Types of Businesses

Organisation for the Harmonization of Business Law in Africa (OHADA)created on October 17, 1993 in Port Louis, Mauritius is the legislation which governs the different types of commercial companies in Cameroon. These companies are classified into registered and unregistered companies. To these may be added the economic interest groups. 1. Registered forms of companies under the OHADA UNIFORM ACT The OHADA Uniform Act makes provision for four types of companies that can be registered. These include;

  • The Sociétés en Nom Collectif (SNC) “Partnership”,
  • The Société en Commandite Simple (SCS) “Limited Partnership”,
  • The Société à Responsabilités Limitées (SARL) “Private Limited Companies”
  • The Société Anonymes (SA) “Public Limited Companies” (PLC).

Registered Companies

Société en nom collectif or SNC (Partnership)

The Société en Nom Collectif or SNC (Partnership) is considered by the OHADA Uniform Act as a commercial company, irrespective of its object. The Act defines this type of company in its Article 270 as a kind of private company in which all the partners are traders (commerçants) and have unlimited liability for the company’s debts.The Société en Nom Collectif must comprise at least two partners of the UACC, the SNC shall be formed by two or more persons contract, to assign assets in cash or in kind to an activity for the purpose of sharing profits or benefiting from savings that may be derive there from. Members of the SNC must possess the status of a commercial person (commerçant) and they must show proof of the presence of “un acte de commerce” (commercial act) to be carried out by the company.25 The members of the company share joint unlimited liability for the company’s debts and must accept to run a common managerial risk. Because of this responsibility, the membership in the SNC as a commercial company is based on the notion of intuitus personae. Any natural person or corporate body may be a partner in the SNC where he/she is not subject to any prohibition of incapacity or incompatibility.However,minors and legally incapacitated persons may not be members in the SNC. So too a husband and wife cannot be partners in the same SNC in which they shall be indefinitely or jointly and severally liable for the company’s debts. One person cannot form the SNC and there is no limit to the number of members. The law imposes neither a minimum amount of capital nor a deadline for the paying up of this capital in the SNC. Article 61 of the UACC dealing with the minimum capital of the SNC, without fixing a minimum capital merely states that “every company shall have a registered capital which shall be indicated in its Articles of Association”.

Société en commandite simple or SCS (Limited Partnership)

The Société en Commandite Simple or SCS is a form of limited partnership with two types of partners, namely, the commandités (full partners) and the commanditaires (limited partners). The commandités have the status of traders (commerçants) while the commanditaires do not have such a status. The former are those who manage the company and are fully liable for the company’s debts, The latter (usually investors) will be “sleeping” partners with a limited personal liability. The name of a limited partner (commanditaire) must not be used as part of the company’s name. Otherwise, that partner will be jointly and severally liable with the full partners (commandites) for the company’s debts. Two or more persons may form a Société en Commandite Simple. The law does not make provision for a single shareholder in a Société en Commandité Simple. However, the ownership of all the shares by a single person shall not entail the automatic dissolution of the company. If the company functions within a period of one year with a single shareholder, any party may petition the competent court for the regularization of the situation. The court may grant the company a maximum of six months for the regularization of the situation. Every Société en Commandite Simple must have a registered capital equal to the amount indicated in its Articles of Association. The UACC does not fix any minimum amount of registered capital for the creation of a Société en Commandite Simple. Contributions of partners can be in cash, services, as a supply of labour or rights on moveable or immovable, tangible or intangible property as a contribution in kind. The share capital is usually divided into shares of equal nominal value. Shares are transferable in a Société en Commandite Simple.

Société à responsabilité limitée or SARL (Private Limited Company)

The Société à Responsabilité Limitée or SARL is by far the most common form of business organization under the OHADA System. It is defined under Article 309 of the UACC as a company in which the members are liable for the companies debts up to the limit of their contributions and their rights are represented by company shares. It may be formed by natural person or a corporate body or by two or more natural persons or corporate bodies. The shareholders of the Société à Responsabilité Limitée, do not ipso facto possess the attributes of a trader (commerçant).57 OHADA equally makes provision  for the creation of a one-man Private Limited Company (SARL Unipersonnelle) and there is no maximum number of shareholders. In creating such a one-man company, the legislature wanted to follow French Law by taking account of the fact that a considerable number of limited liability companies had been operating for some time as mere shells with only one active member and one or more “straw” members. The minimum capital for the SARL is one million F. CFA (1.000.000 FCFA). It is divided into equal shares whose face value may not be less than five thousand FCFA (5.000 FCFA) The capital may be in the form of cash investment or contributions in kind (good will, equipment, patents, buildings, etc…). If there are any contributions in kind, the Articles of Association normally make an evaluation of such contributions and a stipulation of special benefits due to such contributions. Such an evaluation shall be carried out by a shares auditor where the value of the contribution or benefits in question, or the value of the overall contributions or benefits in question is more than five million FCFA (5.000.000 FCFA). Management of the SARL is in the hands of one or more natural persons who are considered as gérant(s) or manger(s) who may or may not be members. Managers are appointed by the members in the Articles of Association or, during the life of the company, by the majority of the shareholders holding more than 50 percent of the registered capital of the company.61 In the absence of provisions in the Articles of Association the manager(s) shall be appointed for four years and his term of office may be renewable. The manager or managers have extensive powers for carrying out management duties in the interest of the company. These powers are enumerated in Articles 328 to 329 of the UACC. Clauses in the Articles of Association which limit their powers are valid only within the company and have no effect on relations with third parties. The managers are liable, severally or jointly, as the case may be, to the company or third parties for violation of legal or statutory provisions applicable to Private Limited Companies, or for violations of the Articles of Association, or for mistakes made during their management.

