Company security means any class or series of equity or voting interests in the company, including common shares and the voting share.
Share companies may issue securities giving access to capital or giving the right to the allocation of debt securities.
Shareholders of a company issuing securities that give access to capital shall have, proportionately to the number of their shares, a pre-emptive subscription right to these securities.
This right is governed by articles 573 to 587-2 and 593 to 597 of the OHADA Law of 2014.
Decisions taken and transactions carried out in violation of the law shall be null.
The issue agreement may stipulate that these securities and the capital or debt securities, to which these securities are entitled, may only be transferred and negotiated together. In this case, if the original instrument issued is a capital security, it does not fall into a specific class within the meaning of article 555 of the OHADA Law of 2014.
Capital securities may not be converted or transformed into securities representative of debts.
Securities issued under article 822 of the OHADA Law uniform Act of 2014 may not be considered as constituting a promise of shares for the application of article 760 of the same law.
The issue of securities giving access to capital or giving the right to allotment of debt securities governed by this Title shall be authorized by the extraordinary general meeting of shareholders by articles 562 to 572 and 588 to 618 of the OHADA Law of 2014. Any decision taken in violation of the provisions shall be null.
The meeting shall decide based on the report of the board of directors or the president of the simplified public limited company or the general director, as the case may be, and on the special report of the auditors.
The reports shall describe, among other things, the characteristics of the securities giving the right to allotment of debt securities or giving access to capital, the terms for allotment of debt or capital securities, to which these securities give right, as well as the dates on which the rights of allotment may be exercised. In case of issuance of securities giving the right to allotment of debt securities composed only of debt securities, the report of the auditor shall address the company debt situation, excluding the choice of items used to calculate the issue price.
Where the capital increase is realized while retaining the pre-emptive subscription right, the auditor shall give his opinion on the proposed issuance and on the choice of items used to calculate the issue price and its amount.
Resolutions passed in the absence of the report of the board of directors or the general director, as the case may be, and of the auditor provided for in this article, shall be null. These resolutions may be canceled in case the report does not include all information prescribed in this article.
A public limited company may issue securities giving access to the capital of the company which owns directly or indirectly more than half of its capital or to a company in which it holds directly or indirectly more than half of the capital.
The issuance must be authorized by the extraordinary general meeting of the company called to issue these securities and that of the company in which the rights are exercised under the conditions outlined in article 822-5 of the OHADA Law of 2014. Absent such authorization, the issuance shall be null.
From the date of the issuance of securities that give access to capital, the company called to allot these securities shall not change its form or purpose, unless authorized to do so by the issue agreement or under the conditions outlined in article 822-14 of the law. Any decision taken in violation of this provision shall be null.
From the date of the issue of securities giving access to capital, the company called to allot these securities shall neither change the rules of distribution of profits, nor amortize its capital nor create preferred shares leading to such a change or such depreciation, nor carry out a capital increase reserved to persons named in the provisions of article 586 above unless authorized to do so under the conditions outlined in article 822-14 of the law and subject to arrange for the necessary arrangements for the maintenance of the rights of holders of securities giving access to capital under the conditions stipulated in articles 822-10 et seq. of the law or by the issue agreement.
Under these same conditions, it may issue preferred shares.
Any decision taken in violation of this provision shall be null.
In the event of capital reduction motivated by losses and carried out by reducing the nominal value or the number of securities comprising the capital, the rights of holders of securities giving access to capital shall be reduced accordingly, as if they had been exercised before the date on which the capital reduction became final.
The company called to allot capital securities or securities giving access to it must take necessary measures for the protection of the interests of holders of rights thus created if it decides to issue, in any form whatsoever, new capital securities with pre-emptive subscription rights reserved for its shareholders, to distribute reserves in cash or in kind, as well as share, issue or merger premiums, or to change the distribution of its profits by creating preferred shares.
For that purpose, it shall:
1) Either enable holders of these rights to exercise them if the period provided for in the issue agreement is not yet open, so they may immediately participate in the transactions referred to in the first paragraph or benefit therefrom;
2) Or adopt provisions enabling them, in case they will exercise their rights later, to subscribe for, on an irreducible basis, newly issued securities, or obtain them freely, or receive cash or similar assets to those that were allocated, in the same the quantities or proportions and under the same conditions, except for dividend rights, than if they were, at the time of the transaction, shareholders;
3) Or adjust to subscription conditions, conversion bases, terms of exchange, or allotment initially provided to take into account the impact of transactions mentioned in the first paragraph.
Unless otherwise provided for in the issue agreement, the company may simultaneously take measures provided for in 1) and 2) of article 822-10 of the OHADA Law above.
It may, in all cases, replace them with the adjustment authorized in 3) of the said article.
