A Summary of Public and Private Limited Companies in Benin
By Maître Charles Badou
Posted: 17th December 2018 09:30The main companies in the law of the Organisation for the Harmonization of Business Law in Africa (“OHADA”) are the Société Anonyme or SA (Public Limited Liability Company) and the Société à Responsabilité Limitée or SARL (Private Limited Liability Company).
The legal system of companies in general and the one of their governance in particular, are governed by the Revised Uniform Act of OHADA relating to the law of commercial companies and economic interest groupings dated 30 January 2014.
The merit of transparency remains topical in terms of corporate governance. In terms of challenges, the effectiveness of governance rules remains one of the main challenges facing the governance of commercial companies. In the same vein, in the current context of globalisation of trade where businesses pursue multiple goals and interests, it is more than necessary to proceed to the establishment of rules of clarity of governance of commercial corporations that have to take on the challenges of market economy. Added to this are the sustainability challenges.
The Uniform Act now provides explicitly for the possibility of concluding "extra-statutory agreements" with a view to organising freely the management of a business.
The shareholders are entitled, amongst other things, to:
- A right to information;
- Obtain dividends;
- The shareholders are liable for corporate debts only to the extent of their contributions and the rights of shareholders are represented by shares;
- Take legal action against a corporate executive for the faults he committed in the performance of his duties;
- At the end of the financial year, the business managers must produce imperatively the accounts and balance sheets of the company and send them to the shareholders at least 15 days before the date of the general meeting.
The shareholders are responsible, inter alia, for: Taking action regarding the internal powers of executives, controlling the management of the company.
The shareholders participate in:the constitutive general assembly, the Ordinary General Meeting, the Extraordinary General Meeting, and the Special General Meeting.
In public limited liability companies (SA), the shareholders are liable for corporate debts only to the extent of their contributions and the rights of shareholders are represented by shares.
The partners cannot be deprived of their right to vote. However, there exist restrictively hypotheses relating to the removal of the right to vote.
It is recognised to shareholders the power to take legal action against a corporate executive for any misconduct committed by him or her in the performance of his or her duties.
In principle, there is no limitation in the holding of securities or shares. Foreigners, Beninese, natural or legal persons can obtain the number of shares available.
However, inBeninese law, the ones operating in the audiovisual sector, the public authorities and the public interest organisations cannot participate directly or indirectly in the share capital or in the management bodies of private televisions, unless it concerns the participation of a provider or a public broadcasting organisation, provided that its participation does not exceed 24% of the capital of the private television.
The public limited liability company (SA) with a Board of Directors having a Board of Directors is headed by either a Chief Executive Officer or a Chairman of the Board of Directors and a Managing Director.
The public limited liability company (SA) with a General Manager is headed by a General Manager who is responsible for the administration and management of the company.
The management of SARL (private limited liability company) is entrusted to one or more private individuals, partners or not, appointed by the partners in the Articles of Incorporation or in a subsequent instrument, by a majority of the partners accounting for over half of the share capital.
In SA (Public Limited Liability Company) with a Board of Directors, the term of office of directors is determined freely by the Articles of Incorporation without the possibility of exceeding six years renewable in the case of appointment during the life of the company and two years, renewable in case of appointment by the Articles of Incorporation or by the constitutive general assembly.
In SA with a General Manager, the first General Manager is appointed in the Articles of Incorporation.
The term of office of the General Manager is fixed freely by the Articles of Incorporation, without the possibility of exceeding six years in case of appointment during the corporate life and two years in case of appointment by the Articles of Incorporation. This mandate is renewable.
The general manager may be removed at any time by the general meeting. If the removal is decided without due cause, it may give rise to damages.
The managers of SARL (private limited liability company) are appointed by the partners in the articles of incorporation or in a subsequent act. In the absence of statutory provisions, the manager (s) is/are appointed for four years. They are eligible for re-election.
The dismissal of the manager, whether statutory or not, must be decided by the partners representing more than half of the shares and based on due cause.
