As you know, the Democratic Republic of the Congo ("DRC") is the last country to have joined the Treaty on the Organization of the Harmonization of Business Law in Africa, (“OHADA") on September 12, 2012. The OHADA dates back to October 17, 1993, as revised in Quebec on October 17, 2008 (“Treaty”); the DRC’s adherence was initiated by the filing of the ratification instrument of the Treaty on July 12, 2012, by the Minister of justice of the DRC, in accordance with Article 53 of the Treaty. The Treaty, Uniform Acts and Regulation of OHADA are therefore applicable as substantive law on the territory of the DRC.

Among the immediately applicable Uniform Acts, we will focus our particular attention on the Uniform Act on the law on commercial companies and economic interest groups of November 17, 1997, (”AUDSC-GIE”) since the AUDSC-GIE has just been part of the Congolese legal system and its transitional provisions are underway, especially the obligation to harmonize the Articles of Association of companies formed before its entry into force. The former Uniform Act is now repealed and replaced by a new Uniform Act on commercial companies and economic interest groups, which has been adopted by the Council of Ministers of the OHADA State members on January 30, 2014; and this new Uniform Act shall enter into force on May 05, 2014 (“N-AUDSC-GIE”) by repealing the AUDSC-GIE.

Our epistemological view in this regard focuses on the consequences of the repealing of the AUDSC-GIE; in particular, the requirement to harmonize the Articles of Association of companies formed before its entry into force in the DRC given that since September 2012, the AUDSC-GIE has been organizing the harmonization of the Articles of Association of Congolese companies and this is scheduled to end on September 12, 2014, (“First harmonization”) (I); the N-AUDSC-GIE which will enter into force on May 05, 2014, organizes another harmonization that needs to be completed before May 05, 2016, (”The Second Harmonization”) (II). The overlapping of these two harmonizations of the Articles of Association of companies governed by Congolese law in relation to the above mentioned Uniform Acts raises real legal issues, which require a solution of law rather than a factual one before the entry into force of the N-AUDSC-GIE (III).

I. The First Harmonization organized by the AUDSC-GIE

In accordance with Article 907, the AUDSC-GIE is applicable to companies and economic interest groups that shall be formed on the territory of one of the "States parties" as from its entry into force in the said State Party. By the use of the future tense “will be", the OHADA legislator excludes from the scope of the AUDSC-GIE, any companies previously formed in accordance with the national laws which remain governed, with respect to their operation, by such legislations, in the case of the DRC, the Decree of February 27, 1887 related to commercial companies as amended and supplemented by the Decree of June 23, 1960 (“Decree about commercial companies”) as well as the Royal Decree of June 22, 1926 relating to the authorization of the formation of the limited joint-stock company (“Royal Decree”). Naturally, the AUDSC-GIE cannot govern the operation and the functioning of the DRC commercial companies; inter alia, the private limited liability company ("SPRL"), the limited joint-stock company ("SARL"), the general partnership, ("SNC"), the limited partnership, ("SCS") and the cooperative companies, ("SC").

Thus, in principle, the DRC law on commercial companies is abrogated. Then, the AUDSC-GIE finds application to the DRC, the last Member State since September 12, 2012. Actually, the AUDSC-GIE organizes and governs the formation of new types of companies which are the following: (i) general partnership (“SNC”), (ii) limited partnership (”SCS”), (iii) limited liability company (“SARL”) and (iv) public limited company (“SA”).

To enable the application of the provisions of the AUDSC-GIE to companies formerly set up under Congolese law, Article 908 subjects those companies to its provisions for the purpose of harmonizing their Articles with those of the AUDSC-GIE during a transitory period of 2 years. This article states that:

“The Companies and Economic Interest Groups set up prior to the entry into force of the present Uniform Act are subject to its provisions. They are required to harmonize their Articles of Association with the provisions of the present Uniform Act within a period of two years as of its entry into force".

Accordingly, upon its entry into force, the provisions of the AUDSC-GIE are applicable to companies of Congolese law only for the purpose of the harmonization of their Articles.  During the transition, the Uniform Act is then not meant to apply to the functioning of companies of the same type formerly organized by the Decree on commercial companies.

