Legal framework

NOTE OF COMPARISON BETWEEN SA, SARL and SAS UNDER OHADA LAW

The comparison of these 3 companies depends on the appreciation and the needs of the person or company who wants to set up one of them. We have chosen to compare these three companies as they are the most commonly used in Senegal.

However, globally we can say that an SA presents a certain notoriety and credibility before third parties (business partners, clients, suppliers, banks etc…) but its functioning rules are less flexible than a SARL which is easier to run than a SA. In many points they are the same.

In Comparison to SAs and the SARLs, an SAS is much more flexible and will give possibility of the shareholders to tailor its functioning rules as they want in the Bylaws at the moment of the incorporation. The SAS is newly admitted in the Corporate law of Senegal, however it presents a good credibility in France where it is inspired from.

Here is a table of comparison of the three types of company in relation to the key points to be taken into account during the set up moment and during the functioning according to corporate law applicable in Senegal.

 

SA/ SAU

SARL/ SUARL

SAS/ SASU

Observations

Nomber of shareholders

1 or unlimited number

1 or unlimited number

1 or unlimited number

Same

Quality of Shareholders

Each Shareholder May be a person or a company

Each Shareholder May be a person or a company

Each Shareholder May be a person or a company

Same

Liability of shareholder

Liability of shareholder limited to its share contribution rate

Liability of shareholder limited to its share contribution rate.

Liability of shareholder limited to its share contribution rate.

Same

Ownership of the asset

Assets own by the company

Assets own by the company

Assets own by the company

Same

minimum Share Capital

 

10, 000,000 FCFA

 

100,000 FCFA.

 

 

No minimum share capital required. It’s up to the shareholder to decide the share capital amount they want in the status.

 

SAS is more open and flexible

 

 

SARL is flexible, as the amount is not high

 

SA is not flexible

Composition of the share capital (type of share participation)

Share capital composed of :

Share in nature

Share in money

Share in know-how is not admitted

Share capital composed of :

Share in nature;

Share in money

Share in know-how is admitted but will not be a part of the capital

Share capital composed of:

Share in nature

Share in money

Share in know-how is admitted but shall not be transferrable

Same

Payment of the share in money at the moment of the incorporation

At least 1/4of the share in money must be paid during the incorporation. The remaining to be paid within 3 years from the registration date.

At least 1/2 of the share in money must be paid during the incorporation. The remaining to be paid within 2 years from the registration date.

At least 1/2 of the share in money must be paid during the incorporation. The remaining to be paid within 5 years from the registration date.

The advantage and disadvantage depend on the appreciation and the needs

Auditor for valuation of share in nature

Mandatory in case of participation with share in nature or stipulation of certain particular advantages

Mandatory in case of participation with share in nature over 5,000,000 fcfa value

Nothing stated by the law meaning that it is not mandatory

SAS is more flexible

Taxes and Social duties (Social security and Pension)

 

  • Income tax of 30% of profit ;
  • VAT 18%
  • Patent (commercial activity tax, rate and calculation depending on the type of activity and the offices fees
  • Registration and stamp fees (case by case
  • Withholding taxes (on salary staff, on dividend…)
  • Social security fees and Pension fees

Same taxes and social duties as SA and SAS

Same taxes and social duties as SA and SARL

The 3 companies have the same tax regime

 

SA

SARL

SAS

 

Management

  • One Person as Chairman -and CEO or, A Chairman of Board of Directors and a CEO
  • A general Administrator

One or many Managers. They must be physical persons, shareholder or not

  • A President is mandatory
  • In addition to the President it is possible to appoint a CEO and Deputy CEO.

SAS is more flexible

 

SA is not flexible

Management and Control

  • An SA can be created with only one General Administrator, then without a Board of Director
  • An SA can be created with a Board of Directors composed of 3 to 12 Director board members (person or company)
  • Board of Directors is not admitted in a SARL
  • Possibility to have a committee of control

Possibility to have a board of Directors mentioned in the bylaws

 

Decision making by shareholders

The decisions of the shareholders are taken through the Ordinary General Assembly or Extraordinary General Assembly or Special Assembly of shareholders.

The decisions of the shareholders are taken through the Ordinary General Assembly or Extraordinary General Assembly of shareholders.

