SENEGAL Trends and Developments Contributed by: Malick Lo, Chadi Safieddine and Mohamed Kamil, SCP Houda & Associés
ness, a graduated alert procedure is available. The auditor first requests explanations from management and may then refer the matter to the board of direc - tors, the general meeting or even the public authori - ties. This tool, often underused, nonetheless serves as a valuable warning signal for shareholders seeking to anticipate a deterioration in the company’s situation. Sanctioning Disloyal Conduct: Abuse of Rights The recognition by OHADA law of majority and minor - ity abuse makes it possible to sanction disloyal con - duct before the crisis degenerates into paralysis. These concepts, developed by case law, have been consolidated through the practice of the CCJA. Majority Abuse Majority abuse is established when the majority makes a decision contrary to the company’s general interests, solely to favour the majority shareholders at the expense of the minority. The sanction is twofold: annulment of the abusive res - olution and an order for the majority shareholders to pay damages to the company or the affected minor - ity shareholders. This action, often dissuasive, allows minority shareholders to restore a balance where they are victims of captured governance. Minority Abuse Conversely, minority abuse is recognised where a minority shareholder, through a negative vote or abstention, prevents the adoption of a decision essential to the corporate interest without legitimate justification. This is notably the case where a capi - tal increase necessary for the company’s survival is refused. The court may then appoint an ad hoc rep - resentative authorised to vote on behalf of the recalci - trant minority shareholder in a manner consistent with the corporate interest. Criminal Sanctions Against Directors Beyond civil sanctions arising from abuse of rights, Senegalese law establishes a specific criminal regime for the most serious misconduct by directors. Law No 13/2018 of 19 April 2018 on the prosecution of offences provided for in the Uniform Acts adopted pursuant to the OHADA Treaty sets out the penalties applicable to offences under seven Uniform Acts.
Among the offences that may be established in a shareholder dispute context are, notably, misuse of corporate assets and credit, distribution of fictitious dividends, presentation of misleading accounts, fail - ure to convene annual general meetings and obstruc - tion of shareholders’ and the statutory auditor’s information rights. Penalties range from fines (from CFA250,000 to CFA5,000,000 depending on the case) to imprisonment of up to five years for the most seri - ous offences. In practice, the initiation of criminal proceedings is sometimes used alongside civil actions to increase pressure on defaulting directors or to obtain informa - tion that the company refuses to disclose. However, this tool must be used with caution, as the instrumen - talisation of criminal proceedings for purely strategic purposes exposes the party to counterclaims and may further entrench the conflict between shareholders. Crisis Exit Mechanisms When the deadlock becomes structural and paralyses the company, crisis exit tools are available. They range from the least to the most intrusive, depending on the severity of the situation and the shareholders’ willing - ness or otherwise to preserve the corporate structure. The Provisional Administrator A provisional administrator may be appointed by a court at the request of any shareholder or interested party in the event of a shareholder dispute that ren - ders normal operation of the company impossible and threatens it with imminent harm. Two cumulative con - ditions are therefore required: a demonstrated break - down and a risk to the company. The president of the court rules by way of summary proceedings or on application. The provisional admin - istrator holds extensive powers that, for the duration of the mission, replace those of the normally compe - tent corporate bodies. The mission is temporary and strictly defined in scope by the appointing decision. Its role is to ensure continuity of operations organise mediation between shareholders and, where appropri - ate, convene general meetings with a view to breaking the deadlock.
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