Takeover / merger regulations

Uniform Act on Commercial Companies and Economic Interests Groups originally adopted on the 17 April 1997 by the Council of Ministers for the Organisation for the Harmonisation of Business Law in Africa (OHADA Uniform Act) as amended on the 30 January 2014. 

Public offers / disclosure regulations

Uniform Act on Commercial Companies and Economic Interests Groups originally adopted on the 17 April 1997 by the Council of Ministers for the Organisation for the Harmonisation of Business Law in Africa (OHADA Uniform Act) as amended on the 30 January 2014. 

Current No. of listed companies

None

Listing rules

None

Regulatory body or bodies

The Council of Ministers for the Organisation for the Harmonisation of Business Law in Africa 

Exchange

Bank of Central African States (Banque des Etats de l’Afrique Centrale) (BEAC)

Principal legislation

Uniform Act on Commercial Companies and Economic Interests Groups originally adopted on the 17 April 1997 by the Council of Ministers for the Organisation for the Harmonisation of Business Law in Africa (OHADA Uniform Act) as amended on the 30 January 2014.

Regulation n°02/00/CEMAC/UMAC/CM of the 29th of April 2000 on Exchange Control

Corporate Governance Code

Uniform Act on Commercial Companies and Economic Interests Groups originally adopted on the 17 April 1997 by the Council of Ministers for the Organisation for the Harmonisation of Business Law in Africa (OHADA Uniform Act) as amended on the 30 January 2014. 

Corruption Perception Index score for 2017

17

Signatories to United Nations Convention Against Corruption (UNAC)?

No

UNAC ratified?

No

Signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?

No

Corruption Perception Index rank worldwide for 2017

171 

Signatories to the African Union Convention on Preventing and Combating Corruption?

Yes - signed the Convention on 30 January 2005

Ratified?

No

Structure of the court system

The court system in Equatorial Guinea is structured in the following manner:

Supreme Court

The Supreme Court is located in the capital, comprised of 13 judges appointed by the President of the Republic for a period of five years. From the 13 judges, the President of the Republic appoints a Chief Justice of the Supreme Court. 

The Supreme Court has the following chambers each of which comprises four judges:

• First Chamber of the Civil and Social Division;
• Second Chamber of the Criminal Division; and
• Third Chamber of the Administration Proceedings.

Provincial Courts

The Provincial Courts are located in the capital of each province with the jurisdiction of the respective region, each such court comprises of a President and eight judges appointed by the President of the Republic on the proposal of the Superior Council of the Judiciary. The courts hear appeals from first instance decisions.

Each Provincial Court has the following chambers:

• First Chamber which deals with civil, social and administrative matters; and
• Second Chamber which deals with criminal matters.

Courts of First Instance

• First instance courts located in the capital of each municipality, each dealing with civil lawsuits and registration as well as appeals filed against decisions of the Magistrates Court.
• Traditional Courts – located in each capital of the municipality, each is chaired by the Court of First Instance and three members and deals with matters related to family law (including marriage entered into in accordance with a traditional ritual).
• Peace Courts – make decisions in relation to geopolitics of each municipality and deals with claims below 300,000 F CFA, conciliation and mediation in civil matters.
• Trial Courts – located in each capital town, each such court deals with misdemeanour and other causes of actions for which the penalty does not exceed six months' imprisonment.

Specialist First Instance Courts

• Courts of Sentencing and Penitentiary Vigilance – located in the capital of each province, each such court deals with matters of prison surveillance.
• Labour Magistrate – located in the capital of each district, each such court comprises of a President and two judges appointed by the President of the Republic on the proposal of the Superior Council of the Judiciary.
• Family Courts and Guardianship of Minors – located in the capital of each district, each such court deals with matters concerning minors (of 18 years old or less) and overseas offences relating to gender violence.

Effectiveness of the court system

The courts tend to be effective. In Equatorial Guinea citizens can also bring certain matters (which would otherwise end up in court) directly to a governmental ministry such as the Ministry of Labour and Social Security. On labor matters for example, there is a legal obligation of prior conciliation/mediation before resort to courts. This has a positive impact on the judicial system as it provides another avenue to pursue and resolve legal matters.

Arbitration

Equatorial Guinea is a Member State of OHADA (Organisation for the Harmonisation of Business Law in Africa) and a signatory of the Procedural Rules of the Common Court of Justice and Arbitration under OHADA of 18 April 1996. Arbitration in OHADA Member States is governed by the Uniform Act.

Equatorial Guinea is not a signatory to The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Judiciary

From a group of recognised jurists the President appoints the Judiciary of the Supreme Court who remain in office for five years. The rest of the Judiciary is appointed by the President following recommendation from the Superior Council of Judiciary, but these judiciaries, in contrast to the former, do not have a specified term.

Perception of the local courts

In general, people tend to bring a claim to a court in order to enforce their rights. Generally, litigation tends to be fairly quick and usually not complicated.

Listed companies

Equatorial Guinea is a member of the Central African Economic and Monetary Community (CEMAC) and has no stock exchange or securities market. Capital transfers in the CEMAC region are not restricted, although restrictions on capital account transactions do exist with other countries.

