Increasing the capital of a SARL or EURL in Algeria: decision, notary, register

Why increase the capital

• Fund a project without borrowing: the money contributed stays in the company.
• Reassure a bank, a supplier or a client: the capital appears on the trade register extract and on your invoices.
• Bring in a new partner, who contributes money or an asset in exchange for new shares.
• Meet a requirement: becoming a joint-stock company (SPA) requires capital of at least 1,000,000 DA, and some regulated activities set their own financial conditions.
• Rebalance the partners' weight, by letting the one who invests more subscribe more.

Who decides, and by what majority

The amount of the capital and how it is split are written in the articles of association. Increasing the capital therefore means amending the articles, and the Commercial Code sets the majority for that decision.

Two practical consequences. First, a partner holding more than a quarter of the capital can block the operation. Second, the increase can be voted without a partner taking part: they keep their shares, but their percentage falls. In an EURL, the question does not arise: the sole partner makes the decision alone, and the notary records it.

Ways to increase the capital

Companies also use two other techniques, with no new money: moving profits held in reserve into capital, or converting into capital a sum a partner has lent to the company. Both require up-to-date accounts showing the reserves or the debt. Have the notary confirm that your case qualifies.

The steps, in order

1. 1

   Set the amount, method and subscribers

   How much, in cash or in kind, who subscribes how many new shares, and at what value per share.

2. 2

   Reread the articles

   They may set a different majority or approval rules if a new partner joins.

3. 3

   Prepare the decision

   Draft resolution, report on the company's situation if the notary requires it, notice to all partners.

4. 4

   Vote the increase

   At a meeting, by a three-quarters majority of the capital. In an EURL, a written decision of the sole partner.

5. 5

   Make the contributions

   Pay in the funds as the notary instructs, or have the contributed assets valued.

6. 6

   Sign the deed before the notary

   The deed records the increase and updates the articles: new capital, number of shares, split between partners.

7. 7

   Publish in the BOAL

   The notary prepares the notice of the amended details for the Official Bulletin of Legal Notices. Keep a copy.

8. 8

   Amend the trade register

   File the amendment request with the CNRC with the amended articles and the BOAL notice, and pay the scheduled fees.

9. 9

   Update everything else

   Beneficial owners within a month if they change, bank, tax office, invoices, letterhead and website.

Worked example (fictitious)

SARL Atlas Conseil (example) has capital of 100,000 DA, divided into 100 shares of 1,000 DA: partner A holds 60, partner B 40. The partners decide to raise the capital to 500,000 DA by creating 400 new shares of 1,000 DA, subscribed in cash: 200 by A, 100 by B and 100 by C, a new partner.

To pass the vote, A alone is not enough: with 60% of the capital, A does not reach three quarters and needs B's agreement. Had B refused to subscribe and C taken 200 shares, B would have fallen from 40% to 8% of the capital (40 shares out of 500). No one can force B to follow, but everyone should measure what the operation changes for them.

What it costs

Common mistakes

• Paying money into the company account before the decision and the deed, with no record of what it represents.
• Forgetting to invite a minority partner: the decision can be challenged.
• Overvaluing an in-kind contribution: the partners answer for it to creditors.
• Stopping at the notarial deed without amending the trade register: the extract still shows the old capital.
• Forgetting the new beneficial owners declaration when a partner joins or percentages change.
• Keeping the old capital on invoices and letters.