OVERVIEW
Secretariat of the Organization for the Harmonization of Business Law in Africa


The Treaty on the Harmonization of Business Law in Africa was signed in Port Louis on 17 October 1993.

The main objective of this treaty is to remedy the legal and judicial insecurity that prevails in Contracting States by modernizing and harmonizing business law in member States.

So far very few reforms have been carried out; each State enacted laws without taking into account laws of Franc Zone States. Indeed most of these laws date back to the colonial era and obviously are no longer consistent with the present economic situation and international relations. Furthermore, ordinary citizens and law professionals find it difficult to know the legal instruments in force.

In addition to restoring the legal and judicial security of economic activities in order to reestablish investors' confidence and to facilitate trade between Contracting States, the Treaty has the following objectives:

  • putting at the disposal of each State common rules that are simple and adapted to the economic situation;
  • promoting arbitration as a speedy and discreet instrument for settling commercial disputes;
  • improving the training of judges and auxiliary officers of justice;
  • encouraging the setting up of an African Economic Community.

As of 1 July 1999, fifteen States were members of the Organization for the Harmonization of Business Law in Africa: Benin, Burkina Faso, Cameroon, the Central African Republic, Côte d'Ivoire, Congo, Comores, Gabon, Guinea, Guinea Bissau, Equatorial Guinea, Mali, Niger, Senegal, Chad and Togo. It is likely that the Republic of Guinea (Conakry) will be the 16th State to ratify the Treaty.

OHADA's area of jurisdiction goes beyond the borders of the Franc zone since "any OAU member and non-signatory State shall be free to become a contracting party. Also, any other OAU non-member State may become a contracting party thereto where all the Contracting States so agree" (Article 53).

OHADA comprises four institutions responsible for the formulation and implementation of the new common law.


It adopts by unanimous vote "uniform acts" which are directly applicable in each of the internal laws of the Contracting States. It meets at least once a year upon notification from the Chairman, such notification being issued on his initiative or on the initiative of a third of the Contracting Parties. The chair of the Council is vested in turn in each Contracting State for a duration of a year.

The Permanent Secretariat which is attached to the Council of Ministers, is responsible for the preparation of Uniform Acts in consultation with the governments of Contracting States, for the coordination of activities and monitoring of the organization's works. It mainly prepares the annual business law harmonization programme and is responsible for the publication of OHADA's Official Gazette.

Its headquarters is in Yaounde (Cameroon)
Address: P.O. Box 10071 Yaounde
Tel/Fax: (237) 21 67 45

The Permanent Secretary is Mr. Aregba Polo (Togo) who was appointed by the Council of Ministers in September 1996 for a four-year term of office.

The school is attached to the Permanent Secretariat. It is responsible for the training and further training of judges and auxiliary officers of justice of Contracting States in the new harmonized business law.

Its headquarters is in Porto-Novo (Benin)

Address P.O. Box 967 Cotonou
Tel. (229) 22 43 67/22 44 11
Fax: (229) 31 34 48

The Director of ERSUMA is Mr. Timothée Some (Burkina Faso)

It comprises of seven judges elected for seven years, reeligible once, from among the nationals of the Contracting States. The Court elects its President and 2 (two) Vice-Presidents from among its members for a non-renewable period of three years six months.

The Common Court of Justice and Arbitration is presided over by Mr. Seydou Ba (Senegal) and comprises:

  • Mr. Jacques Mbosso (Central African Republic), first Vice-President;
  • Mr. Antoine Olivera (Gabon), second Vice-President;
  • Mr. Joao Aurigemma Cruz Pinto (Guinea-Bissau);
  • Mr. Boubacar Dicko (Mali);
  • Mr. Mainassara Maidagi (Niger);
  • Mr. Doumssirimbaye Bahdje (Chad).

The Common Court of Justice and Arbitration has the following attributions:

  • it is consulted for its advisory opinion on draft uniform acts before their submission and final adoption by the Council of Ministers, and also on the interpretation and application of uniform acts,
  • it is judge of annulment in place of the national supreme courts for every dispute relating to the uniform law; matters may be referred directly to the court by one of the parties to proceedings before a national court or may be brought to it by referral from a national court;
  • it organizes and supervises the proper functioning of arbitration proceedings: it appoints or confirms arbitrators, is apprised of the progress of proceedings and examines draft awards, for which it may only propose procedural changes.

The headquarters of the Court is in Abidjan (Côte d'Ivoire)

Address: 01 BP 8702 Abidjan 01
Tel: (225) 32 83 60/32 38 01
Fax: (225) 33 12 59

The President of the Court is Mr. Seydou Ba

Instruments to adopt the common rules are termed "uniform acts". "Preliminary draft uniform acts shall be notified by the Permanent Secretariat to the Governments of the Contracting States which shall have 90 (ninety) days from the date of reception of the notification to forward their written observations to the Permanent Secretariat" (Article 7(1)).

