An Innovative form of integration: OHADA

1. An Innovative form of integration: OHADA Investment Policy Global Workshop, Vienna, May 14, 2012 Xavier Forneris, Investment Climate Department

2. OHADA: Organization for the Harmonization of Business Law in Africa • Created by Treaty of Port-Louis, 17 October 1993 Burkina Faso Niger Mali Chad Senegal Central African Republic Guinée Bissau Congo Guinea Comoros Côte d'Ivoire Benin Togo + DRC (?) Cameroon Gabon Equatorial Guinea

3. OHADA – HARMONIZATION OF COMMERCIAL LAW Rationale & Strategic Objectives: • « OHADA is a legal tool conceived and realized by Africa to promote economic integration and growth » Kéba MBAYE, Founding father of OHADA • Facilitate Trade and Investment both between member countries as well as with countries outside the region • Respond to investors’ concerns: legal uncertainty and lack of reliability of the judicial systems in member countries  A major brake on private investment • Create a “single legal space” among African countries (open to any member of the African Union, not just francophone countries)

4. OHADA – REGIONAL INSTITUTIONS

5. OHADA – HARMONIZATION OF COMMERCIAL LAW HOW OHADA AND MEMBER COUNTRIES WENT ABOUT FULFILLING THESE AMBITIOUS OBJECTIVES: • The 16 member countries decided to “unify” their commercial law framework. • Under OHADA Treaty, the Uniform Laws adopted by the OHADA Council of Ministers (through a participatory process) become domestic law. • Immediately and directly applicable. No need for implementing legislation (more advanced form of integration than EU harmonization).

6. ACHIEVEMENTS : LAWS ADOPTED Regional, National, Local Registres du Commerce et du Crédit Mobilier Registries for Companies and Secured Transactions

7. OHADA – IFC ADVISORY PROGRAM Support the effectiveness of OHADA by: • Providing TA to OHADA Secretariat for the review and reform of the Laws already in force (never amended since adoption) • Helping modernize and implement the Regional Registry (RCCM) • Providing capacity-building and strategic advice to OHADA Secretariat • Facilitating consensus-building and consultation of local and regional stakeholders.

8. OHADA - IFC PROGRAM • Major breakthrough: in December 2010, with support of IFC Program, OHADA Council of Ministers adopted: • Revised OHADA General Commercial Law • Revised Secured Transactions Law • 3 Decrees on the computerization of the Registries for Companies and Secured Transactions • Modernization of secured transactions regime to facilitate access to credit for the local private sector in OHADA zone • Streamlined formalities for business registration and operation • New “entreprenant” status for micro/small businesses to encourage informal entrepreneurs to join the formal economy. • Next: WBG will support implementation by member States.

9. OHADA : CURRENT ACTIVITIES • Currently supporting the drafting of amendments on two high-priority Laws (based on thorough diagnostic): • Company Law • Insolvency Law • Technical work finished. Drafts under review by OHADA States. • Target: for adoption by OHADA Council of Ministers in July 2012 (Comp.) and December 2012 (Insolv.).

10. OHADA – Reform of the Company Law Examples of measuresproposed: • Setting-up the company: Makerecourse to notary (notaire) optional and not mandatory for the founder(s). • SARL (LLC): reduce the amount of mininum capital requiredfromfoundersfrom1 million CFA to 100.000 CFA (= from $2,000 to $200). • New form of joint-stock company: the Societe par Action Simplifiee (SAS)

11. OHADA – Reform of the Company Law Changes In CorporateGovernance Objectives: bring the OHADA Company Law up to best international practices in the area of Corporategovernancethrough : • Clearerdefinition of the stakeholders and theirroles • Improvedgovernance of the Board of Directors • Reducedrisk of conflicts of interest • Increasedtransparency and accountability • StrengthenedShareholders’ Rights • Higher standards for public (= listed) companies

12. OHADA Reforms – Main lessons learntPrincipaux enseignements des réformes OHADA • Achieving consensus between several countries around uniform laws that are directly applicable requires strong political will, patience, capacity-building and access to best practices. • La recherche du consensus entre plusieurs Etats pour adopter (ou reviser) des lois uniformes directement applicables implique une forte volonte politique, de la patience, un renforcement des capacites, et un acces aux meilleures pratiques internationales. • OHADA Law is becoming a reference in Africa and around the world for its innovative and evolving features. • Le Droit OHADA est en phase de devenir un droit de référence mondiale par son côté dynamique, novateur et évolutif

13. CONCLUSION • The form of harmonization that OHADA States have chosen may not work or be accepted everywhere. We provide assistance to OHADA in improving its effectiveness and in modernizing its legal framework but we are not trying to “export” this model of integration. If another region has a different type of integration, different legal instruments, we adapt our assistance (e.g, EAC Program). • La forme d’harmonisation que les Etats OHADA ont choisi de suivre peut ne pas fonctionner ou etre acceptée partout. Nous fournissons une assistance technique a l’OHADA pour améliorer son efficacité, moderniser ce droit mais nous n’avons pas pour mandat « d’exporter » ce modèle. Si une région a un type d’integration et des instruments juridiques différents, nous adoptons alors notre assistance pour l’aider (ex: Programme EAC)