The Algeria Market Authority (COSOB) has issued guidance on calculating the risk diversification ratio for private equity companies, specifying that equity investments in any one company should not exceed 15% of net book equity. The calculation includes earnings retained after profit allocation but deducts profits approved for distribution, even if payment has not yet occurred. The reference base comprises share capital and share premiums, eligible revaluation reserves, and accumulated reserves and earnings, including the result of the latest completed financial year. Eligible revaluation reserves should relate only to tangible and financial fixed assets and arise from an official decision authorized by law or by the governing bodies of the private equity company or its portfolio companies. Regulated provisions and investment grants should be excluded because they derive from tax incentives or public aid and do not constitute permanently available funds.
Algeria Market Authority clarifies calculation of the 15% investment concentration limit for private equity companies
The Algeria Market Authority (COSOB) has clarified how private equity companies should calculate the limit of 15% of net book equity for investments in a single company. The reference base includes retained earnings but excludes profits approved for distribution, regulated provisions and investment grants. Only qualifying revaluations of tangible and financial fixed assets should be included.