SCP HOUDA & ASSOCIES > Dakar, Senegal > Firm Profile

SCP HOUDA & ASSOCIES > Firm Profile

The firm: West Africa, and especially Senegal and Cote d’Ivoire, is one of the most promising emerging markets. However, penetrating the region requires the right partner by your side.

Succeeding Kanjo & Houda Law Firm, founded by Mohamed Kanjo in 1977, Houda Law Firm (Cabinet d’avocats Houda) is regarded as one of the leading law firms operating in Senegal and Cote d’Ivoire. Its 44 staff – half of which are specialised and highly qualified lawyers – provides legal assistance to foreign investors in Senegal and Cote d’Ivoire where Houda Law Firm has opened a secondary office since November 2018.

Indeed, Houda Law Firm has developed an extensive experience by incorporating foreign companies and by providing legal services and representation before national courts and arbitration courts.

When expanding business into Senegal or Cote d’Ivoire, choosing the partner who is there on the ground, prepared to navigate through regional business, law, regulation and local administration makes the difference. Taking the most of the intricacies between overlapping laws such as WAEMU (West African Economic and Monetary Union), ECOWAS (Economic Community of West Africa States) or OHADA (Organisation pour l’Harmonisation en Afrique du Droit des Affaires) is indeed the salient feature of a knowledgeable local law firm confronted to the concrete realities of business laws in West Africa.

With local knowledge and connections, its experienced team assists clients, private or public, with all of their legal needs, from investment structuring until representation before administrative and judicial authorities.

With more than 23 years of experience, the current managing partner, Khaled Abou El Houda, registered at the Senegalese and Ivorian Bar Associations, is recognised as a mining expert in Who’s Who Legal and is rated as a rising star by the International Financial Law Review based on his unique know-how in West African business law.

Houda is the general secretary of the Canadian Institute of Mining, Metallurgy and Petroleum in Senegal and the general secretary of the American Chamber of Commerce (AMCHAM) in Senegal. Houda is a mediator, a conciliator and is recognised as a chartered arbitrator at the Common Court of Justice and Arbitration (CCJA) in Abidjan and at the Center of Arbitration, Mediation and Conciliation (CAMC) in Dakar. Houda is also a member of the African Business Law Firms Association (ABLFA) based in Ivory Coast.

Under his leadership, and with the special knowledge and experience of its partners and associates, the firm currently holds a central position in key sectors such as oil and gas, mining, infrastructure, and banking.

The firm takes an active part in the diffusion and knowledge of local laws by contributing to legal compendium and reports. Recently and among others, Houda Law Firm was a contributing editor of the Senegal country chapter in 2019 of the Public-Private Partnership Review (Law Business Research), a sole contributor in the 2019 Q&A Mining Law for Senegal, part of the African Mining Database for Simmons & Simmons Elexica, and the author of Doing Business in Senegal.

While contributing to the changing face of business in the region, the firm regularly works with high-profile international law firms, namely (and this is not exhaustive) Allen & Overy, Ashurst, Akin Gump, Dentons, Gide Loyrette Nouel, Hogan Lovells, Jones Day, Mayer Brown, McCarthy Tetrault, Pinsent Masons, Simmons & Simmons, and Global Law Office. Such entities frequently appoint the firm to provide general overview reports and opinions about Senegalese or Ivorian law for international investors in private equity and derivatives finance.

Africa is on the rise. Benefiting from lawyers to help your business to navigate through the local business and legal environment will allow you to seize opportunities in Senegal, Cote d’Ivoire and beyond.

Lawyer Profiles

Photo	Name	Position	Profile
	Franck ALLESSIE	Legal Counsel	View Profile
	Khaled Abou El Houda	Managing Partner	View Profile
	Laurence BOCKEL	Senior Legal Counsel	View Profile
	Assane DIEYE	Senior Tax Counsel	View Profile
	Malick LO	Attorney at Law – Senior Legal Counsel	View Profile
	El Hadji Daouda SECK	Attorney At Law	View Profile

Doing Business In

Senegal

Within the last decade, the economic, social and legal landscape of Senegal has undergone developments at various levels. Indeed, Senegal is increasingly becoming a country favourable to investment on a regional and international scale.

