The amended Companies Act provides more flexibility and allows for more sophisticated corporate governance that updates a somewhat rigid and unforgiving Companies Act. Major changes include the introduction of a simplified joint-stock type of company, the codification of shareholders agreements, the introduction of varied share classes, convertible and subordinated bonds and interim dividends.
The Uniform Act for Commercial Companies and Economic Interest Groups (Companies Act) that was originally adopted by the L’Organisation pour L’Harmonisation en Afrique du Droit des Affaires (OHADA) member countries in 1993 has been recently amended. Amendments were adopted by the member countries on 30 January 2014 and the revised Companies Act was published in the OHADA official gazette on 4 February 2014 with the amendments becoming effective on 5 May 2014. The revised Companies Act will apply to Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Republic of Congo, Democratic Republic of Congo, Equatorial Guinea, Gabon, Guinea, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo.
The major changes in the revised Companies Act are:
- A simplified joint-stock type of company with limited liability, high flexibility and ease of governance has been introduced. This type of company is primarily governed by its Articles of Association and has few statutory restrictions
- The revised Companies Act now expressly recognises shareholders agreements and sets out the types of procedures that may be agreed upon by shareholders, such as the management procedures, entitlements to share capital and relationships between shareholders. In addition, the revised Companies Act now states that provisions in shareholders agreements that are inconsistent with the Articles of Association or the Companies Act will be void.
- Corporate governance procedures have been updated and simplified, including allowing for video conferencing for general meetings and the delegation by shareholders of certain matters to the board.
- Companies will be able to issue different classes of shares, with classes of shares having different rights, convertible and subordinated bonds, interim dividends and issue free shares to its personnel.
- There are amendments to statutory requirements relating to the appointment and removal of statutory auditors, the types of information that must be provided to shareholders, the manner in which share capital is raised and share transfer procedures, including the exercise of pre-emptive rights over the transfer of shares.