Institut Universitaire et Stratégique de l’Estuaire

Estuary Academic and Strategic Institute(IUEs/Insam)

Sous la tutelleacadémique des Universités de Dschang et de Buéa.

LECTURE NOTES ON:

COMPANY LAW

Facilitator:

Dr. NAH Anthony

2023/2024 ACADEMIC YEAR

Objective of the course
The desire to encourage entrepreneurship so as to combat unemployment and
improve on economic performance has been the principal preoccupation of the
Cameroon government lately. The knowledge of establishing businesses in the form of
companies and the management of same plays a non negligible role towards this quest.
Thus, companies like human beings are born, they live and die. This course is to
enable the student at the end of it to understand the fundamental rules and practices
governing the formation, functioning, closure and subsequent liquidation of
companies. But before tackling the subject matter, let’s trace the evolution of company
law in Cameroon.
Chapter one: The definition of a company
The problem of defining the term company is not new. This term has troubled
company lawyers since the 17th century. In fact it is difficult if not impossible to have
a common definition of this word. Its definition will vary as one move from one
society to another and from one legal system to another. Kyd in his work titled Kyd on
Corporations 1793 considered that a company was a corporate aggregate. It was
according to him a collection of many individuals united into one body under a special
denomination having the attributes of:
a) Perpetual succession under an artificial form.
b) being vested by the policy of the law with a capacity of acting in several
respects as an individual, that is:
- taking and granting property.
- contracting obligations.
- suing and being sued.
- enjoying immunities and privileges in common.
- exercising a variety of political rights.
Buckley J in Re Stanley Tenant V. Stanley stated that the term company has no
strictly technical meaning. It involves two ideas: first, the association of persons so
numerous as not to be described as a firm and second, the consent of all the members
is not required for the transfer of a member’s interest.
Section 4 of the UACCEIG defines the word company as understood within the
zone. It states that a company is an association formed by persons who agree by
contract to assign assets in cash or in kind to an activity for the purpose of sharing
profits or benefiting from savings that may accrue there from. This definition shares
much in common with that posited by Lindley. The only difference is that section 4
goes further to state that the partners of the company shall undertake to share losses
under the conditions stipulated by the Act itself.

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Chapter Two: Historical evolution of Cameroonian Company Law

The History of Cameroonian Company Law could be traced through four

phases,
Namely:
_The period before 1922
_The period 1922 to 1961
_The period 1961 to 1998
-The period since 1998.
I) THE PERIOD BEFORE 1922
The starting point of this period is the year 1856.It is important to state
that between 1956 and 1922 there was no uniform body of company Law that
applied to Companies existing then composed mostly of British, French,
German, Dutch, Portuguese and Spanish entities. The year 1856 is significant in
that on January 14th a court known as the Court of Equity was established in
Douala by the British. This Court was set up by a treaty for the purpose of
maintaining peace and settling disputes that arose from the commercial
transactions of the international community in Douala.
II) THE PERIOD BETWEEN 1922 AND 1961
The British Mandate for the Cameroons which gave Britain the
responsibility of maintaining peace, order, and good governance for the British
Cameroons as well as the promotion of the material and moral wellbeing and
social progress of its inhabitants was confirmed by the Council of the League of
Nations on July 20th 1922
Before this Mandate, the British had given themselves the right to apply
their Laws to their overseas territories which were merely protectorates under
the Foreign Jurisdiction Act 1843 to 1870.
By the terms of its Mandate, Britain was empowered not only to enact and
administer legislation for the Cameroons, but also to apply its laws to the
territory .Under Article 9 of the Mandate, Britain was permitted to administer
the Cameroons as an integral part of British territory and to constitute it into a
custom, fiscal, and administrative or federation with its adjacent territories..
Britain put this provision into application in 1923 by enacting the
Cameroon under British Administration Orders in Council No.1621 of June
1923 by the terms of which the Cameroons was to be administered as if it
formed part of the British Protectorate of Nigeria This account for legacy of
Nigerian legislation in Cameroon, some of which including the Companies
Ordinance are still enforced today.

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 As far as company law is concerned the law to be administered
thus comprise, the common law, doctrines of equity, and statutes of general
application which were enforced in England by the cut of date of 1st
January1900
Meanwhile in former East Cameroon, the mass of legislation
governing company matters comprise of:
-the original French Code de Commerce of 1807, rendered applicable in
Cameroon by a Law of 7th December 1950.
-Law of 24th July 1867,(and its subsequent amendments up to 1950)
governing Public Ltd Companies(Societes Anonyme) and Limited
Partnerships (La societes en commandite par actions) rendered applicable in
Africa by the Decree of 30th December 1868.This law would be
supplemented by the law of 4th march 1943.Worth mentioning is the fact that
the French Law of 15th November 1940 governing Public Ltd Companies in
which an individual could be both the chairman of the Board of Directors and
Managing Director was not rendered applicable in French overseas
territories.
- The provisions of articles 29 and 39 of the Code de Commerce.
-the Law of 7th March 1925 on Private Ltd Companies ( La Societe a
Responsabilite Limitee “SARL”) rendered applicable in French overseas
territories by virtue of its Article 4 and particularly in Cameroon by the
Decree of 14th May 1930.
-Law of 18thMarch 1919 relating to the Commercial register.
III) THE PERIOD 1961 TO 1998
In 1961, the Southern Cameroons joint the then Republic of
Cameroon to form the Federal Republic of Cameroon, taking on the
appellation of West Cameroon. This constitutional alteration notwithstanding
the laws applicable to companies in the regions has remained virtually
untouched.
Chapter Three: Genesis of the OHADA Treaty
Conceived in April 1991 in Ouagadougou (Burkina Faso) during
a meeting of the ministers of Finance of the Franc Zone, OHADA was created on
the 17th of October 1993 by the treaty of Port-Louis (Island of Mauritius). As its
acronym indicates, it is an organization for the harmonization of business Law in
Africa. Member states include: Benin, Burkina Faso, Cameroon, Central African
Republic, Comoros Island, Congo, Cote-D’Ivoire, Gabon, Equatorial Guinea, Mali,
Niger, Senegal, Chad, Togo, Republic of Guinea and Republic of Guinea Bissau.

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 The last two countries adhered to the treaty after it had been signed by the first
fourteen.