Nevertheless, as a result of the provisions of Article 908 aforementioned, Article 919 of the AUDSC-GIE maintain in force all prior contrary legal provisions for the purpose of their transitory application. It stipulates as follows:

Any legal provisions contrary to the provisions of the present Uniform Act are repealed, subject to their transitory application for a period of two (2) years as from the date of entry into force of the present Uniform Act, to companies which did not harmonize their Articles of Association with the provisions of the present Uniform Act’’,

Since all legal provisions of the Congolese legislation on commercial companies are, in general, contrary to the provisions of the AUDSC-GIE, especially the ”SPRL” and “SARL”, they are therefore repealed as from the entry into force of the Uniform Act, i.e. September 12, 2012. They continue to be applied provisionally until September 12, 2014 only for the purpose of the harmonization of the Articles of Association with the provisions of the AUDSC-GIE that is carried out by way of amendment to the former Articles of Association or by drafting of new Articles of Association through a resolution adopted by a General Meeting of the company, such resolution being adopted in pursuant with the former Congolese law on commercial companies, that is to say, it is made by an Extraordinary General Meeting.

It is worthwhile mentioning that Article 915 of the AUDSC-GIE considers the contrary provisions of the Articles of Association of Congolese companies failing to harmonize their Articles of Association with the provisions of the AUDSC-GIE on that date (Non-harmonized Congolese companies) as null and void. Therefore, they will be viewed as de facto companies in accordance to both Articles 915 and 865 of the AUDSC-GIE.

Taking into consideration the formalistic and severe features of the Congolese judicial procedure, in particular on the admissibility of legal actions brought to justice, including the appeal and cassation, the legal actions of the non-harmonized Congolese companies, de facto companies, shall be dismissed for both lack of legal capacity of their officials to act and lack of legal existence due to a legal form contrary to the provisions of the AUDSC-GIE. The dismissal of the cases may be prejudicial to the financial interests of the concerned companies.

Besides, the non-harmonized Congolese companies, which have become de facto companies, will no longer claim any eligibility to hold licenses and authorizations for the exercise of their activities. This will be the case particularly for banks[1]_ telecommunication companies[2], joint-stock companies as well as mining companies in the operation of their mining activities.

II. Second Harmonization organized by the N-AUDSC-GIE

While companies governed by Congolese law are in the process of harmonizing their Articles with the AUDSC-GIE, the N- AUDSC was then promulgated as noted above. In accordance with Article 920, the N-AUDSC-GIE will enter into force 90 days after its publication on February 04, 2014 in the official journal of the OHADA, namely on May 5th, 2014.  

The N-AUDSC-GIE provides under Article 907 that its provisions are applicable to companies and economic interest groups that are formed in the national territory of one of the "State parties" as from its entry into force in the said State party. In contrast to the AUDSC-GIE that uses the future tense for its implementation, the OHADA legislator uses the simple present tense “are'’ for the implementation of the provisions of the N-AUDSC-GIE[3].

Thus, with respect to the DRC, the N-AUDSC-GIE shall find entirely application as of May 5th, 2014, to companies governed by the AUDSC-GIE, namely: Former companies of Congolese law which will have harmonized their Articles in accordance with the transitory provisions of the AUDSC-GIE, (“Harmonized Congolese companies”); companies formed as from the entry into force of the AUDSC-GIE, (“OHADA companies”); and to formation of new companies organized by the N-AUDSC-GIE.

The provisions of Article 908 of the N-AUDSC-GIE, worded in the same terms as those under Article 908 of the AUDSC-GIE shall also apply only for the purpose of the Second Harmonization of the Articles of Association to which the AUDSC-GIE provisions apply namely the Harmonized Congolese companies and OHADA Companies. In the meantime, the provisions of the AUDSC-GIE will continue to provisionally apply to these companies until May 5th, 2016. In the event of the absence of the Second Harmonization, the contrary statutory clauses of the Harmonized Congolese companies and OHADA Companies shall be viewed as null and this will lead to other consequences in connection with the admissibility of their legal actions, the representation of the company by its officials vis-a-vis third parties and their eligibility to hold licenses and authorizations for the exercise of their activities, as noted above.

