In Guinea, the main types of business organisations are governed by the Uniform Act on Commercial Companies and Economic Interest Groups (Acte Uniforme relatif au Droit des Sociétés Commerciales et du Groupement d'interet économique, or AUSCGIE) adopted on 30 January 2014. The principal forms of corporate/business organisations available in Guinea are as follows.
The principal sources of corporate governance requirements for companies in Guinea are as follows.
OHADA Uniform Acts
The Organisation for the Harmonisation of Business Law in Africa (Organisation pour l'Harmonisation en Afrique du Droit des Affaires, or OHADA) provides a comprehensive set of uniform acts that are applicable across its member states, including Guinea. The AUSCGIE is particularly significant. It governs corporate structures, management practices, and governance standards, ensuring a consistent legal framework throughout the region. The AUSCGIE includes detailed provisions on the formation, operation, and dissolution of companies, as well as specific requirements for corporate governance ‒ for example, the roles and responsibilities of corporate bodies, decision-making processes, and transparency measures.
National Laws
In addition to the OHADA Uniform Acts, several Guinean national laws and regulations influence corporate governance. Key among these is the Economic Activities Code, which regulates economic activities within the country, setting standards for corporate behaviour and governance. Additionally, the Ordinary Law L/2022/0010/CNT on Local Content promotes local participation in various industries, impacting corporate governance by encouraging companies to integrate local stakeholders and resources into their operations. These national laws complement the OHADA framework by addressing specific economic and social contexts within Guinea.
Company By-Laws
Companies in Guinea are also governed by their internal by-laws, which must align both with OHADA acts and national laws. These by-laws are crucial, as they detail the specific governance structure of each company, define the roles and responsibilities of directors and officers, and set out the rights and obligations of shareholders. By-laws ensure that each company adheres to governance practices that are tailored to its unique operational needs, providing a framework for internal management and decision-making that complements the broader legal requirements.
The corporate governance requirements for companies with publicly traded shares in Guinea are based on the AUSCGIE and are compulsory. The key requirements are as follows.
Board of Directors
Public limited companies (sociétés anonymes faisant appel public à l’épargne, or APE) must have a board of directors comprising at least three and no more than 15 members. This limit can only be exceeded in the case of mergers, where the board may include directors from the merged companies up to a maximum of 20 directors. New directors can only be appointed if the number of directors falls below 15 due to death, dismissal, or resignation. The articles of association may specify the exact number of directors within these limits.
Procedure and Publicity for Meetings
The procedure for convening and conducting meetings is governed by Articles 831 onwards of the AUSCGIE. Shareholders and the public (investors) must be informed through notices published in authorised legal journals or by sending a notice to each shareholder by registered mail, fax, or email, provided prior consent is given.
Capital Increase
Any increase in capital must be verified by credit institutions and comply with Articles 838‒839 of the AUSCGIE. This includes verifying assets and liabilities and ensuring the successful completion of the transaction within specified timeframes.
Financial Statement Publication
Publicly traded companies must publish their financial statements, the decision on the allocation of results, and consolidated financial statements (if applicable) in authorised journals within 45 days following approval by the Ordinary General Meeting (OGM). Semi-annual activity and results tables must also be published within four months following the first half of the financial year.
In 2023, corporate governance in Guinea was focused on Local Content Policies (LCPs) aimed at promoting inclusive resource-based development. Key legislative changes under these policies are as follows.
The law mandates that companies ensure at least 50% of managerial positions and 85% of the technical workforce are held by local Guinean nationals by the seventh year of operation. This initiative aims to integrate locals into high-level and technical roles within industries, thereby enhancing local engagement and decision-making. Companies are required to invest in comprehensive training programs focused on skill development and technology transfer for the Guinean workforce. The objective is to reduce dependency on foreign labour by boosting the skills and capabilities of local employees, thereby fostering a more self-sufficient and competitive workforce.
New regulations have tightened the process for obtaining work permits for foreign nationals. Companies must now provide concrete proof of the unavailability of local expertise before hiring from abroad. This measure is designed to prioritise employment opportunities for Guinean citizens and ensure that foreign labour is utilised only when absolutely necessary.
These legislative measures are critical in shaping the corporate governance landscape in Guinea for 2024. They not only aim to bolster local employment and capacity building but also enhance economic sustainability. By ensuring that the benefits of foreign investments and operations in local industries are more equitably distributed, these policies seek to create a more inclusive economic environment in Guinea.
In Guinea, companies face several key issues and requirements related to ESG reporting. These requirements are designed to promote sustainable development and ensure that companies operate responsibly. The main points are as follows.
Environmental Impact Assessments (EIAs)
Companies are required to conduct comprehensive Environmental Impact Assessments (EIAs) to evaluate the environmental and social impacts of their operations, especially for projects likely to have significant environmental effects. This process helps identify potential adverse impacts and plan appropriate mitigation measures.
Compliance With Environmental Laws and International Conventions
Companies must adhere to national environmental laws and international conventions to which Guinea is a party. This includes regulations on pollution control, waste management, and biodiversity conservation, ensuring that operations do not harm the environment.
