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Investment in Algeria - Complementary Finance Act for 2020

The “SFL 2020” has been voted by the Algerian parliament and published in the Official Gazette No. 33

09/06/2020

After having been approved, last May 10th by the Council of Ministers, Law No. 20-07, dated June 4th, 2020, setting forth the Complementary Finance Act for 2020 (the “SFL 2020”), has been voted by the Algerian parliament and published in the Official Gazette No. 33, on June 4th, 2020.
The policy to improve the business climate in Algeria and the opening of the country to foreign investments, initiated by the government, under the Finance Act for 2020, and specified within the draft of the Complementary Finance Act for 2020 (please refer to our Flash Info) is therefore confirmed.

  1. Abolition of the rule limiting foreign shareholdings up to 49% of the share capital of an Algerian company (commonly known as the 51/49 rule). This abolition does not apply to companies involved in (i) retail activities and (ii) activities qualified as “strategic”, which remain subject to a partnership with a national resident shareholding, up to 51%.”
     
    It should be noted that this SFL 2020 confirms the definition of strategic sectors proposed by the Algerian government in its draft of law, adopted last May 10th (please see our Flash Info).
     
    Therefore, except for retail or strategic activities, any other activities related to goods or services production is opened to foreign investments, without the obligation of a partnership, with a local partner.
     
  2. Abolition of the State pre-emption right and the State’s repurchase right, provided in Articles 30 and 32 of Law No. 16-09 of August 3, 2016, relating to investment promotion , that were applicable to any sale made by or to the benefit of foreign investors, as well as, any so-called “indirect” sale of the Algerian company, that has benefited from advantages or facilities at its establishment.
     
    It should, nevertheless, be emphasized that this SFL 2020 introduces a prior authorisation process, triggered by “any transfer of shares by foreign parties to other foreign parties, of share capital of an Algerian legal entity, involved in one of the strategic activities.

    Regulatory texts specifying the procedure for applying to this prior authorisation shall be adopted.
  3. Possibility to recourse to external financing: SFL 2020 abolishes the obligation to resort, as a general rule, to local financing.
  4. Abolition of the obligation for vehicle dealers to invest in an industrial and/or semi industrial activity or any other activity directly linked with the automotive industry sector, in order to maintain their car dealer license (initiated by article 52 of the finance law for 2014).

We remain at your disposal should you need any further information,

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