Acquiring a company in Tunisia: the key legal points to check before signing

Acquiring a company in Tunisia is a strategic transaction that can allow an investor or a group to enter a market quickly, acquire know-how, expand its customer base or strengthen its regional presence. But an acquisition is not limited to negotiating the price. Before signing an acquisition agreement, the investor must clearly understand what is being purchased, which risks are being assumed and which obligations will transfer with the business. In-depth legal due diligence is precisely what makes it possible to identify those risks and address them in the transaction documents. 1. Why acquire an existing company in Tunisia? For a foreign investor, acquiring a Tunisian company can be an alternative to incorporating a new entity. It may notably make it possible to: - gain immediate access to an existing customer base; - take over an operating business; - benefit from teams already in place; - acquire strategic assets; - access existing licences or authorisations, subject to their transferability; - integrate a supplier network; - develop industrial capacity; - accelerate access to the Tunisian market; - develop an export platform towards Europe or Africa. For an international group, this strategy can be particularly relevant where a rapid operational presence is required. But it involves a fundamental difference from creating a company: in an acquisition, the investor may also take over the target's legal, contractual, tax and employment history. 2. First question: what will the investor actually buy? First, the structure of the transaction must be determined. Two main options should be distinguished. Share deal The investor acquires the shares or equity interests in the company. The company remains the same legal person. In principle, it therefore keeps its contracts, assets, liabilities, employees and obligations. This solution may facilitate business continuity, but it also means that the investor must carefully review existing liabilities. Asset deal The investor acquires certain assets or business lines without necessarily taking over the company as a whole. This approach may help ring-fence certain risks, but it requires an analysis of the transferability of each asset, contract, authorisation and legal relationship. The choice between a share deal and an asset deal must therefore be made in light of the commercial, financial, tax and legal objectives of the transaction. 3. Verify the existence and ownership of the shares In a share deal, the first check is whether the seller actually has the right to transfer the shares. The investor should notably verify: - the identity of the shareholders or partners; - the exact share capital breakdown; - the articles of association; - the corporate registers; - decisions of the competent corporate bodies; - any shareholders' agreements; - pledges; - transfer restrictions; - pre-emption rights; - existing put or call options. This verification is essential. An investor should not discover after signing that a third party holds a contractual right that could block or complicate the transaction. 4. Review the articles of association and corporate governance The articles of association are one of the core due diligence documents. In particular, the following should be checked: - the corporate form; - share capital; - management powers; - majority rules; - share transfer conditions; - specific rights of certain shareholders; - convening and decision-making rules; - any special clauses. Board and shareholder minutes and material decisions taken in recent years should also be reviewed. The aim is to confirm that key decisions were validly adopted and that the company operates in accordance with its own rules. 5. Check authorisations and licences Certain activities in Tunisia are subject to specific authorisations, approvals, licences or regulatory conditions. Before an acquisition, it is therefore necessary to determine: Can the activity lawfully continue after a change of control? In particular, the following should be checked: - licences; - administrative authorisations; - sectoral approvals; - concessions; - operating permits; - required certificates; - renewal obligations. Some authorisations may be personal or subject to specific conditions in the event of a change in shareholding. This issue must therefore be examined before signing, not after closing. 6. Audit strategic contracts Contracts are often among a company's main assets. Contracts that generate a significant share of turnover or that are essential to the company's operations must be identified. The review should notably cover: - key customers; - strategic suppliers; - distribution agreements; - franchise agreements; - partnership arrangements; - financing agreements; - IT contracts; - intellectual property agreements; - real estate contracts. Particular attention should be paid to clauses on: - change of control; - termination; - exclusivity; - non-compete; - penalties; - renewal; - limitation of liability. An acquisition may become far less attractive if a change of shareholder allows a strategic customer to terminate its contract. 7. Review debts and security interests The investor must identify all of the target's financial commitments. In particular, the following should be looked for: - bank loans; - supplier credit; - guarantees; - sureties; - mortgages; - pledges; - off-balance-sheet commitments; - debts owed to managers or shareholders. It is also important to check whether certain financings provide for early repayment on a change of control. This analysis should be carried out together with financial and tax advisers. 8. Tax: a major risk in an acquisition The target's tax position requires a specific review. Due diligence may notably cover: - corporate income tax; - VAT; - withholding taxes; - other taxes and duties; - tax filings; - tax audits; - assessments; - disputes; - tax incentives; - filing obligations. The objective is to determine whether the company carries latent tax liabilities. A tax reassessment relating to prior periods can have material economic consequences after the acquisition. 9. Review the employment position and employment contracts Employees are also a key element of due diligence. The following should be examined: - employment contracts; - remuneration; - benefits; - social security obligations; - labour disputes; - significant disciplinary proceedings; - applicable collective arrangements; - commitments towards key employees. Particular attention should be paid to managers and strategic employees. In some businesses, much of the target's value rests on a few key individuals. The acquisition agreement may then provide for specific mechanisms to retain them. 10. Review ongoing disputes A company may appear financially sound while still being exposed to significant litigation risk. The following should be identified: - court proceedings; - arbitrations; - commercial disputes; - tax disputes; - employment disputes; - administrative disputes; - formal notices; - customer or supplier claims. The analysis should also look for potential disputes, not only those already pending before a court. 