Engagement With Local Communities and Stakeholders
Active engagement with local communities and stakeholders is mandatory. Companies must implement strategies to mitigate adverse social impacts, such as resettlement and compensation for affected communities. This fosters good relationships and minimises conflicts.
Regular ESG Reporting
Companies are expected to regularly report on their environmental and social performance. These reports should detail contributions to environmental conservation, social responsibility, and governance practices. Transparency in reporting helps build trust with stakeholders and the public.
Capacity Building
Companies are encouraged to enhance the capabilities of local institutions and communities in managing environmental and social issues effectively. This involves contributing to capacity-building initiatives, thereby ensuring sustainable development and long-term benefits for the local communities.
Monitoring and Evaluation
Continuous monitoring and evaluation of environmental and social impacts is crucial. Companies need robust mechanisms to ensure compliance with environmental standards and the effectiveness of mitigation measures.
Transparency and Accountability
Transparency in environmental and social governance is essential. Companies must ensure that their ESG activities are transparent, including the public disclosure of their ESG reports and impact assessments. This fosters accountability and informed decision-making.
The principal bodies involved in the governance and management of a company under OHADA corporate law vary depending on the form of the company. What follows is an overview of two common forms, the SA and the SARL.
In both the SA and the SARL, the governance structure ensures that there is a clear separation of powers and responsibilities among the different bodies.
What follows is a breakdown of the types of decisions typically made by each governing body in an SA and SARL, and the decisions reserved specifically for a particular body.
Any decision that requires a change to the company’s legal structure or by-laws, such as increasing shareholder liabilities, must be made by the EGM, but only with shareholder agreement. Special meetings convene shareholders of a specific class to approve or disapprove general meeting decisions that modify their rights, with changes becoming final only after special meeting approval.
In summary, in an SA, the General Assembly of Shareholders and the board of directors have distinct roles and reserved decision-making powers. The General Assembly of Shareholders handles routine operational and financial approvals, structural and legal changes, and specific shareholder class rights. The board focuses on strategic direction and operational oversight.
In an SARL, the General Assembly of Shareholders addresses major financial approvals during the AGM, while the managing director oversees daily operations and implements approved strategies. Each body’s decisions are reserved based on their roles and the legal framework provided by OHADA corporate law.
The decision-making processes of the General Assembly of Shareholders and the board of directors are as follows.
In summary, the decision-making processes of the General Assembly of Shareholders and the board of directors are structured to ensure effective governance and compliance with statutory requirements. The OGM focuses on routine corporate matters, requiring a quorum of one-fifth of the shares and passing resolutions by a simple majority. The EGM addresses significant changes, with a higher quorum requirement of a quarter of the shares and resolutions passed by a two-thirds majority. The board of directors meets regularly, with a quorum of at least half the directors, passing resolutions by a majority vote. This structured approach ensures that both routine and significant corporate decisions are made efficiently and with appropriate shareholder and director involvement.
The structure of the board of directors for SAs in Guinea is outlined in Articles 416 to 419 of the AUSCGIE.
Number and Appointment of Directors
An SA can have a board of directors composed of three to 12 members. These directors may or may not be shareholders. If required by the articles of association, directors must own a specified number of shares. The first directors are appointed either by the articles of association or by the constitutive general meeting. Subsequent directors are appointed by the OGM.
Merger Provisions
In the event of a merger, the number of directors can be temporarily increased to include directors from the merged companies, with the total number of directors not exceeding 24. This provision allows for a smooth transition and integration of the management teams of the merging entities.
The roles and responsibilities of various members of the board of directors in an SA are essential for effective governance and management oversight.
In summary, the chair of the board of directors, the general manager, and the board of directors each have distinct roles that contribute to the governance and strategic direction of the company. The chair oversees meetings and ensures management supervision, the general manager handles day-to-day operations within the strategic framework set by the board, and the board of directors provides overall strategic direction and oversight, including financial reporting and the establishment of specific committees for focused governance.
The composition requirements for boards of directors in an SA under OHADA law include specific provisions regarding the number of directors, the role of permanent representatives for legal entities, and the establishment of an audit committee, as follows.
In summary, the composition requirements for boards of directors in an SA under OHADA law emphasize flexibility, representation, and oversight. The number of directors ranges from three to 12, with a temporary increase allowed in case of mergers. Legal entities serving as directors must appoint a permanent representative, and companies that appeal to the public for savings must have an audit committee composed of non-employee directors. These requirements ensure effective governance and accountability within the company.
The appointment of directors in an SA is governed by specific rules. First directors are designated either by the by-laws or during the constitutive general meeting. Subsequent appointments are made by the OGM. Directors must meet any shareholding requirements specified in the articles of association, ensuring they have a vested interest in the company.
Directors can be removed at any time by the OGM. The board also has the authority to revoke the chair and the general manager at any time. However, removal without just cause may result in a claim for damages, highlighting the importance of having justifiable grounds for such actions.
