During the last few years, we assisted to a process where Algeria is progressively limiting the scope of the representative office.
This is a road followed by several Countries in and outside the North Africa Area, mainly because this device is considered to be used by several foreign operators for concealed commercial purposes, even if this possibility is explicitly set aside by the law.
Now, with the foreigners being granted to own up to 100% of a local company, due to the Budget Law 2020 and Complementary Budget Law 2020, it is likely that the scrutinization on the request of opening or renewing of the representative offices will be even more strict and lead potentially to rejection, unless in very special cases.
Here it is worth to note that the Ministry of Trade has the right to assess discretionary whether to approve or not the request of renewal or establishment of a representative office, based also on the requirements of the Country and the presence on the market of other companies active in the same filed.
Therefore, we highly suggest to promptly proceed with the request of renewal for the company that are interested in having a representative office, before the new policy will be enforced.
What are the conditions for renewing a representative office?
These offices are temporary representative structures, allowed to perform scouting, marketing, collecting information and promoting products for the benefit of foreign commercial companies.
More so, it is mentioned that the representative offices do not have legal personality and cannot carry out any business or economic activities. However, how is the renewal of such Office done?
The renewal of representative office follows the same procedures as the opening which is subject to the issuance of the Authorization by the Ministry of Trade whose duration is 2 years, renewable. But, what are the fees to be paid?
A deposit bond equal to 30,000.00 USD is opened and 5,000.00 USD is deposited on a « CEDAC » bank account. Registration taxes amount to 1, 5 Million DZD. So, are there other conditions?
The legal representative of the foreign commercial company must undertake in written to respect the laws and regulations in force in Algeria, in particular not to carry out direct or indirect economic activities. Thus, the foreign company must respect the deadlines and conditions of the renewal of its representative office otherwise it will be held liable.
Which entities are prevented from registering a representative office?
The Order of October 2015 regarding representative offices excludes some activities while some corporate forms are set aside. On one hand, which activities are not permitted?
Article 9 of the Order stipulates that the exercise of commercial activities by the representative office for and on behalf of the foreign commercial company is strictly forbidden. On the other hand, which corporate forms are excluded?
The order specifies the categories that cannot claim the opening of a representative office. These are natural persons, agencies, branches, commercial representations or any other establishment belonging to a company established abroad.
Also, companies engaged in consulting activities, customs declarants, as well as legal entities engaged in activities not subject to registration in the commercial register are expressly excluded.