Unlocking the Dynamics of Contribution Formation in Anonymous Companies (SA) under OHADA

The formation of a public limited company (PLC) often marks a significant milestone for an entrepreneur, necessitating robust financial capacity. But why choose this legal form? Let's delve into the specifics and advantages of this decision within the OHADA (Organization for the Harmonization of Business Law in Africa) space.

Why Opt for a PLC?

The PLC distinguishes itself by its impersonal nature, where shareholders, known as stakeholders, are not bound by specific personal relationships. This categorization places it among capital companies. Similar to a limited liability company (LLC), shareholders' liability is limited to the amount of their contributions, represented by shares. These shares can be either bearer shares or registered shares, freely negotiable among shareholders.

Two types of PLCs can be identified: those that do not appeal to public savings, often established among acquaintances, families, or associates and employees of a company; and those that appeal to public savings, which are large-scale companies whose shares are listed on the stock exchange. The latter category is the most common in practice. Despite this distinction, similar rules apply to both categories under legislation.

1. Substantive Conditions

Substantive conditions pertain to shareholders and the share capital of the PLC.

- Flexible Shareholders: A PLC can be established by a single natural person or legal entity, offering great flexibility in structuring business ownership.

- Robust Share Capital: With a minimum share capital of XAF 10,000,000, the PLC ensures a solid financial foundation, which can be crucial for raising funds or listing its securities on the stock exchange.

2. Formal Conditions

The procedure for establishing a PLC varies depending on the types of contributions made by shareholders.

- General Rules: It includes several phases such as the establishment of subscription forms, the deposit of funds, the notarial declaration of subscription and payment, the signing of bylaws, the holding of the first board of directors meeting, and publicity.

- Specific Rules: Establishing a PLC through contributions in kind requires holding a founding general meeting to assess these contributions.

a. Establishing a PLC without Contributions in Kind and without Specific Benefits:

It generally unfolds in five well-defined phases:

- Phase 1: Subscription Form: Founders establish a subscription form, documenting shareholders' commitments to subscribe to shares in exchange for financial contributions. This form is crucial as it formalizes the commitment of potential investors.

- Phase 2: Deposit of Funds and Notarial Declaration: Founders deposit the funds received within eight days and provide a list of subscribers to the depository. Subsequently, a notary establishes a notarial declaration of subscription and payment, attesting to the conformity of the declared subscriptions.

- Phase 3: Establishment of Bylaws: Founders sign the company's bylaws, which must also be signed by all subscribers. The bylaws define the rules of operation of the company and the rights and obligations of shareholders.

- Phase 4: Registration with the RCCM: The company is registered with the Trade and Personal Property Credit Register (RCCM), granting it legal personality. This step is crucial as it allows the company to act as a distinct legal entity.

- Phase 5: Withdrawal of Funds: Once registered, the company can withdraw the deposited funds, marking the completion of the PLC creation process.

b. Establishing a PLC with Contributions in Kind and Specific Benefits:

The valuation of share capital is significant as it allows determining the company's fortune at the time of its formation.

The methods for valuing contributions in kind fall into two categories: evaluation by shareholders and evaluation by the auditor.

In principle, no problem arises, under OHADA law, regarding contributions in cash since, by definition, they consist of a sum of money whose amount can be accurately determined.

This evaluation is meaningful through the intervention of the Auditor of Contributions, who must be chosen from the list of Statutory Auditors for the simple reason that he is a professional in figures and also a third party vis-à-vis the shareholders. The Auditor's intervention makes the evaluation of contributions in kind and/or specific benefits mandatory.

It generally unfolds in three phases:

- Phase 1: Description of Contributions in Kind and/or Specific Benefits: Contributions in kind and/or specific benefits must be described in the company's bylaws. In the absence of this, they are considered nonexistent.

- Phase 2: Release of Contributions in Kind: Contributions in kind must be released upon the constitution of the company because the shares allocated are in exchange for these contributions in kind.

- Phase 3: Treatment of Evaluation by Shareholders: In accordance with the provisions of Article 400, it is carried out at the time of the realization of the contributions.

- Phase 4: Intervention of the Auditor of Contributions: The Auditor of Contributions, chosen from the list of auditors according to the modalities provided for in articles 694 and following of the AUSCGIE, is unanimously appointed by the shareholders or, failing that, by the competent jurisdiction, at the request of the founders of the company or one of them. The Auditor of Contributions draws up, under his responsibility, a report annexed to the bylaws.

This report describes each of the contributions in Kind and/or specific benefits, indicates the valuation method adopted and the reasons why it was chosen. It attests that the value of the contributions corresponds at least to the nominal value of the shares to be issued.

In the event of impossibility to establish the value of specific benefits, the Auditor of Contributions assesses their consistency and their impact on the shareholders' situation.

According to Article 694, paragraph 2, "the functions of statutory auditors are exercised by natural persons or by companies formed by these natural persons, in one of the forms provided for" by OHADA law.

The Auditor of Contributions, under his responsibility, draws up a report describing each of the contributions, indicating their value, specifying the valuation method chosen and the reasons for this choice and finally, he must affirm that the value of the contributions corresponds at least to the nominal value of the shares to be issued.

The Auditor of Contributions may be assisted, in the performance of his mission, by one or more experts of his choice, it being understood that the fees of these experts will be borne by the company, unless otherwise provided for in the bylaws.

The report is deposited at least 3 days before the date of the constituent general meeting, at the intended address of the registered office; it is made available to subscribers who may consult it or obtain a full or partial copy at their own expense.

- Phase 5: Holding of the Constituent General Meeting: convened at the initiative of the founders after the establishment of the notarial declaration of subscription and payment of the funds and subject to the provisions not contrary to articles 529 and following of the AUSCGIE for its holding, its objective is to proceed with a special vote on each contribution in kind and/or specific benefit. Also, it approves or disapproves the report of the Auditor of Contributions on the evaluation of contributions in kind and the granting of specific benefits in addition to the mentions of articles 409 and following of the Uniform Act.

- Phase 6: Ensuring the Reality and Value of the Contribution: When there has been no

Auditor of Contributions, the shareholders are jointly responsible for five (5) years, vis-à-vis third parties, for the value attributed to contributions in kind. The guarantee obligation concerns only the value of the contributions at the time of the constitution or increase of share capital and not the maintenance of this value.

4. Typology of the PLC

The PLC can be established with a board of directors or a general manager.

- PLC with Board of Directors: This board determines the company's business directions and can choose between a CEO or a chairman of the board of directors and a general manager.

- PLC with General Manager: This option is available when the number of shareholders is limited to three or fewer.

Advantages and Disadvantages

- Advantages: The PLC offers limited liability to shareholders, the possibility of gradually releasing subscribed shares, and the ability to issue securities.

- Disadvantages: It is characterized by strict hierarchy of governance bodies, high share capital, rigorous accounting, and the mandatory appointment of an auditor.

Conclusion

Opting for a PLC entails a series of complex steps, but the advantages in terms of asset protection, flexibility, and credibility may outweigh the initial investment. By understanding the details of establishment and the various options available, entrepreneurs can make informed decisions for their business projects within the OHADA space.