There are specific restrictions on who may be appointed as a director. A person cannot hold more than five directorships in public limited companies within the same member state, with exceptions for controlled companies. This restriction ensures that directors can dedicate sufficient time and attention to each board they serve on. Additionally, the general manager must be a natural person and cannot hold more than three mandates in public limited companies in Guinea. This limitation helps prevent conflicts of interest and overextension of responsibilities.
In summary, the appointment and removal of directors and officers in an SA are regulated to ensure effective governance and accountability. First directors are designated by the by-laws or constitutive general meeting, while subsequent directors are appointed by the OGM. Directors can be removed by the OGM or by the board, with the latter able to revoke the chair and the general manager. Restrictions on appointments include limits on the number of directorships and mandates to ensure directors and officers can fulfil their duties effectively.
The rules and requirements concerning the independence of directors and potential conflicts of interest are designed to ensure transparency and integrity in corporate governance.
In summary, the independence of auditors and the prevention of conflicts of interest among directors are critical aspects of corporate governance. Auditors are required to maintain independence by avoiding activities and positions that could compromise their impartiality. Directors are prohibited from engaging in financial transactions with the company that could create conflicts of interest. Regulated agreements involving directors must receive prior board approval and be disclosed to shareholders through a special report by the statutory auditor, ensuring transparency and accountability in corporate operations.
The principal legal duties of directors and officers of a company encompass a range of responsibilities designed to ensure that they act in the best interest of the company and its shareholders while complying with legal and regulatory frameworks.
In summary, directors and officers have a range of legal duties that are critical for good corporate governance. They have the authority to bind the company within statutory limits and are liable for legal violations and management faults. Specific duties include ensuring the accuracy of financial statements and avoiding conflicts of interest. Directors must always act in the best interest of the company, prioritising its success and integrity over personal gain.
Directors have a primary duty to act in the best interest of the company as a whole. They must also consider the interests of shareholders and third parties in certain situations. Directors are responsible for their actions while performing their duties and must ensure that they act in the company’s best interest, showing loyalty and care in decision-making.
Shareholders have the right to take legal action on behalf of the company if directors fail in their duties. This allows shareholders to seek compensation or corrective measures when directors’ actions harm the company.
Directors can also be held personally liable to third parties for any harm caused by their actions, ensuring accountability and responsibility beyond the company’s internal affairs. Although the primary duty of directors is to the company, they must also consider the interests of shareholders and third parties. This broader consideration helps maintain trust and integrity in the company’s operations and governance.
In summary, directors owe their duties to the company, but they must also consider the interests of shareholders and third parties. This comprehensive approach ensures that directors act responsibly and accountably, balancing the interests of the company, its shareholders, and other stakeholders.
Directors’ duties breaches can be enforced through corporate actions initiated by corporate officers or shareholders. The consequences of such breaches include civil liabilities and criminal penalties.
Criminal penalties apply for serious offences, such as presenting false financial statements and misusing company assets. These penalties serve to deter misconduct and ensure that directors uphold their legal and fiduciary responsibilities.
In summary, breaches of directors’ duties are enforced through corporate actions initiated by corporate officers or shareholders. Shareholders can seek compensation on behalf of the company for any damage caused by directors’ misconduct. Directors who breach their duties face significant consequences, including civil liabilities and criminal penalties, with joint and several liability applying if multiple directors are involved in the breach.
In addition to breaches of fiduciary duties, there are other bases for claims or enforcement against directors or officers in Guinea, as follows.
In summary, directors in Guinea can face claims or enforcement actions for violations of legislative or regulatory provisions and misuse of company assets, in addition to breaches of fiduciary duties. These actions can result in civil and criminal penalties. Although there are mechanisms to limit directors’ liability, such as indemnification or insurance, directors remain individually responsible for their faults and cannot avoid liability for serious misconduct. This ensures accountability and adherence to corporate governance standards.
The process for approving the payment of remuneration, fees, or benefits to directors and officers is clearly defined to ensure transparency and accountability.
There are specific restrictions on the remuneration of directors to prevent excessive or unauthorized payments. Directors cannot receive remuneration beyond the specified limits set by the company’s bylaws or shareholder resolutions. Any decisions made in violation of these limits are considered null and void. This restriction helps maintain a fair and reasonable compensation structure and prevents misuse of company funds.
Failure to comply with the approval requirements for remuneration can have serious consequences, as follows.
In summary, the remuneration, fees, and benefits payable to directors and officers are subject to specific approvals and restrictions to ensure transparency and accountability. Managers’ and directors’ remuneration requires approval by shareholders, while the general manager’s remuneration is set by the board and requires additional approval if the general manager is also a director. Directors are restricted from receiving remuneration beyond specified limits, and any violations render the decisions null and void. Non-compliance can result in nullified decisions, legal and financial penalties, and reputational damage, emphasising the importance of adhering to these approval processes.
Companies are required to make specific public disclosures regarding the remuneration, fees, or benefits payable to directors and officers. The annual report must include detailed information on all forms of compensation paid to corporate officers. Additionally, any significant agreements involving directors, general managers, or major shareholders must be disclosed in a special report by the statutory auditor and approved by the General Assembly of Shareholders. These disclosure requirements promote transparency, accountability, and shareholder oversight in corporate governance.
