Banking & Finance 2019 Second Edition

Last Updated September 10, 2019

Cote d'Ivoire

Law and Practice


Houda Law Firm was founded in 1977 in Dakar (Senegal) and has a staff of 42, half of which are specialised and highly qualified lawyers and legal advisors working to assist clients, including private companies, public entities and individuals, with all their legal needs in Senegal and WAEMU (West African Economic and Monetary Union) member states. The firm has recently opened a branch in Abidjan, Ivory Coast, which will make it the first foreign law firm from the WAEMU region established in the country. The team works on matters related to company incorporation, investment, employment law, taxation, business litigation and arbitration.

A true economic power in West Africa behind Nigeria, Côte d'Ivoire has the largest banking network in the WAEMU, in terms of the number of institutions, agencies and clients with bank accounts.

Ivorian GDP growth reached an estimated 7.4% in 2018 compared to 7.7% in 2017, supported by external demand for agricultural and petroleum products and increased domestic demand resulting from major investment projects and household consumption. The outlook for 2019 is 7% per year. The Ivorian economy remains vulnerable to external shocks that may result from adverse movements in commodity prices (mainly cocoa and oil). However, according to BCEAO's prospects, cocoa prices are expected to rise, in view of the lower supply expected from the main producing countries, following Côte d'Ivoire's decision to require a floor price of USD2,600 per tonne, as well as the increase in local processing demand. In addition, according to the BCEAO's economic outlook note, WAEMU economies may have to worry about trade tensions between the United States and China (despite the resumption of negotiations), the prospect of a Brexit without an agreement and geopolitical tensions (Iran, Venezuela, etc)

Côte d'Ivoire has implemented many reforms as part of its 2016-2020 National Development Plan, particularly in the energy and agriculture sectors.

The bond market in Côte d'Ivoire remains dominated by sovereign issuance. The main purpose of issuing Eurobonds is to finance the budget deficit. In March 2018, Côte d'Ivoire carried out the largest Eurobond issue by an African state since the beginning of the 21st century, worth EUR1.7 billion.

Some banking institutions and microfinance or leasing companies have also issued private bonds after receiving AMF approval (formerly CREMPF).

However, we are not aware of any studies measuring the impact on funding conditions and structures.

We note a surge in the alternative financing system: approved microfinance institutions, foreign lenders, institutional funds and foreign development agencies.

Competition from these new lenders should encourage "traditional" banks to review their lending rules and offer more attractive offers to their customers.

The Ivorian banking system has seen the growth of financial technology in recent years, with several banks offering mobile electronic systems for carrying out banking transactions. It also brings rural populations closer to the banking sector.

Some banks have also established technical partnerships with money transfer companies and telecommunications operators.

At its meeting on 24 June 2016, the WAMU Council of Ministers adopted a prudential framework based on the Basel II and Basel III rules. This mechanism, which came into force on 1 January 2018, aims essentially to promote the preservation of a strong and resilient banking system that meets the needs of WAMU States' economies and the preservation of bank deposits.

These new prudential rules are applicable to banks, banking financial institutions and financial companies operating in the Union.

Tighter capital requirements and stricter regulatory capital ratio standards could, according to some economists, lead banks to reduce their exposure to the highest risk-weighted assets and therefore the largest consumers of equity, with SMEs at the forefront.

On 25 April 2019, the Minister of Economy and Finance of Côte d'Ivoire launched the activities of the Observatoire de la Quality des Services Financiers.

In addition, in June 2019, Côte d'Ivoire set up a guarantee fund of XOF30 billion for small and medium-sized enterprises. A XOF20 billion support fund for entrepreneurs and micro-enterprises should follow by the end of 2019.

On June 28, 2019, the IFC also granted NSIA Banque Côte d'Ivoire EUR20 million in financing to strengthen its financing for very small, small and medium-sized local businesses.

When a bank or a non-bank wishes to carry out banking operations within WAMU, as a normal profession, it will be subject to a banking licensing procedure. Within the Banking Regulation Act, the following constitute banking operations, the receipt of funds from the public, credit operations and the provision of customers and the management of means of payment.

The different stages of the application for accreditation are as follows:

  • be incorporated as a company as provided for by the Banking Act;
  • fully pay up the minimum required share capital, which amounts to XOF10 billion since 2015;
  • send the Minister in charge of Finance an application for approval; and
  • submit the said file to the National Directorate of the BCEAO for the country of establishment.

The Central Bank examines the file and forwards it to the Banking Commission. The Minister in charge of Finance of the country concerned shall issue the approval order, after a favourable assent from the said Commission.

Approval shall be deemed to have been refused if it is not granted within six months of receipt of the complete file by the BCEAO.

In addition, a foreign Bank or company may also finance companies in our jurisdiction, without necessarily wishing to set up and without normally carrying out its financing activities there. In this case, the granting of loans is subject to a declaration for statistical purposes that the Borrower will send to the Ministry of Finance and the National Directorate of the BCEAO indicating:

  • the name and registered office of the lender;
  • the name, registered office and activity of the borrower;
  • the date of the loan (contract to be attached);
  • the currency of the loan;
  • the total amount of the loan expressed in the currency of the account;
  • the duration of the loan and the repayment dates envisaged;
  • interest rates;
  • guarantees; and
  • the amount of loans not yet repaid to the same foreign lender, if applicable.

