Securing Your Investments in Cameroon: A Guide to the OHADA Legal Framework

As the Managing Director of Fonyam and Partners, I consistently engage with investors, both local and international, who are keen to tap into the vast potential of the Cameroonian and Central African markets. A recurring and crucial concern is always the same: “How is my investment protected?”

In an uncertain and high-risk global business environment, understanding the legal mechanisms for securing transactions is not just advisable—it is imperative. Prevention through robust risk management is invariably superior to seeking a cure through litigation after a default.

Fortunately, Cameroon, along with 16 other African states, is a member of the Organisation for the Harmonisation of Business Law in Africa (OHADA). This provides a modern, sophisticated, and uniform legal framework for secured transactions, offering significant protection to creditors and investors.

The cornerstone of this framework is the OHADA Uniform Act Organizing Securities (2010). This act categorizes security interests into three main groups, providing a versatile toolkit for securing obligations.

1. Personal Securities (Sûretés personnelles)

This form of security does not involve a specific asset but instead relies on the promise of a third party. It effectively adds another debtor to the transaction, enhancing the creditor’s chance of recovery.

Key instruments include:

· Suretyship (Cautionnement): A classic guarantee where a guarantor commits to fulfilling the debtor’s obligation if they default.

· Independent Guarantee (Garantie autonome): A powerful, first-demand commitment where the guarantor must pay a specified sum upon the creditor’s request, without contestation based on the underlying contract between the creditor and debtor.

· Autonomous Counter-Guarantee (Contre-garantie autonome): Often used in international transactions, this secures the obligation of a guarantor (like a bank) that has issued an independent guarantee.

2. Security Interests in Personal Property (Sûretés mobilières)

This category involves rights granted over the debtor’s movable assets—both tangible (equipment, inventory) and intangible (receivables, intellectual property). A key advantage under OHADA law is the ability to create these securities without dispossessing the debtor, allowing them to continue using the asset to generate income.

These securities include:

· Pledge (Nantissement): A flexible security interest that can be created over a wide array of assets, including:

  · Accounts receivable (créance)

  · Bank accounts

  · Partnership rights and securities accounts

  · Intellectual property rights

  · The entire business asset base (fonds de commerce)

· Pledge without dispossession (Gage sans dépossession): A specific type of pledge that allows the debtor to retain possession and use of the pledged asset.

· Vendor’s Lien on Business Assets (Privilège du vendeur de fonds de commerce): A specific statutory protection for the seller of a business who has not been paid in full.

· Right of Retention (Droit de rétention): The right to physically hold an asset belonging to a debtor until a related debt is paid.

3. Mortgages (Hypothèques)

For significant investments often involving real estate, the Act provides for mortgages over immovable property. A registered mortgage gives the creditor the right to seize and sell the property through a legal process to satisfy the debt upon the debtor’s default. The OHADA Act sets out clear rules for the creation, registration, and enforcement of these instruments.

Conclusion: Proactive Protection is Key

The OHADA Uniform Act provides a comprehensive and modern system for securing investments. However, its effectiveness depends on expert navigation—selecting the right combination of securities, ensuring proper drafting, and adhering to strict registration formalities.

At Fonyam and Partners, we regularly assist our clients in navigating this framework. We advise on the most appropriate security structures for their specific transactions and meticulously draft the necessary contracts to ensure their interests are robustly protected.

Don’t leave your investment to chance. Secure it with the full force of the law.