Legal forms of business in Algeria

Keywords: legal form of incorporation, Algeria, limited liability company, permanent establishment, temporary group of companies, joint-stock company, Code of Commerce

Abstract

The article deals with the legislation of Algeria governing legal forms of incorporation for entrepreneurial activities. The legal forms of entrepreneurial activities which can be useful for Ukrainian business in Algeria have been particularly emphasized.

Due to the recent tendency of rapid changing of foreign economic relations it is highly relevant to explore new business possibilities and new markets. Despite the fact that the Arab countries were considered as a traditional market for the former USSR states, Ukraine has also a lot of economic interests in this region. At the same time, modern conditions require new approaches and strategies in the competitive environment and technological progress.

Algerian company law has much in common with the French legislation because of historical reasons. At the same time, the Algerian legislation has been adapted for the local environment where the state sector dominates the economy. Algerian laws regulate the following legal forms of business incorporation: sole proprietorship limited liability company, limited liability company, joint stock company, general partnership, limited partnership with shares, limited partnership, undeclared partnership, group, joint venture, liaison office, branch, permanent establishment.

Today a foreign investment in Algeria can only be implemented through a partnership with the national resident shareholding that represents at least 51% of the share capital. This provision of the Algerian legislation can be amended soon in order to attract more foreign investments into the country. Domestic ownership may include several partners. Therefore, at the moment a non-resident natural or legal person cannot register in Algeria certain forms of incorporation like a private limited liability company, branch etc.

If foreign companies are not yet ready for a close integration with their partners in Algeria it can be useful to start the cooperation trough permanent establishment or temporary group of companies. A local shareholder is not required for the above-mentioned legal forms of business.

In future, it could be better to find a more stable form of incorporation such as registration of a limited liability company or a group. In this case it is necessary to have a reliable local partner (s) shareholding at least 51%. This requirement of the Algerian legislation causes certain risks for foreign investors but there is a high possibility that it can be cancelled for nonstrategic sectors of economy in 2020. At the same time, the mentioned legal form allows to enjoy all the rights of the Algerian company, in particular, regarding the purchase of real estate, the implementation of import and distribution, participation in national tenders.

References

Trari Tani, M. (2007). Droit commercial international. Alger: Berti Editions [in French].
Bakirat, А. (2011). Mabadi Al-Kanun Al-tijari. Al-Jazair: Diwanu al-matbuat al-jami’ia [in Arabic].
Derder, L. (2009) Mini-encyclopédie de droit algérien. Alger: Berti Editions. [in French].
Zerouati, A. (2010). Al-Kanun al-khas al-jazairi elman wa amalan. Aljazair: Jamiatu Al-Jazair [in Arabic].
Code de commerce. (2007). Retrieved from http://www.joradp.dz/TRV/FCom.pdf [in French].
Belloula, T. (2017). Droit des sociétés. Alger: Berti Editions [in French]
Décret présidentiel n° 12-23 du 18 Janvier 2012 modifiant et complétant le décret présidentiel n°10-236 du 07 Octobre 2010 portant réglementation des marchés publics (2012). Retrieved from http://www.mincommerce.gov.dz/ fichiers12/dec1223fr.pdf [in French].
Code civil d’Algérie 2007 (2007). Retrieved from http://www.joradp.dz/TRV/FCivil.pdf [in French].
Ordonnance n 09-01 du 29 Rajab correspondant au 22 juillet 2009 portant loi de finances complémentaire pour 2009 (2009).
Retrieved from https://www.commerce.gov.dz/telecharger/reglementation/272/article [in French].
Sarah, B. (2019). Etude de la législation de l’investissement étranger en Algérie : la règle 51/49. Journal of International Management, Educational and Economics Perspectives. Retrieved from https://dergipark.org.tr/en/download/article-file/744268 [in French].
Guide investir en Algérie. (2019) Algiers: Ellipse [in French].
Code de commerce de la République Française. (2019). Retrieved from https://www.legifrance.gouv.fr/affichCode.do;jsessionid=
A1994DECEBE626509A10F2BEE7BDBD0E.tplgfr21s_1?cidTexte=LEGITEXT000005634379&dateTexte=20190919 [in French].
Loi n° 15-20 du 18 Rabie El Aouel 1437 correspondant au 30 décembre 2015 modifiant et complétant l’ordonnance n° 75-59 du 26 septembre 1975 portant code de commerce. (2015) [in French].
Ordonnance n° 96-27 du 28 Rajab 1417 correspondant au 9 décembre 1996, modifiant et complétant l’ordonnance n° 75-59 du 20 Ramadhan 1395 correspondant au 26 septembre 1975 portant code de commerce. (1996) [in French].
Code des Marchés Publics. (2013) Retrieved from http://www.joradp.dz/TRV/FMPublics.pdf [in French].
Décret présidentiel n° 10-236 du 7 octobre 2010 portant réglementation des marchés publics. (2010) Retrieved from
http://www.mincommerce.gov.dz/ fichiers10/dec10236fr.pdf [in French].
Arrêté du 26 Moharram 1437 correspondant au 9 novembre 2015 définissant les conditions et les modalités d’ouverture et de fonctionnement des bureaux de liaison non commerciaux. (2015) [in French].
Loi n° 16-09 du 29 Chaoual 1437 correspondant au 3 août 2016 relative à la promotion de l’investissement. (2016) [in French].
How to Cite
Seheda, I. (1). Legal forms of business in Algeria. Law Review of Kyiv University of Law, (2), 238-245. https://doi.org/10.36695/2219-5521.2.2019.41
Section
The legal system of Ukraine and international law, comparative legal studies