In order to understand the concept of dematerialization of securities, it is substantial to define dematerialization. This consists in transferring information from a physical material (usually paper) to a numerical instrument using an information system. Dematerialization is a complete information process and not limited just to scanning of the document or making a numerical photograph of the document.
Therefore, Dematerialization of securities is the process through which physical securities such as share certificates and other documents are converted into electronic format and held in a Demat account.
The process of Dematerialization of securities has been implemented in the OHADA Law Jurisdiction. Section 744-1 of the Uniform act on commercial companies and economic interest group states that all securities, regardless of their legal form, must be registered into securities account opened in the name of their owner and transfers of securities are supposed to be done from one account to the other. Amongst the OHADA member states, Cameroon is the first to have implemented this reform which is an essential change in the field of Business.
Law No 2014/007 of 23rd April 2014 to set the terms of dematerialization of securities in Cameroon was passed by the Legislatives power followed by its implementing decree N° 2014/3763 of 17 November 2014 to set the conditions of application to the above-mentioned law. Since 23rd April 2016, all securities issued in Cameroon whether registered or bearer securities, whether unlisted or listed securities must be registered in a security’s account opened in the name of their owner are held either by the issuer of the securities or by a custody account holder approved to act as such. Article 13 of the law prohibits the issuance of securities in any other form in Cameroon and penalties are being stated for holders of existing securities who fail to present their securities registered in a security account.
Gabon has recently passed a similar legislation. We can be expecting a total application of dematerialization of securities in OHADA member states in the upcoming year