The Effectiveness of Capital in the Simplified Joint Stock Company

Abstract

This research paper highlights the effectiveness of share capital in the simplified joint-stock company as the foundation of its legal structure and an essential guarantee for creditors. The Algerian legislator adopted a flexible approach to encourage startups, exempting this company form from the

minimum capital requirement imposed on traditional joint-stock companies, leaving its determination to the shareholders in accordance with Article 715 bis 138 of Law 22-09. Capital may consist of cash, in-kind, or work contributions (the latter being non-transferable), with the obligation to subscribe the entire capital at incorporation, pay at least one-quarter immediately, and settle the remainder within five years—striking a balance between flexibility and financial seriousness. To reinforce this effectiveness, the law prohibits the company from resorting to public subscription or listing its shares on the stock exchange, consistent with its purpose of supporting innovation and entrepreneurship. This approach mirrors the French model after the abolition of the minimum capital requirement in 2009, allowing founders to focus on ideas rather than financial resources. However, such freedom may reduce creditor protections when the share capital is merely symbolic, which could require future legislative adjustments to better balance ease of incorporation with the protection of economic transactions.