There is no limitation on the granting of loans by a foreign lender, except to avoid violating the banking monopoly defined above and to comply with the reporting obligations provided for in the regulations governing the external financial relations of WAEMU Member States. These lending operations from abroad can only be carried out through an approved intermediary (Bank), unless otherwise decided by the Minister of Finance.

The granting of securities and guarantees is governed by the provisions of the OHADA Uniform Act on the organisation of securities. The said Act does not provide for any restriction or limitation on the creation of securities for the benefit of foreign lenders.

Regulation No 09/2010 in force in the WAEMU zone on the external financial relations of the Member States contains provisions on exchange controls for certain operations:

  • certain import and export operations;
  • certain payments to foreign countries (outside the WAEMU zone) for capital transactions (for example, repayment of medium and long-term credit) are subject to a request for foreign exchange authorisation, submitted to the Minister of Finance. Each request must be accompanied by supporting documents attesting to the nature and reality of the operation.
  • foreign investment transactions by a resident are subject to prior authorisation by the Minister of Finance;
  • the repayment, by purchase and transfer of foreign currency or by crediting foreign accounts in francs or euros, of any borrowing abroad must be reported for statistical purposes to the Directorate of External Finance and the BCEAO and carried out by an authorised intermediary; and
  • the opening of a foreign currency account in Côte d'Ivoire or the opening by an Ivorian of an account abroad.

We are not aware in our jurisdiction of any measures restricting the use of the proceeds of loans or debt securities.

The Uniform Act organising securities expressly recognises the notion of a security agent who may be a financial or credit institution, national or foreign, and who will act, in their name and as security agent, for the benefit of the creditors of the secured obligation or obligations having designated them for this purpose.

Apart from the Security Agent, Ivorian law does not know the trust or trust within the meaning of the Common Law.

Provided that the loan agreement does not include provisions limiting the possibility of transferring the receivable, the loan may be transferred by way of assignment of the receivable or assignment of the contract.

The assignment of a receivable is made in writing, without the debtor's consent, but it must be served to the debtor in order to be enforceable against them. The assignee benefits from the rights and securities attached to the claim. In practice, certain formalities in the Trade and Personal Property Credit Register and the Land Register will have to be completed in order to notify the change of creditor.

The assignment of a contract entails the assignment of all the terms of the said contract and requires the agreement of the debtor assigned. It will also be subject to subsequent formalities such as the assignment of a receivable.

Subject to what the parties have agreed in the loan agreement, there is no prohibition on repurchasing debt in Côte d'Ivoire. In principle, the redemption is carried out by way of early repayment. If the lender is abroad, this early repayment must be notified to the approved intermediary.

Public acquisition financing transactions are governed by the provisions relating to takeover bids (takeover bids) by which a natural or legal person publicly announces that it undertakes to acquire at a fixed price a quantity of securities of another listed issuer (General Regulation on the organisation, functioning and supervision of the WAMU regional financial market). A takeover bid is triggered from the moment any person proposes to acquire or strengthen an interest equal to or greater than 25% in the voting capital of a company whose shares are listed on an official stock exchange. The bidder must inform the UEMOA Financial Markets Authority (AMF) by filing an information memorandum, the admissibility of which will be examined by the said Authority. At the Study stage, the offer is not public. When the Authority issues its visa, the information note must be disseminated, by publication. The bidder will have to justify the availability of the funds necessary to finance its bid.

Documents are not standardised and therefore their size may vary.

Payments of principal, interest or other payments to lenders are essentially governed by Article 192 of the General Tax Code (GTC). Article 194 of the GTC provides that the creditor is solely responsible for the tax on income from receivables (IRC), notwithstanding any clause to the contrary, whatever the date; however, the creditor and the debtor are jointly and severally liable for it.

The IRC may in certain situations be paid by way of withholding because, under Section 196, tax is paid on a return made by:

  • the drafting notary, when they are domiciled in Côte d'Ivoire and has been instructed to pay or collect interest;
  • the debtor, if they are domiciled in Côte d'Ivoire and pays interest directly to the creditor;
  • the creditor, if the debtor is not domiciled in Côte d'Ivoire and does not pay interest to the creditor through a notary established in Côte d'Ivoire; and
  • by bankers, stockbrokers and securities brokers.

Lenders may be subject to several types of taxes, duties, duties and charges depending on the nature of the loan.

Tax on income from receivables

Income tax on receivables applies to interest, arrears and all other income:

  • Mortgage loans, preferential and unsecured, excluding all commercial credit transactions that do not have the legal character of a loan;
  • Deposits of sums of money at sight or at fixed maturity, regardless of the depositary and regardless of the purpose of the deposit.
  • Cash guarantees.
  • Current accounts.
  • Non-bond loans

The rate is 18%. However, special rates (depending on the status of the lender) are provided for interest, arrears, and other deposit income and current accounts opened in the records of a banker or bank house, stockbroker or securities broker established in Côte d'Ivoire.

