Quick guide for transfer of shares in an existing holding company in the DRC.
Senior Partner
Introduction
Is the DR of Congo a good place to purchase share in a holding company? Since the DR of Congo signed the OHADA (Uniform Act on Commercial Companies and Economic Interest Grouping) in 2012, the banking industry and investors in Africa region and around the world saw the opportunity to do business in DR of Congo. Several financial institutions have been created; others merged to face new friendly business environment. For a savvy purchaser of share in a holding company, this quick guide should help.
Decree 11/020 of September 15:
The law 11/020 of September 15, 2011 regulated the activities of a holding company in DR of Congo [Decree 11/020 of September 15, 2011 regulating holding companies in DR of Congo. Official Report of the Democratic Republic of Congo.]. Its article 11 point 2 identifies a holding company as an institution de microfinance. Clearly, this law in its spirit and letter was enacted to fulfil the commitment of OHADA members to break economic barriers between countries members; i.e. to make the creation of business venture as easier as possible, away from bureaucracy.
Two steps to transfer share:
The first step to transfer share is the amendment of Articles of incorporation and Bylaw by shareholders. Concurrently, these amendments are filed with the registre de commerce et credit immobilier (RCCM).
Second step, the request of transfer of shares must be approved by the Central Bank and transmitted to the Ministry of economy. The Central Bank is the only institution that can approve the transfer of shares in a holding company. Usually, the process takes up to sixty days; the absence of a decision within this period is deemed approval. [ Note that the legal basis for the deadline by implication is article 29 of the Decree 003/2002 of February 2nd 2002 fixing les activites et control des etablissements publics.] No presidential approval is required. [The Royal Decree of June 22, 1926 on Limited Liability Companies provided the presidential authorization regime for Joint stock and Holding companies. The text was repealed by the OHADA (Uniform Act on Commercial Companies and Economic Interest Grouping), which does not provide a presidential authorization regime.]
What type of documents should be filed to obtain approval?
The answer is three:
- (1) a Notarized minute of shareholders’ meeting, approving transfer of shares and amending the Articles/Bylaws;
- (2) a list of shareholders, directors, and proposed shareholders;
- (3) documents demonstrating the credibility of proposed shareholders (financial statement, bank account…). The number of shareholders can be one or more (assuming the investor wants to transfer his share in a Joint stock company - societe anonyme). Also, there is no restriction in regard to shareholders’ nationality.
Conclusion
The main purpose of a purchaser of share is to make money and avoid as possible to pay higher tax. One dictum said: “Tax evasion is a crime; tax avoidance is not”. A savvy purchaser wants to know the amount of tax he should pay. Neither the transferor nor the transferee of shares is a Congolese entity; transfer of shares is NOT subjected to taxation. What a burgain!