STEP-BY-STEP PROCEDURE FOR CREATING A SUBSIDIARY IN CAMEROON
STEPS FOR CREATING A SUBSIDIARY COMPANY IN CAMEROON
The foreign company that wishes to integrate totally the Cameroon market has to create a subsidiary that is effectively an OHADA law company, with its own identity. It must be registered in the RCCM.
This is a legally independent company and it is entirely subject to the OHADA law and local taxation.
A choice can be made between a corporation and a partnership. If the choice is a corporation, the subsidiary will be solely responsible for the business it deals. However, without a guaranty or other type of security provided to the subsidiary, the foreign company may lose its initial contribution in the capital of the subsidiary.
The share capital of the Cameroon subsidiary will be mainly owned by the foreign company (parent company), who may provide leadership, management and control through one or more persons.
In addition to the functions of the branch, the subsidiary performs the following purposes:
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- The subsidiary buys irrevocably products from the foreign company and then resells them. It operates in this case as an importer-distributor;
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- It participates in the definition of trade policy (choice and adaptation of the product, pricing, …) in accordance with the overall strategic and commercial objectives established by the parent company;
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- It implements marketing (prospecting, order entry, customer service, …), logistics (transport, storage and distribution of products) and administrative (customs clearance, invoicing, debt collection) activities particularly through its sales force that is usually recruited locally.
Such establishment gives the following benefits:
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- Market knowledge is very good with a permanent local presence in the market, provided however, that the subsidiary has sufficient autonomy to adapt to local conditions;
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- Control of the marketing policy is very good even though the subsidiary is a separate entity;
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- The subsidiary holding the Cameroonian nationality, the products of the foreign company are considered domestic and potential customers and partners feel secure about the sustainability of the enterprise in the market. Its credibility is enhanced;
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- It allows to simplify and to make profitable logistics, administrative, commercial and financial operations. The company can achieve economies of scale in distribution costs by streamlining the physical transport and storage and in so doing, reduce logistics and marketing costs. In addition, the customer service and the follow-up of bill collection are simplified;
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- The foreign parent company is responsible for the liabilities of the subsidiary until the amount it has invested in. It is not automatically fully engaged – as with the branch – by the actions of its subsidiary. Note however that through bonds, often required of the parent, the commitments may go beyond the initial capital;
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- It sometimes allows the company to bypass certain administrative barriers by charging a local VAT number, for example.
The procedure for creating a subsidiary in Cameroon are:
a. Preparation of documents
1. Request for criminal record and certified copies
2. Notarized tenancy/Taxed agreement
b. Application and notarized articles of associations
1. Notarized Association
2. Ensure the Notarized articles of association is duly taxed and stamped.
c. Any articles in the fields
1. Application for registration statutes
2. Collection of registered statutes
d. Company registration in the Trade Register (RCCM)
1. Application for registration in the RCCM
2. Collection of the extract from the RCCM
e. Publication in the official gazette or legal notices
1. Request for publication in the legal notices
2. Collection of papers containing the announcement
f. Collection of documents at the notary
1. Collection of registration documents at the notary
G. Opening a bank account
1. Opening a company bank account
2. Deposit of the subsidiary’s capital
3. Collection of the company’s bank account details
Article by CHUO ANGABUA JUNIOR
‘’The content of this article is intended to provide a general guide to the subject matter. We insist specialist advice be sought depending on your specific circumstance’’
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