289 – Experts 200 – Fees, 277, 286 – Guarantees, 325 – International Centre for Dispute Resolution (“ICSID”), 298-2 et seq. – International Chamber of Commerce (“ICC”), 298 et seq. – Lex Societatis, 310 – London Court of International Arbitration (“LCIA”), 298-12 – LCI-MIAC, 298-12 – Price, 323

Abuse (of rights) – By majority, 211 – By minority, 215 Accordion squeeze, 462 Action – Individual, 133 – Corporate ut singuli, 131 – Corporate ut universi, 131 Affecto Societatis, 49 Agreement to Incorporate, see Company Annual Accounts – Role of Statutory Auditor, 157 – Determination of, 154 – Dividend, 162 • Fictitious dividend, 163 – Exercise, 155 – Mandatory Reserve, 159 – Accounting Rules, 154 – Carryover, 161 Arbitration: – Applicable Law, 279 – Arbitrability, 302 – Arbitral Tribunal • Resignation and Replacement, 270 • Diplomatic Immunity, 269 • Imparity / Number, 231, 263 • Freedom of choice, 232, 233 • Quality of arbitrators, 235, 268 – Arbitration Agreement • Uniform Act on Arbitration, 225 • CCJA Arbitration, 258 • Enforceability, 311, 313 • Transmission of, 312, 314

469

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Index – Procedure, 275 – Proceedings • Public Procedural Order, 237 – Remedies against the award • Setting Aside, 247, 295 • Appeal, 292 to 294 • Pourvoi en Cassation, 248 • Review / Revision, 249, 296 • Third party proceedings, 249, 295 – Request, 272 – Stipulation for benefit of third party, 326 – Uniform Act • Scope, 222 • Eligible Persons, 223 Assembly of Bondholders see Obligations

B

Bare Ownership see Partner Benefit see Annual Account Board of Directors, see Société Anonyme Branches – Definition, 710 – Registration, 712 – Transformation, 713 – Typology, 711

C

Carryover, 161 Chief Executive Officer, 375-2 Co-General Director, 375-3 Common Law – Of Corporations, 20 Company – Agreement to Incorporate, 22 – By-laws • Failure to satisfy formalities, 66 • Form, 64 • Mandatory Clauses, 64

– – – – –

Capacity, 26 Consent, 24 Contributions, see Contributions Corporate Headquarters, 57 Corporate Purpose • Commercialization, 29 • Legality, 30 • Particularity, 31 – Duration, 61, 62 – Incorporation, 21 – Legal Affairs Journal, 78 – Legal Entity, 52 – Operation, 117 s. – Nullity see Nullities – Ratification • Automatic, 84 • By Registration, 85 • By Special General Assembly, 85, 86 • Conditions, 82 – Registration, • Certificate, 76 • Failure, 72 • Formalities, 74 • Request, 75 • Timing, 74 – Share Capital • Composite Elements, 58 • Changes, 59 – Simulation, 25 – Tax Registration, 77 Contributions – Fictitious, 35 – In Kind, 49 – In Cash, 37 – Making of, 37, 38 – Moratory Interest, 38 – Notarial Statement of Subscription and Payment of, 69, 70

470

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Index Obligation to Provide, 34 Of Service, 41 Realization, 68 Responsibility of; • Founders and First Managers, 113 • Bank, 37 – Restitution, 72 – SARL, 554 – Valuation, 40, 343 Consultation, written – SARL, 586 Cooperative organizations, 646-1 et seq. Corporations, 16 Corporate Associates, 28 Corporate Groups – Definition, 701 to 703 – Subsidiary, 705 – 100% subsidiary, 687 – Common Subsidiary, 706 – Participation, 704 – Fiscal framework, 707 to 708 Corporate Purpose, 54 Creditor, – General Pledge, 4 – Opposition Rights, 185, 465, 520, 691

– Corporate Purpose, 176 – Decision by Shareholders, 179 – GIE, 644, 645 – Just Reasons, 180 – Opposability, 184 – SA, 492 – Single Shareholder, 185 – Société en Commandite, 628 – Société en Participation, 618, 619, 653 Dividend, see Annual Accounts

– – – –

D

De facto Corporation – Operation, 656, 657 – Proof of Existence, 655 Declaration – Notary’s subscription and deposit declaration, 69, 70, 450 – In other business organizations, 71 Dissolution – Anticipated decision, 179 – Causes, 174 – Completion of Term, 175

