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Direct Foreign Investment (DFI)

Measures on FDI in accordance with the new law of 3 August 2016 on the promotion of investment

Adopted by the two parliamentary chambers of the People's Democratic Republic of Algeria, the new Investment Code has been validated unanimously and updated the provisions of the Ordinance of August 2001 codifying the regulations governing the Investments in Algeria.

Repeal of Ordinance N° 01-03

The legal framework applicable to investments consists, henceforth, of Law 16-09 repealing the provisions of Ordinance No. 01-03 on the development of investments and the Law of Finance for 2016 "LF 2016".

However, the Finance Law 2016 governs certain provisions of the Code governing investments. There are three key arrangements, including:

Article 66 of the FL 2016: Extirpated from the Investment Code, this article governs the "49/51" rule and the compliance obligation imposed on companies’ majority owned by foreign investors;

Article 55 of the FL 2016: This Article governs the obligation to use local financing of investments;

Article 62 of the FL 2016: This article now governs privatization by opening the share capital of public economic enterprises.

It should be noted that certain provisions of Ordinance No. 01-03 were simply repealed, without being included in Law 16-09 or in the IF 2016, such as:

  1. The obligation for foreign investment to generate a foreign currency surplus in favor of Algeria throughout the duration of the project and ;
  2. The obligation to provide annual information on the shareholding of foreign legal entities holding shares in Algerian companies.

Main measures relating to foreign investments​

Law 16-09 clarifies and/or modifies certain provisions of the former legislation, namely:

  • The change in the guarantee for transfer of invested capital and the resulting income: its profit is now subordinated to a capital contribution in cash equal to or above minimum thresholds defined according to the overall cost of the project, the modalities of which will be fixed by regulatory framework. Capital reinvestment of transferable profits and dividends is allowed as external contributions qualifying for the transfer guarantee and contributions in kind are eligible for the transfer guarantee under certain conditions;
  • Maintaining the State’s pre-emptive right: Article 30 of Law 16-09 reminds the principle that all transfers of shares made by/or to foreign investors are subject to the State’s pre-emptive right. Law 16-09 refers to statutory instruments for the application. The former Article 4d of Ordinance No. 01-03, which lays down minimum conditions for the application of this right, is repealed, the State’s pre-emptive right seems difficult applicable as it is unless to remain refering to the previous practice ;
  • Details of the State’s repurchase rights: Any sale of assets of 10% or more of the shares of a foreign company holding a stake in an Algerian company that has benefited from advantages or facilities at the time of its establishment, gives rise to Information from the State Participation Council ("CPE"). Failure to comply with this formality or the reasoned objection of the CPE, within one month from the receipt of the information, confers on the State a right of repurchase to the maximum of the shareholding held by Foreign Company ceded in Algerian society. In the absence of any clarification as to its application, the State's right of redemption should not be able to be applied as it stands unless it refers to the previous practice;
  • The jurisdiction of the Algerian courts in the case of disputes between foreign investors and the Algerian State, unless bilateral or multilateral agreements or agreements providing for an arbitration clause exist (Ordinance no. 01-03 referred to competent jurisdictions).

Recast of incentive measures of investments​

After slightly modifying the definition of investment, Law 16-09 provides for a one-time registration of investments with ANDI in order to benefit from the advantages provided by this law.

  • ​Eligibility for advantages: Investments registered with ANDI that do not appear on the lists of activities excluded from the advantages (negative lists) benefit automatically from the advantages provided by Law 16-09 except:
  1. ​(a) Investments amounting equal to or greater than 5 billion dinars (approximately 45,000,000 €) and subject to the prior approval of the CNI;
  2. (b) Investments with particular interest to the national economy, subject to the derogation provisions of the investment agreement;
  3. (c) Activities that are subject to their own benefit regime (as in the case of hydrocarbons).
  • ​Three levels of advantages: Law 16-09 distinguishes between:
  1. ​(a) "common advantages" to all eligible investments;
  2. (b) "additional advantages" for privileged and / or job-creating activities;
  3. (c) "exceptional advantages" for projects of particular interest to the national economy.
  • ​​Nature of Advantages: Law 16-09 provides advantages of varying nature and duration depending on the qualification of the investment and the stage of the project’s completion (phases of realization and operation).

Transitional provisions​

Although Law 16-09 comes into force immediately, the rights and benefits acquired by investors remain governed by the laws under which they were de   clared and the statutory instruments of Ordinance No. 01-03 remain in force until the promulgation of the texts implementing Law 16-09.



National Agency of Investment Development ANDI​