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

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Comoros Congo Central African Republic Chad Niger Burkina Faso Mali Senegal Guinée Bissau Guinea Côte d'Ivoire Togo Benin Cameroon Equatorial Guinea Gabon OHADA: Organization for the Harmonization of Business Law in Africa + DRC (?) Created by Treaty of Port- Louis, 17 October 1993

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA – HARMONIZATION OF COMMERCIAL LAW 3 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)

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA – REGIONAL INSTITUTIONS 4

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA – HARMONIZATION OF COMMERCIAL LAW 5 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).

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency ACHIEVEMENTS : LAWS ADOPTED 6 9 Actes uniformes directement applicables dans les Etats-membres 9 Uniform Acts (laws) directly applicable in member states Droit Commercial GénéralGeneral Commercial Law Droit des SociétésCompany Law Droit des SûretésSecured Transactions Droit des Procédures Collectives (faillite)Insolvency Law Droit de lArbitrageArbitration Law Droit des Procédures de RecouvrementDebt Recovery and Enforcement Law Droit ComptableAccounting Law Droit du transport de marchandises par routeLaw on Transport of Goods by Road Droit des Sociétés CoopérativesCooperatives Law Registres du Commerce et du Crédit Mobilier Registries for Companies and Secured Transactions Regional, National, Local

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA – IFC ADVISORY PROGRAM 7 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.

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA - IFC PROGRAM 8 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.

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA : CURRENT ACTIVITIES 9 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.).

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA – Reform of the Company Law Examples of measures proposed: Setting-up the company: Make recourse to notary (notaire) optional and not mandatory for the founder(s). SARL (LLC): reduce the amount of mininum capital required from founders from 1 million CFA to CFA (= from $2,000 to $200). New form of joint-stock company: the Societe par Action Simplifiee (SAS) 10

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA – Reform of the Company Law Changes In Corporate Governance Objectives: bring the OHADA Company Law up to best international practices in the area of Corporate governance through : Clearer definition of the stakeholders and their roles Improved governance of the Board of Directors Reduced risk of conflicts of interest Increased transparency and accountability Strengthened Shareholders Rights Higher standards for public (= listed) companies 11

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency OHADA Reforms – Main lessons learnt Principaux enseignements des réformes OHADA 12 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

THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency CONCLUSION 13 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 dharmonisation que les Etats OHADA ont choisi de suivre peut ne pas fonctionner ou etre acceptée partout. Nous fournissons une assistance technique a lOHADA pour améliorer son efficacité, moderniser ce droit mais nous navons pas pour mandat « dexporter » ce modèle. Si une région a un type dintegration et des instruments juridiques différents, nous adoptons alors notre assistance pour laider (ex: Programme EAC)