E

F

G

Equity – Equity less than half of share capital, 48, 468 to 474 Expertise in Management, – Management Act, 198 – Conditions for appointment, 197 – Expert • Procedure for nomination, 199 • Scope of duty, 200 – Power of competent Judge, 200 Exequatur, 252

Founders – Civil liability, 111 – Criminal Liability, 114

General Meeting, see Corporation General Director, 375-3 GIE – Capital, 635 – Contract of a GIE, 632 – Creation, 629 – Directors, 638, 639 – Dissolution, 645 – Issuing of Bonds, 641

471

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Index – Members, 633 to 638 – Quorum and Majority, 636 – Transformation, 643

I

Incapacity, 26 Incorporation, see Companies Inequitable Clauses, 45 Interest, Moratory see Contributions

J

Journal (of Legal Affairs), 78

L

Lex Societatis, 308 Legal Entity Directors, 354, 371 Liquidation – Closing of, 188 – Judicial, 181 – Mission of the Liquidator, 187 – Voluntary, 185, 186 Losses, Contributions to, 46

M

Manager – Appointment, 120, 352, 375-2, 377, 563 – Definition, 120 – Dismissal, 356 – Liability • Civil, 126 • Corporate Action, 131 • Management Errors, 128 • Criminal, 137 – Powers, 122 Management Report, 156 Member States (party to the OHADA) – List, 1 – Subject to business law, 14 Mergers, see Restructuring

Mission ad hoc, 205 s. Minors, 26

N

Negotiability, 5, 424, 425 Nullities – Corporate Acts, 89 – Decisions/deliberations, 90 – Limitation, 105 – Non Retroactivity, 107 – Of form, 99 – Opposability, 97 – Purpose and cause of corporate contract, 98 – Regularization, 100 – Restructuring, 700 – Substantive, 92 – Third Party Opposition, 106 – Vitiating factors, 94, 95

O

Obligations – Definition, 507 – Issuing of, 506 – Mass/ General • Assemblies, 519, 520 • Rights, 515 • Information, 521 • Representation, 517, 518 • Collateral, 523, 524 – Reimbursement and Buyback, 513 OHADA (Member States), 1

P

Partial Transfer of Assets – See Restructuring Partners (See also Shareholders) • Inequitable Clauses, 45 • Contributing to Losses, 46

472

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Index • Political Rights, 143, 400, 515, 569, 636 • Pecuniary Rights, 145 • Equality, 43 • Married Spouses, 27 • Management Expertise, 197 • Minors, 26 • Bare Ownership, 149 • Legal Persons, 28 • Société en Participation, 648 s. • Usufruct, 151 • Defects of Consent, 24 Preferential Right of Subscription – Issuing stock to increase capital, 547 – Negotiability, 439 – Reducible Right, 440 – Renunciation, 438 – SA, 434 – Suppression, 437 Provisional Administration, 204 s. Public Offering of Securities – Idea / Notion, 535 s. – Information, 541 to 543 – Particular Advantages, 548 – Preferential Right of Subscription, 549 – Sanctions, 551, 552 – Scope, 534 – Targeted Corporations, 537 – Visa, 545 Public Policy, 12

R

Restructuring, – Annulment, 700 – Auditor’s Inspection, 681 – Bondholder Creditors, 694, 695 – Challenges and Incentives, 660 to 662

– – – –

Creditors’ Rights, 690 to 695 Decisions, 682 to 686 Definitions, 664 to 665 Dissolution of Absorbed Company, 672 – Effective Date, 697 – Labour Law, 671 – Mergers, 661 – Partial Asset Transfer, 663 – Process and Contribution, 678 – Public Corporations, 674 – Regularization, 699 – Report (of Board of Directors), 680 – Scission, 661 – Simplified Restructuring Procedures, 687 – Title Exchange, 670 – Trans-boundary Transactions, 676 – Universal transfer of Assets, 667 to 679 Retained Earnings, – Mandatory, 159 – Optional 160

S

SA, see Société Anonyme SARL, see Société à Responsabilité Limitée Scission, see Restructuring Securities – Shares, 498 s. – ’Dry’ goods, 527 – Compounded, 525 to 530 – Indivisibility, 152 – Pledging, 427 – Notions, 496 – Bare Ownership, 148 – Usufruct, 151 – Status, 495 – Rights and obligations, 515 to 524