In view of its privileged geographical location thanks to its proximity to the European continent and its borders with five countries on the African continent (Mauritania, Mali, Gambia, Guinea Bissau, Guinea), Senegal is in a favourable position to become a real commercial and industrial hub. Numerous non-governmental organisations and United Nations representations have made Senegal their home country in West Africa.

Strongly committed to democratic values, the Republic of Senegal enjoys an exemplary political stability for the continent and has experienced three peaceful political alternations. Macky Sall, the current President, is the fourth President elected since the country’s independence in 1960.

Business environment

Doing business in Senegal presents a lot of advantages as the country is located at the extreme west of the African continent with boarders with five countries (Gambia, Guinea, Guinea Bissau, Mali and Mauritania). This strategic location is enhanced by one of the largest port in West Africa as well as an international airport which has the potential to become one of the major airports in the African continent.

Furthermore, being a member of WAEMU (West African Economic and Monetary Union) and ECOWAS (Economic Community of West Africa), Senegal benefits from a very good regional economic integration which allows investors to have access to a larger Community market with, in particular, nearly 90 million potential consumers in WAEMU and more than 300 million potential consumers in ECOWAS.

This economic integration is complemented by legal integration with its membership of the Organisation for the Harmonisation of Corporate Law in Africa (Organisation pour l’Harmonisation du Droit des Affaires en Afrique (“OHADA”)) which has established through these uniform acts and its various institutions a much-welcomed harmonized legal framework in many areas of business law (commercial law, collective proceedings and securities among others) and dispute settlement (with arbitration). This regional economic and legal cooperation facilitates the stability of investments.

The business facilitation program in Senegal also resulted in the creation of offshore economic zone DISEZ (Dakar Integrated Special Economic Zone). Businesses setting up in DISEZ enjoy various tax incentives and infrastructural support such as registration,  access to utilities accreditation for eligible activities, support in administrative and land-related formalities, exemption in customs duties on equipment and raw materials, income tax exemption, the right to hire staff of foreign and Senegalese nationality for foreign enterprises, the possibility of signing fixed-term contracts for 5 years, and unrestricted transactions in foreign currencies within DISEZ.

Among other advantages available for investors, the Investments Code highlights the following principles. Therefore, the approved foreign investors will have access to:

• a fair and equitable treatment: foreign natural or legal persons shall receive treatment identical to that of natural or legal persons of Senegalese nationality, subject to reciprocity and without prejudice to measures which may concern all foreign nationals or result from the provisions of treaties and agreements to which the Republic of Senegal is a party.
• Most-favored-nation treatment: the investor must be accorded treatment no less favorable than that accorded by Senegal to any investor from a third State.
• A protection from expropriation and nationalization: the investors shall be guaranteed against any measure of nationalization, expropriation or requisition throughout the national territory, except in the public interest, as provided for by law. Where appropriate, the investor shall benefit from fair and prior compensation.

In order to promote investments in the Country, Senegal has also signed 29 Bilateral Treaties on investment promotion and protection, with different countries (among which France, the United Kingdom, Turkey, the United States of America etc) which offer broader advantages to investors who are nationals of the States Parties than the Investment Code does.

The investor wishing to develop his activities in SENEGAL has multiple business structures options:

• To open a representative office which allows an investor to establish himself gradually;
• To open a branch for a period of two (02) years, renewable once (01) by order of the Ministry of Commerce;
• To create a company (most often with limited liability for contributions) in one of the following forms:
  • Société à responsabilité limitée (« SARL »)
  • Société anonyme (« SA »)
  • Société par actions simplifiée (“SAS”)

These commercial companies are governed by the Uniform Act on the Law of Commercial Companies and Economic Interest Grouping dated 30 January 2014.

The Société à Responsabilité Limitée

This company is the simplest of commercial companies, in which the liability of the shareholders is limited to contributions.

The SARL may be established by one natural or legal person, or between two or more natural or legal persons. It does not require any minimum share capital for its creation and its capital is divided into shares. The SARL is managed by one or more natural persons, associated or not.

