TerraLex Cross-Border Guide to Cross-Border Guide to Business Investment in Africa

Under the OHADA (Organisation for the Harmonisation of Business Law in Africa) A foreign investor can set up several legal entities in Senegal, depending on the nature of the targeted activities. The most common business forms are: - Sole Proprietorship which is an economic unit involving the use of human and material resources for production or distribution, based on a pre-established organization.

• The Public Limited Company (SA) is a company in which the shareholders are liable for the company's debts only up to the amount of their contributions, and whose shareholders' rights are represented by shares. The Public Limited Companies are generally used for large-scale projects. The mode of administration is determined by the articles of association, which choose between: Public Limited Company with Board of Directors and Public Limited Company with Managing Director.
• A Limited Liability Company (SARL) is a company in which the partners are only liable for the company's debts up to the amount of their contributions, and whose rights are represented by shares.
• A Simplified Joint-Stock Company is a company set up by one or more partners, whose bylaws freely provide for the organization and operation of the company, subject to the mandatory rules of the Uniform Act on Commercial Companies and Economic Interest Groups (Uniform Act on Business Companies and General Interest Group (GIE).
• General Partnership is company in which all partners are merchants and are jointly and severally liable for the company's debts.
• A Limited Partnership is a company in which one or more partners who are jointly and severally liable for the company's debts, known as "associés en commandite", coexist with one or more partners liable for the company's debts up to the limit of their contributions, known as "limited partners”, and whose capital is divided into company shares.

It is however, for advisable for foreign investors to set up Public Limited Company or a Limited Liability Company.

These forms of Company are governed by the Uniform Act pertaining to the Commercial Companies Act and Genega Interest Group of January 30, 2014, and the Uniform Act on General Commercial Law of December 15, 2010

To register a company under Beninese law, the following steps must be followed: - Registration with the Registre du Commerce et du Crédit Mobilier (RCCM): This involves registering the company with the RCCM. The documents required for registration are the company's articles of association, a copy of the manager's identity document, a certificate of non-conviction for the manager, and a certificate of residence.

• Publication in a legal gazette: After registration with the RCCM, a notice of the company's creation must be published in a legal gazette.
• Registration with the Identifiant Fiscal Unique (IFU): The IFU is a unique tax identification number assigned to each company. This step is mandatory for all companies.
• Notification of CNSS employer number: The Caisse Nationale de Sécurité Sociale (CNSS) is responsible for managing social security schemes in Benin. All companies must notify their CNSS employer number.
• Issuing the business card: The business card is issued by the Benin Chamber of Commerce and Industry. It enables the company to carry out its commercial activities.

The procedures for setting up a business in Benin are relatively straightforward and can be completed in 6 stages over an average period of 9 days.

For the Public Limited Company, the minimum share capital is FCFA 10,000,000. For Limited Liability Companies, the minimum share capital is FCFA 1,000,000 FCFA. However, with the recent amendment, this minimum capital requirement for SARLs has been abolished. Henceforth, any interested party may set up his or her own company without the minimum share capital requirement.

For other companies, the law sets neither a minimum nor a maximum.

Exchange control rules are set out in regulation n°09/2002/ CM/WAEMU of September 26, 2022, relating to the freedom of capital transfers within WAEMU member states. This regulation sets out the conditions and procedures applicable to capital transfers between WAEMU member states and between these states and third countries.

Benin has no specific legal requirement for a certain number of locals (Senegalese nationals) to be directors of companies incorporated in Benin.

There is no legislation specifically obliging legal entities to comply with specific quotas based on demographic criteria such as gender, ethnic origin, or disability.

Periodic statutory reports must be filed with the clerk of the Commercial Court in which the company is registered. The reports are as follows: - Annual financial statements

• Annual reports
• Tax returns
• Value-added tax (VAT) declarations
• Employee reports
• Commercial and customs declarations

• Law n°97-17 of December 1, 1997, on the Labor Code.
• Decree no. 2006-1256 of November 15, 2006, setting out employers' obligations in terms of workplace safety.
• Decree no. 94-244 of March 7, 1994, setting out the organization and operation of workplace health and safety committees.
• National Interprofessional Collective convention of December 30th, 2019

Foreigners need work permits to work in Benin. There are several types of work permit for foreign investors and employees. Work permits are issued by the Ministry of Labor and Civil Service. The types of work permits available are as follows:

• Work permits for investors: This permit is intended for foreign investors wishing to set up a business or invest in an existing business in Benin.
• Work permit for workers: This permit is intended for foreign workers who wish to take up employment in Benin.