Deposit account

Maturity of deposit accounts:

  • Less than or equal to one year;
    1. Individuals: 13.5%; and
    2. Companies: 16.5%;
  • More than one year and less than or equal to three years:
    1. Individuals: 10%; and
    2. Companies: 10%;
  • More than three years and less than or equal to five years:
    1. Individuals: 5%; and
    2. Companies: 5%;
  • More than five years:
    1. Individuals: 1%; and
    2. Companies: 1%.

Current account

  • Individuals: 13.5%; and
  • Companies, whether natural or legal persons: 16.5%.

The rates of 13.5% or 16.5% referred to in deposit accounts and current accounts above shall be reduced by half of:

  • interest on loans granted for a period of at least three years by financial institutions established abroad to finance capital goods; and/or
  • interest on loans contracted by holding companies as defined in Article 23 of this Code with financial institutions established abroad and intended to finance the acquisition of equity securities, as well as interest paid to the shareholders or associates of such companies in respect of sums lent to such companies and intended to finance the acquisition or subscription of equity securities.

Tax on banking transactions:

It concerns transactions related to banking, financial activities and, in general, to the trade in securities and money, with the exception of leasing and money transfer transactions (Article 395). The rate is 10%, reduced to 5% for small and medium-sized companies for bank charges on loans granted to them for the needs of their activities.

However, the GTC has introduced a number of tax exemptions in Article 398 of the GTC.

Value added tax

Where interest is charged by persons other than banks and financial institutions, VAT is applicable. Under Article 339 of the GTC, supplies of goods and services made for consideration by a taxable person acting as such, excluding activities as an employee and agricultural worker, are subject to value added tax.

The VAT rate is set at 18% but is reduced to 9% for milk, petroleum products and solar energy production equipment.

Registration fees

The minimum fixed registration fee of XOF18,000 may also be paid if the parties decide to register the loan deed, in addition to stamp duty.

Tax Considerations :

It should be noted that in the event of the application of a tax treaty, the rate of withholding tax on interest may be reduced to the rate provided for in that treaty.

Also, to prevent tax evasion, Article 14 of the GTC provides for a system that limits the deduction of interest paid to natural or legal persons directly or indirectly linked to the company, in remuneration for the sums they leave or make available to the company in addition to their share of capital, which includes:

  • the total amount of sums made available to the company by all these persons may not exceed the amount of its share capital;
  • the total amount of interest paid in respect of the above amounts may not exceed 30% of the company's income before tax, interest, depreciation, amortisation and provisions;
  • the rate of interest paid may not exceed the average rate of advances from the BCEAO applied for the current year, increased by two points;
  • the sums must be repaid within five years of their availability and the company must not be liquidated during this period. Otherwise, the interest deducted in respect of these amounts is reported in the result of the sixth year or liquidation year; and
  • interest paid to these persons is deductible, regardless of the amount, only if the borrower's share capital has been fully paid up.

Finally, it is interesting to note that under Article 4(B)(7) of the GTC, interest on loans granted to small and medium-sized enterprises by banking institutions for their industrial and IT equipment up to 50%, provided that the duration of the credit is more than three years, is exempt from corporation tax.

The rate of usury is determined by the Council of Ministers of the WAMU. It is published in the Official Gazette or in a newspaper of legal announcements at the initiative of the Minister in charge of Finance. Currently the figures are:

  • for banks, the rate is set at 15% per year;
  • and for economic agents other than banks the rate is set at 24%.

Lending at a usurious rate is a criminal offence.

Lenders generally grant security rights in the following assets: real estate, tangible movable property (inventories, professional equipment, vehicles) and intangible movable property (shares or partnership shares, bank accounts, receivables, goodwill and intellectual property rights).

Security interests are governed by the OHADA Uniform Act on the organisation of the law of security interests. The security interest in real estate is the mortgage.

A mortgage is defined by Article 190 of the Uniform Act on Security Interests (AUS) as the use of a specific or determinable property belonging to the grantor as security for one or more present or future claims, provided that it is specific or determinable.

The mortgage must be published in the land register and, when it is conventional, is instrumented by a Notary Public.

The notarial deed of mortgage is subject to registration and land registration formalities: registration fees are XOF18,000, the land registration tax is 0.8% of the amount of the mortgage and the Registrar's salary is 0.4%. The deed is also subject to the fees set by a presidential decree, the rates of which are currently as follows:

  • Obligation:
    1. from XOF1 to XOF10,000,000, 3%;
    2. from XOF10,000,001 to XOF30,000,000, 2%;
    3. from XOF30,000,001 to XOF90,000,000, 1%; and
    4. above XOF90,000,001, 0.5%.
  • Mortgage allocation:
    1. by separate act, half of the fee for the main act;
    2. by a third party, in the main act, half of the above proportional fee; and
    3. where there is no main act, the fee that would have been charged on that act.

The time limit for formalising a conventional mortgage is approximately 15 days from the signature of the notarial deed of assignment. After the registration of the mortgage, the Registrar issues a statement of real rights and a certificate of registration in the Land Register.

Other forms of security are those relating to tangible and intangible assets. They must be the subject of a written deed, which may be in private or notarial form. These securities must be registered in the Trade and Personal Property Credit Register (RCCM).

