Merger & Acquisition in Cameroon│Business & Corporate Law in Cameroon │Scission Deposing of Company’s Assets.

October 10, 2022

Merger & Acquisition in Cameroon as a transaction is regulated by the OHADA Uniform Act relating to Commercial Companies and Economic Interests Groups. Under this Uniform Act, the law does not make mention of acquisition per se but correlatively defines a Merger as:

The operation whereby two companies merge to form a single company either by creating a new company or by one company acquiring the other.

The company that agrees to merge must not necessarily be equal in terms of size, customers, and scale of operations.

On the other hand, Acquisitions, unlike mergers, involve one company actively purchasing another.

The term merger under the OHADA Uniform Act is being described correlatively defining acquisition.

Merger transactions are commonly done to gain market share, reduce costs of operations, expand to new territories, unite common products, grow revenues, companies benefiting from new technologies and increase profits—all of which should benefit the company's shareholders.

The law also permits companies even under liquidation to be acquired by another company.

These companies under liquidation can also participate in the formation and incorporation of a new company.

Their participation can include merging to form a new company, buying over the existing company and transforming the entity into a new company.

Transformation is an aspect of a merger and also an easier way for an existing company to penetrate new markets.

Moreover, mergers and acquisitions are commonly done by foreign companies in Cameroon to expand their reach and expand their market segments.

However, the Uniform Act makes mention of merger-scission in Cameroon, as a way of one company taking over the other.

This entails the total transfer to the acquiring company, the assets of the company which cease to exist as a result of the merger.

Hence, Merger- Scission are correlative in procedural aspect and applicability under the OHADA Uniform Act.

1. Scission Under the OHADA Uniform Act

Scission as defined by the OHADA Uniform Act shall be the operation whereby the assets of a company are shared among several existing or new companies.

This is applicable in Cameroon for all companies both national and foreign, whose creation purpose and objectives have come to an end.

This is the best way for companies to depose their asset without necessary liquidation.

The acquisition by a company of the disappearing legal entity and status in Cameroon for the beneficiary company shall be outlined in the conditions laid down in the Merger or Scission Contract.

1.1 What is a Merger or Scission Contract?

It is a contract stipulating the terms and conditions upon which the company, an issue of merger shall be applicable to acquisition by the beneficiary company.

All companies involved in a merger-scission operation shall prepare a draft merger-scission document, which shall be adopted by the Board of Directors, the Managing partners or the managers depending on the administration of the company.

Hence, the draft merger–scission document shall contain the following information:

  • The form, name and registered office of the participating companies.
  • Reasons and terms of merger –scission
  • Description, evaluation and inventory of the assets and liabilities to be transferred to the acquiring company or companies.
  • Terms of transfer of shares.

2. Procedural Aspect of Merger in Cameroon Under the OHADA Uniform Act.

Under the OHADA Uniform Act, the procedural aspects of merger with respect to private and public limited companies are different.

The Uniform Act clearly draws a thin line with respect to merger procedures in Private and Public Limited Companies.

2.1 Application of Merger with Respect to Private Limited Companies.

The president of the competent court within which the company was registered, shall appoint a merger auditor to prepare a written report on the terms of the merger.

These merger auditors shall be responsible for the verification of the necessary relevant assets and document pertaining to the merger.

They shall also be responsible for the valuation of the given shares to the participating companies.

Where the acquiring Private Limited Company holds all capital of the acquired company, they shall be no need for the approval of the merger by the extraordinary general meeting of the acquired company.

2.2 Application of Merger with Respect to Public Limited Companies.

Mergers shall be ordered by extraordinary general meetings of each of the companies taking part in the transaction.

The merger shall be ratified by the special meetings of shareholders of the companies taking part in the transaction.

This shall be by the veto power of the shareholders of the given category. Their decision shall approve or disapprove the decision of the general meeting through a special meeting of shareholders.

With respect to the meetings, the board of directors of the companies participating in the transaction shall draw up a report at the disposal of the shareholders.

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