Democratic Republic of Congo
Corporate Guide

What are the different types of companies that can be incorporated in Democratic Republic of Congo?

Limited liability company (société à responsabilité limitée – SARL)

Regarding AUSCGIE, a limited liability company (LLC) is a company in which the shareholders are only responsible for the company’s debts up to the amount of their contribution and whose rights are represented by company shares.

The characteristics of an LLC are the following:

• The number of shareholders is at least one (the maximum is unlimited).
• The maximum duration is 99 years.
• Article 311 of the AUSCGIE provides that, outside of any contrary national provisions, the share capital of these companies shall be equivalent to CDF 1 million. Interministerial Order No. 002/CAB/MIN/JGS&DH/014 and No. 243/CAB/MIN/FINANCES/2014 dated 30 December 2014, which specifies the format of statutes, and the share capital of limited liability companies, provides in Article 2 that the share capital of these companies is freely determined by their shareholders.
• The contributions to the company must be made in cash, in kind or in the form of industry contributions.

They must be enumerated in the statutes.

The value of the shares must be at least equivalent to CDF 5,000 – these shares are not negotiable and must be subscribed in full and fully paid up at the incorporation of the company. It is also necessary to specify in a notarial deed the contributions in cash and in-kind made by each of the shareholders to pay up their share in the company’s capital.

Management and administration

The manager, who must be a natural person, ensures the daily management of the company. They may be chosen from among the shareholders or from outside the company. Unless otherwise provided for, they are appointed in the articles of association or a separate document for a renewable term of four years.

They can be dismissed by a decision of the shareholders representing more than half of the share capital, but dismissal without just cause exposes the company to damages. Their resignation without just cause exposes the manager to damages.

The manager is invested with the extensive powers to act in all circumstances in the name of the company. Clauses limiting their powers are not opposable to third parties. If there is more than one manager, each of them may unless otherwise provided for in the articles of association, act separately.

Any agreement concluded between the company and one of its managers or one of its shareholders must be approved by the shareholders, on a report of the manager or the auditor, if any.

In the case of the articles of association or the law being violated, the manager is liable to face criminal or civil proceedings. The complaint can be filed by one or several shareholders acting individually (individual action for personal injury) or for injury to the company (corporate action).

Quorum required during the general meetings of LLCs

This differs depending on whether it is an ordinary general meeting or an extraordinary general meeting.

For an ordinary general meeting, decisions are taken by a majority of the share capital on the first call and by a majority of the votes cast on the second call. For an extraordinary general meeting, the quorum is three-quarters of the shares.

Shares transfer in an LLC

The transfer of shares is free between shareholders as well as between spouses, ascendants and descendants. Unless otherwise provided for in the articles of association, the transfer to a third party is subject to the consent of the majority of the non-transferring shareholders representing three-quarters of the shares, less the shares of the transferring shareholder.

A right of pre-emption is granted to the co-associates, i.e. they can buy the shares offered for sale as a priority.

Controls in an LLC

In addition to the control carried out by the shareholders in the exercising of their right to communication and information, a supervisory board may be responsible for auditing the accounts and the annual balance sheet and for reporting to the shareholders during the meetings.

When the company exceeds one of the following three thresholds, an auditor must be appointed for three years:

• A turnover exceeding USD 500,000
• Capital of more than USD 20,000
• More than 50 permanent employees

The board of directors and the supervisory board have a permanent right to verify any of the company’s documents. They must issue an audit report on the accounts or, failing that, state the reasons for any reservations made or failure to certify them.

The sole-shareholder LLC

A sole-shareholder LLC has only one shareholder, called the sole shareholder, who can be a natural or legal person. This allows one shareholder to have a legal structure that limits the responsibility and simultaneously ensures the sustainability of the company.

The legal regime of the sole-shareholder LLC is that of the multi-person LLC with some adaptations.

The management can be ensured by the sole shareholder or by a third party. The sole shareholder makes ordinary and extraordinary decisions, but they must be careful not to confuse the company’s assets with their assets. If they succumb to the temptation, they risk being subject to collective procedures (for example, being obliged to cover the company’s liabilities with their assets). They may also be prosecuted for misuse of corporate assets.

The manager, whether they are the sole shareholder or not, must hold the meetings, and file the management reports and the inventory, i.e. they must give an account.

The sole shareholder can decide on an early dissolution. This decision is followed by the transfer of the company’s assets to the sole shareholder’s assets.