The tax registration of the deeds of security is XOF18,000; that of the registration of the security at the RCCM is as follows:

  • From XOF1 to XOF300,000, 0.15%;
  • From XOF300,001 to XOF1,000,000, 0.10%;
  • From XOF1,000,001 to XOF2,000,000, 0.05%; and
  • Above XOF2,000,000, 0.02%.

The Registrar shall issue a pledge or pledge slip containing a transfer number to the Security Registry within two days of filing.

Under the Uniform Act organising security interests and depending on the type of pledge, it is possible that the security interest may relate to a combination of present and future assets.

It is possible that subsidiaries may agree to take security interests in assets belonging to them as security for the commitments of their parent company and vice versa.

In this case, they are subject to prior authorisation by the Board of Directors (for SAs with a Board of Directors) or the General Meeting (SAs with a Managing Director, SARL and SAS) under regulated agreements so that the corporate interests of the companies, which could be assessed independently of the general interest of the group, are in any event respected.

In addition, if it is in the subsidiary's corporate interest, the guarantee it grants to its parent company will not be considered as an act concluded free of charge and could therefore not be cancelled if it was made during a suspicious period.

Parent companies may also grant autonomous guarantees to their subsidiaries and vice versa.

Article 639 paragraph 1 of the Uniform Act on Commercial Companies and EIG Law lays down a principle of formal prohibition on the granting of a security interest by a company in the event of the acquisition of its own shares by a third party.

A possible solution to this prohibition would be to have at least one share acquired by the company wishing to acquire a stake in the target company, so that this new company is no longer considered as a third party but a shareholder of the company.

Concerning the SARL and the SAS, no express restrictions have been provided for by the Uniform Act on the law of commercial companies. However, in practice, it is required to obtain an authorisation from the General Meeting or the Board of Directors to fully inform the Directors and partners of the guarantees granted on the company's assets.

With regard to an SA with a board of directors, a restriction is provided for in Article 449 of the said Uniform Act. It provides that guarantees, endorsements and autonomous guarantees subscribed by companies other than those operating duly authorised credit, microfinance or surety insurance institutions and for commitments made by third parties are subject to prior authorisation by the Board of Directors.

The Board of Directors may, within the limit of a total amount to be fixed by it, authorise the Chairman and Chief Executive Officer or the Chief Executive Officer, as the case may be, to provide guarantees given by third parties.

This authorisation may also set, by commitment, an amount above which the company's guarantee, guarantee, guarantee or autonomous counter-guarantee may not be given.

When a commitment exceeds any of the amounts thus fixed, the authorisation of the Board of Directors is required.

The duration of the authorisations provided for in the preceding paragraphs may not exceed one year, regardless of the duration of the commitments guaranteed, endorsed or guaranteed.

Guarantees, endorsements, autonomous guarantees or other guarantees given, without authorisation, for commitments made by third parties are void.

If the guarantees, endorsements, autonomous guarantees and other guarantees given have been given for a total amount exceeding the limit set for the current period, the excess may not be invoked against third parties who have no knowledge of it unless the amount of the commitment invoked exceeds, in itself, one of the limits set by the decision of the Board of Directors taken pursuant to the provisions of this Article. In this case, guarantees, endorsements, autonomous guarantees or other guarantees are void.

Concerning an SA with Director: Article 506 of the Uniform Act on Companies provides that sureties, endorsements and guarantees given in companies other than those operating credit, microfinance or surety insurance institutions duly approved by the managing director or deputy managing director are only enforceable against the company if they have been authorised in advance by the ordinary general meeting, either in a general or special manner.

Article 61 of the AUS provides for the procedures for the release of securities that are subject to registration in the Trade and Personal Property Credit Register. In accordance with this article, any natural or legal person against whom one or more registrations have been made may, at any time, bring an application to the competent court or authority in the State Party for the release of the registration.

The competent court or authority in the State Party may, in any event and even before deciding on the merits, discharge the registration in whole or in part if the applicant has serious and legitimate grounds.

It is also possible to discharge the registrations by conventional means by filing an authentic deed (for the mortgage) or under private signature (for pledges and pledges) recording the creditor's agreement to the cancellation of the registrations with the Land Register or the Commercial Register.

Competing security rights in the same asset required on the same day under the title with the earliest date are deemed to have been registered first, regardless of the order of the above-mentioned registry. Those required under securities having the same date, are deemed to rank equally with the exception of assignments by way of security and retention of title, which are then deemed to be registered before other security rights whose registration was required on the same day, regardless of the order of the above-mentioned registry (Article 57 al 2et3 of the Uniform Act on Security Interests).

Personal and real estate security interests registered in the RCCM may be assigned prior to their priority. These amendments are only effective if they are registered in the RCCM on the margin of the initial registration.

Similarly, it is possible to modify the rank of conventional mortgages by notarial deed, which must be registered and published as the main mortgage deed.

The secured lender has several means at its disposal to realise its guarantee in the event of default by the debtor.

There are several reasons for the debtor's non-payment including economic difficulties, deliberate refusal to fulfil the obligations of the contract, etc.

