According to article 779 of the OHADA Law of 2014, bonds are negotiable debt instruments that, for the same issue, confer the same rights to a claim for the same nominal value.
Conditions of issuance
Bonds may be issued only by public limited companies and economic interest groups comprising public limited liability companies, which have been in operation for two (2) years and have drawn up two balance sheets duly approved by shareholders.
The issue of bonds is prohibited for companies whose capital is not fully paid.
Issuance of lottery bonds is prohibited.
The general meeting of shareholders is the only body empowered to decide or authorize the issue of bonds. It may delegate necessary powers to the board of directors or the general director, as the case may be, to issue bonds one or more times within two (2) years, and to set its terms.
Any issue of bonds carried out in violation of articles 780 to 783 of the law shall be null.
Bonds bought back by the issuing company and redeemed are canceled and cannot be reissued.
Holders of bonds of the same issue are grouped automatically for the defense of their interests into a group that enjoys legal personality.
However, in the event of successive issuances, the company may, where a provision of each issue agreement so provides, bring together a single group of bondholders with identical rights.
The group shall be represented according to the decision of the general meeting of bondholders which elects them, by one (1) to three (3) representative (s).
The role of representative of the group can be awarded only to natural or legal entities residing in the State party where the headquarters of the debtor company is located.
May not be chosen as group representative:
1) The debtor company;
2) Companies with a stake in the debtor company;
3) Companies guaranteeing all or part of the commitments of the debtor company;
4) Members of company management or directors of the debtor company or a company with a stake in its capital, as well as their ascendants, descendants, or spouses;
5) Employees of companies mentioned above;
6) Auditors of companies mentioned above;
7) Persons banned from exercising the profession of a banker, or who are deprived of the right to lead, administer or manage a company in any capacity.
In the event of an emergency, the group representatives can be appointed by the competent court at the request of any interested party.
The group representatives may be removed from office by the general meeting of bondholders.
The group representatives shall have, except for limitation decided by the general meeting of bondholders, the authority to perform, in the name of the group and of all bondholders, acts of management for the defense of the common interests of the bondholders.
The group representatives shall not interfere in the management of the company. They may participate in the meetings of shareholders but without voting rights. They shall be entitled to obtain documents made available to shareholders and under the same conditions as the latter.
In case of liquidation of assets or judicial reorganization of the company, representatives of the group of bondholders are entitled to act on its behalf. They claim as liabilities of the company in liquidation or the judicial reorganization for all bondholders in the group the principal and interest owed by the company to such bondholders.
They are not required to produce the titles of bondholders of the group to support their statement. In case of complications, any bondholder may petition the competent court for the appointment of an ad hoc representative to make the statement and to represent the group.
In the event of closure due to insufficient assets, the group representative or the designated management representative shall enforce the rights of bondholders.
Costs incurred by the representation of the bondholders during the liquidation of assets or judicial reorganization of the company shall be borne by the latter and shall be considered receivership judicial expenses.
Compensation of the representatives of the groups shall be fixed by the general meeting or by the issue agreement. It shall be paid by the debtor company.
Where the said compensation is not fixed or where its amount is disputed, it shall be fixed by the competent court.