Share Capital Increase in France with Funds from Morocco, Algeria or Tunisia: What Is the Procedure?
A French company can carry out a share capital increase using funds originating from Morocco, Algeria or Tunisia.
From a French perspective, the fact that the subscription funds originate outside France does not, by itself, prevent them from being deposited for a share capital increase. The funds may notably be deposited with a French notary, subject to prior review of the file and completion of the required checks.
However, two separate issues must be distinguished:
- whether the funds can be received in France;
- whether the funds can legally be transferred out of Morocco, Algeria or Tunisia.
Each of these countries has its own foreign exchange and international capital transfer regulations. The subscriber must therefore confirm with its local bank and advisers that the proposed transfer to France is permitted.
Before arranging the transfer, the rules applicable in the country of origin should be distinguished from the ability to deposit funds originating from abroad in France.
Can Funds from Morocco, Algeria or Tunisia Be Used to Invest in a French Company?
Yes, subject to compliance with the applicable regulations.
The subscriber may be:
- an individual residing in Morocco, Algeria or Tunisia;
- a national of one of these countries residing elsewhere;
- a Moroccan, Algerian or Tunisian company;
- a holding company;
- or another investment vehicle.
The fact that the investor or its bank account is located in North Africa does not, by itself, prevent the investor from subscribing to the share capital of a French company.
The transaction must nevertheless allow the subscriber, the originating bank account and the source of the funds to be clearly identified.
Can the Funds Be Deposited with a French Notary?
Yes.
Where the deposit of subscription funds is required for a cash share capital increase, a French notary may act as depositary.
The French company first provides the documents relating to the share capital increase together with the documentation concerning the subscribers.
The file is reviewed before payment instructions are provided.
The funds must therefore not be transferred before the file has been reviewed and accepted.
Once the required funds have been received and the necessary checks completed, the French notary can issue the depositary’s certificate required to proceed with the share capital increase.
Where the transfer is permitted, see also the practical requirements for transferring share capital increase funds from a foreign bank account to France.
Does the Investor Need a French Bank Account?
Not necessarily.
A Moroccan, Algerian or Tunisian investor does not generally need to open a French bank account solely in order to subscribe to a share capital increase.
Where the international transfer is permitted and the file has been approved, the subscription funds may be transferred from a foreign bank account to the account specified by the depositary.
The originating bank account must be identifiable and the payment must be capable of being matched with the relevant subscriber.
In practice, the main difficulty may therefore concern the ability to transfer the funds out of the country of origin, rather than their receipt in France.
Can Moroccan Dirhams Be Transferred to France for an Investment?
Transfers of capital from Morocco are subject to Moroccan foreign exchange regulations.
A Moroccan resident does not necessarily have complete freedom to convert dirhams and transfer the resulting funds abroad for an investment.
Depending on the investor’s status, the nature of the investment and the origin of the funds, the proposed transfer should be reviewed in light of the rules administered by the Moroccan Office des Changes and with the bank handling the transfer.
The conditions governing the outbound transfer should therefore be checked before setting the timetable for the French share capital increase.
From the French perspective, where the transfer can lawfully be made and the file has been accepted, the Moroccan origin of the funds does not, by itself, prevent their deposit with a French notary.
Can Funds Be Transferred from Algeria for a French Share Capital Increase?
Algeria also operates a foreign exchange control regime governing international transfers and capital movements.
An investor holding Algerian dinars or funds located in Algeria must therefore determine whether and under what conditions those funds can be used to finance an investment abroad.
Depending on the investor and the characteristics of the transaction, regulatory or banking requirements may restrict or condition the transfer.
A French notary can review whether the funds can be received for the purposes of the share capital increase but cannot authorise the funds to leave Algeria.
The outbound transfer must comply with Algerian law and should be addressed with the investor’s bank and, where appropriate, local advisers.
What About Funds Transferred from Tunisia?
Tunisia also has foreign exchange regulations governing capital movements and investments abroad.
The applicable conditions may depend, among other matters, on the investor’s status and the origin of the funds.