The preliminary draft uniform act, together with the observations of the Contracting States and a report by the Permanent Secretary is then forwarded to the Joint Court of Justice and Arbitration which has to give its recommendation within 30 (thirty) days. The final text is adopted by the Council of Ministers by unanimous decision of the representatives of the Contracting States present and voting.

Barring special provisions, uniform acts enter into force 90 (ninety) days after their adoption by the Council of Ministers of Justice and Finance. They must be published in the Official Gazette of OHADA and also in the Official Gazette of each of the Contracting States.

The uniform acts are directly applicable and obligatory in Contracting States, notwithstanding any contrary provisions of a previous or subsequent internal law.

On 17 April 1997, the Council of Ministers adopted the first three uniform acts which came into force on I January 1998 following a waiver to the Treaty. They are:

  • Uniform Act relating to General Commercial Law;
  • Uniform Act relating to Commercial Companies and Economic Interest Groups;
  • Uniform Act Organizing Securities.

Two new Uniform Acts were adopted by the Council of Ministers of 10 April 1998:

  • Uniform Act Organizing Simplified Recovery Procedures and Measures of Execution, which shall enter into force (90) ninety days after its adoption, pursuant to the provisions of Article 9 of The Treaty on the Harmonization of Business Law in Africa;
  • Uniform Act Organizing Collective Proceedings for Wiping off Debts, which shall enter into force on 1 January 1999, notwithstanding the provisions of Article 9 of the Treaty.

Finally, with regard to arbitration and to the functions of the Common Court of Justice and Arbitration, one Act and two Rules of procedure have been adopted:

  • Uniform Act on arbitration under the OHADA Treaty (11 June 1999);
  • Rules of Arbitration of the Common Court of Justice and Arbitration;
  • Rules of procedure of the Common Court of Justice and Arbitration.

Before the adoption of the Uniform Act Relating to General Commercial Law by the Council of Ministers on 17 April 1997, trading was governed by very diverse rules both as to their sources (laws, decrees, ordinances, etc.) and their object. The Uniform Act which is close to the economic reality and the life of companies should foster trade and make it safe between economic operators.

This Uniform Act which contains 289 articles comprises, in addition to final provisions, five books dealing respectively with:

  • the status of trader;
  • the trade and personal property credit register;
  • the commercial lease and business;
  • trade middlemen; and
  • commercial sale

The scope of the act is very wide as it applies to every trader, be he a natural person or a corporate body, as well as to every economic interest group whose place of business or registered office is situated on the territory of one of the Contracting States to the Treaty on the Harmonization of Business Law in Africa.

The Uniform Act adopts the classical definition of trader and commercial transactions, while excluding from the list of commercial transactions contracts between "dealers and traders". In contrast, the list includes the exploitation of natural resources, the transactions of middlemen and telecommunication operators. This book also contains provisions relating to the capacity to trade, the accounting obligations of the trader and the limitation of obligations resulting from commercial transactions.

The Trade and Personal Property Credit Register is no longer a simple catalogue without legal impact: it receives the registration of natural persons and corporate bodies as well as entries of amendments and of movable securities.

In fact, there are many trade registers: national registers kept by the registry of the competent court and a regional register that centralizes information contained in each national card-index which is kept at the Joint Court of Justice and Arbitration.

For most of the Contracting States, the Uniform Act is an important innovation as it contains provisions relating to the entry of movables.

A commercial lease is any agreement, even unwritten, between the owner of immovable property and any natural person or corporate body allowing the latter to carry on any commercial, industrial, handicraft or professional activity on the premises with the consent of the owner.

The Uniform Act regulates the obligations of the parties, the fixing of rents and transfer and sub-tenancy conditions, while allowing the parties the liberty to conclude a lease for a specified or an unspecified duration. The right to renew a lease is reserved only for the lessee who shows proof of having carried on the activity provided in the lease for a period of at least two years.

A business comprises a series of resources that enable a trader to attract and maintain customers. It obligatorily comprises customers and a sign or trade name and may comprise movable property (furniture, goods and equipment) and immovable property (right to a lease, operation licenses and patents).

A business may be run directly or within the framework of a management lease contract. The manager under lease has the status of trader.

A trade middleman, who is a trader and may be a natural person or a corporate body, is a person who has the power to act or who intends to act, on a regular basis and as an occupation, on behalf of another person, called the principal, for the purpose of concluding a commercial sales contract with a third party.