Prior to 1993, it was noticed within the region that there was a slowdown in
economic activities due among other facts, that investors were reluctant to do
business with the Zone. The diagnosis given to the reaction of investors was that
they were scared by the inadaptability of the business laws at the time and equally
scared about the working of the judicial machinery.
The legal insecurity could be explained by the fact that ever since independence
the countries of the Zone inherited a legacy of colonial Laws which, in spite of the
dynamics of the environment in which these laws operated little or nothing was
done to reform it. Example is that in company matters it was the old French Laws
of 1867, 1925, 1919, etc. that were applicable in Cameroon. These laws were
obsolete and the lacunae were many. There was therefore the difficulty of
determining exactly at times which legal rule would apply to a particular dispute.
The insecurity posed by the poor functioning of the judicial machinery can be
explained by the fact African courts during this period were in acute shortage of
judicial staff, and the existing ones were either deficient in the knowledge about
law or involved themselves too frequently in acts that were professionally
unethical.
It was in this background that OHADA was created and one of its assignments
was to ameliorate the laws and the judicial mechanism of the region so as to
encourage investment. In order to do this OHADA has got three essential roles to
play, namely:
-Legislate on business Laws
-Adjudicate on disputes
-Train Magistrates and auxiliary judicial staff.

 OHADA Uniform Acts

1 Insolvency law, adopted on 10 September 215

2 General Commercial law, adopted on 15 December 2010
3 Organizing Securities Law, adopted on 15 December 2010
4 Contract for the carriage of goods by road, 22 March 2003
5 Cooperative Societies Law, 15 December 2010
6 Organizing simplified recovery procedures and measures of execution, adopted on
April 10, 1998
7 Mediation Law, adopted on December 15, 2017
8 Arbitration law, adopted on November 23, 2017
9 Uniform Act relating to accounting law and financial information, adopted on 26
January, 2017.

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10 Uniform Act on commercial Companies and Economic Interest Groups, adopted on
January 30, 2014
Chapter Four: Forms of Companies Recognized by the OHADA Law

Art 3 of the Uniform Act states that any persons whatever their nationality
wishing to engage in commercial activity in the form of a company on the territory of
one of the contracting states shall choose the form of company which suits the activity
envisaged from amongst those provided for by the Uniform Act.

The Uniform Act recognizes four forms of companies that can be registered and
two forms which cannot be registered.

I. REGISTERED FORMS

A) Les Societes en nom collectif (SNC)-The Partnership

The SNC (partnership) according to art.270 of the uniform act is a company in which
all the partners are traders and have unlimited liability for the company’s debts
.Membership is based on intuitu personae and is suited for small companies made up
of natural persons who know themselves, have confidence in each other and accept to
run a common managerial risk.

B) Les Societes en commandite Simple (SCS)-The Ltd Partnership

A limited partnership according to Art.293 of the Uniform Act is a partnership in
which one or more partners with unlimited liability for the company’s debts referred to
as”active partners” co-exist with one or more partners liable for the company’s debt up
to the limit of their shares referred to as “sleeping partners” and whose capital is
broken down into partnership shares.
A sleeping partner puts into the firm a certain amount of money for example
one million FRS and then he is not responsible for the debt of the firm above that
figure. This means that he can lose this one million FRS but cannot be made bankrupt
or made to pay more than this sum. The one million FRS is the “limit” of his liability.
He cannot however take part in the management of the firm and this explains why he
is referred to as a sleeping partner as opposed to the unlimited partners who are
responsible for the day to day management of the firm (active partners).
The limited liability partnership shall be referred to by a name which shall be
immediately preceded or followed by the words “limited liability partnership” or the
abbreviation(LLP) in French Societes en commandite simple (SCS)

C) Les Societes a Responabilite Limitee (SARL)-The Private Ltd Company.

Art.309 defines a Private Ltd Company as a company in which the partners are liable
for the company’s debts up to the limit of the contribution and their rights are

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represented by company shares. It may be formed by a natural person or a corporate
body or by two or more natural persons or corporate bodies.
Its registered capital as provided for by art.311 shall be at least 1million FRS .It
shall be divided into equal shares whose par value may not be less than 5000 FRS.
It shall be referred to by a company name which must be immediately preceded
or followed by the words Private Ltd Company or the abbreviation “Ltd” written in
legible characters.
D) Les Societes Anonymes(SA)-The Public Ltd Company.
Art 385 defines a public Ltd company (SA) as one in which the liability of each
shareholder for the debts of the company is limited to the amount of shares he has
taken and his rights are represented by shares.
A public limited company may have only a single share holder.
The minimum authorized capital is fixed by art.387 at 10million FRS. It shall be
divided into shares of a face value of not less than 10000 FRS.
A public Ltd company shall be known by a company name which shall
immediately be preceded or followed in legible characters by the words “Public Ltd
Company” or the abbreviation “PLC”.

II. UNREGISTERED COMPANIES.

E) Societes en Participation-Joint Venture
Some say that a joint venture is to a registered company what concubinage is to
marriage. Initially, a joint venture was destined to remain secret unknown to third
parties. Once third parties had knowledge of its existence, it became a societes cree
des fait (de facto company). But today art.854 of the uniform Act respecting the terms
of art.114 of same defines a joint venture as a company which the partners agree not to
register.

F) Societes Crees de fait-(De facto Companies)

This is a company that does not respect the legal form for establishing a company and
cannot be registered. This is governed by art.115 of the Uniform Act. This article
provides that where contrary to the provisions of the Uniform Act, the articles of
association or where necessary the unilateral deed of intent is not established in
writing and consequently that the company cannot be registered, the company shall be
referred to as a de facto company. It shall not have legal personality. De facto
companies shall be governed by the provisions of articles 864 et seq. of the Uniform
Act.

Chapter Five: Conditions for the formation of business entities in Cameroon

The process of company formation requires the fulfillment of certain

conditions. These are general conditions for the validity of a contract. Conditions

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relating to the substance of the contract and those relating to the form of the contract
must be respected. The non-respect of these conditions could lead to sanctions.
A. substantive conditions
These conditions are not expressly mentioned by the Uniform Act but since the
formation of a company involves a contract, the general principles of contract law
apply. However, the conditions of engaging in commercial activities laid down by the
Uniform Act on General Commercial Law are instructive. Since the UA is inspired
from French Civil Law, article 1108 of the Civil Code is instructive as to the
conditions which must be fulfilled to render the contract valid. It provides that for the
contract to be valid, the parties must agree, have capacity, indicate the object of the
company and the motivating reason, what is known in French as the cause du contrat.
1) Consent
Those who come together to form a company must agree to so do. Agreement which
constitutes the contract should be freely made. Article 1109 of the Civil Code states
that there is no valid consent if the consent has been given only by mistake or if it has
been extorted by violence or induced by fraud.
There should be no contractual clause that is weighted in favour of one of the
parties so as to enable him take an exorbitant advantage of the company to the
detriment of the other members or parties. This type of clause is known in French as
clause ileonie
2) Capacity
Section 7 of the UACCEIG states that any natural person or corporate body may be a
partner in a commercial company where he is not subject to any prohibition, incapacity
or incompatibility as defined in the UAGCL. It is worth emphasising that the rights of
corporate bodies are exercised through the intermediary of their representatives who
are natural persons.
The UAGCL lays down in its book 1 chapter 2, the rules governing capacity to
trade. It states clearly in its section 6 that nobody can engage in trading as a regular
occupation unless he has the capacity to trade. Section 9 states that the exercise of a
commercial activity shall be incompatible with the exercise of the following duties or
occupations:
- Civil servants and staff of public entities and state owned enterprises.
- Court official and auxiliary officers of justice, barristers, bailiffs, auctioneer,
stock exchange broker, notary, court registrar, legal administrator and
liquidator.
- Approved chartered accountant, an approved accounting officer, auditor,
consulting lawyer, ship broker.
- More generally, any occupation the exercise of which is subject to regulation
forbidding the exercise of such activities concurrently with a commercial
occupation.