Annual Report (Article 831-3)
A company must include detailed information on the remuneration and benefits paid to each corporate officer in its annual report. This encompasses the total amount of remuneration paid, any allocation of shares, debt securities, or other financial instruments, and other benefits provided such as bonuses, stock options, and retirement benefits. The annual report provides shareholders and the public with transparency regarding the compensation of directors and officers, thereby ensuring accountability and alignment with the company’s performance.
Special Report (Articles 438 and 441)
Any agreements between the company and its directors, general managers, or major shareholders must be disclosed in a special report prepared by the statutory auditor. This report is presented to the General Assembly of Shareholders for approval and includes details of any transactions or agreements that may present a conflict of interest, the nature and terms of these agreements, and any financial arrangements and benefits provided. The requirement for a special report ensures that all material transactions involving directors, officers, or major shareholders are transparent and subject to shareholder approval, protecting the interests of the company and its shareholders.
The relationship between a company and its shareholders is governed by several key provisions, which ensure that shareholders’ rights are protected and that they can actively participate in the company’s governance.
In summary, the relationship between a company and its shareholders is structured to ensure fair treatment and active participation in the company’s affairs. Shareholders are entitled to proportional dividends and pre-emptive rights on new share issuances, with any waiver of these rights requiring substantial consent. Shares are negotiable after the company is registered, and participation in general assemblies is secured through proper share registration.
Shareholders play a significant role in the governance of a company, primarily through their voting rights and participation in general meetings. However, their direct involvement in the day-to-day management of the company is limited.
Voting Rights
Shareholders have the right to participate in the voting on collective decisions, unless otherwise provided by the AUSCGIE. This enables them to influence major decisions such as the election of directors, approval of financial statements, and significant corporate actions such as mergers or acquisitions.
Proxy Representation
Shareholders can be represented by a proxy under certain conditions set by the AUSCGIE or the by-laws. This provision allows shareholders who cannot attend meetings in person to still exercise their voting rights and participate in decision-making processes.
Control of Majority Abuse
Collective decisions that constitute an abuse of majority power are void. Abuse of majority occurs when majority shareholders vote for a decision solely in their own interest to the detriment of minority shareholders without any justification of interest for the company. This rule protects minority shareholders from unfair treatment and ensures that decisions are made in the best interest of the company as a whole.
Decision-Making in General Meetings
Ordinary and extraordinary decisions are made in general meetings or by written consultation, with specific conditions for each type of company. Ordinary decisions typically involve routine matters such as the approval of financial statements and the election of directors. Extraordinary decisions, which require a higher quorum and majority, involve significant changes like amendments to the articles of association, capital increases or decreases, and mergers or dissolutions.
While shareholders have substantial influence through their voting rights and participation in general meetings, they do not directly manage the company’s day-to-day operations. They can vote on major decisions, be represented by proxies, and are protected against majority abuse. Decision-making is structured through OGMs and EGMs, ensuring that shareholders have a say in critical corporate matters while management retains the responsibility for daily operations.
Shareholder meetings are essential for the governance of a company, ensuring that shareholders can participate in decision-making processes. The rules governing these meetings include provisions for annual general meetings, the convening of meetings, quorum and voting requirements, and the conduct of meetings.
Annual General Meetings
AGM must be held within six months following the close of the financial year to approve the management report, inventory, and financial statements. The OGM must be held at least once a year. If the AGM is not held within this period, the public prosecutor or any shareholder can request the court to order the managers to convene the assembly.
Convening of Meetings
Meetings are convened by the board of directors or the general administrator. If they fail to do so, the meeting can be convened by the auditor, a court-appointed representative, or shareholders representing at least one-tenth of the capital. Notice of the meeting must be announced through a legally authorized journal or by registered mail, fax, or email, provided prior written consent is given.
Quorum and Voting
For an OGM, a quorum is valid if shareholders present or represented hold at least a quarter of the voting shares on the first call. No quorum is required on the second call, and decisions are made by a majority of the votes cast. For an EGM, a quorum is valid if shareholders present or represented hold at least half of the shares on the first call and a quarter on the second call. A third call may be made within two months, with a quorum of a quarter of the shares.
Conduct of Meetings
Meetings are chaired by the chair of the board, the president of the board of directors, or the general administrator. In their absence, the shareholder with the most shares present or the oldest shareholder chairs the meeting. Two shareholders with the most shares present or represented are appointed as scrutineers. An attendance sheet is maintained with the names and addresses of each shareholder present or represented, signed by all present at the beginning of the session. The sheet must be certified as sincere and true by the scrutineers, thereby ensuring transparency and order.
Shareholders in Guinea have several legal bases for claims against the company or its directors, as provided by the New Criminal Code of Guinea, particularly for offences that infringe on their rights or compromise the integrity of corporate governance. Sanctions for these offences include imprisonment, fines, and bans on exercising certain functions, thereby safeguarding shareholders’ interests and promoting responsible corporate conduct.
