Business In Senegal: step by step process of company formation
Businesses in Senegal benefit from a thriving environment that makes it an attractive investment destination on a regional and worldwide scale. Its economic, social, and legal environment has evolved at many levels during the previous decade.
Senegal is a great place to do business since it is positioned in the far northwest of the African region and has frontiers with five other nations. Besides that, the country has one of the biggest ports in West Africa and an international airport with immense potential of being a significant airport in Africa.
Before looking into the company formation process in Senegal, it’s best to understand the available structure of business in Senegal.
Company structures for business in Senegal
The agency that supports forming a business, facilitating administrative and regulatory processes, and acquiring investment incentives is the Agence de Promotion de l’Investissement et des Grands Travaux (APIX). It offers a one-stop shop for company regulatory and administrative procedures.
There are various forms of businesses investors can choose to register in Senegal, and they include:
- A representative office that enables them to establish their business in Senegal progressively.
- Open a branch office for two years. The branch office is extendible once as per the ministry of commerce.
- Incorporating a business in one of the following formats(usually with restricted liability for contributions)
- Limited liability company. – Société à responsabilité limitée (SARL)
- Public limited company. – Société anonyme (SA)
- Simplified joint-stock company (Société par actions simplifiée (“SAS”)
The Uniform Act on the Law of Commercial Companies and Economic Interest Grouping, enacted in January 2014, governs these commercial companies. Below is an in-depth on the various company and tips for establishing a business in Senegal.
Limited liability company. – Société à responsabilité limitée (SARL)
This is the most basic of business entities, in where the shareholders’ have restricted responsibility to their contributions. Moreover, one entity, or two or more legal or natural individuals, may form the SARL. The best thing is that you do not require any set minimum share capital requirement for its formation; The shares are the dividend of the capital. Besides that, whether or not related, one or more natural individuals govern the SARL.
In addition, when forming the SARL, you do not require to hire an auditor unless it satisfies two of the following requirements after the fiscal year:
- a sum on the balance sheet that is more than XOF125,000,000;
- a yearly turnover of more than XOF250,000,000; or
- full-time employees of over 50 people
All in all, the SARL is a company structure explicitly designed for greenfield projects, commercial operations, and services. Due to its inexpensive creation cost, it suits new entrepreneurs well with few resources.
Public limited company – Société anonyme (SA)
As stated in the OHADA (Organisation for the Harmonisation of Corporate Law in Africa), a public limited company is held by a single shareholder.
Although, as stated in the article of association, the founder may choose between two modes of management and administration. You may choose to either opt for a Public Limited Company with a board of directors (from one shareholder) or a Public Limited company with a managing director (up to three shareholders).
A public limited company must have a threshold share capital of XOF10,000,000. Hence, as a founder, you need to appoint a mandated auditor. The selected auditor needs to be a member of the national Order of Chartered Accountants of Senegal.
A public company with a Board of Directors
For such an entity, you should have at least three board of directors (BOD) and a maximum of twelve. Regardless of the number you choose, they don’t need to be all shareholders.
The articles of association may require each director to own several shares of the company that they preside over. Additionally, the chairman of the board of directors needs to be a natural person and a board member.
On the other hand, the entity’s chief executive officer may be a third party of the board. The board is responsible for appointing the two, and they may decide to select one person for the two.
The board of directors establishes its operations’ directives and ensures that they are carried out. It may take up any issue relating to the company’s proper running and resolve it through its discussions. The board may also appoint a chairperson and chief executive officer to combine both functions.
The board of directors performs any controls or verifications that it considers necessary. On the other hand, the chief executive officer is in charge of the company’s overall management. He is the company’s representative in its dealings with external parties.
A Public Limited Company with a Managing Director
The firm’s administration and general management are within the managing director’s purview. Nonetheless, the manager is the company’s representative in its dealings with external parties.
Also, the manager has extensive authority to act on behalf of the company in any scenario. He exerts it within the confines of the corporate purpose and is subject to the powers delegated explicitly to shareholders’ meetings by the Uniform Act and, where relevant, the articles of organization.
The state legislature may appoint one or more natural members to help the managing director as deputy managing director on the managing director’s recommendation. In consultation with the managing director, the general assembly will establish the powers allocated to the deputy managing director.
The SA is a good choice for organizations looking to create joint ventures, make significant investments, or engage in regulated banking or financial operations.
Simplified joint-stock company (Société par actions simplifiée (“SAS”)
The Simplified joint-stock Company is defined as a business formed by one or more shareholders. From the memorandum of incorporation, the shareholders openly do more for the company and control the organization subject to specific legal provisions. For instance, the shareholders’ overall committee can authorize the financial records or modify the memorandum of incorporation).
The partners’ liability is restricted to their contributions, and there is no minimum share capital required to form a SAS. In this scenario, a single shareholder can be created and known as a one-person simplified joint-stock company (SASU).
The firm is represented by a president appointed per the articles of incorporation. He has extensive authority to act on behalf of the firm, as long as the corporate goal is followed.
The articles of association freely establish the choices that must be made by the shareholders collectively in the forms and conditions that they specify. Decisions made in contravention of the legislative provisions are invalid.
The shareholders may appoint one or more auditors.
Simplified joint-stock companies (SAS) must, nevertheless, employ at least one auditor if they fulfill two of the following requirements after the financial year:
- a sum on the balance sheet that is more than XOF125,000,000;
- a high yearly turnover exceeding XOF250,000,000; and/or
- a permanent staff of more than 50 individuals
- A SAS must hire at least one auditor if it controls or is controlled by one or more firms.
This commercial corporation is excellent for businesses with various owners, such as investors and project leaders, equity firms, and companies that provide services or use innovative technology.
Agri-food, import/export, mining, oil & gas, infrastructures, network, communications, construction, and real estate enterprises and banks make up the primary trade industry.
Summary of doing business in Senegal
When doing business in Senegal, ensuring that you are compliant in registering your company is critical. As discussed in the post, it is feasible to invest using various legal options from private and public means.
Therefore, depending on the type of business activity an investor wants to do in Senegal, they may choose a PPP or enter public procurement. Furthermore, as a foreign investor wishing to do business in Senegal, you may register a Senegalese entity depending on the activity. As discussed, your options vary from a branch, a representative office, a subsidiary, and others.
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