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 The UAGCL also provides for some forfeiture. Its section 10 provides that no
person shall carry on a commercial transaction directly or through an intermediary
where he is a subject of:
- A permanent or temporal general ban imposed by a court of one of the
contracting states whether the said ban is imposed as a principal or accessory
penalty.
- A ban imposed by a professional court. In this case the ban shall apply only to
the commercial activity concerned.
- A definite sentence of imprisonment for an ordinary law offence or a non
suspended sentence of not less than three months imprisonment for
misdemeanour against property or an offence of an economic or financial
nature.
Section 8 of UACCEIG states that minors and legally incapacitated persons may not
be partners in a company where their liabilities for the company’s debts exceeds their
contributions. This put this category of persons out of partnership and they cannot be
active partners in a limited partnership.
Section 9 of the UACCEIG prohibits a husband and wife from being partners in
a company where they shall be severally liable for the company’s debt.
Foreigners have the capacity to be partners of a company in Cameroon provided
they accomplish conditions necessary for the exercise of their activities on the territory
of Cameroon. However, where more than 50% of the company’s capital is held by
foreigners, they must seek a prior approval of administrative authorities before the
company is registered. See the law of 10 August on commercial activities in
Cameroon.
3) Object/aim
The object of a company signifies two things: first, section 4(1) of the
UACCEIG provides that the object of a company shall be to assign assets in cash or in
kind to an activity for the purpose of sharing the profit or benefitting from savings that
my derive there from – the contribution of the parties.
Secondly and more important, the object of the company lists the things which
the company can do. These things must be indentified and described in the Articles of
Association. Under the Companies Ordinance, the object of the company is contained
in the Memorandum of Association instead of the articles of association as prescribed
by the UA.
As per section 20 of the UACCEIG, the object of the company must be lawful.
Where the company is engaged in a regulated activity, it shall comply with a special
regulation governing that activity (section 21 UACCEIG). The company’s object may
be changed under the conditions stipulated for amending the articles of association for
each form of company.

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 If a company enters into a transaction which is not included in the object clause,
that transaction will be at least in common law ultra vires and void. The object clause
indicates the capacity of the company
4) Motivation reason (cause)
This is the purpose of the agreement – the end pursued. This explains the reason why
many people associate to do business. It consist of the realization of the company, the
cause must exist, be legal and moral.
B. Formal conditions
There are conditions which are common to all forms of companies and there are
equally supplementary conditions applicable only to companies making public calls
for capital.
1) Common formalities
These conditions relate to the establishment of the articles of association which is the
contract creating the company and the steps that must be taken to inform third parties
of the existence of the company.
a) The establishment of Articles of Association
The articles of association must take a particular form, contain precise information and
must be signed by partners.
i) The form
Section 10 of the UACCEIG provides that the articles of association shall be
established by a notarized deed or by any other instrument that ensures legal validity in
the state of the company’s registered office. Such instruments together with certificates
of writings and signatures of all the parties shall be deposited as originals in the
notary’s office. The act creating a company could be a unilateral deed of intent
registered with the notary. In case of companies with large capital and a complex
management structure, it is always advisable for the advice of a notary to be sought
during the preparation of the articles of association by virtue of their expertise.
Section 11 states that where articles of association have been drawn up in a
private document (acte sous seing prive), many original copies shall be established, as
shall be needed to deposit one copy in the company’s registration office and to fulfil
all the required formalities. A copy of articles of association on plane unheaded paper
shall be given to each partner. However, in the case of partnerships (SNC) and limited
partnerships (SCS), one original copy shall be given to each partner.
The insistence that the unilateral deed of intent must be in writing is in
principle, the rule establishing the validity of a contract, but its non-respect does not
nullify the contract (company). As stated by section 115, where contrary to the
provisions of the UA, articles of association or where necessary the unilateral deed of
intent is not established in writing and consequently that the company may not be
registered, the company shall be referred to as a de facto company and shall have no
legal personality.

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 ii) The Content of the Articles of Association
Section 13 of the UACCEIG indicates the mandatory information that must be
contained in the articles of association. They are:
- Form of the company: this permits readers to know the rules governing its
functioning and also indicates the rights and duties of partners.
- Name of the company followed by its acronym if possible.
- The nature and field of the company’s activity which constitutes it object.
- The company’s registered office.
- Its duration which may not exceed 99 years though there is possibility of
extension.
- The identity of the contributors in cash and for each of them, the amount of
their contributions and the number and value of the shares handed over in
exchange for each contribution.
- The identity of the contributors in kind, the nature and value of contributions
made by each of them, the number and value of shares handed over in exchange
for each contribution.
- The identity of persons enjoying special benefits and nature of such benefits.
- The amount of registered capital.
- The number and value of shares issued stating where necessary the various
classes of shares.
- The provisions relating to the distribution of profits, the constitution of reserves
and the distribution of bonuses after liquidation.
- Rules governing the functions of the company.
iii) The signing of Articles of Association
The future partners seal their engagement by signing the articles of association. They
could do this personally or through the intermediary of an agent who must produce a
power of attorney (procuration). The company is born on the day the articles of
association are signed by the members. The articles of association which is a contract
binding the partners constitutes the law which they have collectively agreed to guide
the management of the company, any amendment will require an extra-ordinary
meeting in which the decision is arrived at by the quorum and a majority which is
higher than under ordinary circumstances.
The articles of association is the basis for the control of the entire company. If
these articles have to bind the third parties who enter into transactions with the
company, the articles must be made public.
b) Publicity
The rules governing publicity in company matters are contained in section 257 to 269
of the UA. According to section 257, the organs empowered to carry on announcement
are on the one hand, the official gazette and the news papers empowered by competent
authorities to publish them and on the other hand, national news dailies in the

