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On 11 September 2019, the Algerian Government adopted a preliminary draft of the Finance Law 2020 (the Draft Finance Law). The Draft Finance Law proposes a repeal of the existing rule that foreign investments can only be made under the framework of a partnership in which one or more Algerian national shareholders residing in Algeria must hold at least 51 percent of the partnership’s shareholding (colloquially known as the 51/49 Rule).
The Draft Finance Law provides that the 51/49 Rule will now only apply to “strategic sectors”. No details have been provided at this stage on the sectors that qualify as “strategic” but we presume that they may include companies operating in the oil & gas, telecommunications, water resources, banking and insurance sectors.
In addition, the Draft Finance Law also provides that the current prohibition on foreign financing will be relaxed to allow development finance institutions to finance “viable infrastructure projects”. The specifics that will need to be demonstrated by a “viable infrastructure project” have not yet been set out.
Whilst there is no visibility at this stage on the exact content of the final finance law that will be adopted on or around 31 December 2019, if the Draft Finance Law is confirmed in its current form it will be a major step forward for Algeria in terms of opening up its market to foreign investors.
Should you require more information, please do not hesitate to contact Foued Bourabiat.
Partner, ALN Algeria | Bourabiat Associés
The content of this alert is intended to be of general use only and should not be relied upon without seeking specific legal advice on any matter.