A de jure company is one that has been lawfully incorporated in full compliance with all applicable statutory requirements. A de facto company, by contrast, exists and operates in practice as a corporate entity despite its failure to satisfy all requisite legal formalities, typically acting in good faith. Whereas de jure status denotes strict legal compliance, de facto status connotes legitimacy derived from practical operation and conduct rather than formal legal recognition.
A de jure company is a duly constituted corporation that has fulfilled all incorporation requirements prescribed under OHADA law, whereas a de facto company (société de fait) is one that operates in practice without having completed the requisite legal formalities, yet is nonetheless accorded judicial recognition for specific purposes, principally to safeguard the interests of third parties.
KEYS ASPECTS OF DIFFERENCE BETWEEN A DE FACTO AND DE JURE COMPANY IN CAMEROON
- Legal Status and Formalities
De Jure Company (By Law): This company has been fully and properly incorporated, having duly registered its Articles of Association, obtained a RCCM (Register of Commerce and Personal Property) number, and completed registration with the relevant tax authorities. It possesses full legal existence and remains in good standing with all applicable regulatory bodies.
De Facto Company (Société de fait): This company has not been properly registered and fails to satisfy the statutory requirements prescribed under OHADA law. Such a situation typically arises where partners conduct themselves as though a duly incorporated company exists, yet have neglected to complete the requisite legal registration process.
- Legal Personality
De Jure Company: The company possesses full legal personality, constituting a distinct legal entity in its own right. As such, it is empowered to hold property, institute legal proceedings, and be subject to suit in its own name.
De Facto Company: Pursuant to Article 115 of the OHADA Uniform Act, a de facto company — being one that has not been formally registered — is expressly denied the attributes of legal personality.
- Liability of Partners/Shareholders
De Jure Company: As a general principle, shareholders of a Société à Responsabilité Limitée (SARL) or Société Anonyme (SA) bear liability for the company's debts solely to the extent of their respective capital contributions, thereby benefiting from the protection of limited liability.
De Facto Company: By virtue of their lack of full legal recognition, partners in a de facto company are frequently subjected to the rules governing general partnerships, rendering them jointly and severally liable for all debts of the enterprise, including with recourse to their personal assets.
- Recognition by the State
De Jure Company: Having complied fully with all applicable laws, the company's existence is beyond challenge by the state or any other authority.
De Facto Company: The state retains the authority to challenge the existence of a de facto company. Nonetheless, in order to safeguard commercial relations and protect the interests of third parties, OHADA law provides for the recognition of such entities, thereby ensuring that their participants are held accountable for their actions and obligations.
- Termination and Dissolution
De Jure Company: Termination is effected through formal dissolution and liquidation procedures as prescribed and regulated under OHADA law.
De Facto Company: A de facto company may be terminated at any time, and any interested party is entitled to apply to a competent court for its official recognition and, by consequence, its dissolution and liquidation, so as to settle all outstanding obligations owed to third parties.