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contracting states of the registered office of the company which show evidence of
effective sales through subscriptions, depositaries or vendors under the following
additional conditions:
- They have been appearing for more than 6 months.
- They are distributed nationwide.
Publication by deposit of deeds or documents shall be done at the registry of the
competent court of the place of the registered office of the company.
Where the publicity formality concerning the formation of a company or the
amendment of its articles of association has been omitted or has been improperly done
and the company has not regularized the situation within a period of one month from
the date of formal notification addressed to it, any interested party may petition the
president of a competent court through summary proceedings to designate an
authorized agent to comply with the publication formality (section 259 UACCEIG).
In all cases where the UA provides that the decision shall be by decree of the
president of the competent court through summary proceedings, a copy of the said
order shall be deposited at the court registry and appended to the company’s file and
entered in the Trade and Personal Property Credit Register (TPPCR).
The importance of publishing the articles of association is to reveal the
existence of the company to third parties. Potential creditors get to know whether they
are lending to an activity within the company’s capacity or ultra vires the company.
Where the formalities for the formation of the company are accomplished
within 15 days following registration, a notice shall be inserted in a news paper
empowered to publish legal notices in the contracting state of the registered office of
the company.

Chapter six: The object of the company and ultra –Vires doctrine

This clause lists the things which the company can do. If it enters into a transaction
which is not included in the clause, that transaction will be at least in Common Law
ultra-vires (beyond its powers) and void, that is of no effect. This clause determines
the company’s capacity. The ultra vires rule limits the indiscriminate extension
(expansion) of the company.
The person most affected by the ultra vires rule of company law in more recent
times were creditors who had supplied goods or services to the company for a purpose
not contained in its object clause. If the company was solvent, no doubt the creditors
would be paid but if it went into insolvent liquidation, they would not even be able to
put in a claim. The court will reject it as being based on a void transaction. Other
creditors may get paid some parts of their debts if the company had some funds. But
the ultra vires creditors will get nothing.

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 The object of every company must be lawful (section 20 UACCEIG). Where
the company is engaged in a regulated activity, it must comply with special regulations
governing such activity (section 21 of the UACCEIG). The company’s objective may
be changed under the conditions stipulated for amending the articles of association for
each company.

Chapter Seven: The registration of companies and other business entities

Registration of companies

As already seen, a company formed and not registered is known either as a

joint venture (société en participation) or a de facto company (société crée de fait).
These forms of company by virtue of the fact that they are not registered do not have a
legal personality. When a company is formed and registered in the Trade and Personal
Property Credit Register, it acquires a legal personality form the date of registration
(section 98 UACCEIG). Let’s begin by examining the Trade and Personal Property
Credit Register.
I – The Trade and Personal Property Credit Register (TPPCR)
Unlike the commercial register that existed hitherto to the adoption of UACCEIG, the
trade and personal property credit register and the procedure of registration of
companies therein are well organized
A. Organization of Trade and Personal Property Credit Register
The Trade and Personal Property Credit Register is organised in a pyramidal manner
from the local to the regional level passing through the national level.
1) Local card index
The local card index is kept by the registry of the court of first instance under the
supervision of the president or a judge delegated by him (section 20(1) UAGCL).
2) National card index
Information entered in the Trade and Personal Property Credit Register at the local
level is centralized in the national card index (section 20(2) UAGCL). In Cameroon, it
is kept by the registry of court appeal in Yaounde.
3) Regional card index
Information entered in the national card index shall be centralized in the regional card
index kept by the Common Court of Justice and Arbitration (section 20(3) UAGCL).
B. The procedure for registration
Companies and corporate bodies referred to in the UACCEIG and UAGCL shall apply
for registration in the TPPCR within a month of their formation to the registry of the
court within whose jurisdiction their registered office is located. The application shall
mention amongst others:
- The business name where applicable, the commercial acronym or sign.
- The activity or activities carried out.

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 - The form of the company or corporate body.
- The amount of the registered capital with the indication of the amount of
contribution in cash and evaluation of contributions in kind.
The following supporting documents shall under the penalty of rejection be attached to
the application:
- Two certified copies of articles of association.
- Two certified copies of the validity and conformity certificate or of a certified
true copy of the certificate of payment of shares.
- Two certified true copies of the list of managers, administrators or business
partners having unlimited liability vis-à-vis the company’s debt or with power
to commit the company.
- Two extracts of the criminal records of the persons referred in paragraph c
above. Where the applicant is not a national of the contracting state, he will
forward his criminal record from the authorities of his country of birth and
failing this any other document in lieu thereof.
- Where necessary, a prior authorization to operate the business.

Chapter Eight: The principle of corporate personality

The effects of registration consist generally on the advantages proceeding from

corporate personality conferred on the company following registration. The cardinal
principle of incorporation is that once a company is incorporated, it assumes a form, a
separate legal entity distinct from its members.
Thirty years later, the House of Lords had the occasion to finally lay down the
principle of corporate personality. This opportunity came in the famous case of
Salmon V. Salmon & Co. Ltd (1887). The case of Salmon thus established the
corporate veil through which personalities of the members of the corporation cannot be
perceived. It is from this fundamental principle of separate personality that most of the
advantages of incorporation spring.
A. Advantages of incorporation
The advantages that follow from incorporation are numerous such as the limited
liability of members.
1) The limited liability of members
In company law, once a company has been incorporated, its entire membership enjoys
limited liabilities, that is, the members of the corporation are not liable for its debts
since the corporation has a separate personality from that of the members. Thus, in the
absence of express provisions to the contrary, the members are completely free from
any personal liability. In the case of a company limited by shares, each member is
liable to contribute when called upon to do so, the full nominal value of the shares held
by him in so far as this has not already been paid by him or any prior holder of those

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shares. In the case of a guarantee company, each member is obliged to contribute a
specified amount to the company’s assets in the case of its being winded up where he
is a member.
2) Property
One of the advantages of corporate personality is that it enables the property of the
corporation to be clearly distinguished from that of its members. In an unincorporated
association, the property of the association is that of the members. The property of the
corporation on the other hand is clearly distinguished from that of the members and the
members have no proprietary rights on the property of the company but merely to their
shares.
The change of membership which causes inevitable dislocation to a partnership
leaves the corporation unconcern, the shares will be transferred but the corporation’s
property will be untouched.
3) Litigation
The rules of law which guide the actions that could be instituted by or against
unincorporated associations are ill-defined, little explored and obscured. Incorporated
companies are not affected by this state of law as they can sue and be sued in their
corporate names.
4) Perpetual succession
As Gower graphically puts it, one of the advantages of artificial persons is that it is not
susceptible to “the thousand natural shops that flesh is heir to.” The death of a
member leaves the company more or less unaffected and members may come and go
but the company can go on for as long as the members wish. This is in contrast with
the UA which stipulates that at the formation, members should determine the duration
over which the company should operate.
5) Transferable shares
The shares of incorporated companies are items of property which are freely
transferable in the absence of provisions to the contrary. In the transfer transaction, the
transferor drops out and the transferee steps into his shoes
6) Borrowing
An incorporated company enjoys the advantage of easy borrowing. This is because of
its exposure to the possibility of having collateral security and ease of tracing
(guarantees) unlike unincorporated companies
7) Company’s nationality
The company’s nationality is sometimes determined by the country in which it was
incorporated. Knowledge of the nationality of the company is important for the
following reasons:
- The law applicable on companies is the law of their nationalities.
- Companies may invoke rights reserve only for national.