Obstruction of Rights
Obstructing a shareholder’s right to participate in a general meeting is a serious offence. It is punishable by imprisonment of one to five years and a fine of GNF20 million to GNF200 million. This provision ensures that shareholders’ rights to attend and vote at meetings are upheld.
Irregular Issuance of Shares
The irregular issuance of shares during a capital increase is punishable by imprisonment of one to five years and a fine of GNF20 million to GNF200 million. This measure aims to prevent unauthorised or illegal alterations to the company’s share capital, thereby protecting the interests of existing shareholders.
Providing Inaccurate Information
Providing inaccurate information in the context of a capital increase is also punishable by imprisonment of one to five years and a fine of GNF20 million to GNF200 million. Accurate information is crucial for shareholders making informed decisions, particularly regarding capital increases.
Failure to Appoint or Convene Auditors
Failure to appoint or convene auditors to a general meeting is punishable by imprisonment of six months to one year and a fine of GNF6 million to GNF50 million. Auditors play a key role in ensuring the accuracy of the company’s financial statements and overall transparency.
The AUSCGIE addresses disclosure and other obligations on shareholders in publicly traded companies, including in relation to the ultimate beneficial owners.
Shareholders are subject to the following disclosure obligations.
Although the AUSCGIE does not explicitly outline separate articles specifically addressing the disclosure obligations related to the ultimate beneficial owners in a detailed manner comparable to those addressing the general shareholders’ disclosure obligations, the requirements for transparency and accountability in Articles 830 and 832 implicitly contribute to disclosing beneficial ownership by enforcing the registration and disclosure of significant shareholdings and the identities of those in control.
These provisions collectively establish the obligations for shareholders and directors to disclose relevant information, ensuring transparency and enabling shareholders to make informed decisions about their investments and participate effectively in corporate governance.
Companies must adhere to various comprehensive annual and periodic financial reporting requirements to ensure transparency, accountability, and compliance with regulatory standards. Non-compliance with these requirements can lead to significant penalties, underscoring the importance of accurate and timely financial reporting to promote transparency and accountability. What follows is a summary of the key reporting obligations.
Annual Financial Statements
The board of directors or managers must prepare summary financial statements, including the balance sheet and the management report. These documents must be approved by the OGM within six months of the financial year-end.
The financial statements must be approved by the General Assembly of Shareholders. Failure to approve the financial statements can result in sanctions, including fines and potential dissolution of the company.
Semi-annual Reports
Companies are required to publish an activity and results table within four months following the first half of the financial year. This table should include Key Performance Indicators and financial results in order to provide an interim overview of the company’s performance.
Consolidated Financial Statements
Companies that control other entities must prepare and publish consolidated financial statements. These consolidated statements must be verified by statutory auditors and an attestation must be included in the publication to ensure their accuracy and reliability.
Filing with the Companies Registry
Companies must file their annual financial statements and the decision on the allocation of results with the Companies Registry within one month following approval by the General Assembly of Shareholders. This filing ensures that the company’s financial information is publicly accessible and up to date.
Companies are also required to publish legal announcements in authorised journals. These public notices include information about general meetings, changes in the articles of association, and other significant corporate events, ensuring that stakeholders are informed about important developments.
Penalties for Non-compliance
Companies that fail to comply with these reporting requirements may face various sanctions, including fines, court-ordered compliance, and potential dissolution. Directors may also be held personally liable for non-compliance, emphasising the importance of adherence to financial reporting obligations.
Requirements for disclosing corporate governance arrangements include the following.
These provisions collectively ensure that companies disclose their corporate governance arrangements, providing shareholders with essential information about the company’s governance structure, board composition, and the remuneration of corporate officers. This transparency helps shareholders make informed decisions and enhances corporate accountability.
Companies in Guinea are required to make several filings with the Companies Registry to ensure transparency and regulatory compliance. Non-compliance can lead to severe consequences, including court intervention to rectify the situation, joint liability for founders and management, and penal sanctions for obstructing audits or failing to communicate necessary documents. These measures enforce compliance and protect the interests of stakeholders.
The key requirements and consequences of failing to comply are as follows.
Incorporation and Corporate Changes
Companies must file their articles of association (by-laws) and any amendments with the Companies Registry, including any changes in the company’s structure. A declaration of regularity and compliance must be filed by the management, administration, and direction members when the by-laws are modified. These filings are published in the National Bulletin of the Trade Registry, ensuring public access to these records.
Annual Financial Statements
Commercial companies must file their annual financial statements with the Companies Registry within one month following their approval by the competent body. This includes the balance sheet, income statement, financial resources and usage table, and the annexed statement of the elapsed financial year. If the documents are not approved, a copy of the competent body’s decision must be filed within the same period. These financial statements can also be filed electronically and are publicly accessible once filed.
Public Notices
Legal announcements must be published in the official journal, authorised journals, the National Bulletin of the Trade Registry, or national daily newspapers with a valid subscription. Notices must include the company’s name, form, capital amount, registered office address, and registration number to ensure that significant corporate events are communicated to the public.
