Best Ways for Acquisition and Transformation by Foreign Companies Establishing in Cameroon.

August 26, 2021

In Cameroon, the easiest way for foreign companies and nationals to penetrate the Cameroon business market is by acquisition and transformation. Companies acquire other companies as a growth strategy to either enter a new market, diversify or offer a new product.

This is a common approach used by smart investors. Upon acquisition, where the company want to transform either by change of name, change of company objectives,

transfer of shares, increase or reduction in share Capital changing its legal form, shall be the operation and decision of its shareholders.

Hence, acquisition and transformation shall not result in the creation of a new corporate body.

It shall merely constitute an amendment of the article of association and shall be subject to the same conditions of form and time limit.

Acquisition And Transformation Of A Company By A Foreign Company In Cameroon

It is possible to establish a branch of a foreign company in Cameroon. The branch may be an establishment of a foreign company or a natural person.

Subject to international agreements or laws to the contrary, the branch will be governed by the OHADA Uniform Act if the company is established in Cameroon.

The branch must be registered with the Trade and Personal Property Credit Register.

A company in existence or to be created must be associated with a branch, not more than 2 years after the branch is set up, unless the obligation is waived by the Minister of Commerce.

A notarized resolution from the parent company authorizing the opening of a branch of that company in a foreign country will be required for this purpose.

Amendment of the Articles of Association.

Amendment of the article of association is exercisable when it comes to transformation of a company, increase or reduction of the company share capital, change of name and objectives of a company. Amendment of the article of association of a company shall be a decision of the general meeting or an extraordinary meeting of the company.

Where the amendment of the articles of association is as a result of transformation of a company, change of company objective, increase or reduction of the company share capital, the following formalities shall be complied with;

  • Deposit at the registry of the Court of First Instance in Charge of commercial matters of the place of the registered office of a certified true copy of the deliberations of the meeting which decided on the transformation, increase or reduction of capital.
  • Shall be deposited within one month from holding of the said meeting at the registry of the Court of First Instance in Charge of commercial matters.
  • Deposit where necessary of the decision of the board of directors, the managing director or manager who effected the increase of capital in case of Public Limited Companies.
  • Deposit at the court registry of a certified true copy of the notarial statement of the subscription and payment as notarized by a notary public and appended to the Trade and Personal Property Credit Registry.

Conditions For The Transformation Of A Company Cameroon

Upon transformation, a decision shall give rise to;

  • The company transformation shall be inserted in a newspaper empowered to publish legal notices in Cameroon of the registered office.
  • A copy of the minutes of the meeting which decided the transformation and of the decision to appoint the members of the new organs of the company shall be deposited at the registry of the court of first instance in charge of commercial matters of where the company is created.
  • Thirdly, the amendments shall be entered in the Trade and Personal Property Credit Register.
  • Also, a notice of the transformation shall be deposited at the office in charge of mortgages where the company is owner of one or more buildings subject to the publication of landed property transactions.

Evaluating Acquisition Companies In Cameroon

Most companies upon acquisition to transform, it is imperative for a company to evaluate whether its target company has a good record.

  • Is the price right? The parameters investors use to value an acquisition candidate vary by industry. When acquisitions fail, it's often because the asking price for the target company exceeds these parameters.
  • Examine the debt load. A target company with an unusually high level of liabilities should be viewed as a warning of potential problems ahead.

This can be investigated similarly by an act of indebtedness as issued by the courts within the jurisdiction the company sets to acquire and transform the company.

  • Undue litigation. Although lawsuits are common in business, a good acquisition company should be litigation free. That exceeds what is reasonable and normal for its size and industry.
  • Scrutinize the financials. A good acquisition company will have clear, well-organized financial statements, which allows the acquirer to exercise due diligence smoothly. Complete and transparent financials also help to prevent unwanted surprises after the acquisition is complete.

Acquisition And Transformation Relating To Commercial Company Shares.

Upon formation of a company, shares are issued in return for its partner’s contribution. Such shares represent the partners’ right and shall be personal property.

Hence the transfer of shares between partners of the company and third party shall be defined in the article of association binding the company and its shareholders.

Where there is a need for transfer of company shares, it shall be established by a written document, binding on the company only after the following conditions have been fulfil;

  • They must be a notification of the transfer to the company by extra- judicial act,
  • The acceptance of the transfer by the company shall be content in a notarial deed,
  • An original copy of the notarial deed of transfer shall be deposited at the company’s registered office against an attestation of deposit issued by the manager,
  • In case of transfer to a third party with compliance with one of the aforementioned formalities, amendment of the articles of association and publication in the trade and Personal Property Credit Register.

Foreign individuals and businesses intending to expand their market to Cameroon are open to acquisition and transformation as the easiest way in establishing themselves in Cameroon.

Hence, transformation shall be by an amendment of the article of association of the acquired company.

Before acquisition takes place it is necessary to evaluate the records of the company to be acquired to check if their records are good and will not be a problem upon acquisition.

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