15
 - A company could escape during periods of trouble for example war (measures
which aim at confiscating enemy’s property).
The UA does not address the issue of the company’s nationality. This must be
because the companies in the contracting states are governed by a common legislation.
This explains the English criterion of incorporation which attached the company to the
country in which it was incorporated.
Section 1 of the UACCEIG states
“Every commercial company including those in which the state or corporate body
governed by public law is a partner whose registered office is located in one of the
territory of the contracting states of the treaty on the harmonization of business law in
Africa shall be subject to the provisions of this UA.”
To make things clearer, section 3 goes further to prescribe that:
“Any person, whatever their nationality wishing to engage in a commercial activity, in
the form of the company in the territory of one of the contracting states shall choose
the form of company which suits the activity envisaged from amongst those provided
for by the Uniform Act.”

Chapter Nine: Lifting the veil of incorporation

The principle set out in Salmon Co Ltd supra, that is, that a body corporate is a
separate entity separate from its members led to the use of the phrase the veil of
incorporation which is said to hang between the company and its members and in law
at least acts as an invisible screen between them.
However, the principle can cause difficulty and in a number of cases, is lifted
by the law so that the human and commercial reality behind a corporate body can be
taken account of. The veil may be lifted by the judiciary or statute.
1) Lifting the veil of incorporation by the judiciary
It is difficult to be precise on the circumstances in which the judge will lift a corporate
veil. However, it may be said that the power to do so is used by the judiciary in a
flexible way to counter fraud, sharp practice and illegality.
a) illegality
The courts have been prepared to draw aside the veil of incorporation. In order to
establish that a company was owned by nationals of an enemy country so that to do
business with it will be illegal because it will be trading with the enemy.
b) Sharp practices
There is also the sharp concept which seems to apply where the company concerned
has been formed primarily to evade existing liabilities or to defeat the law. Here the
courts have been prepared to defeat sharp practice by individuals who are trying to
hide behind the company’s front.

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 2) Lifting the veil of incorporation by statute
section 891 of the UACCEIG states that “any manager of a private ltd co, director,
directors, chairman and managing director, general manager or assistant managing
director who in bad faith uses the asset or credit of the company in a way which is not
good for the company for personal, material or private ends or in the interest of
another company which has indirect influence shall incur punitive sanctions.”

Chapter Ten: Organs of a Company

The organization and functioning of commercial companies is based on the

organs of the company. As such there is a fundamental organ which is that of partners
and the management organ of the company.

I – The main organ of the company: the partners

For a proper organisation and functioning of the company, appropriate organs
must be put in place. These organs will vary depending on the form of company. In
companies based on intuitu personae, the rules are relatively simple. The Civil Code in
its articles 1856-1861 previews a situation where either all the partners together
administer the company or one is designated to do so. The UA adds in its section 207
that partnership shall be a company in which all the partners are traders and have
unlimited liability for the company’s debt. Section 299 states that sleeping partners
may not perform any act of external management even by virtue of the power of
attorney.
Companies are made up of partners who are different from ordinary creditors of
the company. They are members of a group born from the signing of the articles of
association. That is why partners in their totality form a fundamental organ in the life
of a company. Let’s examine the notion and the role of partners and their rights and
prerogatives.
A. The notion and role of partners
The status of a partner goes with the acquisition of shares in a company.
Because of the shares, the partners could enjoy certain rights and prerogatives in the
company, thus demonstrating their importance.
1) Notion of Partners
A partner whether a natural or artificial person is a participant in the company.
In French law, partners are known by different names depending on the form of
company. They are known as associé en nom in a partnership, the commandité and
commanditaire in a limited partnership, participant in société en participation (joint
venture), actionnaire in public ltd company and porteur de parts in private ltd
companies.
The status of partner is proven from the company’s contract if the company is a
partnership, limited partnership or private limited company. This is so because in
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principle, all the names of partners must figure on the articles of association. In public
limited companies, the status of partners is proved from the transfer register or by the
simple possession of a share certificate by the bearer. All companies insist for its
proper functioning on a coming together of a certain number of partners. The number
of partners may depend on the form of company.
As for limited partnership and joint venture, the minimum number of partners is
two. In private limited company initially, the 1925 law fixed a minimum number of
partners at two and maximum at 50. Today section 302(2) UACCEIG provides that the
private limited company can be formed by a natural person or corporate body or 2 or
more natural persons or corporate bodies. In public ltd companies, the 1867 law
initially insisted on a minimum of 7 shareholders. Today, section 385(2) makes it
possible for one person to form a public limited company.
2) Role of partners: the contribution of shares
As the main organ of the company, partners have a main role to play, that of
contribution. Shares are handed over in consideration of their contributions. A share is
defined as a right to receive a certain proportion of the profits of the company and the
capital when the company is winded up. In return for the capitalization of reserves,
profits and share premiums, the company shall issue share or raise the phase value of
existing shares (section 63(1) UACCEIG). Section 56 UACCEIG states that shares
issued by the company shall have the same phase value. A nominal value of shares in
partnerships and limited partnerships is freely fixed by members. It is 5000frs and
10000frs in private ltd company and public ltd company respectively.
Shares are transferable. Section 57 of UACCEIG states that company stocks
(part sociale) shall be transferable while shares (actions) shall be transferable and
negotiable. Shares have always been transferable but not stock. The transfer of stocks
is an innovation of the UA.
Pubic limited companies issue negotiable shares. It is forbidden for any company other
than public limited companies to issue such shares. It shall also be forbidden for
companies other than public limited companies to underwrite the issue of negotiable
instruments.
Partnerships, limited partnerships and private limited companies issue
transferable stocks. For partnerships, stocks may only be transferable upon unanimous
decision of the partners. Where the partners fail to reach unanimity, the transfer shall
not take place but the company’s articles of association may make provisions for a
redemption procedure to enable the transferring partners to withdraw.
Concerning private ltd companies, the UA organises the modalities for transfer
of stocks between partners or third parties and also the transmission of stocks in case
of dead (section 317 UACCEIG). In all companies today, there is the possibility of
transferring stocks and shares even if tied to conditions.

