In the Democratic Republic of the Congo ("DRC"), corporate law is governed by the
Uniform Act on Commercial Companies and Economic Interest Groups of January 30, 2014, ("AUSCGIE"), enacted by the Organization for the Harmonization of Business Law in Africa ("OHADA"). Some practical aspects of companies’ registration formalities are governed by OHADA Uniform Act on General Commercial Law ("AUDCG").
OHADA is an African organization of which the DRC is a member state. Its main mission is the adoption of common and modern legal rules, applicable uniformly in all the member states, adapted to the international economic environment.
The AUSCGIE provides entrepreneurs the choice between different legal forms of companies for their projects, which are: Société à Responsabilité Limitée ("SARL"), Société Anonyme ("SA"), Société par Actions Simplifiée ("SAS"), Société en Nom Collectif (“SNC”), Société en Commandite Simple (“SCS”), or Grouprement d’Intérêt Économique("GIE"). This article focuses on the SARL, which is one of the most popular legal forms because of its ease or formation, and suitability for a wide range of projects.
I. Main features
· Company purpose
In practice, the company purpose is drafted in broad terms, allowing the company to engage in any lawful commercial activity. It may include different economic activities, excluding those that are regulated and may require another legal form, such as insurance and reinsurance activities.
Similar to the other forms of commercial companies, unless prohibited, incapacity or legal or regulatory incompatibility, a SARL can be created by one or more individuals or entities, of any nationality planning to carry out a commercial activity in the DRC. The partners of a SARL are only liable for company debts up to the amount of their contributions. Their rights are represented by company shares.
· Articles of Association
The articles of association of a SARL, which must be notarized in practice, are subject to some degree of formalism. They must be signed by all the partners and must include mandatory information, provided by law such as: the form of the company; its name followed by "société à responsabilité limitée" or the acronym "S.A.R.L"; its purpose, its registered office, its duration (which may not exceed 99 years); the identity of the partners as well as the shares received in exchange for their contribution; the amount of the capital, the number and value of the shares issued (identifying the different classes of shares issued, if any); distribution provisions; constitution of reserves and the distribution of the liquidation surplus, as well as the modalities of its operation.
The amount of the SARL’s Capital is freely set by the partners, depending on the activities that the company intends to carry out.
Each partner is required to make an initial capital contribution, which may be cash, property or services (sweat equity).
Contributions in cash are made by transferring to the company the funds the partner intends to contribute. Shares representing cash contributions are issued, at the time of capital subscription, for at least half of their face value. The balance must be paid within two years of the company's registration with the Commercial Registry ("RCCM), according to the procedures set forth in the articles of association.
Contributions of property are made by transferring to the company the real property or personal rights attached to the assets contributed, and actually making these assets available to the company. They must be assessed by a contribution auditor if the value of such a contribution, or that of all anticipated property contributions, is greater than five million CFA francs. They must be fully paid up upon the formation of the company.
Contributions of services are made by actually providing the technical, professional knowledge or services to the company. The articles of association must describe the services being contributed and determine the terms of its provision, particularly, the duration of the services provided, the number of shares allocated to the contributor, as well as the terms of their liquidation in the event of termination of such services provided as contribution. Contributions of services do not contribute to the formation of the capital, but give right to receiving shares. Voting rights attached to such shares may not exceed twenty-five percent of all the voting rights. In addition, the total share attached to these shares may not exceed twenty-five percent of the profits, net assets, and losses of the company. Furthermore, the shares resulting from this type of contribution are neither assignable nor transferable. They have no face value.
The management of the company is two-fold: managers on the one hand, and partners meetings on the other hand.
The company may be managed by one or more individuals or entities, whether or not they are partners. The manager or board of managers is appointed by the partners, in the articles of association or in a subsequent decision. Unless otherwise set forth in the articles of associations, the manager or board of managers is appointed for a four year period, which is renewable. The power of the manager is rather extensive. Although the articles of association may reserve certain decisions for the approval of the partners, the manager has, at all time, the apparent authority of acting on behalf of the company in her dealings with third parties.
· Decisions by partners
Partners’ decisions are taken in a meeting or by written consent if the partners have elected to take any action this way in the articles of association. However, the annual general meeting is required to be held in assembly. Some matters can only be decided by the partners, in particular: the amendment of the articles of association; the transfer of the registered office; or the transformation of the company into another form.
The appointment of an auditor is optional for companies that do not meet one of the following 3 conditions, at the end of their fiscal year: (i) the total of the balance sheet exceeds one hundred and twenty-five million (125,000,000) CFA francs; (ii) the annual turnover exceeds two hundred and fifty million (250,000,000) CFA francs; or (iii) permanent staff exceeding fifty (50) people.
III. Formation formalities
Like the other OHADA member states, the DRC set up a one-stop window for company formation, GUCE, in May 2014. The GUCE is a single shop for completing all the formalities related to the formation of a company. It brings together all the services involved in the process of company formation, such as, the Notarial office; the clerk of the RCCM; the national economy services in charge of the identification of economic operators in the DRC; as well as various relevant tax services.
Applicants must include in their application file, in addition to the registration request form, information about the partners (identification documents, criminal record); identity of the manager appointed in the articles of association, if any, including a sample of her signature; as well as a statement of capital subscription and payment.
The submission of an application file with the GUCE enables registration with different relevant administrations. Upon processing of the application, the GUCE provides: a RCCM file number (identification number of the newly formed company); a national identification number; a tax identification number; an identification number from the National Institute for Professional Preparation; as well as a registration number with the National Social Security Fund.
Even though the AUSCGIE sets forth the rules for the operating a SARL, it provides some flexibility to the partners. They are free to adjust some provisions of the articles of association to their particular circumstances, particularly in connection with the responsibilities and the extent of the powers of each partner, the manager’s employment statute, the terms and conditions for shares transfer; investments and the turnover expected by the company.
This article does not constitute legal advice. It was prepared with the assistance of Ms. Prisca B. Payanzo Maba, a student from the DRC currently pursuing a Master in Public Administration at Minnesota State University, Mankato in the U.S., and Ms. Juhee Lee, a Korean student with a Master in African laws from the University Paris 1 Panthéon-Sorbonne in France.