Finally, by virtue of the provisions of Article 919 of the N-AUDSC-GIE, the AUDSC-GIE will be repealed on May 5th, 2014. However, it will provisionally apply until May 5th, 2016 to companies that will not have proceeded with the harmonization of their Articles with the provisions of the N-AUDSC-GIE within two years as of the entry into force of the N-AUDSC-GIE ("Second Harmonization").

III. Legal issues raised by the overlapping of OHADA compliance procedures 

The overlapping of these two harmonizations raises the following fundamental questions of law: (i) shall non-harmonized Congolese companies no longer be eligible to the First Harmonization from the date of the N-AUDSC-GIE’s entry into force which will trigger off the Second Harmonization? (ii) Can non-harmonized Congolese companies continue their harmonization with the AUDSC-GIE at the N-AUDSC-GIE’s entry into force? (iii) What may happen to non-harmonized Congolese companies in relation to the AUDSC-GIE on May 5th, 2014? and (iv) shall non-harmonized Congolese companies proceed directly with the Second Harmonization?

The above questions raise several positions in the mind of legal practitioners, which may be relevant and divergent. We may mention, inter alia, the following: the thesis of the continuation or not of the First Harmonization on behalf of non-harmonized Congolese companies on the date of entry into force of the N-AUDSC-GIE (II.1) and the direct transition or not to the Second Harmonization on behalf of non-harmonized Congolese companies on the date of entry into force of the N-AUDSC-GIE (II.2).

III.1.Continuation or not of the First Harmonization on behalf of non-harmonized Congolese companies on the N-AUDSC-GIE’s entry into force

Some may argue on the basis of Article 907, 908 and 919 of the N-AUDSC-GIE that the First Harmonization of the non-harmonized Congolese companies on May 5th, 2014 will remain in force even after the start of the Second Harmonization. This means that the First Harmonization shall continue its course until September 12, 2014. This thesis would be justified on the basis of the following interpretation:

1° Article 907 of the N-AUDSC-GIE, which uses the simple present tense: “the present Uniform Act is applicable to companies and economic interest groups that are set up on the territory of one of the State parties as from the entry into force in the said State party” allows the application of the N-AUDSC-GIE to all companies formed on the date of its entry into force in the DRC. This implies that the N-AUDSC-GIE applies to (i) OHADA companies, namely, companies formed in the DRC following the entry into force of the AUDSC-GIE; (ii) Harmonized Congolese companies, namely, companies formed and governed in accordance with the DRC law and whose Articles of Association have been harmonized with the AUDSC-GIE and (iii) non-harmonized Congolese companies, namely, companies formed and governed in accordance with the DRC law, but whose Articles of Association have not been harmonized with the AUDSC-GIE.

2° The terms of Article 908 part a) of the N-AUDSC-GIE: “Companies and economic interest groups formed prior to the entry into force of the present Uniform Act are subject to these provisions” apply to non-harmonized Congolese companies because they were created prior to the N-AUDSC-GIE.

3° The terms: “To companies which have not proceeded with the harmonization of their Articles of Association with the provisions of the present Uniform” of Article 919 of the N-AUDSC-GIE are inclusive for non-harmonized Congolese companies. Since the same Article 919 of the N-AUDSC-GIE allows the provisional application of the AUDSC-GIE in all its provisions, the conclusion may be that the First Harmonization organized by the AUDSC-GIE shall continue to be carried out until the expiry period of the planned two years.

Under this opinion, there is no legal risk for non-harmonized Congolese companies to continue operating until September 12th, 2014 according to the Congolese company law, which was renewed due to the provisional application of the AUDSC-GIE.

