Author Moore Senegal

Introduction

You have been appointed director or permanent representative of a legal entity, director of a public limited company under Senegalese law. In order to carry out this mandate properly, you need to have the appropriate information to know your rights and obligations, and to avoid any liability or risk to your image.
We've put together a series of articles containing the minimum considerations you need to know. This guide is not intended to be exhaustive, but simply to serve as a « preventive vade mecum »This is the result of our experience in legal secretarial work for public limited companies. You will find in succession :
Theme 1 - The “Administrator's Golden Rules”, which summarize the best practices to adopt
Theme 2 - How you carry out your duties on the Board of Directors
Theme 3 - Cases in which the Director may be held liable
Theme 4 - The main rules governing the organization of a board of directors.

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Theme 1 - What are the Administrator's Golden Rules?

The «Golden Rules» are the main rules and obligations with which a director must comply unless they are contrary to current regulations.

1. Prior to appointment
  • Declare all the mandates you hold, and make sure you comply with the rules on the non-accumulation of mandates prior to appointment. It is not possible for an individual (in his/her own name or as the permanent representative of a corporate body) to simultaneously hold the following positions more than five mandates director of public limited companies having their registered office in the territory of the same OHADA member state.
  • Make sure you are not in a conflict of interest situation.
2. On appointment
  • Carefully read the company's Articles of Association and any other documents that may set out the Board's operating procedures (e.g. Articles of Association, Board of Directors' internal rules, etc.).
3. Duty of information and active participation
  • Obtain detailed information on the company's economic, financial and social situation and its prospects in these areas.
  • Analyze the characteristics of the business sector(s) concerned and how the company operates in these sectors.
  • Devote sufficient time to the performance of your duties.
  • Attend Board meetings. If you are unable to attend, take note of decisions made in your absence.
  • Obtain the information needed to participate in Board decisions in an informed manner.
  • Draw on the skills of experts when you need additional analysis in a particular field.
  • Participate in the Board of Directors' discussions and monitoring of the company's management.
4. Defending the company's interests
  • Ensure that the interests of the company in which you are a director are respected when Board decisions are made.
  • Avoid any situation likely to place you in a conflict of interest, and inform the Board of Directors of any conflict of interest (in the event of actual or potential personal interest).
  • Not to enter into any unauthorized transactions with the company, or collectively make any decisions exceeding the powers of the Board of Directors.
5. Duty of discretion
  • Do not pass on confidential information to third parties, including colleagues who are not required to know such information in the course of their duties.

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Theme 2 - Seven (7) tips to help you fulfill your role on the Board of Directors

These few words of advice are the essential minimum that all directors should apply in all circumstances.

1. Take the time you need to fulfill your mandate director
  • Get to know the company.
  • Attend Board meetings and actively participate in deliberations.
  • Examine the documents provided to you at Board meetings and, if necessary, request any additional information you feel is required to perform your duties.
2. Duty to inform
  • Request and obtain all the documents and information you need to carry out your mission.
  • At the Board meeting called to approve the annual financial statements, be provided with all documents to be sent to shareholders.
  • Have all the information you need to make informed decisions when carrying out transactions requiring either Board approval or authorization, or a report from the Board to the shareholders' meeting.
  • Ensure the confidentiality of the information you receive, otherwise you may be held liable.
3. Respect for the company's interests
  • To act in accordance with the company's purpose and interests by ensuring, in all circumstances, that decisions taken are consistent with both the company's interests and those of its shareholders, taking into account the social and environmental challenges of the company's activities.
4. Conflicts of interest
  • Beware of conflicts of interest.
  • Inform the Board and abstain from voting on the corresponding resolution in the event of a conflict of interest.
5. In the event of difficulties or disagreement
  • Ensure that the minutes of the meeting reflect the Board's deliberations. This document must contain your point of view in the event of disagreement with the Board. Its evidentiary value may later release you from liability as a director.
6. Prohibited conventions
  • It is forbidden for you, your relatives (spouse, ascendants, descendants) and any intermediary persons, under penalty of nullity, to :
    • take out loans from the company in any form whatsoever;
    • be granted an overdraft by the company, on current account or otherwise;
    • have the company guarantee or endorse commitments to third parties.
  • This prohibition does not apply to :
    • when the director is a legal entity (on the other hand, it applies to the legal entity's permanent representative);
    • credit institutions, in the case of ordinary transactions carried out under normal conditions.
7. Regulated and unregulated agreements
  • Free conventions

