Tunisia: Legal Analysis, Business Structures & Forms
Tunisia is a Civil Law Republic, founded upon a constitution that embodies the principles of sovereignty of the people and separation of powers between the branches of government. The Republic is divided into twenty-three regions, each of which has its own local government and is competent to conduct and manage local affairs.
Judicial powers are vested in the Court of Justice (Court de Cassation). The judicial branch of government has criminal, administrative and civil systems.
Civil Court System
The civil court system is divided into four levels; the District Courts, Courts of First Instance, Appeal Courts, and the Supreme Court.
District Courts have jurisdiction to hear matters the value of which does not exceed TD 7,000 as well as matters relating to nationality and labor issues. A single judge hears cases in the District Courts. Appeal of a judgment from a District Court is made to the Courts of First Instance.
Courts of First Instance
A Court of First Instance is located in each of Tunisia’s twenty-three regions in Tunisia. The Courts of First Instance are vested with the power to hear all civil and commercial matters without regard to the monetary value of the claim, including divorces and applications for immediate relief in urgent matters. The Courts of First Instance also hear appeals of decisions from the District Courts. Each Court of First Instance is composed of a panel of three judges.
Cases which began in by the Courts of First Instance, may be appealed to the Appeal Courts. Appeals of District Court judgments decided by Courts of First Instance may not be appealed to the Appeal Courts, but, rather, relief may be sought from the Supreme Court.
The Appeals Courts have jurisdiction to hear appeals of decisions rendered by the Courts of First Instance except where the decision was an appeal from a decision of a District Court. The Appeal Courts cover several regions, and, therefore, cases from several Courts of First Instance are heard by the same Appeals Court.
The Tunisian Supreme Court examines decisions appealed from either the Appeals Court or from the Courts of First Instance sitting in its appellate capacity to determine whether the law was correctly applied by the lower court. The Supreme Court does not examine the substantive aspects of the case on appeal, and only points of law may be appealed to it. Submitting a matter to the review of the Supreme Court does not automatically stay execution of the original judgment. A stay of execution may be granted by the First President of the Supreme Court; the applicant making the motion for such a stay must deposit a bond with the court to secure the judgment.
In the event that the Supreme Court voids a lower court judgment, the matter is resubmitted to another judge or panel of judges of the court which rendered the original judgment. For example, a voided judgment from the Appeals Court covering several regions would be resubmitted to an Appeals Court covering a different area. In the event that the court, on rehearing the matter, fails to comply with the ruling of the Supreme Court regarding the application of law, the matter is heard by the full panel of the Supreme Court whose decision on the case is binding.
Criminal Court System
The criminal court system is very similar in structure to the civil court system. Misdemeanor offenses are handled by the District Courts, while all other criminal offenses, except felonies, are submitted to the Courts of First Instance for determination. Felony crimes are submitted to the criminal courts division of the Appeal Courts after an indictment has been issued by a judge based on the findings of the grand jury (Chambre des Mises en Accusation).
Administrative Court System
The administrative court system is responsible for resolving disputes between individuals and the government and any governmental subdivision or agency.
The commercial law of Tunisia recognizes two types of companies; share companies and companies of persons (partnerships). Foreigners are permitted to hold shares in Tunisian companies without restriction. In companies organized for the purpose of certain commercial and service activities, however, permission of the Higher Investment Board is required in order for foreign investment to exceed 49 percent. Transfers of shares representing in excess of 10 percent of the voting rights in such a company requires a separate approval.
Share Companies may be established as either a joint stock company or a limited liability company.
Joint Stock Companies
Joint stock companies may be established with a minimum of seven shareholders. The minimum nominal value per share in a joint stock company is TD 5. The board of directors of a joint stock company is comprised of between three to twelve directors. The directors appoint the chairman and general manager of the company.
While foreigners may serve as directors of joint stock companies without any limitation, officers of the company are subject to Tunisian labor law which gives preference to Tunisian nationals. Foreign ownership in businesses which engage in certain fields is restricted by decree to no more than 49 percent of the share capital unless special permission is obtained from the Higher Investment Board.
In existing companies, transfers of shares representing more than 10 percent of the voting rights require approval.
Joint stock companies are used primarily to conduct investment operations and activities. From the perspective of the availability of financing, banks prefer the financing arrangements available to joint stock companies.
Limited Liability Companies
Limited liability companies may be established with a minimum of two shareholders. The shareholders appoint a manager who is endowed with all the powers of the company with regard to and toward third parties, even if the shareholders of the company have taken measures to limit the powers granted to the manager. For this reason, limited liability companies are used primarily for small projects and family businesses. All shares must be nominative and bearer shares are allowed only with the permission of the
Ministry of Finance.
A foreign company may establish and register a branch in Tunisia by obtaining a Merchant Card from the Ministry of Trade. The process for obtaining a Merchant Card and registering in Tunisia is significantly easier for foreign companies which have engaged in a contractual relationship with a Tunisian company.
A copy of the contract with the Tunisian company, the incorporation documents of the foreign company and all records and board decisions of the foreign company relating to the creation of the foreign branch must be submitted along with the application for registration to the Ministry of Trade.
In 1996, legislation authorizing the creation of International Trade Companies (ITC) was adopted. An ITC is a non-resident company in which the share capital is held by Tunisian or non-Tunisian residents where at least 66 percent of such share capital is paid through convertible foreign currency, An ITC may engage wholly in export, and 80 percent of its turnover must originate from exportation.
Under Tunisian law, partnerships, or a company of persons, may be formed. The unlimited liability of the persons forming such a partnership or company of persons for its obligations is a deterrent to using this corporate form.
Foreign companies wishing to effect business in Tunisia without establishing a corporate entity in Tunisia must appoint a Tunisian citizen to act as their agent. Agency and representation activities are reserved to Tunisian citizens under the applicable law. An agent wishing to act for a foreign company must conclude a contract with the foreign principal and then apply to the Ministry of Trade for authorization. While the terms of an agency contract are freely negotiable, the contract may not provide for exclusivity.