Executive Decree No. 08-56 of February 11, 2008, on the conditions for exercising the activity of investment capital companies

OFFICIAL JOURNAL OF THE ALGERIAN REPUBLIC No. 09 7 17 Safar 1429 24 February 2008 Executive Decree No. 08-56 of 4 Safar 1429 corresponding to 11 February 2008 on the conditions for exercising the activity of investment capital companies.

The Head of Government, On the report of the Minister of Finance, Having regard to the Constitution, particularly its Articles 85-4° and 125 (second paragraph); Having regard to Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, on the securities exchange; Having regard to Ordinance No. 03-11 of 27 Joumada Ethania 1424 corresponding to 26 August 2003 on currency and credit; Having regard to Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006 on investment capital companies, particularly its Articles 8, 9, 14 and 27; Having regard to Presidential Decree No. 07-172 of 18 Joumada El Oula 1428 corresponding to 4 June 2007 appointing the Head of Government; Having regard to Presidential Decree No. 07-173 of 18 Joumada El Oula 1428 corresponding to 4 June 2007 appointing the members of the Government; Decrees:

Article 1. - In application of the provisions of Articles 8, 9, 14 and 27 of Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, cited above, the present decree aims to set the minimum share capital, the modalities of its holding, the conditions for granting and withdrawing the authorization to operate as well as the fiscal status of the investment capital company.

CHAPTER I MINIMUM SHARE CAPITAL AND MODALITIES OF ITS HOLDING

Art. 2. - The minimum share capital of the investment capital company is set at one hundred million (100,000,000) dinars.

Art. 3. - The subscription to the share capital of the investment capital company is carried out exclusively by means of cash contributions or the acquisition of shares.

Art. 4. - In accordance with Article 9 of Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, cited above, a natural person, their spouse and their ancestors and descendants may not hold together, directly or indirectly, more than forty-nine percent (49%) of the capital of the investment capital company.

DECREES

8 17 Safar 1429 24 February 2008 OFFICIAL JOURNAL OF THE ALGERIAN REPUBLIC No. 09

Art. 5. - In accordance with Article 18 of Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, cited above, a company or companies of the same group may not hold, directly or indirectly, more than forty-nine percent (49%) of the capital of the same company.

Art. 6. - The share capital of the investment capital company is issued and registered in an account with a duly authorized account keeper.

Art. 7. - The shares subscribed for the investment capital company are registered securities. The issuing company maintains a register of shareholders at its registered office. It is made available to shareholders and to the Commission for the Organization and Supervision of Securities Market Operations (COSOB).

CHAPTER II CONDITIONS FOR GRANTING AND WITHDRAWING THE AUTHORIZATION TO OPERATE

Art. 8. - The exercise of the activity of the investment capital company is subject to prior authorization from the Minister responsible for finance in accordance with Article 10 of Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, cited above.

Art. 9. - In addition to the documents cited in Article 10 of the Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, cited above, the application for operational authorization addressed to the Minister responsible for finance includes:

• a sworn statement attesting that the founders and managers of the investment capital company have not been subject to any of the convictions provided for in Article 11 of Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, cited above,
• an information note outlining the investment strategy and, in particular, the modalities of intervention and the investment periods envisaged.

Art. 10. - Upon receipt of the application for authorization to operate, the Minister responsible for finance issues to the founders who submit the application a dated and signed receipt attesting to the receipt of the application. The Minister responsible for finance transmits, for opinion, the authorization application to the Commission for the Organization and Supervision of Securities Market Operations (COSOB) and to the Bank of Algeria. The Commission for the Organization and Supervision of Securities Market Operations (COSOB) and the Bank of Algeria must send their opinion as well as all information deemed necessary within a period that cannot exceed forty-five (45) days.

Art. 11. - The withdrawal of the authorization to operate provided for in items 2 and 3 of Article 15 of Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, cited above, takes place sixty (60) days after notification of the formal notice delivered by the Minister responsible for finance to the company, indicating the reasons for the proposed withdrawal. The company may provide, within a period of sixty (60) days from the date of notification of the formal notice, any element of proof demonstrating its compliance with the conditions that motivated the withdrawal procedure. In the event that the company does not provide proof or when the proofs provided are deemed insufficient, the Minister responsible for finance pronounces the withdrawal of the authorization.

CHAPTER III FISCAL STATUS OF THE INVESTMENT CAPITAL COMPANY AND INVESTORS

Art. 12. - The benefit of the exemptions provided by the provisions of the first paragraph of Article 27 of Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, cited above, is subject to the commitment of the company to retain the funds invested in the companies for a period of at least five (5) years from the date of subscription or acquisition. The retention period is calculated by calendar year starting from 1 January of the year following that of the date of each subscription or acquisition.

Art. 13. - The provisions of Article 12 above relating to the taking of participation are also applicable for the benefit of the reduced rate of 5% of the tax on corporate profits.

Art. 14. - Investment capital companies operating in the form of venture capital benefit from the fiscal regime applicable to investment capital companies.

Art. 15. - The model of the commitment provided for in Article 12 above defining the practical rules for retention of participations and their control is fixed by order of the Minister responsible for finance.

Art. 16. - The present decree will be published in the Official Journal of the Algerian Democratic and Popular Republic.

Done in Algiers, on 4 Safar 1429 corresponding to 11 February 2008 Abdelaziz BELKHADEM.