SENEGAL Trends and Developments Contributed by: Malick Lo, Chadi Safieddine and Marie Laure Haroun, SCP Houda & Associés
Concepts such as fraud ( dol ), fraudulent concealment, warranty against eviction, and general contractual lia - bility, limit contractual freedom. A limitation or exclu - sion of liability clause cannot shield a party from fraud. Similarly, a clause depriving the seller’s essential obli - gation of its substance may be set aside by a court. Accordingly, representations and warranties must be drafted with the prospect of enforcement or litigation before local courts in mind, even where the SPA con - tains an international arbitration clause. The requirement of Senegalese law formalities for share pledges In transactions involving deferred consideration, instalment payments, or vendor financing, share pledges are a common security mechanism. Their effectiveness in Senegal depends strictly on compliance with the Acte uniforme portant organisa - tion des sûretés . The pledge agreement must comply with OHADA formal requirements and be duly regis - tered with the RCCM. Appropriate entries must also be made in the company’s corporate registers. A pledge governed solely by English law, if not formal - ised in accordance with OHADA requirements, can - not be registered locally, will be unenforceable against third parties, and will be difficult to enforce in case of default. In practice, security interests must systemati - cally be structured under OHADA law, regardless of the governing law of the SPA. Post-acquisition governance constraints SPAs and shareholders’ agreements inspired by English practice frequently provide for extensive veto rights, enhanced majority requirements, or contractual control mechanisms. However, the AUSCGIE imposes mandatory rules governing the allocation of powers among corporate bodies, majority thresholds, and corporate formalities. Minutes must include the mandatory information pre - scribed by law and be drawn up in compliance with local requirements, failing which they may be null and void.
A contractual provision inconsistent with mandatory corporate rules will not produce effect at the corporate level. It is therefore essential to ensure consistency between the shareholders’ agreement, the articles of association and OHADA rules, and to anticipate any necessary amendments prior to closing. The central role of the RCCM In a transaction involving a Senegalese company, signing the SPA does not mark the legal completion of the deal. The enforceability of share transfers and security interests depends on the effective completion of local formalities, particularly with the RCCM. Any rejection or irregularity in these filings may deprive the transaction of effect vis-à-vis third parties and significantly increase risk in the event of litigation or insolvency. Tax imperatives In M&A practice, English law is largely irrelevant to the Senegalese tax authorities (DGID). Under Senegalese law, any transfer of shares or equity interests in a local company must be registered within 30 days of signing. In practice, the tax authorities often require a French- language instrument. This necessitates the prepara - tion of a short-form “Local Transfer Act” summarising the key terms of the English-law SPA. Registration duties (generally 1% for share transfers) are calculated on the transfer price or the fair market value, if higher. Any inconsistency between the price stated in the international SPA and the price declared locally may lead to reassessment on the grounds of undervaluation or concealment of price. Foreign exchange control Senegal is a member of the West African Economic and Monetary Union (UEMOA), a point often under - estimated by investors accustomed to deregulated financial markets. Any foreign investment in a Senegalese company must be declared to the Ministry of Finance and to the BCEAO. For clients contemplating future cash outflows (dividends, future sale proceeds, shareholder
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