To obtain a work permit, you must complete an online form and provide the following documents:Medical certificate of fitness issued by an approved labor inspector

• Police record less than three months old
• Curriculum Vitae
• Photocopy of valid passport
• Application fee

Foreigners wishing to acquire land in Benin may encounter land law problems. Land laws in Benin are complex and can be difficult for foreigners to understand. However, foreigners cannot acquire rural land above a certain size. They can, however, exploit land through rural leases of up to five years, renewable. Foreigners may also encounter land ownership problems due to corruption and land fraud.

• Economic Partnership Agreement (EPA) between the European Union and West Africa (Benin)
• African Continental Free Trade Agreement
• United Nations Convention on the International Sale of Goods.
• Economic Community of West African States (ECOWAS) Trade Liberalization Scheme (ETLS) - the ETLS is a regional trade agreement designed to promote intra-regional trade and investment between ECOWAS member countries.
• World Trade Organization (WTO) agreements - Benin is a member of the WTO and is party to various agreements that promote international trade.

Benin is party to various agreements that promote international trade and investment.

To encourage investment in Benin, the government has implemented a series of reforms. These include the creation of a unified regulatory framework for public-private partnerships, a one-stop shop for business registration, and multiple tax incentives to support private investment. There are also tax breaks

The tax implications of opening and managing legal entities in Benin are governed by the General Tax Code (CGI) and the Investment Code. Legal entities are subject to corporate income tax (IS) and value-added tax (VAT).

Companies are required to file an annual tax return and pay corporate income tax on their profits. Tax rates vary according to company type, sales, and location.

There are also sales taxes. These are: VAT, Tax on Financial and Insurance Activities, Gambling Tax. The contribution on the sale of electronic communication services is also included in this category of corporate taxes.

All purchases with a view to resale, whether on a regular or occasional basis, are subject to VAT. Activities relating to the performance of industrial, commercial, agricultural, craft or mining activities are also subject to VAT. Lastly, operations relating to the performance of non-commercial activities, excluding salaried activities, are also subject to VAT.

Law No. 2016-25 of November 04, 2016, concerns the organization of competition in the Republic of Benin. This 92-article text aims to reinforce measures likely to contribute to the development of a more competitive environment

Benin recognizes alternative dispute resolution mechanisms. The country is a signatory to the New York Convention of June 10, 1958, on the Recognition and Enforcement of Foreign Arbitral Awards This means that foreign arbitral awards can be recognized and enforced by Courts in Benin.

Benin has promulgated LOI N°2020-02 du 20 Mars 2020 Portant Code Des Investissements au Bénin. According to Article 12 of this law: Without prejudice to the policy of promoting national entrepreneurship, legal entities of foreign nationality shall not receive less favourable treatment than that accorded to legal entities of Beninese nationality.

The government of Benin is actively working to improve the country's business environment and its attractiveness to foreign investment. Benin has created the Investment and Export Promotion Agency, replacing the three former structures, to facilitate investment applications. A new law to facilitate public-private partnerships has been enacted and should attract additional FDI.

Benin has taken steps to improve the business climate and boost investment in the country's private sector. Reforms have also been launched to make the economy more competitive. Here are a few promising sectors that offer the greatest chances of profitability for foreign investors in Benin:

• Renewable energy
• Agricultural
• Mining
• Agro-industry
• Energy

Benin is a developing country that has enjoyed sustained economic growth in recent years. Over the last few years, Benin has made some progress in the infrastructure sector, particularly in the road and port sectors, but there is still a long way to go in this area. Improving infrastructure could have a positive impact on foreign investment in Benin. Foreign investors are often looking for a business-friendly environment that includes modern, efficient infrastructure. Improved infrastructure could also help reduce production and transport costs, which could make Benin more competitive on the international market.

The risks associated with investing in Senegal include economic vulnerability, low business diversity, underdeveloped infrastructure, political and security concerns, regulatory challenges, and corruption. To mitigate these risks, investors should exercise due diligence, seek out local partners with a good track record, understand Senegal's business culture and obtain legal advice.