SENEGAL Trends and Developments Contributed by: Malick Lo, Chadi Safieddine and Marie Laure Haroun, SCP Houda & Associés
SCP Houda et Associés 66 boulevard de la République, 1st Floor, Building Seydou Nourou Tall, Dakar, Senegal. Tel: +221 33 821 47 22 Fax: +221 33 821 45 43 Email: houda@avocatshouda.com Web: www.avocatshouda.com
M&A in Senegal: Reconciling English Law with OHADA Mandatory Rules In M&A transactions involving a Senegalese target, it is common for the Share Purchase Agreement (SPA) to be governed by a foreign law, and most often Eng - lish law. This practice reflects a quest for neutrality and predictability for international investors. While the choice of governing law is recognised under private international law, it cannot set aside overriding mandatory rules arising from OHADA law, in particular the AUSCGIE ( Acte uniforme relatif au droit des socié - tés commerciales et du GIE – the Uniform Act Relat - ing to Commercial Companies and Economic Interest Groups) and the Acte uniforme portant organisation des sûretés – the Uniform Act on the Organisation of Secured Transactions. Any transaction involving a company incorporated in Senegal therefore requires a careful definition between the lex contractus governing the SPA and the lex societatis governing the incorporation, opera - tion and transfer of shares. Practitioners typically include severability clauses and expressly provide that lex societatis matters (corporate life) are subject to OHADA law, while purely contractual obligations remain subject to English law. Contractual freedom in share transfer agreements Contractual freedom allows parties to an M&A trans - action to select the governing law of the SPA, in accordance with private international law principles and cross-border transactional practice. This choice dictates the overall contractual framework and risk
allocation. However, it is limited by overriding manda - tory rules and by the lex societatis. Where the target is incorporated in an OHADA Mem - ber State, the Uniform Acts – particularly in corporate and security matters – apply irrespective of the cho - sen governing law. Thus, while the SPA may regulate the economic obli - gations of the parties – price, conditions precedent, representations and warranties – the transfer of shares remains subject to the mandatory provisions of the AUSCGIE. The validity and enforceability of the trans - fer require compliance with the articles of association, in particular approval or pre-emption clauses, as well as completion of corporate formalities and, where applicable, registrations with the Registre du Com - merce et du Crédit Mobilier (RCCM), without preju - dice to mandatory tax formalities under the target’s domestic tax code. Any provision contrary to mandatory corporate rules will be unenforceable at the corporate level. In prac - tice, this requires the execution of stand-alone local law documents, compliant with OHADA law. Representations and warranties: Civil Law constraints Mechanisms such as representations and warranties, liability caps, baskets, and time limitations are widely used in cross-border transactions. Their effectiveness must, however, be assessed in light of Senegalese civil law principles.
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