The appointment of an auditor is not compulsory until the SARL meets two of the following conditions at the end of the financial year:

• A balance sheet total exceeding XOF125,000,000;
• An annual turnover exceeding XOF250,000,000; and/or
• A permanent staff of more than 50 persons.
• The partners of the SARL meet in a general assembly, ordinary (each year for the approval of the accounts of the closed financial year) or extraordinary (for any modification of the articles of association).

The SARL is a corporate form adapted to greenfield projects, commercial activities and services. It is also suitable for young entrepreneurs with few resources due to its low formation cost.

The Société Anonyme

The société anonyme under OHADA (Organisation pour l’harmonisation en Afrique du droit des affaires – the Organisation for the Harmonisation of Corporate Law in Africa) law may be held by a single shareholder.

The founder(s) must choose between two modes of management and administration unequivocally in the articles of association: (i) a société anonyme with a board of directors (from one shareholder) or a société anonyme with a managing director “Administrateur Général” (up to three shareholders).

The minimum share capital of a SA is XOF 10,000,000. It must be fully subscribed by the shareholders and may be paid up at least one quarter upon incorporation.

The founders of a SA must appoint a statutory auditor and an alternative, chosen from among experts who are members of the National Order of Chartered Accountants of Senegal.

The Société Anonyme with a Board of Directors

The board of directors is composed of a minimum of three persons and a maximum of 12 members, shareholders or not.

The articles of association may require each director to own a number of shares of the company that they preside over.

The board appoints the chairman of the board of directors from among the natural persons who are members of the board as well as the chief executive officer of the company, who may be a third party of the board. It may also be decided to appoint a chairman and chief executive officer who will combine both functions.

The board of directors determines the orientations of the company’s activities and ensures their implementation. It may take up any question concerning the proper functioning of the company and settles through its deliberations the matters that concern it.

The board of directors carries out such controls and verifications as it deems appropriate.

The chief executive officer on the other hand is responsible for the general management of the company. He represents it in its relations with third parties.

The Société Anonyme with a Managing Director (Administrateur Général)

The managing director takes on under his responsibility, the administration and general management of the company. He represents it in its relations with third parties.

He is vested with the broadest powers to act in all circumstances on behalf of the company and exercises them within the limits of the corporate purpose and subject to those expressly attributed to shareholders’ meetings by the Uniform Act and, where applicable, the articles of association.

On the proposal of the managing director, the general assembly may mandate one or more natural persons to assist the director as deputy managing director.

In agreement with the managing director, the general assembly shall determine the powers delegated to the deputy managing director.

The SA is a suitable form of company for the establishment of joint ventures, for companies with significant investments to make and for companies engaged in regulated banking or financial activities.

The Société par Actions Simplifiée

Recently introduced in the OHADA Uniform Act on Commercial Companies and EIG (Economic Interest Group) Law (in 2014), the SAS is defined as a company set up by one or more shareholders whose articles of association freely provide for the organisation and operation of the company subject to certain mandatory rules (competence of the shareholders’ general meeting to approve the accounts or amend the articles of association, for example).

The liability of the partners is limited to the contributions and there is no minimum share capital to create a SAS. It can be created by a single shareholder: in this case, it is specifically called a single-person simplified joint stock company (SASU).

The company is represented by a President, appointed under the conditions provided for in the articles of association. The President is vested with the broadest powers to act in all circumstances on behalf of the company within the limits of the corporate purpose.

The articles of association freely determine the decisions that must be taken collectively by the shareholders in the forms and conditions they stipulate. Decisions taken in violation of the statutory clauses are null and void.

The shareholders may appoint one or more auditors.

However, simplified joint stock companies (SAS) that meet two of the following conditions at the end of the financial year are required to appoint at least one auditor:

• a balance sheet total exceeding XOF125,000,000;
• an annual turnover exceeding XOF250,000,000; and/or
• a permanent workforce of more than 50 people.
• A SAS that controls or is controlled by one or more companies is also required to appoint at least one auditor.

This form of commercial company is appropriate for companies whose shareholders have different profiles: investors and project leaders, equity companies and companies operating in the field of services and new technologies.

The main trade sector relies on agri-food industries, import/export, mining industries, oil & gas industries, infrastructures, network and telecommunication industries, construction and real estate companies, bank.