Methods and Procedures

Within the meaning of the Uniform Act on the organisation of simplified recovery procedures and enforcement procedures, the secured lender may bring the following actions:

  • a formal notice;
  • a command to pay served extrajudicially;
  • a request for an order for payment submitted to the competent courts (Article 2 of the aforementioned Uniform Act);
  • a protective seizure of claims and movable property which would make it possible to make the debtor's assets (bank accounts) and movable, tangible or intangible property unavailable (Article 54 of the Uniform Act referred to above);
  • as soon as an enforceable title is obtained, the lender could also have the debt assigned to him/her, which would allow him/her to be paid directly to a third party, the sums claimed; and 
  • through an enforceable title, the lender could also proceed with the sale of the debtor's tangible movable property or even seize the debtor's rights, shares or obligations held in a company.


The defaulting debtor could proceed with an enforcement defence, organise its insolvency by benefiting from insolvency proceedings tending to suspend proceedings against it or invoke immunity from enforcement.

Under Ivorian law, the parties may freely invoke a foreign law to organise the content of their contract. 

A contract can always be subject to a foreign jurisdiction. As such, the decision rendered by the foreign court is only enforced in Côte d'Ivoire when it is declared enforceable through an exequatur procedure.

In addition, with regard to the waiver of immunity, the executing judge may invoke immunity from execution and refrain from authorising protective seizures. Indeed, it follows from this article that forced execution and protective measures are not applicable to persons who benefit from immunity from execution.

Please note that judgments or arbitral awards rendered abroad may be enforced in Côte d'Ivoire after the competent judges of those countries have issued a decision ordering the enforcement of those decisions, at the end of the exequatur proceedings.

With regard to the enforcement of judgments, Judicial decisions, whether contentious or non-contentious, and decisions handed down abroad may not give rise to any enforcement on Ivorian territory until they have been declared enforceable. Enforcement proceedings shall be brought by summons and the competent court shall be the court of the defendant's domicile or residence in Côte d'Ivoire or, failing that, the court of the place of enforcement.

This exequatur can only be granted under the following conditions:

  • the judgment emanates from a competent judicial authority under the laws of the country where it was rendered;
  • the judgment has become res judicata under the same laws and is enforceable in the country where it was rendered;
  • the convicted party was regularly summoned to appear before the court, which rendered the judgment and could defend itself;
  • the dispute on which the foreign court has ruled does not, under Ivorian law, fall within the exclusive jurisdiction of the Ivorian courts;
  • there is no conflict between the foreign judgment and another judgment rendered by an Ivorian court, on the same cause, the same object and between the foreign judgment and the foreign judgment; and/or
  • the decision does not contain any provisions contrary to Ivorian public policy.

With regard to the arbitral award, the arbitral award is enforceable only by virtue of an exequatur decision rendered by the competent court in the Contracting State.

Recognition and enforcement shall be refused if the arbitral award is manifestly contrary to a rule of international public policy. The State court, seised of a request for recognition or enforcement, shall decide within a period which may not exceed 15 days from the date of its referral. If, on expiry of this period, the competent court has not issued its order, the exequatur shall be deemed to have been granted.

We are not aware of any such matter.

The Uniform Act on the organisation of collective procedures for the settlement of liabilities provides for two preventive procedures which take place before the cessation of payments

Conciliation is a preventive, consensual and confidential procedure aimed at the financial or operational restructuring of the company. This restructuring takes place through the conclusion of a conciliation agreement negotiated between the debtor and their creditors, or at least their main creditors, with the support of a neutral, impartial and independent third party called a conciliator. Conciliation falls within the competence of the President of the Commercial Court, who is seised of the matter at the request of the debtor.

Preventive settlement is a judicial procedure that also takes place before the suspension of payments. The commercial court is seised at the request of the debtor or at the joint request of the debtor and one or more of their creditors. It is subject to the filing of the preventive composition agreement, which is a document containing the measures envisaged for the recovery of the company. As soon as the draft composition appears to them to be serious, the president of the court appoints an expert in preventive settlement to assist the company. The decision to open the preventive regulation suspends all individual proceedings for the payment of claims arising before the opening of the preventive regulation for a period of three months, which may be extended by one month. The appointed expert must file a report with the president of the commercial court containing the agreement concluded between the debtor and their creditors and the preventive composition agreement. Once the expert's report has been delivered, the president of the commercial court summons the debtor to be heard at a hearing that is not public. If the court finds that the payments have been suspended, it shall automatically rule on the adjustment or liquidation of the property. If, on the contrary, the debtor's situation justifies it, it approves the preventive composition agreement and thus validates the debtor's restructuring proposals.

In addition to the procedures mentioned above, in Côte d'Ivoire companies may opt for technical restructuring such as mergers, demergers or acquisitions or organise internal financial and operational restructuring plans with the collective shareholders.

It depends on the level of difficulty of the debtor company to which the loan was granted. Thus, before the suspension of payments, the decision to open the preventive regulation suspends all individual proceedings for the payment of claims arising before the opening of the procedure for a period of three months, which may be extended by one month. This means that no action for payment can be brought before the court.

After the suspension of payments, the debtor who has security interests will have to register their claim and will be subject to a payment order described in 7.3 The Order Creditors Are Paid on Insolvency.

As soon as insolvency proceedings are opened, all creditors are grouped together and subject to a legal payment order. 

The order of creditors differs, depending on whether the money to be distributed to creditors comes from the sale of real estate or furniture.

