SENEGAL Trends and Developments Contributed by: Malick Lo, Chadi Safieddine and Mohamed Kamil, SCP Houda & Associés
ernance rules, share transfer procedures, conflict resolution mechanisms or exit from the shareholder structure. They typically include the classic: • drag-along clauses (obligation to follow a majority seller); • tag-along clauses (joint exit rights); • buy-or-sell clauses; and • voting agreements. The contractual framework offers two major advan - tages over the articles of association: • confidentiality (the agreement not being filed with the RCCM); and • flexibility, since its amendment does not require the cumbersome formalities of a statutory modifica - tion. However, its scope is purely contractual: a breach of the agreement gives rise to damages, but a transfer carried out in disregard of the agreement remains in principle valid if the corporate formalities have been complied with. Particular vigilance is required to ensure the agree - ment’s compatibility with the mandatory provisions of the AUSCGIE. Article 2 specifies that no derogation from the rules of the Uniform Act is permitted unless a freedom is expressly recognised. In practice, clauses aimed at circumventing the mandatory rules on quo - rum, majority or the jurisdiction of corporate bodies are without effect, at least at the corporate level. Dispute Resolution Mechanisms It is generally advisable to include in shareholders’ agreements or articles of association clauses for ami - cable dispute resolution (mediation, conciliation) and arbitration. Arbitration offers the confidentiality, rela - tive speed and technical expertise that judicial pro - ceedings do not always guarantee. The parties may also include escalation clauses that require a negotia - tion or mediation phase before any referral to a court or arbitral tribunal. In Senegal, this amicable recourse is all the more effective now that mediation is recognised. Including
contractual mediation in a dispute resolution clause allows parties to attempt to resolve the conflict. Detecting the Crisis: Information and Alert Rights When prevention has not been sufficient, it is still nec - essary to identify the dysfunction. Information and alert tools allow shareholders, particularly minority shareholders, to shed light on the company’s difficul - ties. Shareholders’ Right to Information Every shareholder has a permanent right to informa - tion concerning corporate documents (articles of association, minutes, financial statements). Prior to the general meeting, they must receive the documents necessary to exercise their voting rights in an informed manner. In public limited companies, this right is rein - forced and any obstruction to it gives rise to civil and criminal sanctions. Written Questions and Management Audit The AUSCGIE grants shareholders representing a sig - nificant fraction of the share capital the right to sub - mit written questions to the chairman of the board of directors or the chief executive officer concerning any matter that could jeopardise the continuation of the company’s business. Where no satisfactory answer is provided or concerns persist, those same share - holders may apply to a court for the appointment of a management expert to investigate one or more spe - cific management operations. This procedure, more technical than a general judi - cial expert inquiry, enables an impartial assessment of suspicious transactions:
• questionable regulated agreements; • unexplained cash movements; and • asset disposals at undervalued prices.
The resulting report often constitutes a decisive ele - ment in subsequent litigation. In practice, it is one of the most effective tools available to minority share - holders. The Statutory Auditor’s Alert Procedure Where the statutory auditor detects facts likely to jeopardise the continuation of the company’s busi -
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