Liaison offices in Algeria: new measures

Algeria
Available languages: FR

The long-awaited Order setting out some practical modalities for handling applications related to liaison offices has just been published. In fact, the various foreign companies present or wishing to be present in Algeria through liaison offices had been on hold pending publication of this Order.
 
By way of reminder, the complementary finance act for 2015 ("LFC 2015") had set out new rules applicable to liaison offices with just one Article (Article 25), amending Article 212 bis of the Registration Code. The main innovation of this text was to raise the amount of the approval registration fees from DZD 100,000 to DZD 1.5 million, and to extend these fees to renewals. The LFC 2015 also provided for an implementing text, which was formalised by a Decree of 9 November 2015 and published in the Official Journal of 25 November 2015 (the "Order"). The Order sets out the conditions and procedures for opening and operating liaison offices in Algeria.
 
The said Order reiterates various rules applicable to liaison offices concerning their operation, obligations, approval and opening, renewal and closure.

By way of a preliminary remark, the Decree must be seen as a continuation of the rules applicable until now since it confirms that liaison offices are "temporary representation structures" that do not have legal personality and are unable to carry out gainful activities for and on behalf of the company that opened them.

It also reaffirms certain obligations, laid down by the old rules applicable until then, stressing that the costs and charges of operating liaison offices, including the remuneration of staff and the related tax and social security charges, are borne by the foreign commercial company and payable through the "CEDAC" account. The text also confirms the principle of limitation of the duration of the approval to two years, renewable.

Although the Order provided a number of clarifications concerning the documents required for the opening, renewal or closure of the liaison office, there are a few ambiguities that practice should clarify. For example, the text does not clarify what should apply to amend approval. It does not state the fate of registration fees if applications for renewal are rejected, nor does it set out any deadline for processing applications.

Certain provisions also remain confusing, such as Article 11, which provides that "no other approval can be issued to the liaison office". Does this mean that it is impossible for a company to obtain approval once its application has been rejected or not renewed in time?

Does this provision cover the approval granted to a foreign company bearing a name similar to another company in its group? Does it concern approvals granted for companies active in regulated sectors (such as pharmaceuticals) requiring approval or another additional authorisation? We will see how things turn out in practice.

But the Order does have the merit of having provided details concerning authorised activities, details that did not exist in the preceding texts.

For example, Article 3 of the Order specifies a delimitation of the acts for which the liaison office is authorised concerning:

  • Exploring the market;
  • Making contacts;
  • Obtaining information;
  • Promoting products;

And carrying out administrative formalities for the benefit of foreign commercial companies.
This list is interesting since it provides liaison offices with a legal basis for their activities. Previously, there had been no regulatory indication to this effect.
 
The Order has also expressly excluded certain categories of persons and activities from approval, namely:

  • Natural persons;
  • Agencies, branches, commercial representations and any other establishment coming under a company located abroad;
  • Companies carrying out consulting activities, customs brokers, with the exception of services whose presence in Algeria is considered essential;
  • Legal entities carrying out activities not subject to commercial registration.

Here it should be noted that the text does not specify what is meant by "establishment coming under a company located abroad" or "services whose presence in Algeria is considered essential".
 
Lastly, if the principle is adhered to whereby laws provide only for the future with no possibility of having a retroactive effect, the Order should not be applicable to applications lodged before its publication. How will such applications be handled? It is possible, however, that the Ministry, which has been awaiting publication of the Order for their handling, may be tempted to require applicants to comply with the new rules at the risk of seeing their applications rejected.