In the event of a sale of real estate, the funds are distributed in the following order:

  • to creditors who have accepted a conciliation agreement, those whose claim arose before the opening of preventive settlement proceedings and those who had made a new contribution in the context of the composition for legal redress;
  • to creditors of legal costs incurred to achieve the realisation of the property sold and the distribution of the price;
  • to creditors of super-privileged salaries in proportion to the value of the property in relation to the total assets;
  • to creditors holding a conventional or forced mortgage and to separatist creditors registered within the legal time limit, each according to the rank of their entry in the land register;
  • creditors of the estate, whose debts arose from the debtor's continued activity after the opening;
  • to creditors having a general lien in accordance with the order established by the Uniform Act on the Organisation of Security Interests, namely, to creditors having a general lien subject to publication, each according to the rank of its registration in the Trade and Personal Property Credit Register, and to creditors having a general lien not subject to publication in accordance with the order established by Article 180 of that Uniform Act;
  • unsecured creditors with an enforceable title; and
  • unsecured creditors without an enforceable title.

In the case of the sale of movable property, the money is distributed in the following order:

  • to creditors who have accepted a conciliation agreement, those whose claim arose before the opening of preventive settlement proceedings and those who had made a new contribution in the context of the composition for legal redress;
  • to creditors of legal costs incurred to achieve the realisation of the property sold and the distribution of the price itself;
  • creditors of costs incurred to preserve the debtor's property in the interest of the creditor whose securities predate;
  • to creditors of super-preferred wages in proportion to the value of the furniture in relation to the total assets;
  • to creditors secured by a general privilege subject to publicity, a pledge, or a pledge, each on the date of its opposability to third parties;
  • to creditors with a special movable lien, each on the furniture supporting the lien;
  • to creditors of the estate as defined in Article 117;
  • to creditors having a general lien in accordance with the order established by the Uniform Act on the Organisation of Securities;
  • unsecured creditors with an enforceable title; and
  • unsecured creditors without an enforceable title.

To our knowledge, there is no equivalent in Ivorian law to the concept of equitable subordination.

The highest risk in the event of the borrower's or supplier's insolvency is that it may not be able to repay its debt due to insufficient assets at the time of distribution to the various creditors, or if the debt has not been registered in accordance with applicable law.

Nevertheless, the OHADA legislator has provided for different mechanisms, including conciliation procedure, preventive settlement, receivership, mergers and internal restructuring, depending on the level of cash flow difficulties in which the debtor company finds itself, to safeguard as far as possible the interests of creditors and to organise their repayment in accordance with the applicable law.

In Côte d'Ivoire, companies have a more frequent use of so-called mixed investments. It involves combining different forms of capital combining private sector, public sector and development agencies. This makes it possible to raise capital at lower costs.

The flow of financing depends on the sector of activity. The financial profitability of investments added to the security and nature of the guarantees frequently presented by actors in certain sectors may, among other things, justify this reality. Some sectors then appear more attractive than others in Côte d'Ivoire.

Côte d'Ivoire is a pioneer in Africa in terms of private sector participation in the development of public infrastructure through the mechanism of public-private partnerships. The water and electricity distribution sectors, with the Société de Distribution d'Eau de Côte d'Ivoire (SODECI) since 1959 and the Compagnie Ivoirienne d'Electricité (CIE) in 1990, are real "success stories" of Ivorian PPPs. In 2012, faced with the scale of the challenges to be met at the end of the post-electoral crisis in 2011, the Ivorian government decided to make public-private partnerships (PPPs) a key instrument for implementing its development strategy as set out in the National Development Plan. The Government of Côte d'Ivoire has adopted a National Development Plan for the period 2016-2020 with the aim of making Côte d'Ivoire an emerging country with a solid industrial base by 2020.

PPPs in Côte d'Ivoire are governed by:

  • Decree No. 2018-358 of 29 March 2018 determining the rules relating to public-private partnership contracts; and
  • Decree No. 2018-359 of 29 March 2018 on the remit, organisation and functioning of the national steering committee for public-private partnerships.

Regarding legal restrictions, the PPP projects identified give rise to preliminary feasibility studies and their inclusion in the list of PPP projects published by the CNP-PPP.

The principle of using PPPs for the development of each project is subject, particularly in the light of all these studies, to prior approval by the CNP-PPP.

The choice of PPP contract award procedure, consultation documents and draft contracts, as well as their evolution during these procedures, are subject to the prior opinion of the CNP-PPP.

As for other obstacles, some current practices in PPPs undermine the principle of separation of executive, control and regulatory functions and do not contribute to the rationalisation of public procurement bodies.

Some project financing operations in Côte d'Ivoire require government approval. Taxes and administrative fees may also apply. Transaction documents such as those relating to loans are subject to registration and stamp duties. These tax requirements are provided for by the General Tax Code. As well as those relating to securities in accordance with OHADA law on securities.

The legal and institutional framework of the oil sector consists of:

  • Order No. 2012-369 of 18 April 2012 amending Act No. 96-669 of 29 August 1996 on the Petroleum Code; and
  • the Ministry of Petroleum, Energy and Renewable Energies.

