- The payment behaviour in Senegal is poor, with DSO averaging 30 days, while payments are typically made within 60 days in practice.
- Late payments are susceptible to interest calculated at the legal rate of interest, without prejudice to any damages that may be incurred for other reasons.
- The Civil Law in Senegal is inherited from the French Civil Law, which also features case law and customary law adaptations.
Collecting in Senegal
Availability of financial information
Submission of the balance sheet through financial statements is mandatory for all companies in Senegal. LLC (SARL) and PLC (SA) submit their financial statements along with their income tax return to the tax office. However only financial statements of companies (PLC) listed on “Bourse Régionale des Valeurs Mobilière“ (BRVM) stock exchange are made public for investment purposes. PLC and LLC are not required by law to make their financial statements public. As a consequence, it is difficult to have reliable financial information on companies in Senegal.
A copy of the balance sheet is also submitted to the Central Bank of West African States (Banque Centrale des États de l’Afrique de l’Ouest, BCEAO), which provides a central view of payment incidents.
As companies in Senegal need to be registered in the Register of Companies, additional information can be obtained from the Unique Information Collection Centre (Centre Unique de Collect de l’Information, CUCI), which holds the national identification number of companies and associations, known as the Numéro d’identification National des Entreprise et des Associations (NINEA). The CUCI also records the financial statements of all registered companies, although not all companies submit the required information. Information provided by CUCI may not be up to date and financial statements are not made public.
As financial information cannot always be relied upon, trading history is often a better indicator of a company’s viability.
Main corporate structures
There are several types of companies in Senegal, but the most widely used are the SARL and the SA entities:
- Limited Liability Companies (Sociétés à Responsabilité Limitée, SARL) have seen a lot of improvements in order to facilitate the creation of such company type. The minimum capital required for a SARL is CFA 100,000 (approx. EUR 150) and the company can consist of a single partner (owning 100% of the shares) or several partners. SARL is the most common type of entity due to the flexibility they offer.
- Public Limited Companies (Société Anonyme, SA) can consist of either a General Director or a Board of Directors. SA entities are often used by larger companies due to the rules and protection that they offer to the shareholders. The minimum capital required is CFA 10,000,000 (approx. EUR 15,000). The company should appoint a statutory auditor from the association of statutory auditors and accountants. This type of company is more reliable provided that the statutory auditor is doing his job according to accounting standards.
- Another type of company, known as Sole Proprietorship, is the registration of a natural person to do business. This type of company is very popular in Senegal and is designed to help small businesses grow. However, many of them are not willing to develop into LLC or PLC. Although they should submit financial statements, the accounting documents required from Sole Proprietorship are less restrictive.
Although the French influence remains important, the business law in Senegal is based on OHADA Treaty which has been ratified by 17 African countries, most of which are French-speaking except for Bissau Guinea and Equatorial Guinea.
The legislation in Senegal, based on the original colonial legislation of the French Law and introduced in 1830, has evolved since the country became independent in 1960.
The judicial structure of Senegal consists of:
- The Courts of Instance (Tribunaux d’Instance), Courts of Great Instance and Tribunal of Commerce (since 2017), which are responsible for common law matters including criminal, civil, commercial, social and administrative law. They act in the first instance on cases which can then be brought before the Court of Appeal if the decision is contested.
- The Courts of Appeal (Cours d’Appel) in the Courts of Great Instance and Tribunal of Commerce can be considered as the court of second instance, ruling on disputes heard in a Court of First Instance where the outcome is appealed.
- The Supreme Court is the final appeal jurisdiction at the national level.
- The Common Court of Justice and Arbitration (Cour Commune de Justice et d’Arbitrage, CCJA) is the last resort in terms of all commercial area countries who are signed to the OHADA Treaty.
Days Sales Outstanding (DSO)
Late payment interest
Late payment interest is based on a legal interest rate without prejudice to any damages incurred for other reasons.
Debt collection costs
Where the court awards collection costs to the creditor, there is no fixed rate. Instead, the court will assess the costs incurred by the lawyer and/or the creditor and award costs accordingly.
Bank transfers as they are fast, secured, and supported by an increasingly developed banking network domestically and internationally. Checks are considered debt recognition titles and can be used to demonstrate that a debt is certain and undisputed. Checks can also be used for fast-track proceedings.
Letters of Credit are available, although not very popular. Direct payment by cash, check or bank transfer is usually preferred.
Any party can appeal the First Instance Court’s decision before the Court of Appeal within one month from the decision date.
Lodging an appeal
An appeal can be lodged against the Court of First Instance decisions within the time limit of one month from the decision date.
Locally, a final appeal is also possible before the Supreme Court within two months from the decision’s official notification via bailiff.
Enforcing court decisions
How long could legal action take?
How much could this cost?
Alternatives to legal action
Alternative Dispute Resolution methods (ADR)
Enforcing foreign awards
Foreign awards shall not give rise to any enforcement until after they have been declared enforceable. An exequatur shall be granted - irrespective the value of the claim - by the president of the high court of the location where the execution is to be continued.
Foreign arbitration awards can also be enforced in Senegal, in line with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958.
Restructuring the debt
Often a debtor company which has become insolvent goes bankrupt, but it can undergo a judicial restructuring process (‘redressement judiciaire’). The court will then look into the possibilities to restructure the insolvent party by giving it time to discuss a possible solution with all creditors involved. If this is not considered possible, the court will proceed to with bankruptcy proceedings.
Winding up proceedings
Bankruptcies are handled before the Tribunal de Grande Instance (TGI). Creditors must address the judge of TGI, which will then appoint a liquidator to assess the financial situation and conclude whether the debtor is really insolvent.
When a liquidator is nominated by the court, they become the sole manager of the company. All pending legal procedures are suspended.
The liquidator’s tasks are as follows:
- recover the company’s claims from its (third-party) debtors
- invite all creditors to lodge their claims (creditors must present their titles of claim)
- organize creditors’ meetings
- evaluate the assets and the debts
- liquidate/sell assets
- finalize the liquidation and submit a final report.
Creditors must register their claims within three months (90 days after the second publication of the decision of liquidation and appointment of liquidator -the gap between the two publications is 15 days) after the liquidator is nominated. In the event a claim is disputed by the debtor, the creditor will be requested to submit evidence supporting the claim.