CONGO BRAZZAVILLE Law and Practice Contributed by: Louis-Raymond Gomes and Prince Kyssama Dikoulou, Cabinet Gomes
7.6 Acquiring Less Than 100% If a private equity bidder acquires less than 100% ownership of a target, it can secure additional gov - ernance rights through shareholders’ agreements and amendments to the company’s articles of association under the OHADA law. Common rights sought by pri - vate equity investors include: • board representation or nomination rights, allowing the private equity investor to appoint directors or observers; • veto rights or reserved matters, particularly over strategic decisions such as capital increases, mergers, asset disposals or changes to the busi - ness plan; • pre-emption rights on new share issuances or transfers to third parties; • tag-along and drag-along rights, to ensure exit alignment with minority shareholders; and • enhanced information and audit rights, beyond standard corporate law requirements. There is no specific statutory mechanism under Con - golese or the OHADA law for debt push-down struc - tures following a successful acquisition. 7.7 Irrevocable Commitments This is uncommon, as there is no developed tender practice in Congo-Brazzaville. 8. Management Incentives 8.1 Equity Incentivisation and Ownership Such practice is not common in Congo-Brazzaville. The incentive usually takes the form of a performance earn-out with set objectives at the end of a given peri - od. 8.2 Management Participation This is not common in Congo-Brazzaville. 8.3 Vesting/Leaver Provisions Manager shareholders are not common in Congo- Brazzaville. Most private equity transactions in the region are negotiated directly with key shareholders and management, often without the sophisticated
incentive mechanisms typically seen in more mature markets. 8.4 Restrictions on Manager Shareholders Management shareholders can be subject to non- compete, non-disclosure and non-solicitation clauses. Any contractual document entered into by the manag - er providing for non-compete, non-solicitation or any similar clause can be enforced by local courts. The applicant can seek and obtain the payment of dam - ages. Such clauses can also be paired with a penal clause providing for financial compensation. If the manager shareholder has signed a labour agree - ment with the company, they can also be subject to legal action if found guilty of any activity, speech, dis - play or inappropriate language to the prejudice of the company. Such provision can be found in both the employment contract and the equity package. 8.5 Minority Protection for Manager Shareholders Minority protection mechanisms for management shareholders are not typical in private equity transac - tions in the Republic of the Congo. The local private equity landscape is still relatively underdeveloped, and management teams rarely hold significant equity stakes or negotiate sophisticated shareholder rights. Most transactions are structured with the private equi - ty fund holding a controlling interest, leaving limited room for management to influence strategic decisions through equity rights. 9. Portfolio Company Oversight 9.1 Shareholder Control and Information Rights The control rights of a private equity fund shareholder over its portfolio companies are primarily governed by the OHADA law. The level of control typically depends on the percentage of shareholding and the terms negotiated in the shareholders’ agreement (if there is one). However, certain statutory rights are inherent to all shareholders. Private equity fund shareholders
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