Simplified joint stock company (société par actions simplifiée – SAS)

The SAS was introduced as a result of the reform of commercial company law in 2010. It now coexists with the other forms of commercial companies, namely public limited companies, limited shareholdings, general shareholdings and limited liability companies.

It is organised by Articles 853-1 to 853-23 of the Organization for the Harmonization of Business Law in Africa (OHADA) Uniform Act relating to commercial companies and economic interest groups.

The simplified joint stock company is a rather atypical form of company. It is characterised mainly by the freedom granted to the shareholders about its organisation and operation. Its nature and its regime reflect its particularity.

The nature of a SAS

Several elements characterise a SAS:

• It is a company with limited risks. The shareholders are only responsible for the debts of the company up to the amount of their contributions; it is therefore similar to the SARL and the société anonyme (Public limited company) (SA).
• The SAS is a joint-stock company: in return for their contributions, shareholders receive shares and not social shares.
• The company does not make a public offer, i.e. its shares are not negotiable on the stock market. In this respect, it differs from the SA which, under certain conditions, can make a public offering.
• An SAS can be a multi-person company or a sole shareholder company (in this case, we speak of the SASU): the legislation makes provision for both the SAS with several shareholders and the SAS with only one shareholder. There is a common point with the SA, which can also be a one-person company.
• The SAS is a flexible company which can be freely organised by the shareholders, notably about the share capital, the number of shareholders, the modes of administration, etc.
• A SAS is not a company with variable capital, but it can become one.
• There is no minimum share capital; the parties freely determine the share capital as well as the nominal amount of the shares and the conditions of payment of the contributions.

The regime of the SAS

As a consequence of its particular nature, an SAS does not have its legal regime. It is freely organised by the shareholders by Article 853-7, which provides that “the articles of association determine the conditions under which the company is managed”. The only mandatory body in the SAS is the chairman, who represents the company concerning third parties (Article 853-8). The other powers are exercised by the general meeting (Article 853-11).

Moreover, Article 853-3 provides that, unless there are exceptions, the rules for public limited companies apply to a SAS. Among the exceptions, the presence of the auditor is not mandatory except in the cases provided for by Article 853-13.

Simple limited shareholding (société en commandite simple – SCS)

SCSs are companies in which two categories of shareholders coexist:

• The general shareholders, who are in the same situation as the shareholders of general shareholdings and to whom the management is entrusted, unless it is exceptionally entrusted to a third party.
• The limited shareholders, who are only liable up to the limit of their contributions and who cannot interfere in the management of the company, which makes it impossible to appoint a manager from among the limited shareholders.

As for the necessary share capital, the law sets neither a minimum nor a maximum. It is divided into shares, which can only be transferred with the consent of all shareholders unless otherwise provided for in the articles of association. The articles of association must indicate the amount or value of the shares of all the associates.

An annual general meeting is held each year within six months of the end of the financial year.

The limited shareholders and the non-managing general shareholders have the right, twice a year, to obtain access to the books and corporate documents and to ask questions in writing about the management of the company, which must also be answered in writing.

General partnership (société en nom collectif – SNC)

The law defines an SNC as a company in which “all the partners are merchants and are indefinitely and jointly and severally liable for the company’s debts”. An SNC is constituted of persons who commit themselves because of their mutual trust. Its main characteristics are:

• It cannot carry out certain activities such as banking and insurance.
• All the shareholders (at least two) must be merchants.
• The associates commit themselves indefinitely jointly and severally to the payment of the company’s debts.
• The law does not fix any minimum capital.
• The share capital is divided into shares of equal value, which can only be transferred with the consent of all the shareholders.
• The shareholding is designated by a corporate name which must be immediately preceded or followed in legible characters by the words “société en nom collectif” or the acronym “SNC”.
• In principle, the death of a shareholder leads to the dissolution of the shareholding. However, the articles of association may provide for the continuation of the shareholding with the heirs or between the survivors, after reimbursement of the heirs.
• A spouse cannot participate in the same SNC as his / her spouse, to avoid both of them being indefinitely and jointly liable.
• The management is ensured by one or several managers or shareholders, or not.
• The remuneration of the manager is fixed by the act of appointment. Their role is to represent the company in its relations with third parties, but they must keep the shareholders informed of their various actions on an ongoing basis.
• The shareholders have the power to deliberate and to take all decisions beyond the powers of the manager, in particular the approval of the accounts.
• The share of each associate in the profits or their contribution to the losses is proportional to their contribution.
• The contributions in industry do not enter in the amount of the capital, since they are not realisable and they give right only to the attribution of a percentage of the profits.

