Before Establishing a Private Limited Liability and Join Stock Companies in D.R. Congo under OHADA Law
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This article discusses about the Join stock companies and the Private Limited Liability Companies in Democratic Republic of Congo under OHADA law.
The DRC is part of the Organization for the Harmonization of Business Law in Africa, known as “OHADA”, which establishes a modern and common legal framework for business activities directly applicable its Member States.
The different business vehicles recognized under the OHADA legal framework may be summarized as follows:
1. Private Limited Liability Companies (société à responsabilité limitée or “SARL”);
2. Join stock companies (sociétés anonymes or “SA”);
3. Unlimited liability companies, which may be further categorized as either:
3.1. société en nom collectif or “SNC” which is a kind of private partnership where all the shareholders have commercial status and are jointly liable for the company’s debts;
3.2. société en commandite simple which is a type of sleeping partnership;
3.3. société en participation which is very flexible type of joint venture, unregistered and without its own corporate personality;
3.4. société de fait which is a “ de facto Partnerships”, where two or more individuals or corporate bodies act as if they were in partnership without having properly formed between themselves one of the types of company recognized by the Uniform Act.
4. Branch of foreign companies. It is important to take note that the OHADA Uniform act on company law states that within two years of his creation, the branch of the foreign company must be paid up in the share capital of an existing DRC legal entity or a DRC legal entity to be created. The Ministry in charge of trade may discharge a foreign from its obligation of transforming into a subsidiary by an executive order upon request of the branch.
In this article, we will only discuss about the Join stock companies and the Private Limited Liability Companies.
II. Limited Liability Company [Societe a Responsabilite Limitee - SARL]
2.1. Management of the Limited Liability Company [Sarl]
The Sarl is managed by one or more managers (known as “gérants”) who may be chosen either by the articles of association or during the life of the company, by the majority of shareholders holding more than one-half of the registered company.
2.2. Collective decisions
Collective decisions are generally taken at general meetings. However, it should be mentioned there is a possibility to provide for a written consultation, in the articles of association.
A general meeting must be held each year within six months from the closing date of the financial year. In addition, one or more shareholders holding one-half of the company’s shares, or at least one-quarter of the shareholders in number holding at least one-quarter of the company’s shares, may request the convening of a meeting at any time.
2.3. Statutory auditors
At least one (1) statutory auditor must be appointed in an SARL when one of the following three conditions is met:
- its share capital exceeds 20,000 USD;
- the annual turnover exceeds 500,000 USD;
- the permanent staff exceeds 50 employees.
When none of the above criteria is fulfilled, the appointment of a statutory auditor is optional.
III. Joint Stock Companies [Societes Anonymes or “SA”]
3.1. Management of the SA with a board of directors (2 options)
- Board of directors with a chairman of the board also acting as chief executive officer (CEO) and eventually assisted by one or more deputy general managers;
- Board of directors with a chairman of the board assisted by a general manager acting as CEO.
3.2. With a sole managing director acting as a CEO, assisted if required by one or more deputy managers
The share capital of a SA may be held by a unique shareholder. In this case, the SA is managed by a sole managing director assisted by a deputy managing director. There is no board of directors.
3.3. Boards Meetings: Quorum and majority
There is no obligation under the Uniform Act as to the number of board meetings to be held each year, save for the approval of the company’s accounts for each financial year.
In general, all decisions are to be taken by a majority of the members of the board present. However, it is worth mentioning the possibility of providing for an increased majority vote in the articles of association.
3.4. Restriction of number of offices held
No person may simultaneously hold more than three offices as managing directors in an SA having their registered offices in the territory of the same member state of OHADA Likewise, it is prohibited to hold the position of chair person concurrently with the post of managing director or general manager on more than two SAs which have their registered office on the territory of the same member state.
3.5. Statutory auditors
The appointment of a statutory auditor (Commissaire aux comptes) and a deputy statutory auditor is mandatory in an SA.
When the SA makes public offerings two statutory auditors and two deputy statutory auditors should be appointed.
