The Banque d'Algérie has promulgated a regulation defining factoring as an operation where a member transfers their commercial claims to a bank or financial institution, which pays the full amount of the transferred claim, bearing the risk of non-payment. This regulation was published in the Journal officiel on September 20. The regulation aims to provide a clear framework for factoring activities in Algeria.
To be eligible for factoring, the Banque d'Algérie has set seven conditions that must be satisfied. Firstly, the claims must be certain, liquid, and determined in amount, with no dispute from the debtor. This condition ensures that the claims are valid and undisputed. The regulation provides a clear guideline for banks and financial institutions to assess the eligibility of claims for factoring.
The second condition states that the claims must have a payment deadline of less than six months from the date of invoicing. Additionally, the claims must not be extinguished, in whole or in part, by payment, compensation with debts, or any other legal mode of extinction of obligations. This condition ensures that the claims are not outdated or settled.
The Banque d'Algérie has also set conditions that the claims must be freely transmissible, with no legal, regulatory, or contractual prohibition on the transfer of claims. Furthermore, the claims must not be encumbered with a cession, pledge, or any other security or charge that could affect the rights of the factor. This condition ensures that the claims can be transferred without any restrictions.
The fifth condition states that the claims must not relate to a debtor in a situation of cessation of payments, judicial restructuring, liquidation of assets, or similar situations. This condition aims to minimize the risk of non-payment. The regulation also prohibits any contract of factoring that aims to finance claims that have already been financed under another factoring contract.
The Banque d'Algérie's regulation also specifies that the claims must not have been subject to a prorogation of deadline, in whole or in part, in any form. This condition ensures that the claims are not subject to any extensions or modifications. The regulation provides a clear framework for factoring activities, ensuring that banks and financial institutions operate within a well-defined set of rules.
The establishment of these conditions by the Banque d'Algérie aims to promote a secure and transparent factoring environment in Algeria. By setting clear guidelines, the Banque d'Algérie seeks to minimize risks and ensure that factoring activities contribute to the stability of the financial system. The regulation is expected to have a positive impact on the Algerian economy.
Key points
- The Banque d'Algérie has set seven eligibility conditions for factoring, including that claims must be certain, liquid, and determined in amount.
- The claims must have a payment deadline of less than six months from the date of invoicing.
- The regulation aims to provide a clear framework for factoring activities, ensuring that banks and financial institutions operate within a well-defined set of rules.
