BOUCHEMLA LANOUAR & ASSOCIES - BL&A

Cabinet d’Avocats algérien – Algerian Law FirmA member of DLA Piper Africa

10 December 2014

ALGERIAN LEGAL FRAMEWORK FOR FOREIGN INVESTORS

1- Freedom of Investment

Foreign investors are free to invest in any sectors without any prior authorisation (except in some strategic sectors). The prior approval of the National Investment Council is no longer required. A prior declaration of investment is only required in order to be granted tax advantages by ANDI authority.

The investment vehicle can also be freely chosen. Except in some limited sectors, there is no minimum investment threshold required. Therefore, the investment vehicle can be either a limited liability company (SARL) or a joint-stock company (SPA). A branch can only be used in limited sectors (aviation, hydrocarbons,etc).

Foreign investors can open a representative office to prospect the Algerian market.

210 December 2014 BL & A, Member of DLA Piper Africa

2 - The 49/51 % rule

The general principle governing foreign investments is the that all investments should be carried out within the framework of a partnership in which a "national resident" shareholding holds at least 51% of the share capital. The "national resident" shareholding may be owned by several Algerian partners, whether state-owned or not.

This 49/51 Rule applies to any "participation in the share capital of a company", no matter whether the shareholding of the foreign investor relates to the creation of a new entity or of the acquisition of a participation in an existing Algerian company.

310 December 2014 BL & A, Member of DLA Piper Africa

3 - Funding of investment and repatriation rule

Direct foreign investments are mainly financed by the initial share capital injected in Algeria.

Once the local company is set up, the financing of its local investments has to be raised on the local financial market.

Except if it is governmental or multilateral funding, a local joint-venture cannot borrow money from foreign banks or financial institutions.

Foreign shareholders' loans granted to an Algerian company are also possible subject to some limited conditions.

Revenues created by foreign investment made through a capital contribution in foreign currency in goods production and services sectors can be transferred abroad by the local company for the benefit of its foreign shareholder(s). 

410 December 2014BL & A, Member of DLA Piper Africa

4 - Free management of a local joint-venture

Regardless of the form chosen for the investment vehicle, its management can be freely organised by the Algerian partner and the foreign investors.

The Chairman and the General Manager of a joint-stock company (SPA) or the single manager for a limited liability (SARL) can be foreigners, whether resident or not.

The Board of Directors membership can be agreed between the partners. The law does not provide for any restriction.

Shareholders agreements are widespread and are the main tool that is used to structure the management of a joint-venture ands the rules governing the assignment of shares.

510 December 2014BL & A, Member of DLA Piper Africa

5 – Other aspects of Algerian law

Liberty to choose the most relevant governing law

Algerian law authorises parties to a contract to choose a relevant law to govern their contractual arrangements.

So If a foreign law is relevant due to the nationality of one party, the place of signature or the main provisions of the contract, this foreign law can be chosen by the parties as the governing law.

Liberty to choose the most relevant jurisdiction for dispute resolution

Algerian law authorises parties to a contract to choose freely the venue for dispute resolution and recourse to foreign arbitration.

It is worth noting that there is a court of arbitration in Algiers (Centre de Conciliation et d’Arbitrage d’Alger).

610 December 2014BL& A, Member of DLA Piper Africa

6 – New measures encouring investment

Regulations no. 14-04 of 29 September 2014, fixing the conditions of transfer by Algerian economic operators of funds abroad for foreign investment purposes, has recently been enacted and details the procedure and documents required to allow an Algerian company to invest outside Algeria.

Many provisions of the Finance Law for 2015 (currently under discussion in the Algerian parliament) should introduce important modifications, notably:

A single rate for the corporate income tax: 23%;

An extension of the period during which an investment made for the production of goods can be tax exempted;

Increase of the threshold under which the CNI prior authorisation is required prior to an investment.

710 December 2014BL & A, Member of DLA Piper Africa

About BL & A law firm

Bouchemla Lanouar & Associés (BL&A), is a leading business law firm in Algeria managed by Me Fatima-Zohra Bouchemla and Me Mohamed Lanouar.

BL&A has been a member of DLA Piper Africa since 2013.

BL&A is composed of a team of twelve experienced lawyers fluent in English, French and Arabic. Many of these lawyers worked previously in leading international law firms.

BL&A offers a full legal service (advisory and litigation) to locally-based companies and foreign investors.

In addition to its team in Algiers, BL&A has the the support of a dedicated team of lawyers in DLA Piper's office in Paris, which includes partners and counsel with internationally recognized expertise in Energy & Infrastructure, Telecom, Finance and Health sectors. BL&A and DLA Piper teams work seamlessly on Algerian and related matters.

8

OUR CREDENTIALS

BL&A built its reputation working with a significant range of international groups and local major actors.

Our clients include many major industrial and finance companies, such as:

 

9

CONTACT

10

Fatima-Zohra BouchemlaPartner Mobile +213 (0) 661 57 44 17fzbouchemla@bla-dla.com

Mohamed LanouarPartnerMobile +33 6 30 11 69 16DZ + 213 6 66 07 99 51mlanouar@bla-dla.com

Arezki DjadourCounselMobile +33 6 52 48 24 70DZ : +213 7 822 10 364adjadour@bla-dla.com

CONTACT

Thank you for your attention

Visit our website: http://lawfirm-bla.com

1110 December 2014DLA Piper and BL & A

A member of DLA Piper Africa