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On 11 December 2019, the Algerian Government adopted the law 19-14, establishing the finance law for 2020 (the Finance Law, 2020) which has partially repealed the existing rule which provided that foreign investments can only be made under the framework of a partnership in which one or more Algerian shareholders must hold at least 51 per cent of an Algerian law company (colloquially known as the 51/49 Rule) for non “strategic sectors” and has entitled Algerian law companies to be entirely held by foreign shareholders.
However, the 51/49 Rule remained in force until the adoption of implementing regulations defining “strategic sectors”.
Definition of Strategic Sectors: The draft supplementary finance law for 2020 approved on 10 May 2020 by the Council of Ministers (the Draft Supplementary Finance Law) notably aims at defining the “strategic sectors” that will remain subject to the 51/49 Rule.
The Draft Supplementary Finance Law provides that the sectors that qualify as “strategic” are:
It should also be noted that the Draft Supplementary Finance Law maintained the 51/49 Rule for distribution activities.
The Draft Supplementary Finance Law expressly provides that “any other activity for the production of goods and services is open to foreign investment without any obligation of association with a local party”.
Non-Strategic Sectors: All other sectors, notably, the telecommunications, banking & insurance, construction and manufacturing of goods sectors will now be open to a 100 per cent of foreign shareholding.
Other Key Measures:
In addition, the Draft Supplementary Finance Law also provides, inter alia, for the two following important measures:
Major Step Forward: There is no complete visibility at this stage on the exact content of the final version of the signed supplementary finance law that should come into force in July 2020. However, should the Draft Supplementary Finance Law be confirmed in its current form, it will be a confirmation of a major step forward for Algeria in terms of opening up its market to foreign investors and lenders.
Should you require more information, please do not hesitate to contact Foued Bourabiat
Partner, ALN Algeria | Bourabiat Associés