Such adjustment is organized in the issue agreement when capital securities are not admitted to trading on a stock exchange.
For paragraph 1) of article 822-10 of the Law, where there are securities giving access to capital, the company issuing new capital securities with pre-emptive subscription rights reserved to its shareholders shall, where rights attached to securities giving access to capital may only be exercised at certain dates, assign a special period to enable holders of rights attached to securities giving access to capital who would exercise these rights to subscribe for new securities.
The company shall adopt, where rights attached to securities giving access to capital may be exercised at any time, necessary measures to enable holders who would exercise these rights to purchase new instruments.
For paragraph 2) of article 822-10 of the Law, where there are securities giving access to capital, the company allotting shares free of charge shall transfer into an unavailable reserve account, the amount necessary to allot the said shares to holders of rights attached to securities giving access to capital who would exercise their right at a later date proportionally to the number they would have received had they been shareholders at the time of the main allotment.
For the same paragraph 2), where there are securities giving access to capital, the company allotting shares free of charge shall transfer into an unavailable reserve account, the amount necessary to allot, free of charge, shares to holders of rights attached to securities giving access to capital who would exercise their right at a later date proportionally to the number they would have received had they been shareholders at the time of the main allotment.
For paragraph 3) of article 822-10 of the law, the adjustment shall equate, to one-hundredth of a share, the value of securities that are obtained in case of exercise of rights attached to securities giving access to capital after the completion of the transaction and the value of securities that would have been obtained in case such rights were exercised before the completion of the transaction.
To this effect, the new basis to exercise rights attached to securities giving access to capital shall be calculated taking into consideration:
1) In the event of a transaction with pre-emptive subscription right and accordance with stipulations of the issue agreement:
a) Either the ratio between, on the one hand, the value of the pre-emptive
subscription right and, on the other hand, the value of the share after detachment of this right as determined by the average of the first prices listed during all trading sessions on a stock exchange during the subscription period;
b) Or the number of securities issued to which an old share entitles, the issue price of such securities, and the value of shares before the detachment of the subscription right. This value is equal to the weighted average of market prices of the three (3) latest stock exchange trading sessions at least that precede the day of the beginning of the issue;
2) In the event of allotment of free shares, the number of shares to which an old share entitles;
3) In the event of distribution of reserves, in cash or kind, or of issue premiums, the ratio between the amount per share being allotted and the value of the share before allotment. This value is equal to the weighted average of market prices of, at least, the three (3) latest stock exchange trading sessions that precede the day of the beginning of the allotment;
4) In the event of modification of the distribution of profits, the ratio between the reduction by share of the right to benefits and the value of the share before this amendment. This value is equal to the weighted average of market prices of, at least, the three (3) latest stock exchange trading sessions that precede the day of the amendment;
5) In the event of amortization of capital, the ratio between the amount per share of the amortization and the value of the share before amortization. This value is equal to the weighted average of market prices of, at least, the three (3) latest stock exchange trading sessions that precede the day of the amortization.
When the company shares are not admitted to trading at a stock exchange, the issue agreement shall provide for adjustment procedures, including procedures for determining the value of the share to be considered for the implementation of articles 822-10 to 822-10-4 of the Law.
The board of directors, the president of a simplified public limited company, or the general director, as the case may be, shall report the elements of calculation and the results of the adjustment in the next annual report.
Transactions relating to the issuance of new capital securities with pre-emptive subscription rights reserved to its shareholders, of distribution of reserves, or modification of the distribution of its profits by creating preferred shares shall be null in the event of a violation of the provisions of articles 822-10 to 822-10-5 of the Law.
The provisions of articles 822-7 to 822-10-6 of the Law are applicable as long that there are rights attached to each of the components of securities mentioned in these articles.
Where the company called to issue capital securities is absorbed by another company, or merges with one or more other companies to form a new company, or demerges, holders of securities giving access to capital shall exercise their rights in one or more companies benefiting from the contributions. Article 804 of the law is not applicable, except otherwise stipulated in the issue agreement.
The number of capital securities of the absorbing or new company or companies to which holders of securities giving access to capital may claim shall be determined by correcting the number of securities that are scheduled to be issued or to be allotted in the issuance agreement considering the number of shares to be issued by the company or companies benefiting from contributions. The contributions auditor shall give an opinion on the number of shares thus determined.
The approval or a proposal to merge or demerger by the shareholders of the company or companies benefiting from the contributions of the newly created company or companies implies a renunciation by such shareholders waives their pre-emptive subscription right mentioned in article 822-1 of the 2014 OHADA Law for the benefit of holders of securities giving deferred access to capital.
