Transmission of equity interests (Transfer of equity interests inter vivos)
Form of the transfer
According to article 317 of the OHADA Law of 2014, Inter vivos equity interest transfer shall be done in writing.
It is enforceable against the company only after the completion of one of the following formalities:
1°) Notice of the assignment to the company by deed of a bailiff or notification by any means allowing to establish actual receipt by the addressee;
2°) Acceptance of the transfer by the company in an authentic deed;
3°) Deposit of an original copy of the transfer deed at the headquarters against receipt from the manager of a certificate of deposit.
The transfer is enforceable against third parties only after completing one of the above formalities and after filing with the registry of commerce and securities.
Terms and conditions of the transfer (Transfer between members)
The articles of association freely organize the procedures for the transfer of equity interests between members. Failing this, the transfer of equity interests between partners shall be free.
The articles of association may also organize the procedures for the transfer of equity interests between spouses, descendants, and descendants. Failing this, the equity interests shall be freely transferable among the interested parties.
Shall be null, any transfer of equity interests made in violation of the provisions of the articles of an association organized by this article.
Transfer to third parties
The articles of association shall freely organize the procedures for the transfer of equity interests against payment to third parties outside the company.
Failing this:
– The transfer shall only be possible with the consent of the majority of non-transferor members holding three-quarters of the equity interest of the company, excluding the interest of the transferor member;
– The proposed transfer must be notified by the transferor to the company and each of the other members.
Where the company does not communicate its decision within three (3) months from the date of the last notification, consent to the transfer is deemed granted.
Where the company refuses to consent to the transfer, the members shall be jointly and severally required, within three (3) months following the notification of refusal to the transferor member, to acquire the interests at a price which, failing agreement between the parties, shall be fixed by an expert appointed by the competent court at the request of the earliest petitioner.
The three (3) month period may be extended once by a decision of the competent court, and without such extension exceeding one hundred and twenty (120) days. In such a case, the sums due shall bear interest at the legal rate.
The company may also, with the consent of the transferor member, decide within the same timeframe, to reduce the amount of the stated capital by the amount of the nominal value of the equity interests of such member and to purchase such equity interests at a price set by mutual agreement between the parties, or determined by this article.
Any transfer of equity interests made in breach of the provisions of the articles of association established by the paragraphs of this article shall be null.
Where, upon expiration of time limits set forth, none of the solutions provided for in this article, is implemented, the transferor members may freely carry out the transfer initially planned or, if he deems it preferable, abandon the transfer and retain his interests.
Transfer due to death
The articles of association may provide that, in the event of the death of a member one or more of his heirs or successors may become a member (s) only after they have been approved under the conditions set therein.
The approval time limit granted to the company shall not be longer than the time provided for in articles 319 and 320 of the OHADA Law of 2014 and the required majority may not be greater than the one in article 319 of the same law.
The approval decision shall be notified to each heir or successor concerned, by hand-delivered letter against a receipt or by registered mail with a request for acknowledgment of receipt.
In case the company refuses to approve, the provisions of articles 318 and 319 of the OHADA Law shall apply, and where none of the solutions provided for in these articles is implemented has been resolved within the period set, the approval shall be deemed granted. The same shall apply where no notification has been made to the individuals concerned.
Any transfer of equity interests carried out in violation of the provisions of the articles of association established by the first paragraph of this article or, failing this, in violation of paragraph 2 of this article shall be null.
Pledge of equity interests
Where the company gives its consent to a project to pledge equity interests, under the conditions set forth for the transfer of interests to third parties, such consent shall imply approval of the transferee in the event of a compulsory assignment of equity interests regularly pledged, unless the company opts, upon the transfer, to immediately repurchase such interests to reduce its capital.
For the application of the provisions of the paragraph above and for the pledge to be enforceable against third parties, the equity interests pledge must be recorded in a notarial deed or a privately signed deed notified to the company and published in the registry of commerce and securities.