Corporate Law at Madagascar
Absolutely! Here’s an overview of Corporate Law in Madagascar:
Corporate Law in Madagascar
Madagascar’s corporate law framework governs the creation, management, and dissolution of companies and is influenced by the French civil law system, reflecting its colonial heritage.
Legal Framework
OHADA Treaty (Organization for the Harmonization of Business Law in Africa)
Madagascar is a member of OHADA, and thus its corporate laws are largely harmonized under OHADA’s Uniform Acts, particularly:
Uniform Act on Commercial Companies and Economic Interest Groups (Act on Companies)
Uniform Act on Securities Law
Local legislation
Madagascar has implemented OHADA laws but also maintains some local regulations relevant to companies.
Types of Companies
Under OHADA rules (applied in Madagascar), the main types are:
Société à Responsabilité Limitée (SARL) – Limited Liability Company
The most common company form for small and medium-sized enterprises. Liability limited to contributions.
Société Anonyme (SA) – Public Limited Company
Suitable for larger enterprises, can issue shares to the public, must comply with more stringent governance and disclosure.
Société en Nom Collectif (SNC) – General Partnership
Partners have joint unlimited liability.
Société en Commandite Simple (SCS) – Limited Partnership
Includes general partners with unlimited liability and limited partners liable only to their contribution.
Economic Interest Grouping (GIE)
A structure for collaboration between companies, not aimed at profit but to facilitate operations.
Key Features
Company formation:
Companies must be registered with the Trade and Personal Property Credit Register (Registre du Commerce et du Crédit Mobilier - RCCM).
Minimum capital:
SARL: Minimum capital requirement varies but can be as low as 1 million Ariary (~USD 0.25) under OHADA.
SA: Minimum capital typically 10 million Ariary (~USD 2,500), but subject to local rules.
Corporate governance:
SARL managed by one or more managers; SA requires a board of directors or a supervisory board plus a management board.
Financial reporting:
Companies must prepare annual financial statements and file them with the relevant authorities.
Foreign investment:
Madagascar encourages foreign investment, with no major restrictions on foreign ownership in most sectors.
Dispute resolution:
Commercial courts and arbitration (supported by OHADA rules) handle corporate disputes.
Regulatory Authorities
Ministry of Commerce and Industry
Supervises business registration and compliance.
OHADA Common Court of Justice and Arbitration (CCJA)
Oversees uniform application of OHADA laws across member states, including Madagascar.
Tax Authorities
Oversee corporate tax compliance.
Advantages of Madagascar Corporate Law
Harmonization through OHADA simplifies doing business across multiple African countries.
Flexibility in company structure with low capital requirements for SMEs.
Access to a growing market and strategic location for trade in the Indian Ocean region.
Legal protections for shareholders and creditors under OHADA framework.
Encouragement of foreign direct investment with incentives in key sectors.
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