Consequences of Non-compliance
If a required formality is omitted or improperly executed and the company does not rectify the situation within one month of being notified, any interested party can request the competent court to appoint a representative to carry out the necessary formality. A copy of the court decision to rectify any formality must be filed with the Trade Registry. Founders and initial management members are jointly liable for damages caused by the absence of a mandatory mention in the by-laws or the omission/irregularity of a prescribed formality. Company directors or any person in the service of the company who knowingly obstructs the audits or controls of the auditors or refuses to communicate necessary documents will face penal sanctions, including fines and imprisonment.
The AUSCGIE specifies several provisions that address the requirements for appointing an external auditor in connection with a company’s financial statements and the key requirements governing the relationship between the company and the auditor. The appointment of an external auditor is mandatory for both non-public and public companies, with specific provisions for the number of auditors required. The auditor’s term, the process for appointment, and the extension of their mandate are well-defined to ensure continuous oversight. Auditors have extensive responsibilities, as described in this section.
Appointment of an External Auditor
Companies that do not publicly solicit savings are required to appoint one auditor and one deputy. Companies that do publicly solicit savings must appoint at least two auditors and two deputies. The first auditor and their deputies are appointed either in the statutes or by the constitutive general meeting. During the company’s life, the auditor and their deputies are appointed by the OGM.
The term of office for the auditor appointed in the statutes or by the constitutive general meeting is two fiscal years. If appointed by the OGM, the term is six fiscal years. The auditor’s term ends at the conclusion of the OGM that rules on the accounts for the second fiscal year if appointed initially, or the sixth fiscal year if appointed subsequently.
If the General Assembly of Shareholders fails to appoint an auditor, any shareholder can request the competent jurisdiction to appoint one. The mandate thus conferred ends when the General Assembly of Shareholders proceeds with the appointment. If the General Assembly of Shareholders fails to renew or replace the auditor at the end of their mandate, and unless the auditor expressly refuses, their mission is extended until the next OGM.
Obligations and Responsibilities of the Auditor
The auditor must express an opinion indicating that the financial statements are regular and sincere and give a true and fair view of the company’s financial position and results. The auditor reports to the OGM based on the probative elements obtained, either:
The auditor’s mission is to permanently verify the company’s values and accounting documents and ensure the conformity of its accounting to the applicable rules. The auditor verifies the accuracy and consistency of the information provided in the management report by the board of directors or general administrator with the financial statements and reports this to the AGM.
The auditor ensures that equality among shareholders is respected and, in particular, that all shares of the same category have the same rights. The auditor prepares a report detailing the checks and verifications performed, any modifications deemed necessary for the balance sheet and other accounting documents, and any irregularities and inaccuracies discovered. This report is made available to the chair of the board or the general administrator before the meeting that approves the accounts.
The auditor must report any irregularities and inaccuracies observed during their mission to the next AGM and disclose any criminal acts to the public prosecutor without incurring liability for this disclosure. The auditor and their collaborators are bound by professional secrecy for any information they come across in their functions.
The auditor can carry out checks and verifications at any time of the year and access any documents deemed necessary for their mission. They can be assisted or represented by experts or collaborators under their responsibility. The auditor’s fees are borne by the company. The fees are fixed globally, regardless of the number of auditors sharing them ‒ thus ensuring that the audit process is thorough and impartial.
Article 829-1 of the AUSCGIE outlines the requirements for directors concerning the management of risk and internal controls within a company. These requirements are aimed at ensuring effective governance and maintaining the integrity of the company’s financial and operational processes.
Audit Committee
Companies that seek savings under the AUSCGIE are required to establish an audit committee within the board of directors. The audit committee must consist solely of non-employee directors who do not hold positions such as chair of the board, CEO, or deputy CEO within the company. This set-up ensures the committee’s independence and objectivity. The board is responsible for ensuring the competence of the appointed directors by ensuring they have the necessary skills and experience to fulfil their duties effectively.
Primary Missions of the Audit Committee
The audit committee is responsible for examining the accounts and ensuring the appropriateness and permanence of the accounting methods used for the company’s consolidated and individual accounts. It also monitors the process of preparing financial information to ensure its accuracy and compliance with relevant standards. This includes verifying that financial statements provide a true and fair view of the company’s financial position.
Furthermore, the audit committee monitors the effectiveness of internal control and risk management systems, ensuring that the company has adequate controls in place to mitigate risks and that these controls are functioning effectively. The audit committee also issues an opinion on the auditors proposed for designation by the General Assembly of Shareholders, ensuring that they meet the necessary qualifications and standards to maintain the integrity and independence of the audit process.
Reporting to the Board of Directors
The audit committee regularly reports to the board of directors on the exercise of its missions and is required to inform the board immediately of any difficulties encountered in fulfilling its duties. This ongoing communication ensures that the board is kept informed of any issues that may affect the transparency and effective oversight company’s risk management and internal control processes.
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yvesconstanta@baofils.com www.baofils.comIntroduction
Corporate governance in Guinea has been undergoing significant transformation driven by legal reforms, transparency initiatives, and efforts to attract and secure foreign investment. Improving the business environment has been a key objective of the Guinean government, especially since the transition to a democratically elected government in 2010. This article explores the key trends and developments in corporate governance in Guinea, focusing on the legal framework, the role of various corporate bodies, and the impact of recent reforms.
