South Africa: DRC Ratifies Ohada Accession Documents

Last Updated: 19 July 2012
Article by Steven DeBacker and Olivier Binyingo

On 27 June 2012 the Democratic Republic of Congo (DRC) took an immense leap forward in becoming the 17th Member State of the Organisation pour l'harmonisation du droit des affaires en Afrique (Organisation for the harmonisation of business laws in Africa) (OHADA).

More than a year after the publication of the law authorising its membership in the organisation and seven years since the declaration of its initial intention to do so the DRC announced its ratification of the instruments permitting its accession to the 1993 Treaty of Port-Louis establishing OHADA.

The DRC has now deposited its instruments of ratification in the OHADA depository state Senegal which will render the OHADA laws applicable in the DRC in September 2012.

The OHADA System

OHADA is a regional organisation seeking to establish a unified set of business laws to be used across its Member States intending thereby to provide legal stability in commercial fields.

The OHADA objectives were drafted bearing in mind that regional integration in Africa is a principal condition for the development of the African continent and the amelioration of the living conditions of African people.

Further economic integration is one of the bases of the African Union and legal integration is the driving force behind economic integration.

A legal revolution for the DRC

The introduction of the nine OHADA statutes representing modernity and simplicity in francophone African business law will overhaul the law in many spheres. They range in substance from company law to insolvency law arbitration securities law and methods of execution and debt recovery.

Most notable is the long-overdue replacement of the DRC company legislation, currently based on the 125 year old Décret du Roi–Souverain du 27 février 1887 relatif aux Sociétés Commerciales (DRC Companies Act).

The OHADA Companies Act provides that there will be a transitional period of two years from the date that it comes into force during which time entities are to amend or redraft their articles of association to harmonise them with the OHADA Companies Act. The previous laws will continue to apply to companies which have not yet conformed to the OHADA Companies Act during this period. Entities created after the OHADA Companies Act comes into force in September 2012 however will be created in accordance with OHADA law. This means that two sets of company law legislation will coexist for approximately two years: the OHADA and old DRC Companies Acts which may lead to some confusion: the notion of a SARL in the DRC for example is similar to the SA in OHADA law which is a public limited company. On the other hand the notion of a SPRL is akin to an SARL in OHADA law which is a private limited company

Enterprises will further need to bring their accounting systems in line with OHADA principles and prepare and file annual financial statements in a proper manner as set out in the OHADA Accounting Systems Act. This statute will also enter into force in September 2012.

One of the most recently modified OHADA statutes, the OHADA Securities Act which came into force in OHADA Member States in 2011 will become applicable with immediate effect in the DRC in September 2012 but will apply only to those forms of security which are consented to and constituted after its entry into force. Those securities which were established prior to the application of the OHADA Securities Act will remain subject to the laws under which they were created until they expire.

The field of alternative dispute resolution (ADR) will be brought into line with the OHADA laws thereon concerning in particular conciliation and arbitration. As in the other Member States an OHADA arbitral tribunal will be established in the DRC and the OHADA Arbitration Act will become enforceable from September 2012 and will apply to all arbitration proceedings arising after its entry into force where the proceedings take place in an OHADA Member State.

The DRC is not party to the New York Convention, and the OHADA Arbitration Act does not cover the enforcement of foreign arbitral awards in Member States. The latter though provides a significant alternative for those entering into a dispute resolution process (in line with the OHADA objective to promote ADR) who without OHADA might have been faced with a more cumbersome and time-consuming enforcement process under DRC law. No matter a contract's substantive law and the arbitral institution and corresponding procedural law chosen by the parties if the arbitration takes place in a Member State, such as the DRC the provisions of the OHADA Arbitration Act relating to the enforcement of an arbitral award may be used in the DRC or any other OHADA Member State.

Also of great significance in the field of dispute resolution is the existence of the overarching Common Court of Justice and Arbitration of OHADA (the CCJA) which hears appeals on judgments based in OHADA law initially made in the courts of the various OHADA Member States and soon also from DRC courts. The existence of the CCJA will provide an assurance of transparency judicial experience and legal certainty in the application of OHADA law including in the DRC.

The OHADA Member States other than the DRC now are: Benin Burkina Faso Republic of Congo Cameroon Comoros Chad Central African Republic Côte d'Ivoire Gabon Guinea Guinea Bissau Equatorial Guinea Mali Niger Senegal and Togo.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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