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 B. Rights and prerogative of partners
1) Rights
According to section 53 UACCEIG, company shares shall confer on their holders the
following rights:
- a right to a share of the company’s profit whenever they are distributed;
- a right to the company’s net assets when shared following the dissolution of the
company or where the company’s share capital is reduced;
- a right to participate and vote on the collective decision of the partners unless
otherwise provided by the Uniform Act for certain classes of shares.
These rights are exercised under conditions laid down for each form of company. Such
rights may only be suspended or cancelled by express provisions of the UA (section
55). We can distinguish the rights into pecuniary and non pecuniary rights.
a) Pecuniary rights
This is principally the right to dividend distributed by the company under conditions
fixed in the articles of association failing which it shall be done proportional to
contributions. There is also the right to benefit from the reserves (gratuitous)
attribution of capital in the case of increase of capital. There is equally the right to take
back the initial contribution in case of liquidation.
According to section 54 UACCEIG, the right and obligations of each partner
shall be proportional to the amount of his contribution whether such contributions
were made during the formation of company or during the existence of the company.
This rule applies to the sharing of dividends and the determination of the rights of
partners in the event of winding up.
The partners will receive no dividends in case there is no profit. Even when
there is profit, at times the company can decide to put in place a reserve in order to
auto finance it. The distributable profit shall be the income of the trading year to which
shall be added income brought forward less past losses and appropriation for reserves
in accordance with the provisions of the law or of the articles of association.
The general meeting may under conditions set forth in the articles of association
decide to distribute all or part of the company’s reserve fund provided the reserve is
not classified undistributable by the articles of association. In each case the general
meeting shall specify the reserved items from which such funds shall be drawn. In case
of winding up partners have the right to share in what is left after the creditors have
been paid.
b) Non pecuniary rights
These rights emanate from the notion of affectio societatis or the common will to come
together. They are rights which permit partners to exercise an influence on the
management of the company. This right is sometimes called political right. Every
holder of a share counts as a partner irrespective of his status or function in the
company, that is, the manifestation of the principle of equality between partners. This

19
equality however, is displaced at the point of voting at times taking account not only of
partners’ personality but also the number of shares which partners have.
2) Obligations
The partners have an obligation to contribute towards the losses of the company under
the conditions stipulated for each form of company. The sharing of benefits like that of
contribution towards losses should take into consideration the number of shares which
each partner has, that is, it is proportionate to the shares possessed in the company.
Worth mentioning is the fact that any clause in the articles of association which
dispense any member from the payment of contribution towards company’s losses is
considered ineffective or null and void (clause leonies). However, it is possible for a
partial exoneration to be decided upon.

Chapter Eleven: Management of a Company

There are different types of organs of management and their composition varies
from one company to another. However, common rules govern the appointment and
dismissal of managers.
A. Composition, appointment and revocation of management
Companies are either governed by managers or by a board of directors. In fact, the
running of the affairs of the companies by managers is the rule for partnership, limited
partnership and private limited companies. For public limited company, the affairs of
the company are controlled either by a board of directors (conseil) which amongst
them is appointed the chairman and a managing director or managing director
(administrateur general) in a company with not more than three shareholders. The
managers of companies may either be salary or non-salary. If they are salary, their
relationship with the company will be governed by the labour contract. If they are non-
salary, they will simply be regarded as agents (commandités) of other partners.
Access to the managing function is opened to everybody. However, there are
some prescriptions provided by the law. See capacity to trade in section 9 & 12 of
UAGCL and section 178 of the Penal Code.
In principle, partners designate managers of companies. Exceptionally, in cases
of disaccord of partners, the court can be called upon to appoint a provisional
administrator whose functions are spelt out and this is temporal.
The dismissal of company’s administrators still falls within the exclusive
powers of the partners. No matter the method of designation or dismissal of company
directors, the consequences are same for all forms of companies.
Third parties must be informed of their appointment, dismissal or resignation.
This information is deemed to have passed to third parties if it is inserted in the Trade
and Personal Property Credit Register (section 124 UACCEIG).

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 B. Rules of management
For a company to attain its objectives those charged with management and
administration must do their jobs well. The methods of management vary from one
form of company to another. There can be collegiate management as in partnership or
management based on division of labour (principle of specialization). Managers must
put in place strategies to enable the company acquire benefits or at worst avoid loss.
For this reason, they have been accorded powers which they must use in the daily
operation of the companies and powers to issue the financial situation of the
companies.
1) Power to manage
The problem of determining the powers of managers leads us to look at the conditions
under which acts of the managers will bind the company vis-à-vis third parties. This
implies that acts which are ultra vires are forbidden and sanctioned. In this wise,
judicial intervention is always necessary in the management of companies.
a) Commitment of the company by management
The powers of the managers are not defined by law but are contained in the articles of
association. The articles could grant to management very wide powers the same way it
could limit their powers. The UA defines the powers of the company’s administrators
if the articles of association is silent.
The administrators act on behalf of the company when the powers of the
administrators are contained in the articles of association, there must be of two
categories. A list of decisions that the administrators can take without consulting
partners and a list of decisions that must be taken in consultation of partners who
decide by majority or unanimously.
b) Judicial intervention in company management
Only the management organs of the company can appreciate what is in the best
interest of the company. The judiciary can therefore not judge the management organ
on the basis of the fact that the act was not in best interest of the company. However,
in times of crises, such as when there is paralysis of the management organ, the court
can appoint an administrator in lieu of those designated by the partners.
A partner who is not happy with the decision because he estimates that the
decision was arrived at by the undue use of majority power or minority power can
petition the court for its annulment. In this case, sections 130 and 131 of UACCEIG
are very instructive. Section 130 states that a joint decision may be annulled for undue
use of majority powers and may commit the partners who voted for them vis-à-vis the
minority shareholders. There shall be undue use of the majority powers when the
majority shareholders vote in favour of a decision which serve only to their interest,
goes contrary to the interest of the minority shareholders and cannot be justified in
terms of the company’s interest.

