According to article 242 of the OHADA Law of 2014, the invalidity of a company shall only derive from an express provision of this uniform Act or, subject to the provisions of the next paragraph, from texts governing the invalidity of agreements.
The invalidity of the company entails its dissolution followed by its liquidation by the provisions of this Uniform Act.
In private limited companies and share companies, the invalidity of the company shall not be caused by defective consent or the legal incapacity of a member unless such legal incapacity affects all the founding members.
The invalidity of any acts, decisions, or deliberations amending the articles of association may only derive from:
– A provision of this uniform Act that expressly provides it;
– Laws governing the invalidity of agreement in general;
– Or a breach of a provision of the articles of association deemed material by the competent court.
The invalidity of any acts, decisions, or deliberations not amending the articles of association of the company may only derive from:
– A provision of this uniform Act that expressly provides it;
– The violation of a mandatory provision of this uniform Act;
– The violation of a mandatory provision of texts governing agreements;
– Or a breach of a provision of the articles of association deemed material by the competent court.
In limited partnerships or general partnerships, publicity formalities shall be mandatory under penalty of invalidity of the company, acts, decisions, or deliberations, as the case may be, without the partners and the company being allowed to enforce/rely on this ground of invalidity against third parties.
However, the competent court shall have the option not to pronounce the invalidity of the company where fraud was not committed.
The action for invalidity shall be moot where the cause of invalidity has ceased to exist on the day the competent court rules on the merits of the case on the first instance unless such invalidity is based on the unlawful nature of the corporate purpose.
The competent court before which an action for invalidity is brought may, even automatically, set a time limit to correct the invalidity. It shall not pronounce the invalidity less than two (2) months following the date on which the summons and complaint were introduced.
Where to rectify invalidity, a general meeting must be called and the normal call of such a meeting is alleged, the competent court shall grant the time required for the members to make a decision.
Where, at the expiration of the deadline outlined in the paragraphs above, no decision has been taken, the competent court shall make a ruling at the request of the earliest petitioner.
In case the invalidity of the company, its acts, decisions, or deliberations are based on defective consent or the legal incapacity of a member and where the invalidity may be regularized, anyone having an interest therein may give a formal notice to the incapacitated member or the one whose consent was defective to regularize it or to take action for invalidity within six (6) months under penalty of this action to lapse.
The notice shall be served by a deed of a bailiff or notified by any means that shall prove actual receipt by the addressee. Notice thereof shall be given to the company.
The company or a partner may submit to the competent court, within the time limit prescribed in the preceding article, any measure likely to revoke the motivations for actions of the petitioner, notably the repurchase of securities of the incapacitated member or the one whose consent was defective.
In such case, the competent court may either pronounce the invalidity or make the proposed measures compulsory where they have been previously adopted by the company under the conditions set forth for the amendment of the articles of association.
The member whose securities repurchase is being requested shall not take part in the vote and his shares or equity interests shall not be taken into account in the calculation of quorum and majority.
Where the invalidity of the company acts, decisions, or deliberations is based on the infringement of publicity regulations, anyone with an interest in the regularization may, by notice served by a bailiff or by any means proving its actual receipt by the addressee, send a demand to the company requesting that the public be done within the time limit of thirty (30) days following such demand.
Failing regularization within this time limit, any interested party may petition the competent court to appoint an agent responsible for carrying out the formality.
Actions for invalidity of the company shall be time-barred after three (3) years from the date of the registration of the company or publication of the document amending the articles of the association unless the invalidity is based on the unlawfulness of the corporate purpose and is subject to lapse referred to in article 248 of the law.
The actions for invalidity of the acts, decisions, or deliberations of the company shall be time-barred after three (3) years from the day where the invalidity is incurred unless it is based on the unlawfulness of the company purpose and subject to lapse referred to in article 248 of the law.
However, the action for invalidity of a merger or a demerger shall be time-barred after six (6) months from the date of the last entry in the registry of commerce and securities required by the merger or demerger transaction.
An objection by a third party to decisions pronouncing the invalidity of a company is admissible only during six (6) months from the date of publication of these decisions in a newspaper authorized to publish legal notices of the headquarters of the court.
Where the invalidity of the company is pronounced, it shall put an end, with no retroactive effect, to the execution of the agreement. The company shall, then, be dissolved and, in the event, there are many members in the company, it shall be liquidated.
The decision pronouncing the invalidity of a merger or a demerger shall be published within one (1) month from the day such decision became final.
It shall have no effect on the obligations born or for the benefit of the companies to which the assets are assigned, between the date the merger or demerger takes effect and the date of the publication of the decision pronouncing the invalidity.
In the event of a merger, companies involved in the transaction shall be jointly liable for the execution of the obligations referred to in the preceding paragraph on the absorbing company.
The same shall apply in the case of a demerger, of the company being divided, for the obligations of companies to which the asset is assigned.
Each of the companies to which the asset is being assigned shall be liable for its obligations between the date the demerger takes effect and the date of publication of the decision pronouncing the invalidity.
Neither the company nor the members may invoke invalidity against bona fide third parties.
However, invalidity due to defective consent or legal incapacity may be enforceable, even against bona fide third parties, by the legally incapacitated person, or his legal representative, or by the individual whose consent was defective.
The members and company management to whom the invalidity is attributed may be declared jointly liable for the subsequent damage suffered by third parties as a result of the cancelation of the company.
The civil liability suit based on the cancellation of the company or acts and deliberations after its formation shall be time-barred at the end of three (3) years from the day the cancellation decision acquired the force of res judicata.
The disappearance of the cause of invalidity shall not preclude a civil liability suit for compensation for damages caused by the defect tainting the company, the act, or deliberation. Such action shall be time-barred after three (3) years from the day the invalidity was corrected.