Others will advise against this opinion by refusing to admit the continuation of the First Harmonization on behalf of the non-harmonized Congolese companies on May 5th, 2014. Such opinion could be justified on the basis of the following:

1° Article 907 of the N-AUDSC-GIE provides that “the present Uniform Act is applicable to companies and economic interest groups that are set up within the territory of one of the State Parties”, notably the DRC, as from its entry into force. We recall that Article 907 of the AUDSC-GIE did not apply to the OHADA territory and applies to the DRC only to future companies to be formed in accordance with its own provisions. This even more obvious since companies formed in those states were governed by national legislations whose forms did not, in general, correspond to those organized by the AUDSC-GIE. This is also the case of Congolese commercial company legislation, which organizes types of commercial companies generally different from the types organized by the AUDSC-GIE. A contrario, Article 907 of the N-AUDSC-GIE with respect to the rules on form and substance shall naturally apply to OHADA companies and Harmonized Congolese companies, for the mere reason that the types of companies have remained virtually the same, notwithstanding the institution of the simplified joint stock company (”SAS”, French acronym), as a new type of company.

2° Article 908 of the N-AUDSC-GIE which states: “Companies and economic interest groups formed prior to the entry into force of the present Uniform Act are subjected to these provisions”, the same Article in fine is more meaningful when it states that companies that had been formed previously are required to harmonize their Articles of Association with the N-AUDSC-GIE within two years as of its entry into force. From the foregoing, it is notable that compliance of companies governed by the AUDSC-GIE to the provisions of the AUDSC-GIE is envisaged only for the purpose of harmonization with the provisions of the present Act.

3° Based on the foregoing discussion of Articles 907 and 908 of the N-AUDSC-GIE, from a legal viewpoint, it is not possible to assert the continuation of the application of the repealed transitional provisions of the AUDSC-GIE by the N-AUDSC-GIE to non-harmonized DRC companies. The latter companies are not eligible regarding the Second Harmonization. The contrary option should lead to the theory of “harmonization in the harmonization” or “transition in the transition”.

4° This is all the more so relevant since the OHADA legislator could have expressly authorized in a clear wording under Article 919 of the N-AUDSC-GIE, the continuation of the First Harmonization after the start of the entry into force of the N-AUDSC-GIE repealing the AUDSC-GIE. In that case, the said Article would be read as follows:

”The Uniform Act of April 17, 1997 on commercial companies and economic interest groups is repealed, subject to its transitional application for a period of two (2) years as from the date of the entry into force of the present Uniform Act, to companies in the process of harmonizing their Articles of Association with the provisions of the Uniform Act of April 17, 1997 on the law on commercial companies and economic interest groups on the date of the entry into force of the present Uniform Act and to companies which have not harmonized their Articles of Association with the provisions of the present Uniform Act”.

5° Such legal wording could have allowed, in a clear way, the extension of the First Harmonization until September 12, 2014. Thus, statutory clauses of non-harmonized Congolese companies failing to comply with the transition organized by the AUDSC-GIE on the date of the entry into force of the N-AUDSC-GIE shall be viewed as null. Besides, this y will face other consequences as shown above, i.e. they shall be viewed as de facto companies not eligible to the advantage of the Second Harmonization. The only possibility opens to them on the request of any interested person shall be the application of the rules pertaining to general partnership through a commercial court having territorial jurisdiction[4].

6° In addition, the assumption of the continuation of the First Harmonization at the entry into force of the N-AUDSC-GIE should not be justified since this could result in the reduction of the two-year transitional timeframe organized in Article 919 of the N-AUDSC-GIE. Indeed, this period stems from its entry into force, from May 5, 2014 until May 5, 2016. The non-harmonized Congolese companies which would continue the First Harmonization following the entry into force of the N-AUDSC-GIE until September 12, 2014 would then lose the advantage of the 5 months of the Second Harmonization which they might start after the First. This assumption would then result in the reduction of a timeframe established by law, namely: the N-AUDSC-GIE. Therefore, it would be illegal.

III.2. Direct transition or not to the Second Harmonization on behalf of non-harmonized

Congolese companies on the date of the entry into force of the N-AUDSC-GIE

The second thesis would advocate the direct transition to the Second Harmonization on behalf of non-harmonized Congolese companies on the date of the entry into force of the N-AUDSC-GIE on the basis of the development of Articles 907 and 908 made by the proponents of the theory of the continuation of the First Harmonization.

