Law No. 2018-20 of April 17, 2018 on Startups

No. 32 Official Journal of the Tunisian Republic — April 20, 2018 Page 1189 Laws Law No. 2018-20 of April 17, 2018 on Startups (1) . In the name of the people, The Assembly of Representatives of the People having adopted, The President of the Republic promulgates the law as follows: Chapter I General Provisions Article 1 - This law aims to establish an incentive framework for the creation and development of Startups based notably on creativity, innovation, and the adoption of new technologies, achieving high added value and competitiveness at national and international levels. Chapter II On the Definition and Creation of Startups Art. 2 - For the purposes of this law, a Startup is considered any commercial company formed in accordance with prevailing legislation that has obtained the Startup label in compliance with the conditions set forth in this law. Art. 3 - The Startup label is granted to a company meeting the following conditions:

1. Its existence does not exceed eight (8) years from its incorporation date,
2. Its human resources, total assets, and annual turnover do not exceed ceilings set by government decree,
3. Its capital is held by more than two-thirds (2/3) by natural persons, venture capital investment companies, risk collective investment funds, seed funds, and any other investment bodies under prevailing legislation or by foreign Startups,
4. Its business model has a strong innovative dimension, notably technological,
5. Its activity has high economic growth potential. The Startup label entitles the company to incentives and encouragements provided by this law during its validity. The Startup label's validity cannot exceed eight (8) years from the company's incorporation date.

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(1) Preliminary works: Discussion and adoption by the Assembly of Representatives of the People in its session on April 2, 2018. Art. 4 - Any natural person wishing to create a Startup may apply for the Startup label when meeting conditions 4 and 5 of Article 3. In this case, a Pre-label is granted for six (6) months. Obtaining the Startup label is subject to company incorporation and compliance with other conditions of Article 3 before the Pre-label expires. If the natural person wishing to create a Startup is an employee, their public or private employer cannot oppose the company's incorporation. Art. 5 - The competent services of the Ministry responsible for the digital economy perform the following tasks:

1. Receiving and sorting Startup label applications while verifying that company requests meet conditions 1, 2, and 3 of Article 3 above.
2. Managing the Electronic Startup Portal as the single point of contact for administrative procedures specific to Startups,
3. Supporting Startups and monitoring the benefit of incentives and advantages granted under this law. The Minister responsible for the digital economy may delegate all aforementioned tasks to an entity with the necessary technical competencies, pursuant to a convention concluded for this purpose. Art. 6 - A technical committee named the "Labeling Committee" is established under the Ministry responsible for the digital economy, which rules on applications meeting conditions 4 and 5 of Article 3. The Pre-label and Startup label are granted by decision of the Minister responsible for the digital economy, based on a conforming opinion from the Technical Committee. The committee's powers, organization, and functioning are set by government decree. Companies that have submitted a Startup label application, met conditions 1, 2, and 3 of Article 3, obtained funding from venture capital investment companies, risk collective investment funds, seed funds, or other investment bodies under prevailing legislation, and concluded relevant conventions with the Ministry responsible for the digital economy are deemed to have satisfied conditions 4 and 5 of Article 3 without needing to refer to said Committee. The conditions, procedures, and deadlines for granting the Startup label are set by government decree.

Page 1190 Official Journal of the Tunisian Republic — April 20, 2018 No. 32 Art. 7 - The Startup must, during the label's validity:

1. Meet growth targets regarding human resources, total assets, and annual turnover, as set by government decree.
2. Maintain accounting in accordance with prevailing legislation and regulations, and submit its financial statements to the Ministry responsible for the digital economy by March 31 of the year following the relevant fiscal year.
3. Notify the Ministry responsible for the digital economy of any changes concerning elements cited in Article 3 within one month from the date of such change. The Startup label is withdrawn for non-compliance with the above first paragraph, based on an official report and after hearing the Startup's legal representative or, where applicable, its proxy, recorded in a corresponding report. The absence of the legal representative or proxy does not hinder the withdrawal procedure. The label is also withdrawn from companies ceasing to meet Article 3 conditions.
4. The Startup label is withdrawn by decision of the Minister responsible for the digital economy, based on a conforming opinion from the Technical Committee. The withdrawal procedure is set by government decree. Chapter III Encouragements for Startup Creation Art. 8 - Any Startup promoter, public agent or private company employee, may benefit from a startup creation leave for one year, renewable once. Up to three (3) founding shareholders working full-time in the relevant Startup may benefit from this right. The public or private employer cannot oppose the departure of an agent benefiting from a startup creation leave. However, the agent must obtain prior written authorization from private employers with fewer than one hundred (100) employees. The conditions and procedures for obtaining the startup creation leave are set by government decree. Art. 9 - A public agent or private company employee benefiting from a startup creation leave retains their contractual and regulatory relationship with their employer, without receiving remuneration or benefits related to their original position. They are also not entitled to paid leave during the startup creation leave period. Upon expiration of the startup creation leave, the public agent or private employee has the right to reinstate in their original position or corps, even if temporarily overstaffed. This overstaffing is resolved at the first vacancy arising in the relevant corps or position. The promoter has the right to voluntarily terminate the startup creation leave during its period. The procedures for terminating the startup creation leave are set by government decree. Art. 10 - Any Startup promoter may benefit from a Startup grant for one year. Up to three founding shareholders working full-time in the relevant Startup may benefit from said grant. A founding shareholder of multiple Startups cannot benefit from more than one Startup grant in the same period. Amounts allocated for the Startup grant originate from resources of the National Employment Fund, donations, and all other resources provided by prevailing legislation and regulations. The grant's value, as well as its terms, conditions for granting and management, are set by government decree. Art. 11 - Any newly graduated person legally eligible for employment programs under prevailing regulations, who creates a startup, retains the right to benefit from these programs for a maximum of three (3) years from the Startup label grant date. Any newly graduated person legally eligible for the employment programs mentioned in the above paragraph, who concludes an employment contract with a Startup, has the right to choose between immediate enjoyment of these programs or deferral. In case of deferral, they may avail themselves of these programs after the employment contract with the Startup expires, within a maximum period of three (3) years from the contract start date. Art. 12 - The Ministry responsible for the digital economy handles deposit formalities and covers patent registration fees for Startups at the national level. It also handles deposit formalities and covers international registration fees within available resources, respecting justice and equity rules. This occurs after preliminary evaluation and opinion from the body responsible for industrial property. The Ministry may be assisted by scientific research experts to aid in the evaluation process. The cited resources originate from contributions of the Communications and Information Technology Development Fund, donations, and all other resources provided by prevailing legislation and regulations. Chapter IV Financing and Incentives for Startups Art. 13 - Notwithstanding Articles 12 and 12-bis of Law No. 89-114 of December 30, 1989, promulgating the Personal Income Tax and Corporate Tax Code, the following are fully deductible within the limit of income or profit subject to tax:

