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Flash info Algeria | Financing of direct foreign investments or foreign investments in partnership: new opportunities

07/11/2013

Article 4 bis of order no. 01-03 of 20 August 2001, as amended and supplemented, relating to the development of investment, establishes the principle of the obligation of local financing of direct foreign investments or investments in partnership, except in the specific and exceptional case of the constitution of capital.

To ensure full compliance with this principle, the financial authorities instructed companies governed by Algerian law to integrate advances of funds granted after 26 July 2009 into their company share capital at the latest by 31 December 2010.

Decree no. 13-320 of 26 September 2013 introduces changes to the obligation of local financing and now authorises recourse to associated current accounts subject to fulfilment of the following conditions:

  • advances on current accounts may not, under any circumstances, be remunerated;
  • the time frame for the transfer of shareholders' contributions may not exceed three years from the date of receipt of the funds in the account.

After this period of three years, the current accounts must be incorporated into the company share capital.

Furthermore, in the event of recourse to local financing, the companies created in the framework of a direct foreign investment or a foreign investment in partnership may benefit from financial guarantees issued by the multilateral financial institutions. These guarantees may be remunerated and may give rise to a transfer.

Authors

Picture of Samir Sayah
Samir Sayah
Partner Africa Practice – Corporate, M&A
Algiers
Abdessemed-Mourad-Nabil
Mourad Nabil Abdessemed
Head of tax department
Algiers