Additionally, in respect of Article 919 of the N-AUDSC-GIE, those upholding this opinion will argue that non-harmonized Congolese companies are included in the terms ”companies that have not proceeded with the harmonization of their Articles of Association with the present Uniform Act” Non-harmonized Congolese companies may, without proceeding the First Harmonization, proceed directly with the Second Harmonization. For those sharing this view, non-harmonized Congolese companies should benefit from an extension until May 5, 2016.

Those upholding a divergent opinion to those advocating the theory of the continuation of the First Harmonization may oppose it by arguing that it should occur beyond the period of the triggering off of the Second Harmonization concerning the application of Articles 907 and 908 of the N-AUDSC-GIE.

As a second support to this theory, the proponents of the divergent opinion should uphold that Article 919 of the N-AUDSC-GIE allows the temporary operation of the AUDSC-GIE, on behalf of companies that it governs on the date of the N-AUDSC-GIE’s entry into force, only for the purpose of the Second Harmonization in pursuance with its Article 908 part b). Yet, non-harmonized Congolese companies are not temporarily governed, on the date of the entry into force of the N-AUDSC-GIE, by the provisions of the AUDSC-GIE. They are subject to provisions of the AUSGC-GIE only for the need of the First Harmonization, in accordance with Article 908 part b) of the AUDSC-GIE. On the contrary, they are temporarily governed by the Congolese law on commercial companies on the date of the entry into force of the N-AUDSC-GIE, as per Article 919 of the AUDSC-GIE, in order to enable them to change into one of the types of companies organized by the AUDSC-GIE. As long as non-harmonized Congolese companies are not be in a position to be governed by the provisions of the AUDSC-GIE in the matter of their functioning, they cannot directly move forward to the Second Harmonization.

It would be otherwise if the OHADA legislator had subscribed to the thesis or theory of direct transition of non-harmonized Congolese companies to the Second Harmonization. The OHADA legislator would have clearly envisaged this under Article 919 of the N-AUDSC-GIE, which would be read as follows:

”All contrary legal provisions, as well as the Uniform Act of April 17, 1997 on the law on commercial companies and economic interest groups are repealed, subject to their transitional application for a period of two (2) years as from the date of the entry into force of the present Uniform Act, to companies in the process of harmonizing their Articles of Association with the provisions of the Uniform Act of April 17th, 1997 relating to commercial companies law and economic interest groups ; and companies that have not proceeded with the harmonization of their Articles of Association with the provisions of the present Uniform Act.’’ 

The drafting of such a legal provision would have allowed the transitory application of the Congolese law to non-harmonized Congolese companies; and at the same time, it should temporarily apply the provisions of the AUDSC-GIE to harmonized Congolese companies and OHADA companies. Furthermore, it should enable, without any further interpretation, the extension of the transitory period until May 5th, 2016 as it is advocated by the proponents of the theory of the direct transition to the Second Harmonization. 

Nevertheless, some would uphold that the transition organized on behalf of the non-harmonized Congolese companies should keep the term until September 12th, 2014. Yet, the harmonization of their Articles of association should be done directly in pursuance of the provisions of the N-AUDSC-GIE as from May 5, 2014.

IV. Possible solutions to the overlapping issue of OHADA compliance procedures 

It is clearly shown that the entry into force of the N-AUDSC-GIE creates confusion as to on the continuation and finalization of the First Harmonization process. This will certainly lead to various and contradictory interpretations.

A law that is clear in itself does not need any interpretation and gives legal and judicial security to people and goods subject to its application. Such law promotes a better climate for investments; this is one of the main arguments of OHADA specialists willing to conquer the DRC. Unfortunately, the immediate result of the transitory regime of the N-AUDSC-GIE with regard to the evolution of OHADA law in the DRC will be, on the date of the entry into force of the N-AUDSC-GIE, a confusion of harmonization processes to the prejudice of commercial companies, their shareholders and directors.

It is possible that the drafters of the N-AUDSC-GIE have not considered the specific case of the DRC during the drafting of the transitory regime of the N-AUDSC-GIE. It is also possible that the DRC itself did not attract the attention of the other States Parties who had already finalized their First Harmonization on the specificity of the transition concerning the DRC.

