Company sales are a big milestone, which in most cases, is the climax of the long hard work and strategic development. This is not a simple handshake and the passing of money; this is a legal procedure, as defined by the Mauritanian Commercial Code and under the supervision of major regulatory organisations in Mauritania. You are either selling out as an entrepreneur who owns his own business or you are a shareholder in a bigger business and you need to exit, planning, due diligence and adherence to formalities are the key steps that should be taken.
Prepare and organise the sale
This process starts way before a customer is discovered. The initial one is internal alignment. The decision to sell has to be adopted in a multi-shareholder company in accordance with the statutes of the company and Mauritanian law. This normally entails a decision by the shareholders in a general meeting that involves a qualified majority. At the same time, an in-depth internal audit should be carried out in order to put the company in the spotlight. This includes the arrangement of all financial reports, tax returns, contracts, titles to property, employment records and licensing. It aims at producing a transparent and organised business, which enhances value and accelerates due diligence. You also have to also determine the basic outline of the sale. These two are the sale of the company shares (cession de parts sociales or cession d’actions) and the sale of its business-related assets (cession de fonds de commerce). The sale of the shares is normally easier for the seller since the seller sells the whole legal personality, the whole assets, liabilities, and contracts of the legal personality to the new owner. The asset sale on the other hand entails the process of identifying targeted assets and liabilities to be transferred which may be more complicated yet could provide tax benefits or enable the seller to hold on to some liabilities. It will have serious legal and tax consequences and it will be necessary to consult a local legal advisor at this early stage only.
Due diligence, valuation and the agreement.
When a serious buyer has been involved, the due diligence stage starts. This is thorough research done by the buyer on all facets of your company. They will investigate your economic well-being, legal adherence, the contractual agreement, the status of employees, and ownership of assets. The readiness at the first stage is very important. When there is a smooth due diligence process, this creates trust and this may stop renegotiations or a reduced offer due to risks discovered.
Along with due diligence, there is the imperative phase of company valuation. Although a purchaser will have his/her own evaluation, you need to have a market value on the valuation of a financial expert or auditor. The most widely used are the asset-based valuation, the discounted cash flow analysis, and the examination of the multiples of comparable transactions in the area. This has a good objective basis for price talks. The conclusion of this process is the drafting and signing of the Sale and Purchase Agreement (SPA). This is the fundamental legal document that binds the transaction. It should be carefully described including the price of purchase, the terms of payment, the representations and warranties made by the seller (guarantees about the condition of the company), terms precedent (such as the acquisition of regulatory approvals), and provisions, explaining how liabilities will be dealt with. This agreement in Mauritania is commonly notarised to be binding.
Formalities and final transfer
As SPA is signed, you are under the execution phase and this will entail several administrative processes in Mauritania. One of the first actions is to renew the registration of the company in the Trade and Personal Property Register (Registre de Commerce et du Credit Mobilier – RCCM). This is under the Business Formalities Centre (Centre de Formalites des Entreprises – CFE). You will be required to submit a filing of transfer with the notarised SPA, revised company statutes with the new shareholder(s), and evidence of publication of a legal notice. A legal notice should be published in one of the official journals, including the Journal Officiel de la République Islamique de Mauritanie. This announcement educates the community and, most importantly, creditors of the company on the change in ownership that gives them a legal time to potentially dispute the transaction. This should also be communicated to the tax (Direction Generale des Impots – DGI) and social security (Caisse Nationale de Securite Sociale – CNSS) authorities on the change in ownership. Securing the tax clearances to ensure that all requirements are paid till the date of sale is also a major protection measure to ensure the parties do not face the liability in future. Lastly, a practical handover takes place. These are the transfer of operational control, signature of a bank account, customer and supplier list, keys, and passwords. It is advisable to document this transition by way of a formulated handover protocol that will be signed by both parties to ensure that the requirements of the SPA have been met.
Conclusion
The process of selling a company in Mauritania is a complex one that requires one to be a strategic-thinking, well-prepared, and accurately-legalized seller of a company. It is a buy where the advice of skilful people, a lawyer, a tax consultant, and more often a broker is not a luxury, but a necessity. They may assist in structuring the deal in the best way possible, through the compulsory filing with the CFE and the RCCM, coordinate the creditor notification procedure, and make certain that all tax filings are straight. Through systemic steps of preparing the company, negotiating a good Sale and Purchase Agreement and finally clearing up the legal and fiscal formalities, sellers will be able to successfully exit. This gives assurance that the legacy of their operation will be handed over safely, the liabilities will be handled in good faith and the business will be handed over to its new owners.
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