Subscription or purchase by the company of its own shares, either directly, or by a person acting in his own name but on behalf of the company, is prohibited. Likewise, the company cannot grant advances, loans or grant security interest for the subscription or purchase of its own shares by a third party.
However, the extraordinary general meeting that decided on a capital reduction not motivated by losses may authorize the board of directors or the general director, as the case may be, to acquire a specific number of shares in order to cancel them.
Founders or, in case of a capital increase, members of the board of directors or the general director are required, under the conditions set forth in articles 738 and 740 of the OHADA Law of 2014, to pay up for shares subscribed for or acquired by the company in violation of the provisions of the first paragraph of this article.
Likewise, where shares are subscribed for or acquired by a person acting in his own name but on behalf of the company, this person is bound to pay up for shares jointly with the founders or, as the case may be, the members of the board of directors or the general director. The subscriber is also deemed to have subscribed for shares on his own account.
Notwithstanding the provisions of the first paragraph of article 639 of the law, companies that allot their shares under the conditions set forth in articles 626-1 of same law may, for this purpose, subscribe or acquire their own shares. Shares thus acquired must be allotted within a period of one year from the date of their acquisition.
The company shall not own, directly or through a person acting in his own name but on behalf of the company, more than ten percent (10%) of the total number of its own shares.
Shares subscribed for or acquired shall be in the nominative form and fully paid up upon subscription or acquisition.
Founders or, in the case of a capital increase, members of the board of directors or the general director shall be bound, under the conditions set forth in article 640-1 of the law, to cause the shares subscribed or acquired by the company to be paid in, in accordance with the first paragraph of this article.
Likewise, where shares are subscribed for or acquired by person acting in his own name but on behalf of the company, this person is required to pay up for the shares jointly with the founders or, as the case may be, the members of the board of directors or the general director. The subscriber is also deemed to have subscribed to shares on his own account.
The acquisition of company shares shall not have for effect the reduction of equity to an amount lower than the amount of the capital plus non-allocated reserves.
Shares owned by the company shall not give rights to dividends.
Payment for subscribed shares or payment for shares acquired for a free allotment shall be made by a mandatory deduction, up to the amount of shares to be allotted, on the portion of profits of one or more fiscal years, as well as reserves, with the exception of the legal reserve.
Sums levied on profits for payment or acquisition of shares shall be entered in a reserve account until the final allotment of such shares.
When the amount of a reserve account constituted by deducting from the company profits is equal to the amount of shares allotted, the final allotment may be achieved.
In the event of issuance, the board of directors or the general director, as the case may be, is authorized to make the necessary changes to the provisions of the articles of association insofar as these amendments are materially in line with the results of the transaction.
The provisions of article 639 of the law are not applicable to fully paid-up shares, acquired as a result of a universal assignment of assets or as a result of a court decision.
However, shares must be transferred within a period of two (2) years from their subscription or acquisition; at the expiration of such period, they must be cancelled.
The company is prohibited from taking its own shares as collaterals/pledges, directly or indirectly through person acting in his own name but on behalf of the company.
Shares taken as pledges/collaterals by the company must be returned to their owner within a period of one (1) year. The refund/return shall be made within a period of two (2) years if the transfer of the pledge to the company is consequent to a universal assignment of assets or a court decision; failing this, the pledge agreement shall automatically be null.
The prohibition provided for in this article does not apply to daily operations of credit, microfinance or surety/guarantee insurance institutions duly authorized.
When the company decides to purchase its own shares for the purpose of cancelling them and reducing its capital in due proportion, it shall make the purchase offer to all shareholders.
To this end, it shall published in a newspaper authorized to publish legal notices of the headquarters location a notice containing the following information:
1) the name of the company;
2) the type of the company;
3) the address of the headquarters;
4) the amount of the stated capital;
5) the number of shares whose purchase is contemplated;
6) the price offered per share;
7) the payment method;
8) the period during which the offer is opened. This term offer may not be less than thirty (30) days from the publication of the notice;
9) the place where the acceptance of the offer may occur.
Where all shares are in the nominative form, the notice referred to in article 643 of the law may be replaced by a notification containing the same particulars made to each shareholder by hand-delivered letter against a receipt or by registered mail with request for acknowledgement of receipt. The notification cost shall be borne by the company.
Where shares offered for purchase exceed the number of shares to be purchased, the number of shares offered by each selling shareholder shall be reduced proportionally to the number that he proves to own or hold.
Where shares offered for purchase do not reach the number of shares to be purchased, the stated capital shall be reduced to the amount of shares purchased.
However, the board of directors or the general director, as the case may be, may decide to repeat the transaction under the conditions set forth in articles 643 and 644 of the law, until the full purchase of the number of shares initially set, provided that the transaction is repeated within the time specified by the decision of the general meeting that authorized the reduction of capital.
Repurchase transactions carried out in violation of articles 643, 644, 645 and 646 of the law shall be null.
The provisions of articles 643 and 646 of the law are not applicable when the general meeting, in a bid to facilitate an increase of capital, a merger or a demerger, has authorized the board of directors or the general director, as the case may be, to purchase large numbers of shares representing at most one percent (1%) of the amount of the stated capital, in order to cancel them.
Likewise, these provisions are not applicable in the case of a repurchase by the company of shares whose transferee has not been approved.
The auditor shall give, in his report on the proposed transaction, his opinion on the advisability and terms of the planned purchase of shares.
Where shares have usufruct attached, the offer to purchase shall be made to the underlying title holder. However, the repurchase of shares shall be final only where the usufructuary has expressly consented to the transaction.
Unless otherwise agreed between the underlying title holder and the usufructuary, the repurchase price of shares shall be divided between them proportionally to the value of their respective rights to the shares.
Shares purchased by the company that issued them, for a reduction of capital, must be cancelled within fifteen (15) days following the expiration of the deadline for the purchase offer stated in the notice referred to in article 643 of the law.
When the purchase is made in order to facilitate a capital increase, a merger or a demerger, the time limit for cancelling shares shall begin on the day where the shares were redeemed.
Shares acquired or held by the company in violation of the provisions of articles 639 and 640 of the law shall be cancelled within the period of fifteen (15) days from the date of their acquisition or, where applicable, at the expiration of the time limit of one year referred to in the first paragraph of article 640 of the law.
Shares cancellation shall be evidenced, where they are in a nominative instruments, by an entry in the company nominative share register.
In the case of bearer shares, the cancellation of shares shall be evidenced by a transfer to an account opened in the name of the company, either within the company or with an intermediary.