In our jurisdiction, it is possible to invest through different legal tools from private or public perspective. On one hand, a foreign investor can conclude a PPP or enter into a public procurement and on the other hand a foreign investor can create a Senegalese entity, a branch, a subsidiary, a representative office depending on the type of activity the investor wants to operate in Senegal.

Economy

Currency strength

The currency of Senegal is the CFA Francs that it shares with 14 member states of the franc zone (eight member states of the West African Economic and Monetary Union) and 6 of the Central African Economic and Monetary Community).

The CFA franc benefits from a fixed parity with the euro, full convertibility with the euro and a guarantee by the Banque de France through the Paris foreign exchange market.

Inflation rates

Exchange rate stability contributes to lower inflation in the franc zone than in the rest of sub-Saharan Africa, thereby preserving the purchasing power of the populations. Inflation has been below 3% in the franc zone in recent years, whereas the average in sub-Saharan Africa is around 9%.

Through the pooling of foreign exchange reserves, the Franc Zone promotes the definition of common economic policies within each economic region. In this way, it creates larger markets and promotes greater fiscal discipline, notably thanks to the common criteria that member countries undertake to respect.

Main trade sectors

In Senegal, the primary sector (natural resources, fishing, agriculture etc.) and the secondary sector represent both more than 20% of the GDP. The tertiary sector (Tourism, agriculture, real estate, banking, mobile banking, telecommunications etc.)  is the most performing sector and represents more than 50% of the GDP.

Current opportunities & future prospects

Since the accession of President Macky Sall to power in 2012, Senegal has established a plan for economic development and emergence by 2035 called the “Senegal Emerging Strategic Plan”. To this end, many infrastructure projects and legal reforms have been initiated.

Senegal has positioned itself as a major player in the development of the West African region through its participation in large-scale projects and infrastructures. Among others, we can note the implementation of a highway network, the largest wind farm (Taiba Ndiaye) and photovoltaic solar energy in West Africa (Bokhol), a TER (Regional Express Train), the development of the mineral port of Bargny, the development of the industrial Zone of Diamniadio etc.

Recent mining, oil and gas discoveries have attracted investors, particularly large international groups. Senegal has also undertaken projects to modernise laws, notably on the management of natural resource exploitation (2019 oil and gas code, 2016 mining code, 2019 law on local content for hydrocarbon sector activities). The Senegalese vision of natural resource exploitation tends to seek a balance in the governance of natural resources between the profitability of investments and the protection and development of local communities.

The recent oil & gas discoveries have been the key to attract investors. Also, the numerous projects of big scale (Arena Stadium, Industrial Zone, Airport, International Conference Centre etc) permitted to attract companies from different nationalities and different sector to undertake the construction projects.

It is also important to note that Senegal is a country with more than 50% of its population under the age of 20, Senegal therefore benefits from a very young population, allowing to have easily access to manpower. The Senegalese government gave an important place to local content by the introduction of the law of 2019 related to local content in oil & gas sector and its numerous application decrees. Hopefully, these measures will lead to a transfer of knowledge and know how permitting to Senegalese businesses to align with international standards and therefore be recruited.

One of the particularities to Senegal and generally to Africa is the exponential growth of mobile banking. The Senegalese population has experienced a digital boom moving from an informal and underground economy where everything is paid by cash to the dematerialisation of payments through their mobile phone instantaneously. Mobile banking is used by every layer of the society and is available in the whole country. Almost each year new actors of mobile banking are making their marks in the Senegalese market.  

Legal system

The legal system is basically constituted of three levels of jurisdiction:

• first-instance courts (District Court, High Court), with specialized jurisdictions like the Labor Court or the Trade Court for cases related to these matters;
• the Courts of Appeal are jurisdictions from the second level, in charge of reviewing the cases judged by the courts if one of the parties is not satisfied of the decision delivered by the first-instance courts; and
• the Supreme Court, which is the highest court in the Senegalese judicial order, before which claims can be brought to assess violations of the law by lower courts.

For the alternative method of conflict resolution, Senegal has signed and ratified the ICSID (International Centre for Settlement of Investment Disputes) convention and complied with the four public awards rendered against the State. As Senegal is also a signatory state of the 1958 New York Convention, most commercial arbitration awards are recognized throughout Senegalese legal order. And last but not least, the OHADA zone designed a unique business dispute resolution system through the Common Court of Justice and Arbitration (CCJA).