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 Section 131 on its part states that minority partners may be liable in the event of
undue use of minority powers. There shall be undue use of minority powers where in
voting, shareholders object to decisions which are necessary for the company’s interest
and cannot show any legitimate interest in doing so. Any dispute between partners or
between one or more partners and the company shall be brought before the competent
court of law (section 147 UACCEIG). The disputes may be referred to arbitration
either through the arbitration clause or by compromise.
2) The power to manage the financial situation
All commercial companies are under the obligation to keep accounts and this
obligation is governed by legal rules which must be respected. The breach of these
rules will call for sanctions to be meted out on the company’s management at fault.
a) The keeping of accounts
The Code de Commerce in its article 8 obliges all natural and corporate bodies which
have got the status of traders to keep a day book on which their commercial activities
shall be recorded on daily basis or to keep a monthly summary of the financial
operations or documents that can permit the verification of monthly operations.
Section 9 of same Code also obliges the trader to draw up every year’s inventories and
liabilities of the company. Loses and profits must be provided.
b) Sanctions
Many offences may be committed by company administrators in their management of
summary financial report. Essentially, dishonesty is at the base of all sanctions, see
sections 314 and 332 of the Penal Code.
Section 890 of UACCEIG punishes managers who are dishonest in preparing
annual summary financial statements. It states that a company executive who
knowingly even without any sharing of dividends publish or present to shareholders or
partners with a view to hiding the true situation of the companies summary financial
statements not showing for each fiscal year an accurate picture of the transactions of
the year, of the financial situation and of the situation of the estate of the company at
the expiry of this period shall incur a punitive sanction.

Chapter 12: The principle of majority rule and Minority Protection

The struggle between management and dissident shareholders can be taken in

another direction other than the annual general meeting. This is obviously in the
courtroom. The position under Common Law inspired Companies Ordinance that the
principle of majority rule will always prevailed to the detriment of the minority is far
fresh from reality nowadays. Be that as it may, during corporate democracy, Majority
rule remains the music of the day as a particular number of shares are fixed for each
shareholder in order to attend general meetings and take decision. This can be
considered as an exception to the rule that every shareholder has a right to attend

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meeting. The minority is not left without a solution in this frustrating situation. Thus,
they can resort to judicial action in order to influence decision making. By so doing,
they can compel majority shareholders to change a decision.
1 The Principle of Majority Rule.
Decisions taking through a vote in a company have often been surrounded to the
doctrine of fraud on the minority such that, the majority cannot waive a breach of the
director’s fiduciary duty by approving a misappriation by him of the corporation’s
property which could be fraud on the minority. The reason behind this is that
companies are regulated as democratic institutions in which the minority shareholders
ought to abide by the will of the majority. This is in line, with, the common democratic
saying that, “majority carries the vote”. Thus, we can say that, a majority rule is
formed when at a voting for or against a resolution, the opinion of the majority vote
casted holds water.
2. Minority Protection under OHADA Law
The UA has consolidated this position in its Articles 130, by indicating that
collective resolutions based on undue use of the majority shall be void and may
commit the partners who voted for them vis-à-vis the minority shareholders. There is
undue use of majority powers when the majority shareholders vote in favour of a
decision which serves solely their interest, goes contrary to the interest of the minority
shareholders, and cannot be justified in terms of the company’s interests.

Chapter 13: Dissolution-winding up and liquidation of companies

In spite of its long existence, a company can be terminated as a result of a

winding up proceeding. The immediate consequent of dissolution is the liquidation of
the company. This consist in the collection and realization of the company’s assets to
settle a list of contributories and creditors, to pay the company’s debts and liabilities
and divide a surplus (if any) amongst members of the company in accordance with
their rights. The provisions governing dissolution and liquidation of companies are
contained in book VII of the UACCEIG. Details on the procedure of dissolution and
liquidation of companies are laid down in the Uniform Act organizing Collective
Proceedings for Wiping off Debts (UACP). The UACCEIG does not proffer the
definition of the concept of dissolution. The legislator only enumerates the causes of
dissolution and specifies its consequences.
When the period fixed for its duration by the articles of association expires
without extension or the event if any occurs, on the occurrence of which the
company’s articles of association or UA provides that is to be dissolved, then a
dissolution order shall be pronounced and steps taken to liquidate the company. The
causes of dissolution are many and at times peculiar to certain forms of companies.

23
We shall examine the causes common to all companies and consequences of
dissolution.
I – Common causes of dissolution
The UACCEIG in its section 200 enumerates seven causes of dissolution of
companies. Amongst the causes put forward, some come about under circumstances
external to the company, and others are the voluntary acts of the partners themselves.
Dissolution is therefore provoked.
A. External causes of dissolution
They include the expiry of the period for which the company was formed, the
realization or extinction of its object, the annulment of the company’s partnership deed
and other causes provided by the articles of association.
1) The expiry of the duration of the company
According to section 30 of UACCEIG, the expiry of the term shall entail the automatic
dissolution of the company. The partners are free to fix on their articles of association
the date on which the company’s life comes to an end. Section 70 provides that the
duration cannot exceed 99 years. However, partners can extend its duration or
anticipate on the life by reducing its duration. In this case, they must amend the
articles of association in the light of amendment procedures for each form of company.
2) Extinction of company’s object
The realisation of the company’s object supposes the accomplishment of the task for
which the company was formed, for example, a company formed to dig a canal or
construct a bridge must be dissolved once the canal has been duck and the bridge
constructed. On the other hand, there is the extinction of the object when the activity
the company was formed to execute turns to be impossibility, for example, when the
object is illegal.
Realisation or extinction of the object of a company as cause of dissolution of
company operates rarely. This is because members of the company generally take the
pains to draft objects wide enough to stand the taste of time. The object may state for
example that with the completion of the canal, the material and capital of the company
will be used in other public works.
3) Annulment of the company’s partnership deed
This is a rare event. However, once this is done, the effect is that the company must be
dissolved. A judgment ordering the liquidation of a company automatically calls for its
dissolution.
4) Causes provided for in the articles of association
A company can be terminated for all the reasons provided for in the articles of
association. The articles may provide that heavy losses may lead to dissolution. If the
company’s unit goes into fire it will cause heavy loss and thus dissolution and
liquidation of the company.

