Algeria

Algeria

Adoption of Complementary Finance Act for 2020

04 Jun 2020

After having been approved, on 10 May 2020 by the Council of Ministers, Law No. 20-07, of 4 June 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 4 June 2020. The Act confirms the changes introduced in the draft of the Complementary Finance Act for 2020. Relevant changes include the following: 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%.” 2. Abolition of the State preemption 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. However, the SFL 2020 introduces a prior authorisation requirement, 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.” 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).