With a population of approximately 12 million, Guinea has endured more than five decades of authoritarian rule and severe economic mismanagement. Since the transition to a democratically elected government in 2010, Guinea has been on a path towards stability and economic viability. The country is rich in natural resources, including a substantial portion of the world’s bauxite supply and the world’s largest untapped high-grade iron ore deposit. Despite these resources, Guinea has faced challenges related to corruption, inefficient governance, and under-developed infrastructure.
Legal Framework for Corporate Governance
Uniform Act on Commercial Companies and the Economic Interest Group
The primary legal framework governing corporate governance in Guinea is the Uniform Act on Commercial Companies and Economic Interest Groups (Acte Uniforme relatif au Droit des Sociétés Commerciales et du Groupement d'interet économique, orAUSCGIE), adopted by the Organisation for the Harmonisation of Business Law in Africa (Organisation pour l'Harmonisation en Afrique du Droit des Affaires, or OHADA). This act provides comprehensive regulations for various forms of business organisations including general partnerships (sociétés en nom collectif, or SNCs), limited partnerships (sociétés en commandite simple, or SCSs), limited liability companies (sociétés à responsabilité limitée, or SARLs), public limited companies (sociétés anonyme, or SAs), and simplified joint stock companies (sociétés par actions simplifiée, or SASs).
Corporate Bodies and Decision-Making Processes
General Assembly of Shareholders
The General Assembly of Shareholders is the highest decision-making body in a company. It meets annually for ordinary sessions and may also convene for extraordinary sessions as necessary.
The Ordinary General Assembly (Assemblée Générale Ordinaire, or AGO) is held within six months following the close of the financial year to approve financial statements and conduct regular business. Decisions are made based on majority voting, with each share typically carrying one vote. A quorum of a quarter of the voting shares is required on the first call and no quorum is required on the second call.
The Extraordinary General Assembly (Assemblée Générale Extraordinaire, or AGE) convenes for major decisions such as amending the statutes, approving mergers, or dissolving the company. It requires a quorum of at least half the shares on the first call and a quarter on the second call.
Notices are sent at least 15 days in advance and minutes of the meetings are recorded and signed by each attending or represented shareholder.
Board of directors
The board of directors is responsible for the strategic management of the company. Meetings are held as frequently as necessary and are typically convened by the chair. The board meets at least quarterly and a majority of board members must be present for a quorum. Decisions are made by majority vote, with the chair having a casting vote in the event of a tie. Minutes of the meetings are recorded and signed by the chair and another board member. The audit committee, composed of non-executive directors, is responsible for reviewing financial statements, monitoring internal controls, and assessing risk management.
Management team
The management team, led by the CEO or managing director (directeur général), is responsible for the day-to-day operations of the company. They make decisions during regular management meetings based on predefined policies or board directives. The strategies approved by the board are then implemented by the management team to ensure alignment with corporate objectives.
Statutory auditors
Statutory auditors play a crucial role in ensuring the accuracy and compliance of financial statements. Companies that seek public investment must appoint two auditors and two alternates for six-year terms. Auditors verify the company’s values and accounting documents, report on the accuracy of financial statements, and ensure equality among shareholders.
They report their findings to the General Assembly of Shareholders and are bound by professional secrecy.
Special committees
The board has special committees such as the audit, risk, and compensation committees that focus on specific issues. These committees comprise board members and sometimes external experts. They meet separately from the full board to discuss detailed issues within their scope. Based on their discussions and analyses, they make recommendations to the full board or the General Assembly of Shareholders for approval.
Recent Reforms and Trends
Recent reforms in Guinea have focused on improving transparency, accountability, and corporate governance practices.
Transparency and anti-corruption measures
The Guinean government has introduced several measures to enhance transparency and combat corruption. Notably, the new Mining Code commits to increasing transparency in the mining sector, requiring competitive tendering for contracts and publishing all mining contracts for public scrutiny. Mining companies must sign a code of good conduct and develop corruption monitoring plans.
Additionally, Guinea is committed to full membership in the Extractive Industries Transparency Initiative (EITI), aiming to improve transparency in the oil, gas, and mining industries.
Anti-Corruption Law
Guinea is dedicated to combating corruption, which negatively impacts its economic development. Corruption encompasses various practices and is not uniformly addressed in legal texts. To fulfil this commitment, the country enacted Law L/2017/041/AN on 4 July 2017 for the prevention, detection and punishment of corruption and related offences.
The adoption of the Anti-Corruption Law demonstrates the Guinean government’s intention to create a healthy legal environment conducive to improving the business climate. It promotes transparency and safeguards investors from potential corruption or related activities. It also enables victims of corruption to seek assistance from national and international anti-corruption bodies.
The Anti-Corruption Law of 4 July 2017 governs the legal and institutional framework for corruption in Guinea. It applies to acts of corruption and related offences attributable to:
To prevent corruption risks, the law categorises public agents and prohibits state entities from financing political or union activities. Institutions must annually report payments to the state and vice versa. The law also requires companies to disclose audit results revealing corruption to the public prosecutor.
