There is usually a misconception as regards the powers managers can exercise in the course of running the affairs/business of a company. These powers also touch on the agreements or engagements executed by these managers on behalf of the company. The OHADA Law has in order to curb the abuse of office of the manager, placed some restrictions on the type of agreements which a manager can engage on behalf of a company.

For private limited companies it shall be prohibited under penalty of nullity of the contract for natural persons who are managers or partners under any form whatsoever to contract loans from the company, obtain an overdraft on a current account or otherwise from the company, or make the company endorse or guarantee their commitments towards third parties.

For public limited companies, the same rule applies to the managing director or assistant managing director as well as their spouses, ascendants, descendants and by third parties.

There is an exception to this rule concerning public limited companies engaged in banking or operate as a financial institution. This form of public limited company may grant its managing director or assistant managing director in whatever form a loan, a current account overdraft or otherwise a security, a guarantee or any other surety where the agreements relate to ordinary transactions concluded under normal terms.

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