The legal framework for the electricity sector consists of:

  • Law n° 2014-132 of 24 March 2014 on the Electricity Code;
  • Act No. 85-583 of 29 July 1985 organising the production, transmission and distribution of electricity in Côte d'Ivoire;
  • Decree 98-725 of 16 December 1998 restructuring the electricity sector;
  • Decree No. 2016-782 of 12 October 2016 on the terms and conditions for concluding concession agreements for the conduct of electricity generation, transmission, dispatching, import, distribution and marketing activities;
  • Decree n°2016-783 of 12 October 2016 setting the conditions for the exercise and sale of electrical energy produced by an independent producer or of excess electrical energy produced by a self-producer; and
  • Decree No. 2016-785 on the organisation and functioning of the National Regulatory Authority for the Electricity Sector of Côte d'Ivoire.

The institutional framework of the electricity sector:

  • the Ministry of Petroleum, Energy and Renewable Energies.

The legal and institutional framework of the mining sector:

  • Law n° 2014-138 of 24 March 2014 on the Mining Code;
  • Decree n°2014-397 of 25 June 2014 determining the terms and conditions for the application of Act n°2014-138 of 24 March 2014 on the Mining Code; and
  • the Ministry of Mines and Geology.

The structuring of projects in Côte d'Ivoire raises several questions about:

  • the definition of the most optimal legal framework for the implementation of the project;
  • the financing of the Project;
  • the incorporation of the project company;
  • the identification of all responsibilities and risks associated with the project that could affect its success; and
  • the possible tax structure of the contract, if any.

Regarding the legal form of a project company, Cote d'Ivoire is a member of OHADA. Among the different forms of companies provided for by the OHADA Uniform Act on the law of commercial companies and the Economic Interest Grouping, the most common are:

  • the Société Anonyme (''SA'');
  • the Société à Responsabilité Limitée (''SARL''); and
  • the Société par Actions Simplifiées (''SAS'').

Restriction on Foreign Investment

Foreign investment in Côte d'Ivoire is encouraged. The government's strategy focuses on strengthening the capacities of the private sector, investment promotion, access to finance (for business projects), improving the business climate, creating CEPICI, creating a new investment code (Order No. 2018-646 of 1 August 2018) that is even more attractive to foreign investors and promoting the Ivorian label on the international market. Several bilateral investment agreements have been signed by Côte d'Ivoire.

The Ivorian government has put in place a number of measures to promote foreign investment:

  • the introduction of a new Investment Code;
  • the establishment of a one-stop shop for business creation;
  • the implementation of the online filing of complaints with the Commercial Court;
  • a programme of major works in terms of transport infrastructure, including the privatisation of the Abidjan - Ouagadougou railway line and the extension of the port of Abidjan; and
  • a national development plan has been drawn up for the period 2016-20, which aims to make private investment an engine of the country's economic growth.

Other Restrictions

Cote d'Ivoire is a member of various regional organisations including in particular the Organisation for the harmonisation of business law in Africa (OHADA), the inter-African conference of insurance markets (CIMA), and the West African Economic and Monetary Union since its creation (WAEMU).

Regarding restrictions on exchange controls, there is an obligation of intermediation, and notification to the Direction de la Monnaie et du Crédit (Currency and Credit Office) of the Ministry of Finance and to the Central Bank for West Africa States (BCEAO) must be made in relation to other transactions such as loans made abroad, liquidation of investments made by a resident abroad, foreign investments made in a WAEMU member state and the transfer of investments between non-residents of this State, prior approval to payments made abroad other than usual payments, repayment of medium- and long-term loans granted to finance commercial and industrial operations in Côte d’Ivoire, any foreign investment made by a resident (taking into account that such investment must be financed up to 75% by foreign loans), reinvestment of liquidation proceeds, loans of any kind made by Intermediaries to non-residents, including overdrafts and cash advance (either in XOF or EUR) made to non-residents, the opening of local accounts in currency other than EUR or XOF to non-residents requires the prior approval of the Central Bank.

Overall, there does not seem to be any restriction on foreign presence in the major sectors of Côte d'Ivoire. Foreign investment in certain services related to the energy and mining sectors (including exploration, drilling and related activities) was included in Côte d'Ivoire's schedule of specific commitments under the General Agreement on Trade in Services (GATS) in 1994. On the other hand, mining and energy products are subject to numerous and complex interventions by the State, including at the border.

Financing projects remains very complex in Côte d'Ivoire. The gap between the financing needs of the country's projects and the local resources available is considerable. To do this, the sources of funding are diverse and varied. These may be local sources of financing (local savings, domestic financial market, local public financing). These may be external sources of project financing such as official development assistance, foreign direct investment, financial support from development partners, etc).

Another source is mixed financing, combining concessional and private capital to support projects with a high development impact in sectors that are struggling to attract market financing but could eventually become commercially profitable.

Public-private partnerships are one of the forms of structuring that respond to the financing problem encountered in Côte d'Ivoire. Almost all projects initiated by public entities are structured as PPPs.

Côte d'Ivoire is rich in natural resources. The country has oil, natural gas, copper, iron, gold and even diamonds. It tends to move towards a low-carbon economy to carry out its projects. Côte d'Ivoire has specified the means of action of each actor through the adoption of Law No. 2014 - 390 of 20 June 2014. Legislation relating to mining, oil and energy has been amended to take into account the theme of sustainable development.

