Africa Organisation for the Harmonisation of Business Law in Africa (OHADA)

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[co-authors: Olivier Bustin, PhD]

Clarifications on the Member States’ discretionary powers in adopting domestic legal provisions that are consistent with the Uniform Acts

The Government of the Republic of Côte d’Ivoire sought to clarify whether OHADA Member States (Member States) retain the powers to enact new legislation with respect to the domestic commercial law legislation. Whilst the issue has been considered before the Abidjan-based Court of Justice and Arbitration (CCJA), the Republic of Côte d’Ivoire’s view is that Member States may enact new domestic commercial legislation provided that such legislation does not contradict, in form, substance, or spirit, the provisions of the Uniform Act adopted by the OHADA (as provided for in the CCJA, Opinion, 30 April 2001, nº 001/2001/EP).

By way of example, Côte d’Ivoire Law nº 2015-903 of 30 December 2015 (Law 903) lowered the share capital threshold requiring the board of directors' approval in instances where corporate officers or shareholders wish to contract with the company (directly or otherwise) to 5 per cent (of the total share capital of the company). The Ivorian legislator had presumably considered that this law, although more onerous than that of Article 438 of the Uniform Act of Corporate Companies Law (AUDSCGIE), was nonetheless valid because it was not contrary to AUDSCGIE.

However, this Ivorian law was problematic. Although the supervisory power conferred on the board of directors was not circumvented, when it is exercised more strictly than provided for in AUDSCGIE, this reinforced supervision has the effect of contradicting or hindering the recognised right granted to shareholders and corporate officers to enter into agreements with the company that are not subject to prior authorisation (by the board of directors). This contradiction or hindrance should have sufficed to declare the provisions of Law 903 contrary to those of AUDSCGIE.

However, the CCJA (as provided for in its Opinion, 16 February 2017, nº 002/2017) does not take up this interpretation and instead states that any domestic (commercial) legislation which has not been authorised by the relevant AUDSCGIE authority is incompatible with it, even when it is identical to a provision of the AUDSCGIE (or it can be implicitly deduced that it is the same). In other words, Member States may only change their domestic legal order within the limits of the specific exemptions granted to them in terms of AUDSCGIE. For this purpose and in the present case, the AUDSCGIE does not foresee any exemptions to Article 438.

In the event that AUDSCGIE is silent on a particular aspect of commercial law, would this result in Member States being prohibited from enacting legislation that deals with these particular aspects, as this legislation would in any event first have to be authorised by AUDSCGIE? If this is the case, it would appear that the relevant AUDSCGIE authority would have overreaching powers.

Such an approach is perilous, when no clear guiding principle is stated in AUDSCGIE (with regard to the authorisation of domestic commercial legislation of Member States by AUDSCGIE). By way of example, AUDSCGIE is silent on the (i) possibility of having staff representatives appointed to the board of directors, (ii) granting of all or part of the employees of a company stock options, and (iii) transfer of the registered office of a company domiciled in a third-party State to a Member State. Accordingly, does this mean that OHADA law prohibits Member States from enacting domestic law on these aspects? We hope that this is not the case. If so reform of AUDSCGIE would be necessary to deal with this lacuna in the law.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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