COTE D’IVOIRE Trends and Developments Contributed by: Andy Lionel Biaou, Evelyne Biaou and Marine Quintric, Houda Law Firm
Failure to complete publication formalities may expose the company to disputes concerning the enforceabil - ity of the transformation. In Côte d’Ivoire, practical delays in administrative reg - istrations may occasionally complicate implementa - tion timelines, particularly in complex multi-step restructurings. The human aspect of companies’ transformation The partners The transformation is, above all, a decision that goes to the heart of the pact between partners. The part - ner who has joined a family SARL has not necessarily implicitly agreed to become a minority shareholder in an SA open to outside investors. This is why the AUS - CGIE provides protection mechanisms: in certain con - figurations, any partner who has not voted in favour of the conversion may request redemption of his or her shares before the operation takes effect. The practice reveals that tensions between major - ity and minority shareholders are the main source of blockage in transformation operations. These ten - sions do not always arise from irreconcilable conflicts of interest: they are often the result of insufficient com - munication, late information or a feeling of exclusion from the decision-making process. The wise board will systematically organise preliminary discussions with the minority shareholders, well in advance of the convening of the meeting. Employees Pursuant to the Labour Law, employment contracts are maintained by operation of law. The conversion does not constitute a legal ground for dismissal, nor a substantial modification of the employment contract, enforceable against the employee. A dismissal based on transformation alone would not only be illegitimate; it would expose the company to significant financial penalties before the social courts. The legal rule is therefore protective. But the rule is not enough to preserve the confidence of the teams. Experience shows that a transformation that is not communicated in time generates rumours, the volun - tary departure of talent and general demobilisation. Staff representatives must be informed and consulted;
beyond the legal obligation, clear, educational com - munication addressed to all employees is an invest - ment in post-transformation operational success. Creditors Creditors prior to the conversion may not, in principle, demand the early repayment of their claims solely on the basis of the change in form. As the legal personal - ity is maintained, the debtor remains the same. How - ever, if the conversion leads to a limitation of liability that did not exist before (as in the case of the transi - tion from an SNC, where the partners are indefinitely liable for the company’s debts, to a SARL or an SA), the previous creditors benefit from a right of opposi - tion, the terms of exercise of which are strictly regu - lated by the AUSCGIE. Banking partners deserve special attention. Many financing contracts contain clauses relating to the “change of control” or the “change of the corporate form” that are treated as triggering events. A prior audit of credit agreements is therefore essential to anticipate negotiations with banks and avoid any unwanted cross-default. In the majority of OHADA member states, process - ing benefits from a preferential tax regime. In Côte d’Ivoire, the General Tax Code does not treat a trans - formation as a cessation of activity that would result in the immediate taxation of profits and unrealised capital gains, provided that certain continuity condi - tions are met. The registration fees applicable to the processing report are generally set at reduced rates. That being said, caution is required. Each transaction is a case in point and the tax analysis must be carried out specifically, taking into account the current tax years, the carry-forward losses, the VAT credits and the approval regimes from which the company could benefit. Some investment approvals or Free Zone regimes may indeed be called into question by the conversion if the initial conditions for granting it were linked to the corporate form. Tax Issues and Practical Pitfalls An overall favourable tax regime
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