Client Alert : Equatorial Guinea



What happened?

Equatorial Guineahas enacted Decree 72/2018(the “Decree”) which revises Decree 127/2004 (the “Old Decree”) and provides additional rules intended to foment and guarantee foreign investment. The Decree affirms that foreign companies operating in sectors other than the petroleum sector are excluded from the local ownership and management requirements. While requiring all national and foreign companies to bank locally.

What are the consequences?

As provided by the Old Decree, the share capital of companies and corporations operating in the petroleum sector and their subcontractors must include Equatorial Guinean individuals or companies exclusively owned by nationals.The Decree seeks to reinforce the government’s policy and commitment to enforce compliance with local ownership requirements within the petroleum sector.

National Ownership & Management: Petroleum Sector
  • The ownership of Equatorial Guinean nationals in companies registered by foreigners or by foreign companies established in Equatorial Guinea must constitute at least 35% of the share capital.
  • The national shareholders must be at least three.
  • The national and foreign shareholders must share the powers of planning, organisation, personnel integration, directly and control of the company, through the designation of executive powers to Equatorial Guineans.
  • Nationals shall have at least one third of the seats on the company’s board of directors.
Enforcement: Petroleum Sector
  • The public notaries are required to verify compliance with the above national ownership requirement before legalising the articles of association of the company.
Other Sectors
  • Foreign companies that wish to invest in Equatorial Guinea, in sectors other than the petroleum sector, ae not required to have local partnersand are excluded from the management related obligations.
Banking: All Sectors
  • Foreign and national companies that wish to invest in Equatorial Guinea must hold accounts with any bank registered in the country.
State and National Companies: Petroleum Sector
  • State and/or national companies in the hydrocarbons sector have preferential rights in the shareholding structure, including that of subcontractors.
  • There is no obligation to have additional national shareholders when a state and/or national company’s shareholding equates to 35%.
Infrastructure Projects
  • Foreign companies based outside Equatorial Guinea that are awarded a public works-contract must share 5 to 10% of their net profits with an Equatorial Guinean partner.

Draw up an implementation plan-with clear tasks for each stakeholder-to ensure compliance and avoid adverse repercussions on operations (inability to enter the market, disqualification from tenders and cancellation of company’s registration).

Does my company need to take any action?

Businesses that may be affected ought to contact their external advisors promptly to request a copy of the Decree and seek further advice with regards to its ramifications and implement measures to ensure compliance. As a minimum, businesses ought to consider the below measures:

Regulatory Mapping

Read and understand all the requirements imposed by the Decree.


Train employees and managers on the Decree.

Implementation & Accountability

Draw up an implementation plan-with clear tasks for each stakeholder-to ensure compliance and avoid adverse repercussions on operations (inability to enter the market, disqualification from tenders and cancellation of company’s registration).

Local Content Requirements
  • View the Decree in conjunction with other applicable local content rules.For instance, those imposed by the national content regulations passed by the Ministry of Mines and Hydrocarbons and those that may be contractual
  • Identifying potential national partners
  • Draw up a national partners’ strategy, assess potential partners (conduct proper due diligence and draw up and implement a due diligence remedial work plan), seek internal approvals of the partnership and train national partners on company policies and
  • Set up a structure that allows your company to protect its intellectual property, QHSE standards and other confidential and sensitive information.
  • Conduct an internal assessment with stakeholders to ascertain the financial impact, and more importantly consider any effecton pricing
  • Engage with local banks and
  • Review Contracts with clients and service providers to confirm compliance with local banking requirements.

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