Public limited company (société anonyme)

An SA is a company in which “the shareholders are responsible for the social debts only up to the amount of their contributions and whose rights are represented by shares”.

Its main characteristics are the following:

• It can have only one shareholder.
• The commitment of the shareholders is limited to the amount of their contribution. This is why the capital that constitutes the credit of the company must be indicated in all documents.
• Similarly, the rights of the shareholders are proportional to the amount of their contributions represented by negotiable securities.
• The incorporation of the company is subject to the fulfilment of numerous formalities, which are relatively complex when there is a public offering (concern for the protection of public savings).
• The minimum share capital is USD 200,000 in the case of a public offering, and USD 20,000 otherwise.
• The share capital can be increased during the life of the company either by new contributions or by the incorporation of reserves. In the event of a loss, the share capital can also be reduced.

Management and administration

The law offers the shareholders two solutions: a corporation with general administration or a corporation with a board of directors.

1. An SA with general administration
   A corporation with a maximum of three shareholders need not set up a board of directors. It may appoint a managing director who assumes the functions of administration and management of the company. This managing director is appointed either by the Articles of Association or by a general meeting. They must necessarily be a natural person, who may combine their duties as directors with an employment contract.
2. An SA with a board of directors
   

   The board of directors is composed of at least three, and at most 12, shareholders, elected by the general meeting for a period that cannot exceed two years in the case of appointment by the articles of association or by the constitutive general meeting, and six years where they are appointed during the company’s life. They may be re-elected but may also be dismissed at any time by the ordinary general meeting, even if the matter has not been included in the agenda.

   A non-shareholder may be appointed as a director. A director may also be bound to the company by an employment contract. The director is remunerated by a fixed function allowance determined by the general meeting. The board of directors may grant exceptional remuneration for special assignments.

   The board of directors is chaired by a chairman appointed from among its shareholders, and the management of the company is ensured by a CEO chosen by the board of directors from among its shareholders or outside them.

   The decisions of the board of directors are taken by a majority of the shareholders present or represented. The directors are liable for any damage caused to third parties and the shareholders.

Controls in an SA

Apart from the general meetings of shareholders, the control of the activities of the corporation is ensured on an ongoing basis by the auditors and occasionally by any expert appointed by a judge to investigate a specific management act.

Every corporation is required to have at least one statutory auditor and one alternate. In the case of a public limited company, two statutory auditors and two alternates are required.

If the company fails to appoint an auditor, any shareholder may ask the interim relief judge to appoint one until the general meeting has made the required appointments.

The statutory auditors occupy a special place in public limited companies, enjoying a certain independence in the performance of their mission. Indeed, the duration of their mandate as well as its content are determined by law and not by the will of the shareholders: Their term of office is two financial years when they are appointed by a constituent general meeting or by the articles of association, and six financial years when they are appointed by an ordinary general meeting (during the life of the company). To guarantee their independence, the law provides that they can only be dismissed by a general meeting and for misconduct. Similarly, one or more shareholders representing at least one tenth of the share capital have the right to apply to the courts for the removal of one or more statutory auditors.

Role of the statutory auditors

Their primary role is to control: the statutory auditors verify the validity of the information given to shareholders and the regularity and sincerity of the company’s accounts. To facilitate the accomplishment of this heavy task, the law grants them important powers of control and investigation.

In addition, they are required to inform the company’s directors and shareholders of any irregularities and inaccuracies found. In particular, they must present a general report to the shareholders on the accounts for the past financial year. They are also required to disclose to the judicial authorities (public prosecutor, judicial police authorities, etc.) any criminal acts that they become aware of during the course of their duties.

Economic interest group (groupement d’interet economique – GIE)

An economic interest group is governed by Book VII of the Uniform Act relating to the law of commercial companies and economic interest groups. It can be defined as a legal entity whose exclusive purpose is to implement, for a given period, all means likely to facilitate or develop the economic activity of its shareholders, to improve or increase the results of this activity.

Consequently, the GIE is not a commercial company, insofar as its purpose is not to make profits for itself and to share them, but its role is to pool means intended for the development of the economic activity of its shareholders. Nor can it be considered as an association in the sense that its object may be commercial and that its activity must be essentially related to the economic activity of its shareholders.