As with Morocco and Algeria, the ability of a French notary to receive the funds must be distinguished from the investor’s ability to transfer them out of Tunisia.
The subscriber should therefore confirm the applicable requirements with its bank and, where necessary, the relevant Tunisian authorities or local advisers before initiating the transfer.
What if the Funds Are Already Held in Euros Outside the Investor’s Home Country?
The position may be different where the investor already holds funds in a bank account located in another jurisdiction.
For example, a Moroccan, Algerian or Tunisian national may reside in another country and hold euros in a bank account there.
The subscriber’s nationality does not automatically mean that the funds are subject to the foreign exchange rules of the subscriber’s country of nationality.
The actual circumstances should therefore be considered, including:
- the investor’s country of residence;
- the identity of the bank account holder;
- the location of the funds;
- the source of the funds;
- and any regulations applicable to their transfer.
The file should therefore be assessed by reference to the actual location and origin of the funds, rather than nationality alone.
Can a Moroccan, Algerian or Tunisian Company Subscribe?
Yes. From a French perspective, a foreign company may generally subscribe to a share capital increase of a French company.
The documentation will notably need to establish:
- the company’s legal existence;
- its registration;
- its articles of association or equivalent constitutional documents;
- the identity of its legal representative;
- the authority of the person acting in connection with the transaction;
- its ownership structure;
- and its ultimate beneficial owners.
Translations or document authentication formalities may be required depending on the documents and jurisdiction concerned.
Separately, the foreign company must ensure that its local regulations permit it to make and fund the proposed investment in France.
These transactions form part of the broader framework applicable to share capital increases involving foreign investors in France.
What Source-of-Funds Documents May Be Required?
The geographical origin of the funds does not remove the requirement to understand their economic origin.
Depending on the subscriber and the amount invested, supporting documentation may include:
- bank statements;
- evidence of income or assets;
- documents relating to the sale of an asset;
- corporate accounts or financial statements;
- evidence of available corporate cash reserves;
- financing documentation;
- or other evidence explaining the origin of the investment funds.
The precise documents required will depend on the circumstances of each transaction.
Can a Third Party’s Bank Account Be Used to Facilitate the Transfer?
A third party should not be used to circumvent foreign exchange restrictions or banking requirements.
Where the holder of the originating bank account is not the person or company subscribing to the share capital increase, this must be disclosed to the French notary before any transfer is made.
The relationship between the subscriber, the account holder and the funds must be capable of being understood and documented.
Additional supporting documents may therefore be required, and the payment can only be accepted if the circumstances permit it.
Routing the funds through another person, company or bank account does not turn a transfer prohibited in the country of origin into a permitted transfer.
How Should a Share Capital Increase Using Funds from North Africa Be Prepared?
The French procedure and the outbound transfer requirements should ideally be considered in parallel.
In practice:
- the terms of the share capital increase are determined in France;
- the documents concerning the subscriber and source of funds are submitted to the French notary;
- the subscriber simultaneously confirms with its bank the conditions governing the international transfer;
- after reviewing and accepting the file, the French notary provides payment instructions;
- the subscription funds are transferred in accordance with those instructions;
- after actual receipt of the required funds and completion of the necessary checks, the depositary’s certificate is issued.
Early preparation is particularly important where the share capital increase must be completed by a specific date.
Deposit Funds from Morocco, Algeria or Tunisia with a French Notary
Chassaint & Cerclé Notaires, a French notary office based in Paris, assists French companies with the deposit of funds for share capital increases involving investors or funds originating from Morocco, Algeria or Tunisia.
The file can be submitted remotely for review before any transfer is made.
The office reviews the documentation concerning the subscriber, any ultimate beneficial owners, the originating bank account and the source of the funds.
Where the file has been accepted and the transfer can be made in accordance with the regulations applicable in the country of origin, payment instructions are provided to the subscriber.
After receipt of the funds, the depositary’s certificate can be issued within 24 business hours, provided that the file is complete and the required checks have been completed.
For further information and to submit your share capital increase file, please visit our dedicated share capital increase page, click here.
