SHELLA FRU, Managing Partner

CHI AND Partners Law Firm

Yaoundé, Cameroon

Tel:+(237)656 899 294

Email:shella@chi-partners.com

Cameroon the country of the indomitable lions, is located in West Central Africa. Cameroon has over 28 million inhabitants with a surface area of about 475,440 km2, its geographical location and its diversified economy makes Cameroon indeed a land of promise for investors. The currency used in Cameroon is the FRANC CFA. Cameroon has a bilingual workforce and a real GDP growth rate of 4.1% in 2022, up from 3.5% in 2021.Cameroon has signed the African Continental Free Trade Area (AfCFTA) agreement, and benefits from all the opportunities offered by AFCFTA. It is presently the largest economy in the Central African Economic and Monetary Community (CEMAC). The main contributors to economic growth are agriculture, mining, tourism, transportation(railways, roads, seaports and airports), extractives (oil and gas, timber), telecommunication, manufacturing and Tech. Agriculture is one of the largest employers of labor in Cameroon. The country is known for its commercial cultivation of crops such as bananas, oil palm, okra, cocoa, pepper, coffee and tobacco. Fishing and livestock are also important contributors to the economy, the country also has mineral resources like oil and gas, hydrocarbon and bauxite. The digital economy of Cameroon is fast growing attracting a wide range of investors.

APPLICABLE LAW FOR THE REGISTRATION OF BUSINESSES

The applicable law is the OHADA Law on Commercial Companies and Economic Interest Groups.

FORM OF BUSINESSES PROVIDED BY OHADA LAW

According to Article 3 of the Uniform Act relating to Commercial Companies and Economic Interest Groups in Cameroon, any person,(nationals or non-nationals, individual or legal person) wishing to engage in a commercial activity shall choose a form of company which suits the activity envisaged from among those provided by the OHADA (Organisation for the Harmonization of Business Law in Africa) Law. The forms of businesses are:

Private company
Private limited Company
Public Limited Company
Simplified Joint Stock Company
Limited Partnership
Economic Interest Group

The choice of company will depend on the sector of activity and the capital of the founders or Promoters.

PRIVATE LIMITED COMPANY (LTD) (SARL)

A Private Limited Liability company is a form of company where the shareholder(s) have limited liability. Shares in a Private Limited company shall be personal property and shall not be open to the public.

According to Article 309 of the Uniform Act relating to Commercial Companies and Economic Interest Groups of the OHADA Law stipulates that a private limited liability company may be formed by a natural person or a corporate body, or by two or more natural persons or corporate bodies. Thus a Private Limited Company can be created by a sole shareholder.

A foreigner can equally register a Private Limited Company in Cameroon, however, where a foreigner holds more than 50% of the total share capital he will have to obtain an authorisation from the minister of commerce before carrying out commercial activities in Cameroon.

The law of December 14,2016 to fix the minimum registered capital and conditions for using notary publics in the establishment of private limited companies in Cameroon, it reduced the minimum share capital of a private limited company from One Million(1 000 000)Franc CFA to One Hundred thousand (100.000)FRANC CFA.

Shares can be in kind or in cash i.e shareholders may contribute to the company in the form of money, services(supply of labour),rights on movable or immovable ,tangible or intangible(an idea or intellectual property).Contributions in cash must be fully paid up at the time of the formation of the company.

The administration and management of a Private Limited company is simple, one or more managers can manage a Private Limited Company. A shareholder can be appointed as the manager of a Private Limited company. Manager(s) can be appointed in the Articles of Association or via a contract of employment.

The appointment of an auditor is not mandatory, however, the appointment of one or more auditor(s) become mandatory where the company fulfilled at the close of a fiscal year either two of the following;

The balance sheet is greater than One hundred and twenty five million(125.000.000) FRANC CFA;
The annual turnover exceeds Two hundred and Twenty Five Million(250 000 000) Franc CFA;  The permanent Staff exceeds 50 persons;

Auditors are elected in the ordinary general meeting where the company fulfilled at the close of the fiscal year the above conditions.

A Private Limited Company is set up for a period of ninety-nine(99) years, the existence of the company begins on the date it is entered in the Trade and Personal Property Credit Register of the city/town where the desired head office of the Company shall be located.

The expiry of the term of the company shall entail its automatic dissolution, unless an extension of its life span has been decided upon under the conditions laid down in Article 32 to 36 of the OHADA Uniform Act.

The registration of a Private Limited Company can be done within 7 working days.

PUBLIC LIMITED COMPANY (PLC)(S.A)

A Public Limited Company can offer shares to the Public, the minimum share capital of a Public Limited Company is Ten Million(10 000 000) Franc CFA. A single shareholder can register a Public Limited Company.

A foreigner can register a Public Limited Company. However, certain sectors of activities, require a local shareholder to hold shares.