The Act makes a distinction between three types of middlemen in business:

  • the commission agent, who is a person who undertakes in his own name to carry out, but on behalf of a principal, the sale or purchase of goods, for a commission;
  • the broker, whose habitual occupation is to put people in contact in order to facilitate or to bring to the successful conclusion of conventions, deals, agreements or transactions between them;
  • commercial agents, who are authorized agents whose occupation is to permanently negotiate and eventually conclude contracts of sale, purchase, hire, or provisions of services on behalf of and on the account of producers, industrialists, traders or other commercial agents, without being bound to them by a contract of employment.

The Act defines the role, the powers, the legal import of transactions and the conditions of remuneration of commercial agents.

Provisions relating to commercial sale apply to contracts of sale of goods between traders, be they natural persons or corporate bodies and not to sales to consumers, sales after seizure, auction sales and to sales of chattels, negotiable instruments, currencies or foreign exchange.

The Uniform Act also provides for:

  • rules governing the establishment of a contract of sale;
  • the seller's obligations: delivery, merchantability and guarantee;
  • the buyer's obligations: payment of price and taking delivery;
  • penalties for the non-respect of the contractual obligations of the seller and the buyer, as well as exoneration from liability, effects of termination of contract and barring by limitation;
  • effects of contract: transfer of risks and ownership. The Uniform Act introduces the ownership reserve clause, that is the possibility for the parties to postpone the transfer of ownership to the day of complete payment of the contract price.

The Uniform Act is divided into one preliminary chapter which defines its scope of application and four parts dealing respectively with general provisions governing commercial companies, special provisions relating to each form of commercial company, penal provisions, and final and transitory provisions.

Every commercial company, including those in which a State or a corporate body governed by pubic law is a partner, whose registered office is located on the territory of one of the Contracting States shall be subject to the provisions of this Uniform Act.

The first part comprises nine books dealing respectively with:

  • the formation of a commercial company;
  • the functioning of a commercial company;
  • the civil liability of company executives;
  • legal links between companies;
  • the transformation of a commercial company;
  • merger-scission and partial transfer of assets;
  • the dissolution-liquidation of a commercial company;
  • the nullity of a company and company acts; and
  • formalities-publication.

This part contains important innovations, namely:

  • a commercial company may be formed by a single person, referred to as a "sole proprietor", on the basis of a written document: a private limited company and a public limited company may therefore have a single shareholder;
  • the registered office may not consist solely in a postal address, but shall be localized by an address or a specific and adequate geographic indication;
  • the procedures for making a public call for capital are the subject of a separate title. Companies whose shares are listed on the stock exchange of a Contracting State as well as 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 shall be deemed to be making a public call for capital;
  • auditors henceforth play an important audit role in the functioning of commercial companies: an auditor may ask for explanations from the manager, who shall be bound to respond, in respect of any matter likely to jeopardize the continued operation of the company and which he noticed while examining documents forwarded to him or those he had access to in the performance of his duties.
  • the notion of consortium is acknowledged: control shall be presumed where a company holds more than half of the voting rights of another company either directly or by virtue of an agreement concluded with other partners of the company.

Any person, whatever his nationality, wishing to engage in a commercial activity in the form of a company in one of the Contracting States shall choose one of the forms of company provided for by the Uniform Act.

Private company

A private company shall be a company in which all the partners are traders and have unlimited liability for the company's debts. The registered capital shall be broken down into shares of the same face value.

Sleeping partnership

A sleeping partnership is a partnership in which one or more partners indefinitely and 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.

Private limited company

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 shares in the capital of a company. It may be formed by a natural person or a corporate body, or by two or more natural persons or corporate bodies. The minimum registered capital of a private limited company shall be one million CFA francs.

Public limited company

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. A public limited company may have only a single shareholder. The minimum authorized capital of a public limited company shall be fixed at ten million CFA francs, with shares of a face value of not less than ten thousand CFA francs.

Joint venture

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. 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.

De facto partnership

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 described above.

Economic interest group

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. It shall not by itself give rise to the realization or sharing of profits.

This part defines the various offences relating to the formation of companies, to the management, administration and directing of companies, to general meetings, to variation of the capital of public limited companies, to the audit of companies, to the dissolution and liquidation of companies and to public calls for capital.

The Uniform Act does not deal with penalties to be imposed as they have to be determined by the various national legislations.

The provisions of this Uniform Act shall be applicable immediately for companies formed from the date of entry into force of the Uniform Act and within a period of two years for companies formed before this date and which have to harmonize their Articles Association through amendments to their former Articles of Association or by adoption of new Articles of Association.

