Regulatory Alerts2005-07-18
Law No. 2005-58 of July 18, 2005 on Seed Funds
The Tunisian State enacted Law No. 2005-58 to establish seed funds as specialized securities investment vehicles designed to strengthen the equity of innovative projects prior to their effective startup phase. The legislation mandates that these funds deploy capital through direct equity participation, shareholder current account advances, and patent exploitation to complete technical studies and commercialization processes. It further defines unit holder redemption rights, fund liquidation triggers, manager qualifications under existing financial codes, and aligns operational rules with the Collective Investment Scheme Code while permitting specific statutory derogations.
1 LAW NO. 2005-58 OF JULY 18, 2005 ON SEED FUNDS1 In the name of the people, Having been adopted by the Chamber of Deputies, The President of the Republic promulgates the law whose text follows:
Article 1. – Seed funds are securities investment funds aimed at strengthening the equity of innovative projects before the effective startup phase. These funds primarily assist promoters in:
- exploiting invention patents,
- completing the technical and economic study of the project,
- developing the product's technological process before the commercialization phase,
- finalizing the financing structure. Seed funds are governed by the provisions of Chapter II and Articles 23, 26, 27, 28, 31, 32, 33, and 34 of Chapter III, as well as the provisions of Title III of the Collective Investment Scheme Code promulgated by Law No. 2001-83 of July 24, 2001, insofar as they are not derogated from by this law.
Article 2. – Seed funds commit to employing their assets in participating in the capital of companies that undertake to implement the projects foreseen by Article 1 of this law, or in securities granting access to their capital, as well as in the form of shareholder current account advances. The implementation details for this article are established by decree.
Article 3. – Holders of seed fund units may not request redemption before the expiration of the period set forth in the fund's internal regulations, and upon expiry of this term, unit holders may demand liquidation of the fund if their redemption requests, filed with the fund manager provided for in Article 4 of this law, have not been fulfilled within one year from the filing date.
Article 4. – (new) as amended by Decree-Law No. 2011-99 of October 21, 2011, amending legislation on venture investment companies and risk mutual funds and easing the conditions for their interventions. The manager of a seed fund is an investment company provided for by Article 31 of the Collective Investment Scheme Code promulgated by Law No. 2001-83 of July 24, 2001, or by Article 20 of Law No. 2005-96 of October 18, 2005, on strengthening the security of financial relations. This law shall be published in the Official Journal of the Tunisian Republic and executed as a law of the State. Tunis, July 18, 2005 Zine El Abidine Ben Ali
1 As amended by Decree-Law No. 2011-99 of October 21, 2011, amending legislation on venture investment companies and risk mutual funds and easing the conditions for their interventions.