Issues pertaining to the contracts and remuneration of members of management bodies are governed exclusively by the Uniform Act. However, the national laws of OHADA Member States may be called in with regard to the conditions for the formation and drafting of contracts.
Only corporate bodies are empowered to make decisions about the timing and content of disclosure of information. It was also observed that if a new serious event occurs, the shareholders are not required to remain silent. And they will inform the executive managers outside the legal mechanism.
In SA (public limited liability company), the general meeting of shareholders is convened by the Board of Directors or the General Manager, as the case may be. Failing that, it may be convened by the auditor, by a representative appointed by the competent court of law, ruling in emergency interim proceedings, or by the receiver.
The convening notice must indicate the date, the venue of the meeting and the agenda. The notice of meeting must be communicated to the shareholders at least 15 days before the date of the general meeting for the first convening and, if necessary, at least six days for the subsequent convening. When a general meeting is convened by an ad hoc proxy, the judge may set a different time limit.
The agenda of the general meeting is decided by the convener of the meeting. The general meeting is chaired by the Chief Executive Officer, the Chairman of the Board of Directors or the General Manager or, in the event of they are prevented and subject to contrary statutory clause, by the shareholder having or representing the largest number of shares or, in the case of a tie, by the most senior member.
In SARL (private limited liability company), the partners are convened to meetings by the manager. One or more shareholders accounting for half of the company shares or holding, if they represent at least one quarter of the partners, one quarter of the shares, may request the holding of a general meeting. The general meeting of shareholders is presided over by the manager or by one of the managers. If none of the managers is a partner, it is chaired by the partner present and accepting, who has the largest number of shares, and in the event of a tie, by the most senior.
In the performance of their duties, corporate executives must act in strict compliance with the legal or regulatory provisions applicable to the Company and its Articles of Incorporation. Moreover they must of course demonstrate competence, diligence and loyalty.
The managers are liable individually or jointly to the company or third parties, for breaches of the laws or the regulations applicable to companies, or violations of the provisions of the Articles of Incorporation or misconduct in the performance of their duties.
In the general partnership (SNC), all the partners are traders and liable indefinitely and jointly for corporate debts.
In the limitedpartnership (SCS), coexist one or more partners who are indefinitely, jointly and severally liable for the corporate debts, referred to as "general partners," with one or more partners liable for corporate debts, within the limit of their contributions, referred to as "limited partners” and whose capital is divided into shares.
Regarding the main challenges, the effectiveness of governance rules remains one of the main challenges facing the governance of commercial companies. Added to this are the sustainability challenges.
The decision of the timing and content of disclosure of information is left to the discretion of the corporate bodies that are empowered to take it.
Members of the management body or other persons may carry various insurance policies.
Worker’s representation in the running of companies is addressed in almost all OHADA member countries. Employees are no strangers in the pursuance of the business of the company. Indeed, employees who contribute daily to the existence of the company are sometimes the first to notice complications.
The search for the effectiveness of any economic activity depends on the control of the right to information. In fact, in the digital age, if the control of information is at the heart of the governance of commercial companies, it is viewed as a prerequisite but not sufficient to acquire full control over information.
Corporate social responsibility is provided for under the Bill No. 98-004 of 27 January 1998 on the Labor Code in Republic of Benin, the General Collective Labor Agreement applicable to companies belonging to the private and para-public sectors in Republic of Benin, and the Bill No. 98-19 of 21 March 2003 on the Social Security Code in Republic of Benin.
The decision on the timing and content of the disclosure of information is left to the discretion of solely the corporate bodies which are empowered to take it. With regard to transparency, the auditor is the one responsible for it in the company.
The information in question must have at least a close link with the management of the company. However, one of the surest means of protecting the interests of shareholders and allowing them to exercise effective control over the management of executives is to provide them with as much information as possible on the management of corporate affairs, provided that such information is accurate.
The shareholders may take the initiative to request management expertise from the president of the competent court of law of the company's registered office. Management expertise meets a classic concern expressed explicitly in the Uniform Act, i.e. inform partners about the management of the company at a given time.
It may be admitted that the organisational chart of the governing body of the company should be publicised.