OHADA's Uniform Law on Security Interests

Harmonising business law across Africa



A look at OHADA's uniform law on security interests.



An introduction to OHADA

The Council of Ministers of the member states of OHADA, the pan-African organisation for the harmonisation of business law in Africa, recently formally adopted a new uniform law that simplifies the creation, perfection and enforcement of security interests, permits security to be granted directly in favour of a security agent and authorises cash collateral and security assignments over trade receivables.

OHADA and pan-African law

Created by treaty signed on 17 October 1993 in Port-Louis (Mauritius), OHADA is a pan-African organisation which has the aim of promoting regional integration and economic growth and to ensure a secure legal environment through the harmonisation of business law in the OHADA region. To achieve this end, OHADA has promulgated a number of Uniform Laws which, upon a member state’s adhesion, are directly applicable and override any local or national laws, whether promulgated prior or subsequent to such adhesion.

OHADA counts among its member states 16 sub-Saharan African jurisdictions: Benin, Burkina-Faso, Cameroon, Central African Republic, Chad, Comoros, Côte d’Ivoire, Congo (Republic),The Democratic Republic of the Congo, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Between 1997 and 2003, the Council of Ministers of the OHADA member states approved the adoption of Uniform Laws in the following areas:

  • General Commercial Law (1997)
  • Commercial Companies and Economic Interest Groups (1997)
  • Security Interests (1998)
  • Simplified Recovery Procedures and Enforcement Measures (1998)
  • Insolvency Proceedings (1998)
  • Arbitration Law (1999)
  • Accounting Law (2000)
  • Contracts for the Carriage of Goods by Road (2003).1

Many of these OHADA Uniform Laws were initially broadly inspired by similar legislation under French law due to the historical ties between the relevant jurisdictions and France (or, in the case of the Democratic Republic of the Congo, Belgium, the relevant laws of which were historically similarly inspired by French law).  Since that time, French law has been modified to take into account developments in international law and practice, and several of the analogous OHADA uniform laws have been similarly modernised in order to render the OHADA zone more attractive to international investment. The first laws to be modernised were the Uniform Law on Security Interests and the Uniform Law on General Commercial Law, both of which were adopted on 15 December 2010 and came into force on 16 May 2011.  Since that time, revised versions of the Uniform Law on Commercial Companies and Economic Interest Groups (adopted on 30 January 2014, came into force on 5 May 2014 but with a grace period of two years for existing companies to modify their Articles of Association to comply with the new law) and the Uniform Law on Insolvency Proceedings (adopted on 10 September 2015 and expected to come into force on 24 December 2015) have also been modernised.

The original OHADA Uniform Law on Security Interests

As is the case under French law, the OHADA Uniform Security Interest Law organised security interests according to the nature of the category of assets over which the security is sought to be created, applying different rules for the creation and perfection of security over each such asset class:

Gage de meubles corporels

A pledge over tangible moveable assets, requiring physical dispossession of the pledged assets either to the pledgee or to a third party designated mutually by the pledgor and the pledgee and, unless national legislation provides otherwise, signature of a written agreement subjected to local registration tax

Gage de meubles incorporels

A pledge over intangible moveable assets such as receivables, requiring signature of a written agreement subjected to local registration tax and formal notice (signification) of the pledge on the obligor of the underlying receivable

Nantissement des droits d’associés et valeurs mobilières

A pledge over shares in commercial companies, requiring signature of a written agreement subjected to local registration tax as well as filing of the security with the Registry of Commerce (often at a cost determined as a percentage of the amount of the secured debt)

Nantissement du fonds de commerce

A pledge over the business of a commercial company, i.e. a bundle of rights consisting of goodwill, lessee’s leasehold rights, logos and commercial names, patents, trademarks and other intellectual property rights, and business equipment (but not trade receivables, inventory (stock in trade) or ownership rights in real property), requiring signature of a written agreement subjected to local registration tax as well as filing of the security with the Registry of Commerce

Nantissement du materiel professionnel et des véhicules automobiles

A pledge of business equipment and/or motor vehicles used in the business of the pledgor, requiring formalities similar to the business pledge

Nantissement des stocks

A pledge of inventory (stock in trade), requiring formalities similar to the business pledge


Mortgages  over real property, requiring execution of a notarised deed unless otherwise permitted under national law, and registration in the real estate register.

In each case, enforcement of the security interest required either forced sale of the pledged asset at auction and satisfaction of the secured debt out of the proceeds thereof (with any surplus being remitted to the pledgor), or petition to a court for attribution of the asset to the pledgee following an evaluation by an expert designated by the court of the value of the pledged asset. Any contractual clause authorising either the sale or the attribution of the pledged asset in the absence of such formalities was considered to be null and void.

The new OHADA Uniform Law on Security Interests

Since the promulgation of the existing OHADA Uniform Law on Security Interests, the body of French legislation which served as its inspiration has undergone considerable modernisation, culminating in the promulgation of an Ordonnance in 2006 which significantly revamped the rules relating to ordinary security interests, and a law in 2007 creating the fiducie, a concept akin (but not identical) to the trust concept, permitting the outright transfer of property rights over assets in order to secure debts.2

On 15 December 2010, the Council of Ministers of the member states of OHADA agreed to adopt an amended version of the Uniform Law on Security Interests3 which significantly modifies the existing legal framework by streamlining procedures for the creation, perfection and enforcement of security.