The solution would be to urgently amend Article 919 of the N-AUDSC-GIE (IV.1); to obtain an advisory opinion of the Common Court of Justice and Arbitration (“CCJA’’ (IV.2); or to speed up the finalization process of the First harmonization of non-harmonized Congolese companies (IV.2.3). 

IV.1. Urgent amendment of Article 919 of the N-AUDSC-GIE

The first solution should be the urgent adoption by the OHADA legislator of a new Uniform Act amending and supplementing only Article 919 of the N-AUDSC-GIE before the entry into force of the N-AUDSC-GIE, in order to avoid the consequences mentioned above.

It is clear that the amendment or drafting procedure of urgent Uniform Acts is not so far organized in the Treaty. Yet, the latter does not prevent it although the timeframe organized under Article 7 of the revised Treaty consists of minimum time frames that may be extended at the request of the Permanent Secretary.

Given the urgency and necessity to achieve a peaceful and non conflicting transition of the DRC company law to the AUDSC-GIE and N-AUDSC-GIE, at the request of the DRC, the Permanent Secretary may initiate a communication to the State parties concerning the draft revision of Article 919 of the N-AUDSC-GIE in which the Permanent Secretary would invite them to abandon the maximum timeframe of Article 7 of the treaty or extend the timeframe and return the draft revision within 15 days. This will allow the Permanent Secretary to postpone this draft Uniform Act and its report while inviting the CCJA to issue its urgent opinion, for instance within fifteen days as from the receipt of the consultation application by the Court. The issue of such urgent opinion would allow the Permanent Secretary not to wait the expiry of the timeframe of sixty days in order to get ready the final text of the draft Uniform Act to be submitted to the next urgent meeting of the Council of Ministers.

Nevertheless, the adoption of the Uniform Act on the amendment of Article 919 shall, with regard to Article 9 of the revised Treaty, only enters into force within 90 days as of the publication in the OHADA Official Journal. The Council of Ministers shall then amend the provisions of Article 920 of the N-AUDSC-GIE for the purposes of harmonization of the date of entry into force of the Uniform Act amending Article 919 of the N-AUDSC-GIE.

If the will of the OHADA legislator is in favor of the theory of the continuation of the First Harmonization despite the triggering off of the Second Harmonization, this should be clearly stipulated under the amended Article 919.

On the contrary, if the view of the OHADA legislator would be in favor of the non-continuation of non-harmonized Congolese companies, but rather for the direct transition to the Second Harmonization, the legislator might be inspired by the draft proposal set out in the antithesis of this opinion.

Thus, the OHADA substantive law should include clear provisional rules that should remove any doubt on the overlapping of harmonizations.

IV.2. Advisory opinion of the Common Court of Justice and Arbitration

In the absence of such assumption, the DRC should bring the case before the Common Court of Justice and Arbitration (CCJA) so that the latter may issue an advisory opinion about the confused transition in which the DRC is confronted with; the Court should ensure the interpretation of the provisions of Articles of the AUDSC-GIE and N-AUDSC-GIE analyzed herein.

The obvious advantage of seeking the interpretation of the CCJA is that the appreciation of the timeframe setting lies with the power of the President of this jurisdiction. This would enable an emergency issue of the opinion sought.

Thus, the DRC should submit a written request drafted in clear words in order to solicit an urgent review of the question by the Court which has to set reasonable timeframes for notification and exchange of remarks among the State parties and the Court[5].

Nevertheless, with regard to the scope and incidence of the advisory opinion on the DRC question, it is worthwhile to emphasize that this would have the effect of a general guidance in the interpretation and implementation of the controversial provisions.

IV.3. Speed up the finalization process of the First Harmonization

As mentioned above, Congolese companies that have not harmonized their articles of association with the AUDSC-GIE must proceed with the First harmonization to avoid the risk that their contrary statutory provisions be null and therefore changed into de facto companies and suffer all other consequences abovementioned.

While the two solutions, consisting of amending the N-AUSDC-GIE or issuing an advisory opinion by the CCJA are being considered, Non-harmonized Congolese companies have an interest in harmonizing their Articles of Association without delay in compliance with the AUDSC-GIE before the abrogation by the N-AUDSC-GIE which shall enter into force on May 5th ,2014.