The legal foundations
To understand the many powers of the Board of Directors of public enterprises, one must turn to the legislative and regulatory framework. Command of the legal foundations makes it possible to define the organization, role, mission, responsibility and scope of the board's powers.
The OHADA legal framework
The Uniform Act on Commercial Companies and Economic Interest Groupings (AUSCGIE) forms the basis of commercial company law in the 17 member states. It provides the harmonized framework for the organization and functioning of the Board of Directors, mainly under the legal form of the public limited company.
Specific features of Beninese law for public enterprises
Although the AUSCGIE applies to public enterprises that have adopted the form of a commercial company, the public nature of their shareholding and mission requires adjustments and clarifications provided by Beninese law.
Law No. 2020-20 of 02 September 2020 on the creation, organization and functioning of public enterprises in the Republic of Benin and the Beninese Code of Good Governance for Public Enterprises are the key texts.
The Beninese State, as sole or majority shareholder, exercises strengthened control, often through the Ministry of Economy and Finance. As members of the deliberative body, the appointed directors act on behalf of the State as shareholder. Beninese law regulates appointments to ensure professional, ethical governance.
Role of the Board of Directors
Article 438 et seq. of the AUSCGIE defines the role and powers of the Board of Directors. The board is vested with the broadest powers to act in all circumstances on behalf of the company, within the limits of the corporate purpose. In this capacity, it:
- determines the orientations of the company's activity and ensures their implementation;
- carries out the checks and verifications it deems appropriate and may request any documents it considers useful.
Beninese texts, in particular company statutes (adopted by decree in the Council of Ministers), often specify the board's remit, emphasizing its mission of strategic steering and effective oversight of management. This mission unfolds along three main axes: strategic orientation, supervision of General Management, and accountability.
Strategic orientation role
The board is the body that designs and approves the general policy of the public enterprise. In this capacity, it sets the broad lines and the medium and long-term objectives and approves the key documents: the multi-year development plan, the budget, the company's organization chart, the procedures manual, and so on. The board may also create the committees or commissions needed to fulfil its mission.
Supervision of General Management
Supervision begins with the appointment and performance evaluation of General Management. The board appoints and, where appropriate, dismisses the Director General. In the Beninese context, the Council of Ministers makes the appointment, on the proposal of the supervising Minister, who is expected to have received the board's proposal.
The board also ensures that the Director General implements the general policy and the budget it has approved, within the framework of the laws, regulations and standards in force. It further examines the management accounts and the internal control and audit reports, in particular those of the statutory auditor.
Accountability
Accountability means taking stock of actions. This mission guarantees transparency of management. The board adopts the annual activity and management report submitted to it by the Director General. This report must account for the achievement of strategic objectives and the use of public funds.
Likewise, the board approves the annual accounts (balance sheet, income statement, and so on), which are then forwarded to the supervising Minister for approval in the Council of Ministers. For Beninese public enterprises, the board's deliberations must be transmitted to the supervising Minister for review of their legality and appropriateness.
The board's decision-making powers
The board is vested with the broadest powers to act on behalf of the company, within the limits of the corporate purpose and of the powers reserved to General Meetings (Article 419 of the AUSCGIE). In other words, the board is empowered to take any decision and perform any act in the interest of the company. It acts on the company's behalf and may bind it in all circumstances not legally or statutorily reserved to another body.
However, these broadest powers are not unlimited. They are bounded by two clear frontiers: the corporate purpose and the powers of the General Meeting. The board must act within the corporate purpose as defined in the company's statutes. Any act exceeding the corporate purpose is unenforceable against the company.
In the Beninese context, for public companies, this AUSCGIE principle applies with one major nuance: the presence of the State as sole or majority shareholder, acting through the supervising ministries. Subordination to the supervisory authority means that board decisions, even when taken within its broadest powers, may be subject to that authority's control. Deliberations become enforceable only after approval or non-opposition by the supervisory authority.
Similarly, in a State-owned company, the role of the General Meeting is performed by the supervisory authority, which thereby exercises the General Meeting's powers.
Ultimately, the Board of Directors of public enterprises has the power to manage and steer the institution in the broadest possible way, but must know that it is doubly constrained: by the AUSCGIE and by the supervisory authority.
One question remains: with regard to the composition of the boards of public enterprises in relation to their broadest powers, what should be retained in terms of effectiveness?