The new OHADA Uniform Law on Security Interests brings the OHADA legal framework on security interests in line with the more recent developments under French law. In some cases it even goes beyond it, addressing issues unresolved by French legislation. Among the most important changes effected by the new OHADA provisions are the following4:

  • Any security interest or other guarantee of the performance of an obligation may be created, filed, administered and enforced by a financial or credit institution, whether domestic or foreign, acting as a security agent for the creditors (both present and future). In the event of the subsequent insolvency of the security agent, the security continues to be available to the underlying beneficiaries of the security and cannot be attached by the creditors of the security agent itself. This important change in the law means that it is no longer necessary for security in the context of syndicated loans to be granted separately to each of the individual creditors or for changes in the composition of the lending syndicate to require amendments to the security documents which could trigger additional registration or filing fees.
  • Security can henceforth be created to secure both existing and future debt (as long as the future debt is determinable) and can be created over both existing and future assets.
  • Physical dispossession of the pledgor with respect to tangible pledged assets is no longer required (although this method of perfection remains optional); perfection of such security may now also be accomplished without such dispossession by means of a filing at the Registry of Commerce. Specific provision is made, in the case of fungible assets, for the replacement of secured assets with identical assets, thereby permitting the “rolling over” of secured assets in such cases.
  • Where the pledged asset is a sum of cash or an asset that is quoted on an official exchange, or, in the case of any other tangible assets (except in the case of the business pledge), where the debtor is a professional, the parties may provide that the creditor may enforce the pledge by self-appropriation of the secured asset so long as the value of the asset at the date of the appropriation is evaluated by an expert (who can be designated mutually by the parties or designated by the court), with any surplus value being returned to the pledgor.
  • Pledges of intangible assets now expressly include not only receivables and company shares, but also bank account balances (this was generally understood to the be the case under the existing Uniform Law but the new law makes this particularly clear). Perfection of security over receivables no longer requires formal service of the security on the underlying obligor by signification; simple notice (or adherence by the obligor to the pledge agreement) is sufficient; however, in order to be enforceable against third parties, the security must be perfected by filing at the Registry of Commerce. Once a pledge of a receivable is notified to the obligor, such obligor must make payment of the receivable directly to the pledgee.
  • Pledges of shares continue to be possible, but it will henceforth also be possible to pledge “accounts of financial instrument” (comptes de titres financiers), ie, all of the securities and other financial instruments that are deposited from time to time in an account. Such security is created and perfected by a simple declaration of pledge signed and dated by the owner of the account in which the securities are deposited5. This important change permits considerable flexibility in respect of security interests over financial instruments since the composition of the securities account may change over time and no filing with the Registry of Commerce is required to perfect the pledge; however, in practice it is limited for the moment to securities and other financial instruments which are dematerialised and can therefore be deposited in such an account.
  • Filings of security interests for perfection purposes at the Registry of Commerce are simplified, it no longer being necessary to provide a comprehensive summary of the events of default which can lead to acceleration of reimbursement of the secured debt. Plans are also under way within OHADA to provide computerised access to filings at the Registry of Commerce, enabling creditors to determine more easily the current situation of security filed against a debtor.
  • Property rights over assets can be transferred by way of security for debt, ie, it will henceforth be possible to create security assignments over both tangible and intangible assets, provided that the secured debt is granted by a legal entity, whether domestic or foreign, habitually providing banking or credit transactions6. A security assignment of receivables is effective as against the underlying trade debtor on simple notification to such debtor; however, enforceability as against third parties requires filing at the Registry of Commerce. The new Uniform Law also expressly permits the creation of cash collateral by means of fiduciary transfer of a sum of cash by way of security to a blocked account in the books of a credit institution, going even further in this respect than the analogous French law provisions; such transfer is effective upon notification to the bank in question of the existence of the security interest; no filing at the Registry of Commerce is required.

A welcome addition

The new Uniform Law on Security Interests will be a welcome addition to the OHADA legislative corpus, providing increased certainty to debtors and creditors alike and greater flexibility both in the choice of security interests available and in the manner in which they are created, perfected and enforced.

  1. Certain areas of business law are not covered by OHADA-wide uniform laws, such as administrative law, forestry and mining law, insurance law and taxation and social security law. A draft of a uniform OHADA law on contracts prepared in concert with Unidroit has not been promulgated. Several OHADA member states are also members of West or Central African monetary unions and are subject to common legislation on exchange controls and to the monetary policy promulgated by regional central banks.
  2. Prior French legislation dating back to 1981 had already permitted the security assignment of professional trade receivables to credit institutions in order to secure credit made available by such institutions to the assignor.
  3. The Council of Ministers also approved an amended version of the Uniform General Commercial Law, as well as the promulgation of a Uniform Law on Co-operative Companies. However, a proposal to adopt a Uniform Labour Law was not passed.
  4. The new Uniform Law also makes certain changes to the law on personal guarantees, both sureties (cautionnements) and autonomous guarantees (garanties autonomes), which are outside of the scope of the present summary. As a more technical matter, the new Uniform Law clarifies the distinction between gage (pledge over tangible moveables) and nantissement (pledge over intangibles). Accordingly, the pledges over materiel professionnel, over véhicules automobiles and over stocks are henceforth referred to as gages, while the pledge over meubles incorporels is now referred to as anantissement.
  5. The pledgee may also request the institution in which the account is held to provide a certification of such pledge.
  6. Although the relevant introductory language to this section of the new Uniform Law is general and therefore covers all assets, the remaining language of the section deals essentially with security assignment of trade receivables and creation of cash collateral.