473

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Index Shareholders – Allocation of shares, 499 – Dividend, 503 to 504 – Information, 401 – Political Rights, 400, 501 – Proxy, 412 – Voting, 406 to 411 – Written Questions, 404 Shareholder Agreements, 42 Société Anonyme • Board of Directors • Security, Approvals, Guarantees, 359 • Composition, 350 • Convening Methods, 367 • Meeting Locations, 368 • Powers, 358 • Presidency, 371 • Board’s Minutes, 375 • Proxy, 372 • Quorum and Majority, 373 • Distance Meetings, 368, 369 – Clauses, 333 – Contribution of Funds, 335 • Changes in Capital, 59 • Freeing corporate capital, 338 • In Kind, 39, 335 s., 343 s., 455 s. • Subscription Form, 337 – Directors • Board Vacancies, 365 to 366 • Dismissal, 365 to 357 • Duration of term of office, 355 • Multiple mandates, 362 to 364 • Requirements, 351 • Special Delegation, 360 – Dissolution, 492 – General Administrator

–

– –

–

–

– –

• Delegating, 380 • Nomination, 377 • Powers, 379 to 380 • Salary, 381 • Several Offices, 382 • Term of Office, 378 General Assembly • Annulment, 410 • Calling (the General Assembly), 408 • Delegation of decision to increase capital to Directors, 435 • Extraordinary, 418 • Ordinary, 417 • Order of Business, 411 • Minutes, 416 • Place, 413 • Special, 418 Incorporation, 332 s. Increase in Capital, 430 s. • Accordion Squeeze, 462 • Compensation, 449 • Liberation, 447 • Publishing an Opinion, 445 • Reports, 443 to 444 • Share Price, 442 • Subscription Bulletin, 446 Reconstituting Shareholder’s Equity • Failure, 473 to 474 • Modalities, 469 • Procedure, 470 to 472 Reduction of Capital • Procedure, 464 to 464 • Creditors’ Objections, 465 to 466 • Criminal Sanctions, 467 Share Buyback, 475 to 487 Transformation, 488 to 491

474

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Index Société à Responsabilité Limitée – Contribution in Kind, 557 – Corporate Capital, 556 – Corporate Name, 561 – General Assembly • Written Consultation, 586 • Minutes, 585 • Quorum and Majority, 583, 584 • General Meetings, 575 to 579 – Incorporation, 554 – Managers • Appointment, 563 • Compensation, 564 • Responsibility, 566, 567 • Removal and Resignation, 565 • Status, 563 – Reconstituting Respective Capital, 558 – Regulated and Prohibited Agreements, 596 to 599 – Shares • Dividend, 568 • Right to transfer shares, 590 to 592 – Shareholders, 555, 568 s. Société en Commandite Simple – Dissolution, 628 – Management, 623, 624 – Required Text, 622 – Shareholders, 625 to 627 – Transfer of shares, 625 Société en Nom Collectif – Choosing of, 610 – Collective Decisions, 615 to 617 – Corporate Capital, 611 – Dissolution, 618, 619

– Management, 612, 613 – Transferring shares, 614 Société en Participation • Dissolution, 653 • Indivisibility, 651 • Relationship with Third Parties, 652 • Shareholders, 650, 651 • Status, 647, 648 Statutory Auditors – Annual Report, 157 – Appointment • In SA, 383, 387 • In SARL, 593 to 595 – Dismissal, 398 – Duty to denounce, 394 – Length of terms of office, 386 – Liability, 392, 393 – Obligations, 390 – Obstruction, 391 – Professional Secrecy, 397 – Report, 394, 395 – Restructuring, 681 Warning, 192

T

Transformation – Consequences • For Auditors, 170, 171 • For Managers, 170 • For Corporate Creditors, 172 – Effective Date and Publication, 168 – Special Formalities for SA and SARL, 167, 488 s. – GIE, 642 to 644 – Procedure, 166

475

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Index – Branches, 713 – Survival of the legal personality, 169 Transitional Clauses, 20

U

Undivided Shareholders’ Rights, 152 Universal Transfer of Assets, see Restructuring Usufruct, 151

W

Warning – Statutory Auditor, 192 – In the SA, 193 – In the SARL, 194

476

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