The fight against corruption in Guinea involves the following bodies:
Local Content Policies
In order to promote inclusive resource-based development, Guinea has implemented local content policies. These policies include employment quotas, whereby companies are required to ensure that a significant percentage of managerial positions and technical workforce roles are held by Guinean nationals. Additionally, companies must invest in training programmes focused on skill development and technology transfer for the Guinean workforce. New regulations also prioritise local employment by tightening the process for obtaining work permits for foreign nationals.
Corporate Social Responsibility
The 2011 Mining Code of Guinea introduces the country’s initial legal structure for corporate social responsibility (CSR). This includes the requirement for mining companies to submit Social and Environmental Impact Plans for approval before commencing operations. Additionally, companies must adhere to a Code of Good Conduct, which entails refraining from corrupt activities and following EITI principles.
Investment Framework
The emergence of a new economic approach in Guinea focuses on attractiveness, efficiency, and the inclusion of the private sector in defining economic policies. This approach is demonstrated by recent legal, judicial and institutional reforms, including the adoption of the new Investment Code on 25 May 2015.
The Investment Code aims to promote the creation, expansion, diversification and modernisation of enterprises in various sectors, including agriculture, manufacturing and services. It also emphasises job creation, attracting foreign capital, and the transfer of technology.
The Investment Code applies to all economic activities across Guinea and is divided into two zones: Zone A (Conakry and surrounding areas) and Zone B (rest of the national territory). Both local and foreign investors are assured equal treatment, the ability to transfer profits abroad, and protection against expropriation except for public utility reasons with fair compensation. The Investment Code offers tax and customs exemptions during the installation phase and reduced tax rates during the production phase, with more favourable terms for investments in Zone B.
The institutional framework includes the Ministry of Private Sector Promotion, the Agency for the Promotion of Private Investment (Agence de Promotion des Investissements Privés, or APIP-Guinée), and the Technical Committee for Investment Monitoring (Comité Technique de Suivi des Investissements, or CTSI). Investors must comply with local laws, contribute to workforce qualification, prioritise local suppliers, and improve community living conditions. They are also required to submit annual activity reports.
Challenges and Future Outlook
Despite making significant progress, Guinea still faces challenges in corporate governance. Corruption remains widespread, and regulatory procedures are often unclear, leading to corruption and inefficiency. Guinea lacks sufficient infrastructure to support advanced commercial activities, with issues such as electricity shortages and poor road and rail systems.
The business environment continues to be affected by a history of political instability and insecurity, although recent efforts have been made to improve stability. Nonetheless, Guinea’s long-term economic outlook is more promising today than it was in past decades.
With its abundant natural resources and ongoing reforms, Guinea has the potential to achieve sustainable economic growth and improve corporate governance standards. The government’s commitment to transparency, local content, and CSR – along with international support – will be crucial in realising this potential.
Public-Private Partnership Policy
Guinea has enacted a law to regulate PPPs as part of its strategy to involve the private sector in major projects. This law replaces the 1997 BOT (Build-Operate-Transfer) Law and the public service delegation outlined in the 2012 Public Procurement Code. The objective of this new law is to establish the institutional framework and define the legal rules governing the awarding, control and regulation of PPPs in line with international best practices. It encompasses comprehensive contracts covering the financing, design, construction or transformation, maintenance, operation, or management of infrastructure.
PPPs include public service delegations, partnership contracts, and all agreements, regardless of their name or contractual form (including BOT-type contracts). PPP contracts can benefit from the advantages and exemptions provided in the Investment Code.
The PPP award procedure is based on principles of competition, freedom of access to public procurement, equal treatment of candidates, and transparency of procedures. The rules provide for the open tender procedure as a principle and, exceptionally, for direct negotiation. The tender procedure selects the service provider through a competition after retaining the most advantageous offer. The direct negotiation procedure involves the contracting authority directly negotiating with a private entity without competition. A “spontaneous offer” is when the private entity initiates a project and conducts preliminary and feasibility studies at its own expense.
Under the lease mode, the operator covers operating costs and is remunerated from sector revenues used for public service management. Concession allows the concessionaire to operate the public service at its own risk and collect user fees. The partnership contract allows the private operator to be remunerated by the public authority independently of user fees.
The implementation and monitoring of PPPs are overseen by several bodies:
Conclusion
Corporate governance in Guinea is experiencing major changes due to legal reforms, transparency initiatives, and local content policies. The AUSCGIE provides a strong framework for corporate governance, ensuring structured decision-making processes for different corporate bodies. Despite ongoing challenges, Guinea’s abundant natural resources and dedication to reform offer opportunities for sustainable economic growth and improved corporate governance. Continued efforts to combat corruption, improve infrastructure, and maintain political stability will be crucial in achieving these goals.
3rd Floor Apt No 5 BP: 1926
Immeuble Alima
Kaloum
Conakry
Guinea
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yvesconstanta@baofils.com www.baofils.com