The société anonyme or SA

The société anonyme or SA is a Public Limited Companies (PLC). It is a type of company where participation is based more on the capital invested than on the status of the shareholders. These are large companies which sell their shares (actions) to ordinary members of the public as investors. Article 385(1) of the UACC defines the Société Anonyme or SA (Public Limited Company) as a company in which the liability of each shareholder for the debts of the company is limited to the amount of share he has taken and his rights are represented by shares. The number of members in the SA may be two or more. However the UACC makes provision for a single shareholder to wholly own the company (Société Anonyme Unipersonnelle).65 So a person wishing to form the Société Anonyme need not go round to look for other members if he/she has enough capital . The minimum authorised share capital for the SA is fixed at ten million FCFA (10.000.000) francs CFA for companies whose shares are not offered to the public and for public companies intending to sell their shares to the public,68 they must have an authorised minimum share capital of one hundred million FCFA (100.000.000) francs CFA. The capital of the SA is divided in shares whose nominal value are not less than ten thousand FCFA (10.00O) CFA francs.70 The share capital of the SA must be fully subscribed before the date of signature of its Article of Association or holding of the constituent general meeting, and subscribers have a period of up to three years within which to complete payments. In principle, three types of organs intervene in the functioning of the SA, namely, the management organs, the deliberation organs and the control organs.

Unregistered Forms of Companies Under OHADA

OHADA law makes provision for two types of unregistered companies namely;

  • The  Societe  en Participation or SP (Joint Ventures) and
  • The Society de Fait or SF (De Facto Partnership) .
Société en Participation (joint venture)

The   Société en Participation (joint venture)  is described as an entity whose partners agree not to register it in the Trade and Personal Property Credit Register and not to give it a corporate personality. Such a company is not subject to publicity and its existence may be proved by any means.The Société en Participation (joint venture) is a company formed by at least two members, with the intention of having no registered office, no corporate name or assets and liabilities of its own. Such a company cannot enter into contracts; and cannot be a party to court proceedings; or be subject to collective insolvency proceedings. Partners in the Société en Participation are free to determine the object, duration and functioning of the company. They may also determine the rights of the partners and termination of the joint venture. Unless a different method of organization is provided for the relations between partners , this type of company is governed by the general rules applicable to the SNC and partners must comply with the mandatory rules which have been enacted by the OHADA Uniform Act Relating to Commercial Companies.

Société de fait or SF (De facto partnership)

The Société de Fait (De facto partnership) is a company which cannot be registered because it fails to respect a prescription of the Uniform Act. It is in fact an incompletely formed company. Article 864 of the UACC describes the Société de Fait as a de facto company where two or more natural persons or corporate bodies act as partners without having formed between themselves one of the companies recognized by the Uniform Act. OHADA Law also describes another situation where a de facto company may arise by stating that where two or more natural persons or corporate bodies form between themselves a company recognized by the Uniform Act, but have not fulfilled the constituent legal formalities, the company will be regarded as a de facto company. 3. Groupement d’intérêt économique (GIE) or Economic interest groups OHADA law has borrowed the French concept of « Groupement d’Intérêt Economique (GIE) The UACC in its Article 869 describes the GIE as a legal entity which has the exclusive object of putting in place for a specified duration all the means necessary to facilitate or develop the economic activity of its members and to improve or increase income from the said activity. From this the implication of creating the GIE is to foster economic activity. Two or more persons can create an economic interest group to carry out economic activities. Such a group can be registered in the Trade and Personal Property Credit Register and it would have corporate personality and full capacity from the date of registration. The law does not require any minimum amount of capital to create the GIE, so it can even be created without a share capital. Members of the group create such a structure for their own benefit and are liable for the debts of the group jointly and severally unless otherwise stipulated. Organization of the functioning of the GIE is determined by a contract and such a contract shall freely lay down the contributions of each member to the group. New members can join the group under the conditions laid down by the contract and those wishing to withdraw may do so under the conditions stipulated in the contract.89 Management of the GIE could be in the hands of one or more directors. Article 877 of the UACC is to the effect that the GIE could be administered by one or more natural persons or corporate bodies, provided that in the case of a corporate body, such corporate body shall designate a permanent representative, who shall incur the same civil and criminal liabilities as if he were a director in his own name.