Foreign investment restrictions

Regulatory environment

The regulatory environment for foreign investment is regulated by the WAEMU Law (which Senegal is a member). These regulations apply directly to the Senegalese legal framework.

It provides a declaration regime for statistical purposes to the Directorate of Money and Credit of the Ministry of Finance and to the BCEAO in the context of the constitution of foreign investments in Senegal and the transfer of investments between non-residents, as well as loans contracted by residents with non-residents.

It is important to note that this declaration obligation for statistical purposes only concerns direct investments (ie, sole participation, when it exceeds 10% of the capital of a company).

The declaration of investment is letter sent against a receipt to the Ministry of Finance and Budget and to the BCEAO. It contains, on the one hand, for the constitution of a direct investment:

• the designation of the enterprise or company abroad or in the WAEMU member state in which the investment is to take place;
• the nature of the investment;
• the amount of the investment;
• the methods of financing;
• the deadlines for its realization; and
• the reasons for and the effects of the investment envisaged.

On the other hand, the loan declaration contains:

• the name, address and professional activity of the borrower;
• the name and address of the lender;
• the date of the loan agreement or any document in lieu thereof (documents to be attached);
• the currency of account of the loan;
• the total amount of the loan, expressed in the currency of account;
• the duration of the loan and proposed repayment dates; and
• other information (eg, whether this is a consolidation of a previous loan, the amount of outstanding loans to the same or other foreign lenders, etc).

In practice, this declaration may be filed after the financing documents have been signed and the transaction has been completed, or after the funds have been disbursed.

Direct investment

Senegal is generally an open country to direct investments. This is reflected in the increasing number of signed BIT’s with foreign countries and Double Tax Treaties allowing to attract and protect foreign investment and investors.

A new investment Code allows several innovations, such as the creation of one-stop shops for the incorporation of a company or for connection to electricity, the dematerialization of customs procedures, the reduction of taxes for companies that invest, as well as the various tax incentives.

Restrictions on foreign capital

Depending of the sector, there is some restriction on foreign capital. Here are some examples:

• the local content Law on the Oil and Gas sector provide two types of regimes which limit, among other things, foreign participation in the capital of an oil or gas company.
• For the print media, the threshold for participation in the capital is set at 51% by one or more national public or private persons. In addition, the foreign company may not directly or indirectly hold more than 20% of the capital of a print media enterprise.
• The capital of an audiovisual communications company must be held by at least one or more persons of Senegalese nationality up to 51%.

Foreign exchange controls

Foreign exchange controls are regulated too by WAEMU Law.

In accordance with Articles 76 paragraph d, 96 and 97 of the amended WAEMU Treaty and Article 3 of the WAMU Treaty and Article 6 of Regulation N°09/2010/CM/UEMOA/ relating to the external financial relations of Member States of the West African Economic and Monetary Union (WAEMU), operations between residents of WAEMU Member States are free and without any restriction.

However, payments to foreign countries in respect of capital transactions must be subject to a foreign exchange authorization request submitted to the Minister in charge of Finance unless they are related to:

• contractual amortization of debts and repayment of short-term loans granted to finance commercial and industrial operations;
• the transfer of proceeds from the liquidation of investments or the sale of foreign securities by non-residents;
• the required settlements, either in respect of transactions in foreign exchange derivatives or in respect of transactions in commodity and primary product.

Top tips to takeaway “What to know before Investing”

In any foreign acquisition, the main issues are likely to be:

• the identity of the target (public or private, form of entity);
• the legal barriers depending on the structure and the sector;
• whether it is a merger or an acquisition; and
• the tax implications of the acquisition.

Comparative Guides

• Ivory Coast: Investing In

  Published: January 2024

  Authors: Andy Lionel BiaouMarine Quintric Saria AbouKhalilTess Roussel

  This country-specific Q&A provides an overview of Investing In laws and regulations applicable in Ivory Coast.

• Senegal: Banking & Finance

  Published: March 2024

  Authors: Khaled ABOU EL HOUDADr. Franck Olivier ALLESSIE

  This country-specific Q&A provides an overview of Banking & Finance laws and regulations applicable in Senegal.