The share capital of the Public Limited Company must be fully subscribed for before the date of the signature of the Articles of Association. 25% of the share capital representing cash contributions must be paid upon incorporation and the rest is payable within three years from the date of registration of the company in the Trade and Personal Property Credit Registry.

The administration and Management of a public Limited company is determined by the Articles of Association at incorporation or by the constituent general meeting. The forms include:

A public limited Company with a managing director;  A public Limited Company with a Board of Directors.

The Public Limited Company may be managed and directed by a managing director if the number of shareholders is equal or less than three(03).

The Public Limited Company with boards of directors comprises of:

An administrative Board, the Board of Directors
The general management is assumed by a natural person, in this case the general manager (or chairman and general manager in the event of the same person holding the functions of chairman of the board of directors and general manager)

In a Public Limited company with a managing director, the Managing director assumes both the functions of director and general management of the company.

The Public Limited Company shall be administered by a board of directors when the number of shareholders exceeds three (03). The directors may be either shareholders or non-shareholders. Where the articles of association is silence the appointment of non-shareholder directors shall be the responsibility of the ordinary general meeting.

The appointment of auditors is optional where the company does not make a public call for capital but mandatory where it makes a Public call for capital.

The time frame for the registration of a Public Limited Company is two(02)weeks.

FOREIGN/EXPATRIATE STAFF

Foreigners must obtain a resident permit and a work permit from the competent immigration authority in conformity with Decree No. 2007/255/PR of September 4th 2007 which governs immigration in Cameroon and lays down the conditions which foreigners must satisfy in order to be issued a residence permit and work permit in Cameroon.

The employment contract of a foreign worker must be approved by the minister of employment and vocational training. The employer or his legal representative is responsible for filing the contract.

Employers shall pay work Visas fees which is a deduction of the equivalent of one month’s annual salary for non-African workers and half a month’s salary for African workers.

INTELLECTUAL PROTECTION

Companies wishing to invest in Cameroon can protect their trademark, Corporate name, brand name, patent etc. with the African Intellectual Property Organisation (OAPI) .A prior Corporate name search is advisable. The protection of trademarks is done at the African Intellectual Property Organisation, in accordance with the Bangui Agreement of 24 February 1999.

TAX REGISTRATION

Tax registration of a company in Cameroon is done at the tax office where the company’s head office is situated. In 2023, the corporate tax has seen a reduction of 28% to 25%.

INCENTIVES

The finance law 2023 introduced a set of incentives for companies in Cameroon operating in the agricultural sector, Fishing and livestock sectors, import, brewery industry, manufacturing, companies processing raw materials and the digital economy.

Incentives in Agricultural Sector

Exemption from tax and employer charges on wages paid to seasonal agricultural workers;
exemption from VAT on the purchase of pesticides, fertilizers, and inputs as well as equipment and materials for agriculture, livestock, and fishing;
exemption from registration fees on loan agreements intended to finance agricultural, livestock, and fishing activities;
exemption from registration fees on the transfer of land used for agriculture, livestock, and fishing;
exemption from property tax on properties belonging to agricultural, livestock, and fishing enterprises and used for these activities;
exemption from paying the business license contribution for the fist five(05) years of operation;
exemption from income tax, including advance payment and minimum collection;
the fifth (5th) year and beyond a waiver of the contributions required for company licenses;  the payment of a flat income tax rate of 0.5% of turnover;
Exemption from VAT on the sale of local products by farmers, breeders, and fishermen is stipulated under (Article 128 (6) of the GTC[

The other legal entities of the said sector benefit from the tax advantages provided by the law of April 18, 2013 setting incentives for private investment.

Manufacturing Sector /Companies Processing raw Materials

 Companies that process local raw materials benefit from a 50% deduction in the monthly advance payment and income tax.

Companies in the following industries can receive this benefit: – the agricultural, breeding, f ishery, and leather products industries.

Brewery Industry

The rationalization of the promotion of drinks made from local raw materials by reducing 30% of the taxable base of ad valorem excise duties for these drinks and beverages for a period of three years starting on 1 January 2023;
Giving the Minister of Finance the authority to waive the minimum threshold of 40% require d in cases where local raw materials are unavailable.
The increase in the deductibility rate of damages and breakages incurred by companies in the brewery sector from 0.5% to 1% of the total volume of production, in order to take into account, the reality of the losses incurred by these companies;
The exemption of VAT on the purchase of basic foodstuff from farmers by public entities in charge of the regulation or management of food stocks.

Pharmaceutical Industry

 The extension of the 50% deduction of the advance income tax rate to companies producing pharmaceutical products and fertilizers in order to promote their local production;

CAMEROON BUSINESS GUIDE 2023 BY FRU SHELLA ESQ