Key principles for structuring effective security in a financing transaction
In financing transactions, security is only effective when it is properly selected, documented, perfected and capable of enforcement. The OHADA Uniform Act Organising Securities provides a harmonised framework covering personal guarantees, movable security interests and mortgages across OHADA Member States.
The first priority is to identify the secured obligations and collateral precisely. The security documents should clearly define the principal debt, interest, fees and enforcement costs, as well as any future or contingent obligations intended to be covered.
The lender must then select the appropriate security package. Depending on the transaction, this may include suretyships, autonomous guarantees, pledges over tangible assets, charges over receivables, bank accounts or shares, retention of title arrangements, and mortgages over real estate.
Proper perfection is equally essential. Where required, security interests must be registered with the Trade and Personal Property Credit Register (RCCM), notified to relevant third parties or supported by possession or control of the collateral. Failure to complete these formalities may affect the security’s enforceability and priority against other creditors.
Before closing, lenders should also verify the borrower’s ownership of the assets, corporate authority, existing encumbrances and compliance with applicable local formalities. In syndicated financing, an OHADA security agent may be appointed to constitute, manage and enforce security for the benefit of the lenders.
Finally, the enforcement strategy should be considered from the outset. A strong security package must remain effective not only during the life of the loan, but also in the event of default or insolvency.
Effective security under OHADA law therefore requires more than signed documents: it demands careful structuring, timely perfection and continuous monitoring.