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 B. Provoked causes of dissolution
The dissolution of the company may be provoked by the voluntary act of one or more
partners. In certain cases, it emanates from a court’s decision.
1) Voluntary acts of partners
We have seen that partners in a common accord can decide to dissolve the company
before the expiration of its term. Equally, one partner can provoke the dissolution of a
company by denunciation. He can petition the dissolution of the company if he realises
that the shares are rested in the hands of one partner.The Uniform Act does not put in
without these possibilities as it says that the company can be terminated by a decision
subject to the conditions for the amendment of the articles of association. It is clear
that there can be anticipated dissolution on common accord and denunciation by a
partner.
a) Anticipated dissolution
Before a company’s duration expires, partners can put an end to it. Anticipated
dissolution can be direct or indirect. It is direct when it emanates from the decision of
the General Assembly of partners or in application of a clause in the articles of
association. It is indirect if it is the consequence of another collective decision, for
example, decision to be absolved by another company as a result of fusion or
transformation into another different form of company implying the disappearance of
the present personality. Voluntary dissolution must not be dictated by a fraudulent
motive.
b) Renunciation
This idea emanates from the general principles of contract law. It holds that a partner
who no longer wishes to be part of the company can unilaterally renounce it.
Renunciation is only possible in a contract whose duration is unspecified either
because there is no term or the term exceeds a human life span. Renunciation must be
done in good faith and the timing must not be so as to inflict hardship on other
members. For it to be valid, all the members must be informed by way of bailiff’s writ.
c) Concentration of all shares in a single hand
The concentration of all the shares in the hands of a single partner used to be a
common cause of dissolution. Today, with the coming into force of the Uniform Act,
this position has been altered. The UA authorises a single person to form a private ltd
and public ltd companies. A company which starts with a plurality of members and
ends up with a member is therefore regular and cannot be dissolved.
However, section 60 UACCEIG states that in the case of companies in which
sole proprietorship is not allowed by the act, the ownership of all the shares by a single
person shall not entail the automatic dissolution of the company. A party concern may
petition the president of a competent court for dissolution where the situation is not
regularised within a period of 1year. The court may grant the company a maximum
period of 6months to regularise the situation. It may not order dissolution where on the

25
date of ruling on the merit of the case the situation has been regularised. This applies
for partnership and limited partnership.
2) Courts dissolution
A variety of factors can provoke the dissolution of a company before it comes to the
end of its term. Ordinary law recognises certain situations which a partner can ask for
anticipated dissolution:
- failure of the partner to honour engagements vis-à-vis the company, for
example, failure to pay contribution.
- Habitual incapacity which paralyses the company.
- Other cases whose seriousness is left for the appreciation of the judge.
Section 200 talks of a company coming to an end upon its premature dissolution
pronounced by a competent court at the request of a partner for justified reasons
notably in the case of non performance by a partner of his obligation or
misunderstanding between partners hampering the normal functioning of the company.
II – The aftermath of dissolution
The dissolution of the company has a number of consequences the immediate of which
is the liquidation of the company.
A. Effects of dissolution
When a company is dissolved it conserves its legal personality for liquidation purposes
until the liquidation procedure is completed. Liquidation is the collection and
realization of the company’s assets to settle a list of contributories and creditors (pay
the company’s debts and liabilities) and to divide the surplus (if any) among the
members of the company in accordance with their rights.
For the dissolution of the company to have effects on third parties, the act
prescribes certain forms that must be respected. Section 201 states that the dissolution
of the company shall have an effect on third parties only with effect from its
publication in the TPPCR. Also, concerning this aspect of publicity, section 202
stipulates that dissolution shall be published through a notice in the news paper
empowered to publish legal notices in the place of registered office, by depositing the
act or reports deciding or recording the dissolution at the court registry and by an
amendment of the entry in the TPPCR.
Section 201(1) holds that the dissolution of the company in which all the shares
are held by one person shall entail a total transmission of the assets and liabilities of
the company to such person without resorting to liquidation.
Creditors may object to the dissolution before the competent court within a
period of 30days following its publication. The court shall reject the objection or order
the settlement of debts or the provision of guarantees if the company offers any and if
there are deemed sufficient. The transmission of assets and liabilities and the winding
up of the company shall be effective only after the expiry of the time limit or objection

26
or where the objection has been declared inadmissible or if the settlement of debts has
been effected with guarantees provided.

B. Liquidation of the company

Here we are going to examine the modalities and liquidation operations.
1) Formalities of liquidation
Section 203 specifies the field of application of the provisions of the Uniform Act
governing liquidation of companies. The provisions apply where liquidation is effected
out of court in accordance with the articles of association and where liquidation is
ordered by a court decision. Court ordered liquidation comes about in the absence of
liquidation clauses in the articles of association or an express agreement between the
parties. Court ordered liquidation equally comes about on request made to a court by
competent authority. Section 223 mentions persons who can make such request. They
include:
- the majority of members in the partnership.
- Partners representing not less than 1/10 of the capital in the other forms of
companies having legal personality.
- The company creditors.
- The representatives of debenture holders group.
However, partners may agree that the provisions of sections 224-241 of the Uniform
Act relating to court ordered liquidation be applicable in case of out of court
liquidation.
In case of court ordered liquidation, the powers of the board of directors, a
managing director or the executive shall end with effect from the court decision
ordering the liquidation of the company (section 224 UACCEIG).
The company shall be under liquidation as soon as it is dissolved for any reason
whatsoever. The words “company under liquidation” as well as the name(s) of the
liquidator(s) shall be included in all the acts and documents issued by the company to
third parties in particular, on all letters, invoices, notices and various publications.
2) Liquidation operations
Generally, distribution of the company’s assets after dissolution is seen as the only
task involved in the liquidation of companies. This is false. Liquidation involves the
collection of company’s assets and liabilities which may be disbursed by putting into
place operations to terminate the matters the company has involved itself into. After
the assets and liabilities have been matched, the surpluses are divided between the
members of the company according to their rights. To realise these operations,
liquidators should be appointed.

27
 a) Appointment of liquidators
The liquidator is the representative of the company during the period of liquidation, be
it court ordered or out of court liquidation. The decree of 8th August 1985 prohibits
those who have been barred from administering from being appointed liquidators.
To ensure that the liquidation process is carried out, a liquidator must be
appointed. In this light, section 206 UACCEIG states that where a liquidator is decided
upon by the partners, one or more liquidators shall be appointed:
- Unanimously by partners in case of partnership
- Unanimously by active partners and a majority of capital of sleeping partners in
case of a limited partnership.
- By the majority capital of partners in the case of private ltd company.
- Under the quorum and majority conditions provided for extra-ordinary general
meeting in the case of public limited company.
The liquidator may be chosen from within the partners or a corporate body. The
liquidator may be a public body where the partners are unable to appoint a liquidator
and he is appointed by court decision at the request of any interested party as provided
under sections 226 &227 UACCEIG. That is, the court decision ordering the
dissolution of company may appoint one or more liquidators (section 226). The
duration of the liquidator’s mandates should not exceed three years.
b) Powers of the liquidators
The problem here is to determine the acts which the liquidators can accomplish
unilaterally and those which they can accomplish only with the authority of the
partners. In effect, it is generally admitted that the liquidator acting alone may sell and
transfer the company’s property and recover debts.
The Uniform Act specifies acts which the liquidator is prohibited from
performing and states acts which he performs only after authority from partners. In this
light, section 214 forbids the transfer of all or part of the assets of the company under
liquidation to the liquidator, employees or their spouses, ascendants and descendants.

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