No. 32 Official Journal of the Tunisian Republic — April 20, 2018 Page 1191

• revenues or profits reinvested in subscribing to the initial capital or its increase for Startups,
• revenues or profits reinvested in subscribing to the capital of venture capital investment companies, or placed with them as risk capital funds, risk collective investment funds, seed funds, or other investment companies under prevailing legislation, which commit to using at least 65% of paid-up capital or any amount made available to them or issued shares, in participating in Startup capital or subscribing to interest-free convertible bonds or other categories of equity funds without interest, issued by Startups. The conditions to benefit from the advantages mentioned in this article are set by government decree, after opinion of the Minister responsible for finances. Art. 14 - Profits arising from the transfer of shares related to participations in Startups are exempt from capital gains tax. Art. 15 - Notwithstanding Articles 100 and 173 of the Commercial Companies Code, and in case of a capital contribution in kind, Startup shareholders are authorized to choose the auditor for contributions to evaluate said contribution. Art. 16 - Notwithstanding Article 344 of the Commercial Companies Code, Startups legally authorized to issue convertible bonds are permitted to conduct multiple issuances of convertible bonds, independently of conversion option periods. Art. 17 - Subject to the provisions of the Foreign Exchange and External Trade Code, any Startup has the right to open a special foreign currency account with approved intermediaries, which it freely funds with foreign exchange from capital participation, issuance of convertible bonds, or advances in current accounts and, generally, all other categories assimilated to equity under prevailing regulations, as well as its operating revenues. The Startup freely manages and without authorization the assets of said account, within current operations or investment operations to develop its activities, notably regarding acquisition of tangible and intangible assets, creation of foreign subsidiaries, and acquisition of shares in foreign companies. The rules and operating procedures for said account are set by circular of the Central Bank of Tunisia. Art. 18 - A guarantee mechanism named the "Startup Guarantee Fund" is created, aiming to guarantee participations of venture capital investment companies, risk collective investment funds, seed funds, and other investment bodies under prevailing legislation, in Startup capital up to a rate set by a convention concluded between the Minister responsible for the digital economy and the Minister responsible for finances. This mechanism applies only in case of amicable liquidation of Startups. The benefit of this guarantee is not cumulative with that of the National Guarantee Fund. The guarantee mechanism mentioned in the first paragraph of this article is financed by a financial endowment charged to resources of the Communications and Information Technology Development Fund, by donations, and all other resources provided by prevailing legislation and regulations. Management of the guarantee mechanism is entrusted to the Tunisian Guarantee Company pursuant to a convention concluded between the Ministry responsible for the digital economy, the Ministry responsible for finances, and the Tunisian Guarantee Company. Art. 19 - The Startup benefits, during the validity period of the Startup label, from exemption from corporate tax, and state coverage of employer and employee social security contributions under the legal system, charged to resources of the National Employment Fund. Art. 20 - Any Startup is considered an approved economic operator under the provisions of the Customs Code. This law shall be published in the Official Journal of the Tunisian Republic and executed as a law of the State. Tunis, April 17, 2018. The President of the Republic Mohamed Béji Caïd Essebsi Law No. 2018-21 of April 17, 2018, approving the loan agreement concluded on September 25, 2017, between the Tunisian Republic and the German Credit Institute for Reconstruction (KFW) for financing the support program for reforms in the water sector (1). In the name of the people, The Assembly of Representatives of the People having adopted, The President of the Republic promulgates the law as follows: Single Article - The loan agreement annexed to this law, concluded in Tunis on September 25, 2017, between the Tunisian Republic and the German Credit Institute for Reconstruction (KFW) in the amount of one hundred million (100,000,000) Euros for financing the support program for reforms in the water sector is approved. This law shall be published in the Official Journal of the Tunisian Republic and executed as a law of the State. Tunis, April 17, 2018. The President of the Republic Mohamed Béji Caïd Essebsi ____________ (1) Preliminary works: Discussion and adoption by the Assembly of Representatives of the People in its session on April 2, 2018.