Foreign investment rules

A majority of investment contracts are negotiated on an individual basis with the corresponding Ministry of the State. There is a proposed national law which requires a certain percentage of the workforce engaged on a foreign investment to be native and/or Equatoguinean. In some sectors, investments require public-private partnerships and/or associations with a governmental agency. The Chamber of Commerce provides information to and works with potential foreign investors. Therefore, potential foreign investors must work directly with the corresponding ministry in order to negotiate, and consequently execute, a contract. Substantial contracts may be referred to the President for approval.

On a more detailed basis, foreign investors must notify and register the enterprise or branch office. In addition, the following requirements are also necessary:

• notarisation of the statutes of the parent company;
• registration of the enterprise or branch at the Commercial register, registration of the branch office or enterprise in the Treasury & Budget Ministry and the Labour & Work Ministry;
• advertisement of the enterprise’s incorporation in the official bulletin including the information such as the address of the branch and/or enterprise;
• social objective of the enterprise's parent company;
• address of the enterprise's parent company;
• amount of social capital for the administration or parent company of the enterprise;
• list of the four shareholders with the highest number of shares in the parent company;
• statutes of the parent company in Spanish;
• copy of the passport of a local director, formation plan for Equatorial Guinean citizens;
• Business Plan;
• four photographs of the local representative for the branch office; and
• bank account and solvency certificate.

Legislation

Non-Competitive Commercial Practices. Decree Number 16/2001 of February 26 according to which non-competitive commercial practices are prohibited in Equatorial Guinea.

Impact of regulatory regime on business

N/A

Scope

The legislation covers the following areas:

• production of goods or services within the country;
• commercialisation of good of services in the country;
• hiring within the country;
• imports and exports of goods and services in the country;
• investment in any sector within the national economy;
• imposition of buying quotes and imposition of retail prices of wholesalers to retailers; and
• adulteration of weights, measurements, bills and brands.

Value added tax

VAT is imposed on the supply of goods or services. The standard rate is 15%.

Some products are subject to a reduced rate of 6%, others are exempt and others are subject to a special duty tax at a rate of 30%. Capital gains are subject to corporate tax of 35%.

Resident VAT payers must be registered. Non-resident VAT payers must appoint a solvent resident representative to be jointly responsible for the payment of VAT and the discharge of other VAT obligations.

Registered VAT vendors are required to file monthly VAT returns within 15 days from the end of the month. The tax due must be paid within 15 days following the filing of the VAT return.

Personal income tax

The head of a family is subject to PIT both on his/her own income and on the income of his/her dependent children and spouse, subject to the individual’s right to elect to be assessed separately. A married woman is assessed separately if she is separated from her husband or if her husband is not subject to tax in Equatorial Guinea.

Capital gains accruing to individuals as a result of company mergers are not subject to PIT if the new company has its registered office in Equatorial Guinea or another CEMAC state.

Failure/delay in paying PIT withheld is subject to a penalty of 25% plus 10% interest per month, capped at 100% of the total tax withheld.

Payroll tax and social security

There is no payroll tax.

Salaries are only subject to the Work Protection Fund and National Social Security Fund (INSESO) contribution.

Employees make a monthly contribution to INSESO and the Work Protection Fund. Employee contributions are 0.5% of the net salary to the Work Protection Fund and 4.5% of the gross salary to INSESO.

The employer contributions are 1% of the gross salary to the Work Protection Fund and 21.5% to INSESO.

Transfer pricing

There are no specific rules in Equatorial Guinea regarding transfer pricing. The CEMAC regulations confer a general rule on the prohibition of a direct or indirect transfer of income to an affiliated company by means of a decrease or increase in sale or purchase prices or interest on loans. Tax authorities can evaluate such indirect transfers by contrasting them with transactions of similar nature by other companies operating under normal circumstances in Equatorial Guinea.

Corporate tax

After a three-month period of activities and/or services which generate income, an entity will be considered by the Equatorial Guinean authorities as resident.
Only profits made in Equatorial Guinea are subject to Corporation Tax.

Corporation Tax at a rate of 35% is to be made on filing of the tax return within the first four months following the closing of the Fiscal Year by an Equatorial Guinean resident entity.

Export processing zone

The Equatorial Guinean government tends to introduce policies that are more activist in nature, as well as create a stable macroeconomic framework which entails commitment to trade openness and provides basic public goods that are necessary for growth.

Real property tax

Rural property tax of XAF100 is levied for each hectare or fraction thereof of the surface area of the property.

An urban property tax equal to 1% of 40% of the sum of the value of the land and the buildings constructed on it is imposed.

Interest

Interest paid to a non-resident entity is subject to 10% WHT on the gross amount.

Royalties

Royalties paid to a non-resident entity are subject to a 10% WHT on the gross amount.

Stamp duty

Stamp duty is levied on the execution of various documents at rates ranging from 1% to 10%.

Losses

Losses may be carried forward for up to three years (five years for companies in the oil & gas industry) but may not be carried back. Losses of one entity may not be transferred to another entity in the case of a corporate reorganisation. After three consecutive years of losses, companies will be de-registered from the Tax Registry (except new companies).

Technical service fees

Technical service fees are subject to a 10% WHT on the gross amount.

Thin cap regulations

There are no thin capitalisation regulations in Equatorial Guinea.