This uniform act is an important amendment as well as a considerable revision of the provisions hitherto applicable in the Contracting States which, with the exception of Senegal, had not amended the law on securities inherited from the Napoleonic Code of 1804.

It defines in a general manner the notion of security. It contains 151 articles which treat in 6 distinct titles collateral securities, transferable guarantees, mortgages, the distribution and classification of securities and lastly, final provisions.

Securities are the means offered a creditor by the law of each Contracting State or by agreement between the parties to guarantee the execution of obligations, whatever their legal nature may be.

Collateral security consists in an undertaking by one person to be answerable for the obligation of the principal debtor in case of the latter's default or at the first call of the beneficiary of the guarantee.

A secured debt consists in the right of a creditor to ask for payment, preferentially, from the proceeds of the sale of personalty or realty used to guarantee his debtor's obligation.

Surety-bond

A surety-bond is a contract in which the guarantor undertakes, and the creditor accepts, to perform the debtor's obligation if the latter fails to perform it himself, possibly without the debtor's authority and even without his knowledge. All surety-bonds are joint and several with the principal debtor unless otherwise stipulated by agreement or by an express legal provision. The commitments of the guarantor should be defined precisely.

Letter of guaranty or counter-guaranty

A letter of guaranty is an agreement by which the guarantor undertakes to pay a fixed amount to the beneficiary on the latter's first call.

A counter-guaranty letter is an agreement by which the counter-guarantor undertakes to pay a fixed amount to the guarantor on the latter's first call.

Guaranty and counter-guaranty agreements must be recorded in writing and may not, under penalty of being declared void, be subscribed by natural persons.

Possessory lien

A creditor in legitimate possession of the debtor's property may hold it until he receives full payment of what is owed him, on condition that this right be exercised before any seizure, that the claim be unquestionable, liquid and due, and that there exist a link between the debt and the asset held. The link is deemed established where the holding of the asset and the debt result from business dealings between the creditor and the debtor.

Pledge

A pledge is a contract in which personal property, tangible or intangible, is offered to the creditor or a third party agreed upon by the parties as security for the payment of a debt. A pledge may be constituted for past, future or possible debts, provided they are not voidable.

Pledging without dispossession

The following may be pledged without dispossessing the debtor:

  • partnership rights and transferable securities,
  • a business,
  • professional equipment,
  • motor vehicles, and
  • stocks of raw materials and merchandise.

General and special liens

General liens confer on the holder a preferential right on the assets of the debtor or on some of the assets only, for example:

  • a lessor of a building has a lien over the furniture of the rented premises;
  • a carrier by land has a lien over the transported property, on condition that there be a link between the property transported and the debt.

A mortgage confers on its holder a right of pursuit and a preferential right. A distinction is made between contractual mortgages, resulting from an agreement, and forcible mortgages which are granted by law or by a court ruling.

The Uniform Act provides for separate classification for transferable securities and real property securities by listing the order in which they should be distributed.

Any security granted, established or created prior to this Uniform Act and in conformity with the laws then in force remains subject to that law until its extinguishment.

By adapting to the existing economic structures and striving to clarify the applicable instruments, this Uniform Act is without doubt the one which brings in the highest number of modifications.

The Uniform Act on debt recovery and enforcement sets out the legal proceedings that the creditor can rely upon to force his debtor to meet his commitments (payment of a sum of money, obligation to deliver a good or to hand it back).

The text deals with two different procedures: simplified debt recovery and seizure of property (distraint) procedures. It institutes quick, inexpensive and efficient methods of debt collection such as the injunction to pay (writ of execution issued by the judge against the debtor, in favour of the creditor) and the restitution procedure, which will be a strong protection for the unpaid creditor.

The Uniform Act relating to bankruptcy and insolvency, organizes the prevention of difficulties experienced by businesses and ensures the protection of sustainable businesses through preventive settlement procedures, especially intended for those businesses which have strong chances of financial recovery. A business in difficulty is entitled to make a settlement proposal which may be either approved or rejected by the competent jurisdiction. In the latter case, bankcruptcy proceedings will ensue. The Act lays down a judicial recovery procedure in the case of insolvent debtors and sets out rules with regard to corporate manager's responsabilities and obligations.

Framed on the UNCITRAL Model Arbitration Law, the Uniform Act applies to all arbitrations whose seat is located in one of the OHADA member States, whether the arbitration involves parties from a OHADA country or from a foreign State. Modern and flexible, its purpose is to promote arbitration as an efficient means to settle disputes. The Act is completed by the Rules of Arbitration of the Common Court of Justice and Arbitration which sets out the functions of the Court with regard to arbitration and other jurisdictional matters.


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Published by Juris International, 2000
Juris International