A corporate guarantee and social responsibility code have been established to promote RSE and sustainable development practices.

Côte d'Ivoire aims to be an energy distributor throughout the West African sub-region. The country envisages a total electrification of rural Côte d'Ivoire by 2020, which should be done by connection. Despite many life-saving measures taken, bottlenecks related to indicators remain, namely high customs and tax costs on renewable energy equipment; weak institutional framework; lack of inter-ministerial coordination and collaboration; and difficulties in raising funds by promoters.

Actions to improve the governance of the natural resources sector (implementation of the Electricity Code Act) and energy management (installation of improved stoves, promotion of energy-efficient light bulbs and optimised energy housing) will continue over the 2018-20 period.

Laws that govern this area include:

  • Act No. 96-766 of 3 October 1996 on the Environment Code;
  • Law n°2015-532 of 20 July 2015 on the Labour Code; and
  • Decree No. 96-894 of 8 November 1996 determining the rules and procedures applicable to studies relating to the environmental impact of development projects.

The institutional framework is the Ministry of Environment and Sustainable Development.

Côte d'Ivoire's sustained growth and high investment needs make it a very attractive market for Islamic financial solutions. Côte d'Ivoire, as a bridgehead for investment in West Africa, is very interested in this new financing method, which can partly support its strong need for support. While Islamic finance products represent only marginal solutions, they are well received.

Islamic finance being oriented towards the financing of the real economy, it is adapted to the needs of a State and a population that has considerable needs in terms of infrastructure, housing, health, or energy.

Côte d'Ivoire, where a large part of the population is Muslim (nearly 42% according to some estimates), represents a very favourable area for the establishment of this type of structure.

While Côte d'Ivoire has not yet developed a legal framework for the development of an Islamic financial industry, Côte d'Ivoire has already issued Islamic bonds and sought to attract Islamic microfinance actors.

BCEAO issued Instruction No. 002-03-2018 on the special provisions applicable to credit institutions engaged in Islamic finance. This instruction, which is directly applicable in Côte d'Ivoire, aims to define the conditions for carrying out Islamic finance activities in WAMU.

This Instruction applies to all credit institutions that fully or partially comply in their operations with the principles and rules of Islamic finance and operate in the territory of a WAMU Member State.

Credit institutions may exclusively or partially carry out Islamic finance operations through a dedicated branch. An application for authorisation is required for credit institutions wishing to carry out Islamic finance operations on an exclusive basis.

Credit institutions wishing to open an Islamic branch must specify this intention in their application for authorisation as a credit institution or apply for an extension if they already have an authorisation.

Each credit institution engaged in Islamic finance must have an Internal Compliance Board or "Internal Shari'a Board" to ensure that transactions comply with the principles and rules of Islamic finance.

At the BCEAO level, the Central Compliance Council or Central Shari'a Board should be established and will be responsible for ensuring the compliance of Islamic financial practices within WAMU with the principles of Shari'a law.

Instruction No. 003-03-03-2018 defines the conditions for carrying out Islamic finance activities in the West African Monetary Union applicable to decentralised financial systems (DFS).

In 2015, Côte d'Ivoire issued its first bond issue of XOF150 billion in the form of Islamic Shari'a-compliant bonds. A second "Sukuk" was issued in 2015 for a similar amount. This operation was carried out at the Regional Securities Exchange (BRVM) in Abidjan.

Sukuk are backed by tangible assets, often real estate. As part of these two issues, the loan was backed by some of the State's real estate assets.

Instruction No. 004-05-2018 on the technical characteristics of Islamic finance operations carried out by credit institutions in the West African Monetary Union (WAMU) provides in its annex a list of banking operations and contracts in accordance with the principles and rules of Islamic finance in the Union that credit institutions may carry out and Instruction No. 005-05-2018 the equivalent for decentralised financial systems.

Mainly listed are:

  • Qardh;
  • Mourabaha funding;
  • Moussawama funding;
  • Ijara funding;
  • Istisna;
  • Salam;
  • Arboun;
  • Waad;
  • Filing in good faith;
  • Moudaraba funding;
  • Moucharaka; and
  • Tawarruq.

Collective proceedings in Côte d'Ivoire are governed by the Uniform Act on the organisation of collective proceedings for the settlement of liabilities adopted on 10 September 2015.

That Act does not yet provide for any provision applicable to insolvency or restructuring proceedings for the claims of sukuk holders.

We are not aware of any regulatory provisions on the classification of sukuk.

We are not aware of any such cases.

Houda Law Firm

Residence Nabil, rue du Commerce
Plateau Abidjan – 1st floor, left;
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(+ 225) 20 24 43 87

(+ 225) 20 24 43 86
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Houda Law Firm was founded in 1977 in Dakar (Senegal) and has a staff of 42, half of which are specialised and highly qualified lawyers and legal advisors working to assist clients, including private companies, public entities and individuals, with all their legal needs in Senegal and WAEMU (West African Economic and Monetary Union) member states. The firm has recently opened a branch in Abidjan, Ivory Coast, which will make it the first foreign law firm from the WAEMU region established in the country. The team works on matters related to company incorporation, investment, employment law, taxation, business litigation and arbitration.

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