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Home > Publications > Investment > Investment in Algeria > Supplementary financial laws for 2009 and 2010, main provisions regarding foreign investment in Algeria
Supplementary financial laws for 2009 and 2010, main provisions regarding foreign investment in Algeria
1. Obligation to comply with the rules of capital distribution in Algerian company provided for in the Additional Financial Laws for 2009 and 2010.
1.1 Rules of company's capital distribution as provided for in the Additional Financial Law 2009.
Article 58 of the Ordinance n°09-01 of July 22. 2009 constituting the Additional Financial Law for the year 2009, has added in the Ordinance n°01-03 of August 20. 2001, modified and completed, on the development of investment, the following provision: Article 4 bis:
” The foreign investments realized in the economic activities of production of the goods and the services are the subject, prior to their realization of a declaration of investment with the ANDI. Foreign investments can be realized only within the framework of a partnership of which the resident national shareholding represents at least 51 % of the share capital. The national shareholding can consist in the addition of several partners. Notwithstanding the preceding paragraph, the foreign trade activities can be carried by individuals and legal entities only within the framework of a partnership of which the national resident shareholding represents at least 30% of the share capital.”
1.2 Obligation to comply with the rules of company's capital distribution as provided for in the Additional Financial Law 2010 in cases of modification of the shareholdings of an Algerian company.
Article 45 of the additional financial law for the Ordinance n°10-01 of August 2010 constituting the additional financial law for the year 2010, has added to Article 4 bis of the Ordinance n°01-03 of August 20. 2001, modified and completed, on the development of investment, the following provision:
“Any change any change of registration in the trade register leads to prior compliance leads, leads, first, the compliance with the rules of company's capital as provided for (in Article 4 unique). This obligation does not apply if the modifications relate to the following situations:a share modification (increase or decrease) which does not induce a modification of the shareholding and the share capital distribution between the shareholders;the removal of an activity or the addition of a second activity;the modification of the activity following the modification of the activities nomenclature;the appointment of the general manager or directors of the company;the modification of the registered office”
2. Right of pre-emption” of the Algerian Sate or Algerian State entities as provided for in the Additional Financial Laws for 2009 and 2010.
2.1 In case of a direct transfer.
Article 62 of the Ordinance 09-01 of July 22. 2009 constituting the Additional Finance Law for 2009, has added an article 4 quinquies to the Ordinance n°01-03 of August 2001 on the development of the investment, according to which the Algerian State and the Algerian state companies, in case it transfer by a foreign partner of its participation in an Algerian company, have a right of first refusal.
This pre-emption right has been reiterated and précised in Article 46 Ordinance 10 of August 26. 2010 constituting the Additional Finance Law for 2010, which added and to Article 4 quinquies of the Ordinance No. 01-03 on the development of investment the following provision:
“Any transfer of a stake in Algerian company by foreign shareholders or for the benefit of foreign shareholders will be subject, under penalty of nullity, to the prior presentation of a certificate of waiver of the right of first refusal issued by the competent department of the ministry of Investment.
The request for a certificate of waiver shall be filed with the competent department by the public notary in charge of drafting the deed of transfer; the price and the transfer conditions shall be précised. In case of the exercising of the right of first refusal the price shall be established by an expertise.
In case of issuance of the certificate, the state will still have the right to exercise its pre-emption right during one year as provided for in the registration Code, if the price is insufficient.
The absence of reply at the end of the one month deadline will be regarded as a waiver of the right to exercise the pre-emption right, except when the amount of the transaction exceeds an amount determined by an order of the Ministry of investment; or when the transaction relates to shares of a company exercising activities defined by the same order.
This order will also define the modalities of recourse to the expertise as swell as the template of the above mentioned certificate.”
This provision is self explanatory.
2.2. In case of an indirect transfer .
Article 46 of the Ordinance 10-01 of August 26, 2010 constituting the Additional Finance Law for 2010 has added a provision (Article 4 quinquies) in the Ordinance 01-03 of August 20. 2001 on the development of investment that allows the Algerian State or Algerian State owned companies to have a pre-emption right on the shares of an Algerian company assigned by a foreign shareholder or to a foreign shareholder.
Article 47: “The total or partial transfers, abroad of shares or social parts of companies holding shares or social parts in Algerian companies, which benefited from advantages or facilities at their setting-up, are subordinated to the consultation of the Algerian State.The State or the public enterprises keep the right to buy back the shares or the social parts of the company concernedIn this last case, the repurchase price is fixed on the basis of an expertise in the same conditions as set forth in the preceding article".
To strengthen this right of purchase (repurchase) of the Algerian State, Article 48 of the Additional Financial Law for 2010 added to the Ordinance 01-03 an Article 4 septies according to which:
"The foreign corporations, owning shares in companies established in Algeria, have to communicate annually the list of their shareholders authenticated by the commercial register of the State of residence ".