ABOUT THE AUTHOR: Prof. Dr. Joseph Yav Katshung
Professor of Law, Attorney at Law and Founder of Yav & Associates, Law firm in DRC.
Copyright Yav & Associates
More information about Yav & Associates
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
The different business vehicles recognized under the OHADA legal framework may be summarized as follows:
1. Private Limited Liability Companies (société à responsabilité limitée or “SARL”);
2. Join stock companies (sociétés anonymes or “SA”);
3. Unlimited liability companies, which may be further categorized as either:
3.1. société en nom collectif or “SNC” which is a kind of private partnership where all the shareholders have commercial status and are jointly liable for the company’s debts;
3.2. société en commandite simple which is a type of sleeping partnership;
3.3. société en participation which is very flexible type of joint venture, unregistered and without its own corporate personality;
3.4. société de fait which is a “ de facto Partnerships”, where two or more individuals or corporate bodies act as if they were in partnership without having properly formed between themselves one of the types of company recognized by the Uniform Act.
4. Branch of foreign companies. It is important to take note that the OHADA Uniform act on company law states that within two years of his creation, the branch of the foreign company must be paid up in the share capital of an existing DRC legal entity or a DRC legal entity to be created. The Ministry in charge of trade may discharge a foreign from its obligation of transforming into a subsidiary by an executive order upon request of the branch.
In this article, we will only discuss about the Join stock companies and the Private Limited Liability Companies.
II. Limited Liability Company [Societe a Responsabilite Limitee - SARL]
2.1. Management of the Limited Liability Company [Sarl]
The Sarl is managed by one or more managers (known as “gérants”) who may be chosen either by the articles of association or during the life of the company, by the majority of shareholders holding more than one-half of the registered company.
2.2. Collective decisions
Collective decisions are generally taken at general meetings. However, it should be mentioned there is a possibility to provide for a written consultation, in the articles of association.
A general meeting must be held each year within six months from the closing date of the financial year. In addition, one or more shareholders holding one-half of the company’s shares, or at least one-quarter of the shareholders in number holding at least one-quarter of the company’s shares, may request the convening of a meeting at any time.
2.3. Statutory auditors
At least one (1) statutory auditor must be appointed in an SARL when one of the following three conditions is met:
- its share capital exceeds 20,000 USD;
- the annual turnover exceeds 500,000 USD;
- the permanent staff exceeds 50 employees.
When none of the above criteria is fulfilled, the appointment of a statutory auditor is optional.
III. Joint Stock Companies [Societes Anonymes or “SA”]
3.1. Management of the SA with a board of directors (2 options)
- Board of directors with a chairman of the board also acting as chief executive officer (CEO) and eventually assisted by one or more deputy general managers;
- Board of directors with a chairman of the board assisted by a general manager acting as CEO.
3.2. With a sole managing director acting as a CEO, assisted if required by one or more deputy managers
The share capital of a SA may be held by a unique shareholder. In this case, the SA is managed by a sole managing director assisted by a deputy managing director. There is no board of directors.
3.3. Boards Meetings: Quorum and majority
There is no obligation under the Uniform Act as to the number of board meetings to be held each year, save for the approval of the company’s accounts for each financial year.
In general, all decisions are to be taken by a majority of the members of the board present. However, it is worth mentioning the possibility of providing for an increased majority vote in the articles of association.
3.4. Restriction of number of offices held
No person may simultaneously hold more than three offices as managing directors in an SA having their registered offices in the territory of the same member state of OHADA Likewise, it is prohibited to hold the position of chair person concurrently with the post of managing director or general manager on more than two SAs which have their registered office on the territory of the same member state.
3.5. Statutory auditors
The appointment of a statutory auditor (Commissaire aux comptes) and a deputy statutory auditor is mandatory in an SA.
When the SA makes public offerings two statutory auditors and two deputy statutory auditors should be appointed.
ABOUT THE AUTHOR: Prof. Dr. Joseph Yav Katshung
Professor of Law, Attorney at Law and Founder of Yav & Associates, Law firm in DRC.
Copyright Yav & Associates
More information about Yav & Associates
View all articles published by Yav & Associates
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
