OBG talks to Samy Laghouati, Managing Partner, Gide Loyrette Nouel Algeria

Interview: Samy Laghouati

What additional efforts are needed to improve the rights and regulatory environment for investors?

SAMY LAGHOUATI: It is necessary to clarify a number of legal provisions on investments, both in general and specifically for foreign investment. New statutory instruments could reinforce the legal environment of the investment regime and improve operational security.

How has the 2012 Complementary Finance Law changed the the investment code?

LAGHOUATI: Changes made by the 2012 Finance Law are minor as compared to those introduced by the previous complementary finance laws in 2009 and 2010. However, we should welcome the modifications it makes, including the amendment to Order No. 01-03 of August 20, 2001 concerning investment promotion. Article 63 of the 2012 Finance Law stipulates that the transfer or exchange of guarantee shares (provided for in Article 619 of the Commercial Code) between old and new directors of a company that does not exceed more than 1% of the value of the company’s capital can be freely performed without the obligation to respect the foreign investment limitation rules. This amendment of Article 4 of Ordinance 01-03 makes it easier for Algerian companies to restructure their boards of directors where the firm’s board is composed by foreign directors, as the latter can now freely transfer their guarantee shares to new directors without having to face rules limiting foreign ownership. Thus, the 2012 Finance Law allows for joint stock companies that were created before the new laws and whose shareholding have not been affected by foreign ownership limitation, to update their articles of association and restructure their boards of directors and shareholder registries. Nevertheless, it should be noted that the clarification made by the 2012 Finance Law on the transfer of guarantee shares does not address the issue of the state’s pre-emption right. Failing to provide for a specific exemption, any proposed guarantee share transfer must still be formally notified to the Ministry of Investment by an Algerian notary. A clarification on this point would help companies to efficiently implement the change of directors in their boards and secure the mandates of their directors without being threatened with revocation because of the risk for the latter of not purchasing the guarantee shares within the legal deadline of three months provided for in the Algerian Commercial Code. However, in practice, the state has regularly implicitly (by not replying to the notification with a period of 30 days) or expressly (by answering the notary that it will not exercise its right over the shares) refused to exercise its right of first refusal in the situation of guarantee share transfers project.

To what extent is intellectual property taken into consideration in the Algerian legal framework?

LAGHOUATI: Algeria already has a legal framework for the protection of intellectual property rights. Nevertheless, it is necessary to change the extent of protection and enforcement of these rights in line with how they are being undertaken among OECD countries. It is clear that the protection of intellectual property rights contributes significantly in stimulating research and innovation, especially in an economic environment that is competitive and globalised. Beyond strengthening policies that promote innovation, Algeria must contend with widespread counterfeiting. For these reasons, a more detailed look must be taken into supporting and protecting efforts in innovation and the rights that are in place to protect new products. These evaluations should be conducted in partnership with companies. However, it should be noted that the Algerian Customs service has made strong efforts to address these issues, especially with the obligations that were most recently conferred on it by the Ministry of the Interior with regards to the informal market. Public authorities carry out other monitoring activities as well, such as the initiative of the Ministry of Culture, which decided to destroy a large number of counterfeit CDs and DVDs that had been referred to it.