The decisions of the shareholders are taken through the Ordinary General Assembly or Extraordinary General Assembly of shareholders

Same

Pouvoirs des dirigeants

 

 

 

 

 

 

 

 

The President and CEO, the chairman or the CEO have all power to act on behalf of the company before the third parties

The board of Directors shall determine the guideline of the company’s activity and shall control its execution by doing any control and checking needed

The board will adopt the financial statements and will draft the activity Management report for the shareholders.

 

The Manager(s) have all power to act on behalf of the company before the third parties, subject to the power granted to the shareholders

 

 

The President and CEO, the chairman or the CEO have all power to act on behalf of the company before the third parties. The limitations set out in the bylaws are not opposable against third parties

 

Same

Responsabilité des dirigeants

The directors/Managers are either individually or jointly liable to the Company or to third parties, either for infringements of the applicable laws or regulations, or for breaches of the articles of association or for faults committed in their management.

The Managers are either individually or jointly liable to the Company or to third parties, either for infringements of the applicable laws or regulations, or for breaches of the articles of association or for faults committed in their management.

The directors/Managers are either individually or jointly liable to the Company or to third parties, either for infringements of the applicable laws or regulations, or for breaches of the articles of association or for faults committed in their management

Same

Auditors

 

 

 

 

It is Mandatory to have at least one auditor in a SA company

 

 

 

 

  • Not mandatory

 

  • Mandatory if two of these conditions are met:

- total balance sheet is more than 125, 000, 000 FCFA.

- the annual turn over is above 250, 000, 000 FCFA.

- the permanent staff number is above 50 persons.

  • Not mandatory

 

  • Mandatory if two of these conditions are met:

- total balance sheet is more than 125, 000, 000 FCFA.

- the annual turn over is above 250, 000, 000 FCFA.

- the permanent staff number is above 50 persons.

- is controlling one or many companies or it is controlled by one or many companies

SA is not flexible on this point

 

SARL and SAS are quite the same on this point

 

SA

SARL

SAS

 

Responsability of shareholder

Shareholders are responsible of social debts in prorate to their share contribution.

Shareholders are responsible of social debts in prorate to their share contribution.

Shareholders are responsible of social debts in prorate to their share contribution.

Same

Financial Rights

Right to dividend, right to reserves, bonus of liquidation and preferential right of subscription in case of a share capital increase.

Right to dividend, right to reserves, bonus of liquidation and preferential right of subscription in case of a share capital increase.

Right to dividend, right to reserves, bonus of liquidation and preferential right of subscription in case of a share capital increase.

Same

Right for intervention

Right to receive Information on the company right to participate to The General Assemblies and to vote.

Right to receive Information on the company right to participate to The General Assemblies and to vote.

Right to receive Information on the company right to participate to The General Assemblies and to vote.

Same

Clause of Approval of share transfer

Possible to provide the prior approval of share transfer in the bylaws, only for share transfer to third party. And also between shareholders

Mandatory in case of a transfer to a third party.

It can be spread to others transfers in the bylaws

Possible to provide in bylaws for all types of transfer

SA is more flexible in this point than SARL

SAS is more flexible than the two

Note on the Registration and Protection of a Trade Mark in the AIPO Area (African Intellectual Property Organization)

A brand is a visible sign used by a natural or legal person to distinguish its products or services from those of its competitors.

Article 2 of Annex 3 to the Bangui Agreement explicitly lists the signs which are likely to constitute a trade mark. The sign must be independent of the usual designation of the marked object. These include names, particulars, arbitrary or fancy names, the characteristic shape of the product or its packaging, labels, envelopes, emblems, imprints, stamps, seals, vignettes, borders, combinations or arrangements of Colors, drawings, reliefs, letters, figures, currencies, and pseudonyms.

A brand may be individual or collective. If it is individual it belongs to a natural or legal person. A collective brand, for its part, is the brand of goods or services whose conditions of use are laid down by a regulation approved by the competent authority and that only public bodies, trade unions or groups of trade unions, associations, Producers, industrialists, craftsmen or traders can use, provided they are officially recognized and have legal capacity.

Brands can be classified into 3 categories:

  • Verbal brands which are those which are written and pronounced
  • Figurative brands consisting of designs, shapes, and other graphs
  • Complex or semi-figurative brands consisting of a combination of the two previous varieties

The African Intellectual Property Organization (OAPI) was created by the Bangui agreement of the 2nd March 1977. It comprises 17 African member states. These countries include Benin, Burkina Faso, Cameroon, Republic of Central Africa, Comoros, Congo, Côte d'Ivoire, Gabon, Guinea (Conakry), Guinea Bissau, Equatorial Guinea, Mali, Mauritania, Niger, Senegal and Togo. The combined territory of these 17 member states constitutes the protective space for a trademark registered at the OAPI's level.