Unrestricted agreements are those entered into in the normal course of business and on arm's length terms. To this end, you must ensure that :

  • the proposed agreement is similar to the company's ordinary business transactions, i.e. those usually carried out in the ordinary course of its business by reference to its corporate purpose or activity; ;
  • and that the terms and conditions of the agreement are customary for the company's dealings with third parties.
  • Regulated agreements

In this case, you must be careful to follow the procedure described below:

  • the person directly or indirectly interested in the agreement is required to inform the Board of Directors before the agreement is concluded;
  • the Board rules on the authorization requested (the director concerned does not take part in the vote). In the absence of prior authorization, the agreement may be cancelled if it has harmful consequences for the company, and the director may be held liable;
  • each year, the Board must review the agreements entered into and authorized in previous years, which remained in force during the previous year.
  • within one month of entering into the agreement, the Chairman will inform the statutory auditors, if any, of the agreement and the reasons for its interest to the company.
  • The Statutory Auditors or, if none have been appointed, the Chairman of the Board of Directors, will draw up a special report for the attention of the shareholders, who will be asked to approve this agreement at the next Ordinary General Meeting. If the meeting does not approve the agreement, the directors may be held liable for any prejudicial consequences.
  • In the case of agreements entered into and authorized in prior years and which remained in force during the last financial year, the Statutory Auditors, if any, must be informed within one month of the end of the said financial year.

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Theme 3 - When and how can you be held liable as a director? 

As a director, you may be held civilly and/or criminally liable by the company, shareholders or third parties.

1.civil liability

1.1Liability to the company

  • Directors are liable to the company for breaches of the laws and regulations governing public limited companies (e.g., infringement of shareholders' right of disclosure, irregularities in the keeping of accounts), breaches of the bylaws (e.g., failure to comply with clauses limiting the powers of the Board, failure to comply with rules governing the control of share transfers) or mismanagement (which could be defined as acts contrary to the company's interests). Art.740 AUSCGIE
  • As decisions are taken by the Board of Directors, it is the Board's fault that will be sanctioned; directors' liability will therefore be collective and joint and several. To avoid liability, the director (who is presumed to have committed an individual fault) must demonstrate that he or she acted as a prudent and diligent director, notably by opposing the contentious decision.
  • Exceptionally, a director may be held individually liable if he or she alone has committed a fault, for example in the exercise of a special mandate..
  • The action may be brought either by the company's legal representatives, or by one or more shareholders representing at least one-twentieth of the share capital.
1.1.2 Liability to shareholders
  • The director is liable to the shareholders if the latter can justify a personal prejudice distinct from that of the company and if the prejudice suffered is caused by a simple fault of the director.
  • In practice, legal action is generally taken against the company or its directors.
1.1.3 Liability to third parties

Liability towards third parties is exceptional as long as the company is not in preventive settlement, receivership or compulsory liquidation. In order for such liability to apply, the director must have committed a fault separable from his duties.

1.1.4 Liability conditions

For the action to succeed, the injured party must demonstrate the fault committed, provide proof of the loss suffered and establish the causal link between the fault and the loss.

1.1.5 Specific responsibilities of the permanent representative of a corporate director

The permanent representative is liable in the same way as any individual appointed as a director in his or her own name. They are also liable in respect of the legal entity they represent.

2.criminal liability

The Uniform Act relating to the law governing commercial companies and EIGs contains a large number of offences by act or omission which may be committed by managers and directors alike.