The company or companies benefiting from contributions or the new company or companies shall automatically replace the issuing company in its obligations to holders of said securities.
Unless otherwise stipulated in the issue agreement and except an early dissolution not resulting from a merger or demerger, the company may not impose to the holders of securities giving access to capital, the repurchase or refund of their rights. Any contrary decision shall be null.
Holders of securities giving deferred access to capital, after detachment, if applicable, of rights of the original securities under this chapter, shall be grouped automatically for the defense of their common interests in a group that enjoys civil personality and shall be subject to the provisions identical to those which are outlined in articles 786 to 814 of the Law. A separate group shall be formed, if applicable, for each class of securities giving the same rights.
The general meetings of holders of such securities shall be called to authorize all amendments to the issue agreement and rule on any decision relating to the conditions of subscription or allotment of capital securities determined at issue.
Each security giving access to capital shall carry one voting right. The conditions for quorum and the majority are those set in articles 552 to 554 of the Law.
Meetings costs as well as, generally, all expenses related to the operation of different groups shall be borne by the company called to issue or allot new securities representative of its stated capital.
When securities issued under this section are bonds intended to be converted or redeemed into capital securities, redeemed or exchanged against capital securities, the provisions of the second, third, and fourth paragraphs of this article apply to the group formed by the second sentence of article 785 of the Law.
Where a procedure for judicial reorganization is initiated concerning a company issuer of securities giving access to capital under the conditions of article 822 of the Law, the time limit for the exercise of the right to allot a fraction of the stated capital shall be opened at the opening judgment.
Capital increases made necessary by the exercise of rights attached to securities giving access to capital shall not give rise to publication requirements outlined in article 598 of the Law. Subscription forms shall be established under the terms of articles 601 to 603 of the Law, except stipulations outlined in paragraphs 6) and 7) of this last article. Articles 571, 604 to 617 of the OHADA Law of 2014 do not apply to capital increases carried out by exercising rights attached to securities giving access to capital. Publication formalities outlined in article 618 of the law shall be accomplished within one month.
The increase of capital is final by the mere exercise of rights, and where applicable, of matching payments.
At any time during the current fiscal year and no later than during the first meeting following the end of the fiscal year, the board of directors or the general director, as the case may be, shall record, if applicable, the number and the nominal value of shares issued for the benefit of holders of rights over the past fiscal year and make the necessary amendments to as the provisions of the articles of association relating to the amount of the stated capital and to the number of securities that compose it.
Where the holder of a security giving access to capital is not entitled to an integral number of securities, the fraction of the share forming “the odd lot” shall be paid in cash; this payment shall be equal to the fraction of share forming “the odd lot” by dividing the value of the share.
In the event of issuance of new capital securities or new securities giving access to capital as well as in the event of a merger or demerger of the company called to issue such securities, the board of directors or the general director, as the case may be, may suspend, for a maximum period of three (3) months, the possibility of obtaining the allotment of capital securities through the exercise of the right referred to in article 822-19 of the OHADA Law of 2014, or article 626-1 of the same law.
Unless otherwise provided in the issue agreement, capital securities obtained, at the end of the suspension period, through the exercise of the rights attached to securities, shall give the right to dividends paid during the fiscal year in which they were issued.
The information contained in the notice by which the board of directors or the general director, as the case may be, suspend the possibility of acquiring capital securities shall be communicated to holders of securities giving access to capital by registered mail with a request for acknowledgment of receipt, seven (7) days at least before the date of entry into force of the suspension. Where the company securities giving access to capital are admitted to trading at the stock exchange or where all its securities giving access to capital are not in the nominative form, the notice containing this information shall be published, within the same period, in a newspaper authorized to publish legal notices.
Such notice shall state, in addition to the information provided in article 257-1 of the law, the dates of entry into force and the end of the suspension.
Rights attached to securities giving access to capital that have been exercised or have been acquired by the issuing company or by the company called to issue new capital securities shall be canceled by the issuing company.
Holders of securities giving access to capital have, vis-à-vis the company issuer of securities they are meant to receive, the right to access the company records provided to shareholders or made available to them.
When the rights to allotment of a percentage/portion of the stated capital are incorporated or attached to bonds, the right to communication shall be exercised by the representative of the group of bondholders, by articles 791 and 797 of the OHADA Law of 2014.
After the detachment of these rights from the original instrument/securities, the right to communication shall be exercised by the representatives of the group formed by article 822-14 of the law.
In all cases, representatives of different groups may attend the general meeting of the shareholders, but without voting rights. They shall not, in any way, interfere in the management of the company.
Insofar as they are the provisions of compatibility with the special provisions of this chapter, the provisions of articles 765 to 773-1 of the law apply to securities giving access to capital.