According to the OAPI, in order for a brand to be registered, its conditions of use must be fixed by a regulation approved by the competent authority and only public bodies, trade unions or groups of trade unions, associations, groups of producers, industrialists, craftsmen or merchants may use it, provided they are officially recognized and have legal capacity. According to Article 8 of Annex III of the Bangui Agreement of 24 February 1999 as amended, the various documents which compose a file of application for trademark registration:

  • request addressed to the Director General of the Organization in sufficient number of copies
  • proof of payment of the filing fee to the Organization;
  • a power of attorney under private seal, without stamp, if the applicant is represented by an agent;
  • the reproduction of the trade mark containing the list of goods or services to which the trade mark applies and of the corresponding classes of the International Classification of Goods and Services for the purposes of the registration of trade marks (Nice Agreement); The number of reproductions of the brand to be provided shall be determined by the regulations for the application of this Annex;
  • the regulation of use attached to the collective brand must be approved by a ministerial decision setting out the conditions for use of the brand
  • There are two modes of deposit: either a direct deposit or an indirect deposit.
  • Direct deposit: application is filed directly with the OAPI or sent by post. For applicants domiciled outside the OAPI, they must file with the OAPI through a representative chosen in one of the member states.
  • Indirect deposit: application filed with the Ministry in charge of industrial property. This method of filing is reserved for applicants domiciled in the territory of OAPI.
  • 400 000 FCFA minimum if the mark is in black and white
  • 450 000 FCFA if the mark contains colors

A brand may not be validly registered if:

  1. it is devoid of any distinctive character, in particular because it consists of signs or indications constituting the necessary or generic designation of the product or the composition of the product;
  2. it is identical to a brand owned by another holder and which is already registered, or whose filing date or priority date is earlier, for the same goods or services or for similar products or services, or if it resembles such a brand as to involve a risk of deception or confusion;
  3. it is contrary to public order, morality or law;
  4. it is likely to mislead the public or the commercial community, in particular as to the geographical origin, nature or characteristics of the goods or services concerned;
  5. it reproduces, imitates or contains among its components coats of arms, flags or other emblems, abbreviations or acronyms or an official sign or stamp of inspection and guarantee of a State or intergovernmental organization established by an international convention, except authorization of the competent authority of that State or of that Organization.

- The registration order

An order of registration of the brand, signed by the Director General of OAPI, mentioning the number assigned and announcing its publication in the official bulletin of intellectual property (BOPI).

- The Certificate of Registration

As soon as the registration has been effected, the holder of the registration shall be issued with a certificate containing, in particular, the following information, as it appears on the register:

  1. the serial number of the brand;
  2. the date of filing of the application for registration, the date of registration and the priority date, if claimed;
  3. the trade name or surname and given name of the proprietor of the trade mark and his address;
  4. a reproduction of the brand;
  5. an indication of the classes of goods or services to which the registration relates.

If the application is rejected, the applicant may lodge an appeal within 60 days with the Higher Appeals Commission. The verdict of this commission is final and without appeal.

Once the trademark is registered, it can be used for 10 years renewable. The brand which has not been renewed at the end of this period falls, in principle, into the public domain. However, ownership of the brand may be retained without limitation of duration if the applicant makes renewals every 10 years.

Once the brand has been registered, the proprietor of that brand has the exclusive right to use the brand for the goods or services for which it has been registered, and for similar goods or services.

By virtue of that right the proprietor of the trade mark may prevent all third parties acting without his consent from using in the course of trade identical or similar signs for goods or services which are similar to those for which the trade mark Or services shall be registered in cases where such use would entail a likelihood of confusion.

The right to a trademark arises at the time of filing and the publication of the application for registration makes the right effective against third parties. This request shall be accepted if all the conditions laid down in Articles 9 and 10 of Annex III to the revised Bangui Agreement are met.

The owner of a trademark shall be deprived of its right to the trademark when it has allowed the trademark to become degenerate which has become customary.

Because of the principle of specialty, trademarks can only be protected for the same or similar products as listed on the deposit without taking account of the filing classes in accordance with Article 9 of Annex III to The Bangui Agreement which provides that "the trade mark may be registered for one or more classes of goods (...) within the meaning of the Nice Agreement concerning the International Classification of Goods for the Purposes of the Registration of Brands ".