The director may, for example, be criminally liable in certain rare cases:

  • misuse of company assets or credit: imprisonment for one to five years and a fine of FCFA 500,000 to FCFA 5,000,000 (art. 35 of Act 2018-13 of April 27, 2018 on the repression of offences provided for by the Uniform Acts adopted in application of the OHADA treaty) ;
  • certain offences relating to changes in share capital: FCFA 250,000 to FCFA 1,000,000 (articles 40 and 44 of Act 2018-13 of April 27, 2018 on the repression of offences under the Uniform Acts adopted in application of the OHADA treaty)
  • certain offences relating to public offerings: increase and reduction of capital: fine of FCFA 250,000 to FCFA 2,000,000 (article 53 of law 2018-13 of April 27, 2018 relating to the repression of offences provided for by the Uniform Acts adopted in application of the treaty relating to OHADA).

In most cases, it is the “operational” managers (Chairman and CEO, Managing Director, Deputy Managing Director) who are held liable.

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Theme 4 - What are the main rules governing the organization and operation of the Board of Directors?

1.organization of the board of directors

The Board of Directors is a collegial body, made up of a minimum of 3 and a maximum of 12 directors, who may or may not be shareholders; between these two limits, the number of members is freely determined by the company's bylaws (depending on the company's activity and size).

Directors collectively exercise the functions assigned by law to the Board. Individually, they have no rights other than that of being provided with the documents and information they need to carry out their duties, and to attend and vote at Board meetings.

The Board of Directors may set up specialized committees from among its members.

The committees most frequently set up are the following:

  • the Audit Committee or Accounts Committee (responsible for monitoring the process of preparing financial information, the effectiveness of internal control and risk management systems, the statutory audit of accounts by the statutory auditors and the independence of the statutory auditors, and, in public interest entities, for approving services other than the certification of accounts);
  • Risk Committee (responsible for monitoring risk policies and procedures);
  • Compensation Committee (responsible for setting compensation policy principles);
  • the Nominating Committee (responsible for proposing new directors and senior executives).

In principle, these committees only have advisory or proposal powers, as decisions must be taken by the Board.

2. board meetings
2.1 Convocation of the Board of Directors
  • The methods (simple or registered letter, fax or verbal notice) and deadlines for convening Board meetings are freely defined in the bylaws.
  • The meeting agenda is set by the Chairman (subject to any specific provisions of the Articles of Association).
2.2 Representation of directors - Videoconferencing
  • Unless otherwise stipulated in the Articles of Association, a director may be represented at Board meetings. In this case, he/she must give a written mandate to another director. A director may represent a maximum of one other director.
  • Unless otherwise stipulated in the Articles of Association, the by-laws may provide that, for the purposes of calculating quorum and majority, directors who take part in Board meetings by videoconference or other means of telecommunication are deemed to be present, provided that the means used transmit at least the voice of the participants and meet the technical requirements for continuous and simultaneous retransmission of the proceedings.
2.3 Quorum - Majority
  • At least one-third of members must be present if videoconferencing or telecommunication means are used: directors represented by proxy are therefore disregarded when calculating the quorum.
  • Decisions are taken by a majority of members present or represented (unless the bylaws provide for a higher majority), with the Chairman of the meeting having the casting vote in the event of a tie (unless the bylaws provide otherwise).
2.4 Chairman of the meeting

Meetings are normally chaired by the Chairman of the Board of Directors. In his absence, and unless otherwise stipulated in the Articles of Association, the meeting is chaired by the director holding the greatest number of shares or, in the event of a tie, by the oldest director.

2.5 Meeting minutes

The deliberations of the Board of Directors are recorded in minutes drawn up in a special register kept at the registered office, and initialled by the judge of the competent court. However, the minutes may be drawn up on continuously numbered loose-leaf pages, initialed under the conditions set out in the preceding paragraph and sealed by the initialing authority.

In the event of attendance at Board meetings by videoconference or other means of telecommunication, any technical incidents that may have occurred during the meeting and disrupted the proceedings are noted in the minutes.