The purchase price will be determined by expertise. The detail of the procedure of the purchase provided for in article 47 of the Additional Financial Law for 2010 has not yet been fixed; it may take several months before the application decrees will be released.
1.1 Rules of company's capital distribution as provided for in the Additional Financial Law 2009.
Article 58 of the Ordinance n°09-01 of July 22. 2009 constituting the Additional Financial Law for the year 2009, has added in the Ordinance n°01-03 of August 20. 2001, modified and completed, on the development of investment, the following provision: Article 4 bis:
” The foreign investments realized in the economic activities of production of the goods and the services are the subject, prior to their realization of a declaration of investment with the ANDI. Foreign investments can be realized only within the framework of a partnership of which the resident national shareholding represents at least 51 % of the share capital. The national shareholding can consist in the addition of several partners. Notwithstanding the preceding paragraph, the foreign trade activities can be carried by individuals and legal entities only within the framework of a partnership of which the national resident shareholding represents at least 30% of the share capital.”
1.2 Obligation to comply with the rules of company's capital distribution as provided for in the Additional Financial Law 2010 in cases of modification of the shareholdings of an Algerian company.
Article 45 of the additional financial law for the Ordinance n°10-01 of August 2010 constituting the additional financial law for the year 2010, has added to Article 4 bis of the Ordinance n°01-03 of August 20. 2001, modified and completed, on the development of investment, the following provision:
“Any change any change of registration in the trade register leads to prior compliance leads, leads, first, the compliance with the rules of company's capital as provided for (in Article 4 unique). This obligation does not apply if the modifications relate to the following situations:a share modification (increase or decrease) which does not induce a modification of the shareholding and the share capital distribution between the shareholders;the removal of an activity or the addition of a second activity;the modification of the activity following the modification of the activities nomenclature;the appointment of the general manager or directors of the company;the modification of the registered office”
2. Right of pre-emption” of the Algerian Sate or Algerian State entities as provided for in the Additional Financial Laws for 2009 and 2010.
2.1 In case of a direct transfer.
Article 62 of the Ordinance 09-01 of July 22. 2009 constituting the Additional Finance Law for 2009, has added an article 4 quinquies to the Ordinance n°01-03 of August 2001 on the development of the investment, according to which the Algerian State and the Algerian state companies, in case it transfer by a foreign partner of its participation in an Algerian company, have a right of first refusal.
This pre-emption right has been reiterated and précised in Article 46 Ordinance 10 of August 26. 2010 constituting the Additional Finance Law for 2010, which added and to Article 4 quinquies of the Ordinance No. 01-03 on the development of investment the following provision:
“Any transfer of a stake in Algerian company by foreign shareholders or for the benefit of foreign shareholders will be subject, under penalty of nullity, to the prior presentation of a certificate of waiver of the right of first refusal issued by the competent department of the ministry of Investment.
The request for a certificate of waiver shall be filed with the competent department by the public notary in charge of drafting the deed of transfer; the price and the transfer conditions shall be précised. In case of the exercising of the right of first refusal the price shall be established by an expertise.
In case of issuance of the certificate, the state will still have the right to exercise its pre-emption right during one year as provided for in the registration Code, if the price is insufficient.
The absence of reply at the end of the one month deadline will be regarded as a waiver of the right to exercise the pre-emption right, except when the amount of the transaction exceeds an amount determined by an order of the Ministry of investment; or when the transaction relates to shares of a company exercising activities defined by the same order.
This order will also define the modalities of recourse to the expertise as swell as the template of the above mentioned certificate.”
This provision is self explanatory.
2.2. In case of an indirect transfer .
Article 46 of the Ordinance 10-01 of August 26, 2010 constituting the Additional Finance Law for 2010 has added a provision (Article 4 quinquies) in the Ordinance 01-03 of August 20. 2001 on the development of investment that allows the Algerian State or Algerian State owned companies to have a pre-emption right on the shares of an Algerian company assigned by a foreign shareholder or to a foreign shareholder.
Article 47: “The total or partial transfers, abroad of shares or social parts of companies holding shares or social parts in Algerian companies, which benefited from advantages or facilities at their setting-up, are subordinated to the consultation of the Algerian State.The State or the public enterprises keep the right to buy back the shares or the social parts of the company concernedIn this last case, the repurchase price is fixed on the basis of an expertise in the same conditions as set forth in the preceding article".
To strengthen this right of purchase (repurchase) of the Algerian State, Article 48 of the Additional Financial Law for 2010 added to the Ordinance 01-03 an Article 4 septies according to which:
"The foreign corporations, owning shares in companies established in Algeria, have to communicate annually the list of their shareholders authenticated by the commercial register of the State of residence ".
The purchase price will be determined by expertise. The detail of the procedure of the purchase provided for in article 47 of the Additional Financial Law for 2010 has not yet been fixed; it may take several months before the application decrees will be released.