  • Opposition against the registration of the brand

Anyone who has an interest against the registration of a trademark, may make an opposition claim requesting the cancellation of the registration of a trademark by sending a reasoned opinion to the Director General of OAPI accompanied by the document proving the payment of the opposition fee. 

The opposition application must be made within 6 months of the publication of the mark registered in the Official Bulletin of the Organization.

  • Request of the annulment of a trademark by a Well-known brand

It should be noted, however, that the owner of a well-known trademark may claim the annulment before the courts of the effects on the national territory of one of the Member States of the deposit of a trademark liable to create confusion with his own. Such action may not be commenced after the expiration of five years from the date of filing, if it has been effected in good faith.

It is possible that the rights of creators are exploited or disputed rightly or wrongly.

Unlawful exploitation of the brand may be attacked by its owner by an action for unfair competition or infringement proceedings.

  • Action for unfair competition

On the basis of Annex VIII of the Agreement revising the Bangui Agreement, different specific situations of unfair competition may be envisaged:

  • Creating confusion with the business of others
  • Infringement of the image or reputation of others
  • Deception to the public
  • The denigration of the business of others, its activities or its products
  • The disclosure, acquisition or use by third parties of confidential information
  • Acts likely to disorient the competitor

If one of these facts is found, the proprietor of the brand has the possibility of legal action. Where the owner of a brand considers that a criminal act is being carried out on his goods, he shall bring the matter before the Court of First Instance. In order to initiate this action, a legitimate interest must be present. This condition implies that only those who have a right to use the brand (the proprietor of the brand, his successors in title, the assignee and the assignee) can act.

The applicant is obliged to take legal action within ten working days of notification of the detention of the goods.

In order to take legal action, the plaintiff may apply to the administrative or judicial authorities.

Concerning the administrative authorities, Article 12 of the Paris Convention for the Protection of Industrial Property states that "each of the countries of the Union undertakes to establish a special industrial property service and a central repository for communication to the public (...), trademarks ".In the OAPI space, it is the Director General who is responsible for publishing an official periodical sheet for the reproduction of registered trademarks. He is the authorized person to register the quarreled brand. The opponent's appeal is then to ask him to reconsider his decision.

As regards the judicial authorities, the merchant who fails to comply with the requirements relating to free competition may be exposed to various measures, ranging from a conviction to pay damages to his competitor, penal fines and which may result to a closure of the company. For these sanctions to be applied, the applicant must apply to the Court of First Instance for actions relating to trademarks. Where the action is "brought by way of correction, if the accused raises in his defense matters relating to the ownership of the brand, the competent court has the status of exception" (Article 47 (2) of Annex III The revised Bangui Agreement).

  • Action for infringement

Counterfeiting is an infringement of an industrial property right. Trademark infringement consists in reproducing a trademark without the authorization of the owner of the intellectual property right.

Annex 3 of the Bangui Agreement cites the constituent material elements:

  • Counterfeiting by affixing a brand belonging to another
  • The possession of products bearing a counterfeit brand
  • Counterfeiting by reproduction
  • Counterfeiting by imitation of the brand of another
  • Counterfeiting by product substitution

It is important to indicate the parties to the action:

The legal action must be initiated by any person having a legitimate interest. Thus, the applicants may be: the owner of the brand, the assignee, the co-owner or the beneficiary of the exclusive right of exploitation whose contract contains no stipulations to the contrary. The action must be brought against the named defendant, that is, the perpetrator of the offense.

Let us then state the competent court:

The competent court is that which is held by common law, namely that of the place of commission of the offense or that of the domicile of the defendant. An action for infringement may be brought by civil or correctional means. In the first case, the civil court is competent and considers as summary. In the second case, the criminal court seized may be subject to exceptions relating to the ownership of the brand raised by the defendant. If the criminal court is seized, the civil court will have to stay the proceedings.

As regards the proceedings, it should be noted that the proof of the infringement relates by any means. In addition to the usual modes that are notably the statement of bailiff, the testimony and the market investigation, seizure-counterfeiting is a mode particularly adapted to the action for infringement. The latter may be requested by the owner of the brand or the holder of the exclusive right of use.

However, the action for infringement may encounter obstacles. The defendant can demonstrate that the acts criticized are not counterfeit, either because there is in fact no likelihood of confusion or because it uses the sign outside the specialty. The defendant may also rely on the nullity of the trade mark or even on the earlier date of its exploitation.

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