COTE D’IVOIRE Trends and Developments Contributed by: Andy Lionel Biaou, Evelyne Biaou and Marine Quintric, Houda Law Firm
This principle of continuity is particularly important for international investors and lenders. Businesses oper - ating large-scale projects or regulated activities can - not afford operational uncertainty whenever restruc - turing becomes necessary. OHADA case law and legal scholarship have consist - ently confirmed this principle. The Common Court of Justice and Arbitration (CCJA) has clarified that a transformation constitutes a modification of the com - pany’s legal structure rather than the creation of a new entity. Similarly, OHADA legal doctrine emphasises that a valid transformation does not produce novation of the company’s rights and obligations. In practice, this continuity significantly facilitates cor - porate reorganisations in Côte d’Ivoire and across the OHADA region. Why Companies Transform in Practice in Côte d’Ivoire? Corporate transformations are increasingly driven by practical business needs rather than purely legal con - siderations. From SARL to SA: supporting growth and investment One of the most common transformations in Côte d’Ivoire is the conversion of a limited liability company (SARL) into a public limited company (SA). This transition often occurs when: • a company reaches a significant operational size; • external investors are expected to enter the capital; • governance structures need to become more sophisticated; or • financing requirements increase. The SA structure is generally perceived as more suit - able for medium-sized and large enterprises because it offers: • enhanced governance mechanisms; • clearer separation between ownership and man - agement;
• greater flexibility for investment transactions; and • stronger credibility with financial institutions and investors. Private equity investors and institutional partners fre - quently prefer the SA structure because it accommo - dates boards of directors, more advanced governance systems and more robust shareholder arrangements. Limiting shareholder liability Transformations may also be motivated by risk man - agement considerations. Businesses initially created as partnerships or as unlimited liability structures may later seek to limit shareholder exposure by converting to an SARL or an SA. This is particularly relevant where activities become more capital-intensive or operational risks increase. As companies grow, shareholders generally seek stronger separation between personal assets and business liabilities. Family business structuring Family-owned businesses represent a significant por - tion of the Ivorian economy. Many such businesses were initially established with relatively simple struc - tures and highly informal governance arrangements. As these businesses expand, transformation opera - tions may become necessary to: • professionalise governance; • organise succession planning; • separate management from ownership; • facilitate entry of new investors; or • reduce governance disputes among family mem - bers. Transformation therefore often becomes a govern - ance modernisation tool rather than merely a legal operation. Group reorganisations Large regional groups operating across OHADA juris - dictions increasingly use restructuring mechanisms to rationalise their operations.
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