11. Verify intellectual property For a technology, industrial or services company, intellectual property may represent a substantial part of the value. In particular, the following should be checked: - trademarks; - patents; - designs; - software; - copyright; - domain names; - licences; - development contracts; - rights held by employees or contractors. An investor must ensure that the company actually holds the rights needed to exploit its main intangible assets. 12. Review real estate assets Where the target owns or operates material real estate, a specific review is required. In particular, the following should be checked: - title deeds; - lease agreements; - mortgages; - easements; - building permits; - operating compliance; - any disputes. For an industrial company, the legal status of the land and buildings can have a direct impact on transaction value. 13. Check regulatory compliance M&A transactions are increasingly tied to compliance issues. Depending on the target's activity, it may be necessary to review in particular: - personal data protection; - competition rules; - sector-specific obligations; - financial regulation; - environmental rules; - compliance duties; - internal procedures; - anti-corruption frameworks. For a European group, the acquirer's own compliance requirements may also need to be assessed to ensure coherent integration of the target. 14. Review foreign investment and exchange control rules For a foreign acquirer, the transaction also requires an analysis of Tunisian rules applicable to international investment. In particular, the following should be examined: - the nature of the activity; - the relevant sector; - any restrictions or authorisations; - investment formalities; - acquisition financing; - cash flows; - dividend repatriation mechanics; - exit mechanisms. This analysis should be carried out early in the process to avoid a regulatory constraint blocking the transaction after signing. 15. What should a good acquisition agreement contain? After due diligence, the findings must be reflected in the legal documentation. The acquisition agreement should notably address: - price; - payment mechanics; - conditions precedent; - representations and warranties; - asset and liability warranties; - specific indemnities; - pre-closing obligations; - post-closing undertakings; - transfer conditions; - price adjustment mechanisms. The objective is to ensure that risks identified during due diligence are not left only in a report. They must be addressed contractually. 16. Asset and liability warranties An asset and liability warranty is a key mechanism in many acquisitions. It protects the buyer where certain matters existing before the sale turn out to differ from what was disclosed. It may notably cover: - undeclared debts; - tax risks; - employment risks; - disputes; - contractual liabilities; - certain regulatory risks. Its drafting must be particularly precise. In particular, the following should be defined: - covered risks; - exclusions; - thresholds; - caps; - time limits; - claims procedures; - payment mechanisms. 17. Conditions precedent: do not overlook them Some transactions require several conditions to be satisfied before closing. These may include: - obtaining an authorisation; - bank consent; - release of a pledge; - obtaining a regulatory approval; - completing a prior restructuring; - approval by the competent corporate bodies. The drafting of conditions precedent must leave no ambiguity as to: who must do what, within what timeframe, and with what consequences if a condition is not satisfied. 18. Price should not be the only negotiated item In an acquisition, price is obviously essential. But an experienced buyer also negotiates: - warranties; - payment terms; - adjustment mechanisms; - treatment of debt; - tax risks; - seller undertakings; - management obligations; - exit terms; - dispute resolution mechanisms. A price difference can sometimes matter less than a properly structured warranty. 19. A successful acquisition starts before signing The process can generally be structured around several stages: Step 1 — Target identification Strategic, financial and commercial analysis. Step 2 — Letter of intent Definition of the main transaction parameters. Step 3 — Due diligence Legal, tax, financial, employment, regulatory and commercial review. Step 4 — Structuring Choice between share deal and asset deal and determination of the financing structure. Step 5 — Documentation Drafting and negotiation of the acquisition agreement and ancillary documents. Step 6 — Conditions precedent Obtaining authorisations and completing preparatory steps. Step 7 — Closing Transfer of shares or assets and payment of the price. Step 8 — Post-closing Integration, governance, any restructuring and warranty monitoring. 20. Main mistakes to avoid An investor should notably avoid: 1. Signing a binding letter of intent too quickly. Early documents can already create material legal effects. 2. Limiting due diligence to the financial accounts. A balance sheet does not necessarily reveal all legal risks. 3. Overlooking key contracts. The target's value may depend on a few commercial relationships. 4. Underestimating tax and employment risks. They may emerge after closing. 5. Failing to check authorisations. A business may depend on an authorisation that is not automatically transferable. 6. Neglecting warranty mechanics. A poorly drafted warranty can be difficult to enforce. 7. Forgetting post-closing. The acquisition is not finished on the signing date. 21. Why legal due diligence is decisive Legal due diligence is not an administrative formality. It allows the investor to answer several fundamental questions: What does the company actually own? Which obligations will be assumed? Which risks could reduce the value of the investment? Which contracts could be affected by a change of control? Which warranties should be requested from the seller? Which conditions must be satisfied before closing? Those answers then make it possible to negotiate the transaction on a much stronger footing. Acquiring a company in Tunisia with ANILF support An acquisition in Tunisia requires coordinating several dimensions: company law, foreign investment, contracts, tax, employment law, sector regulation, intellectual property, disputes and compliance. ANILF assists Tunisian and international investors in acquisition and growth transactions in Tunisia. Our support may notably cover: - preliminary legal analysis of the target; - legal due diligence; - review of title and governance; - contract audit; - regulatory audit; - risk identification; - transaction structuring; - share deals and asset deals; - negotiation of letters of intent; - drafting and negotiation of acquisition agreements; - asset and liability warranties; - shareholders' agreements; - conditions precedent; - closing support; - post-acquisition workstreams. Are you considering acquiring a company in Tunisia? Before finally negotiating the price or signing the acquisition agreement, have the target, its legal structure and the main transaction risks analysed. ANILF can support you throughout the acquisition process, from due diligence through closing and post-transaction follow-up. Conclusion Acquiring a company in Tunisia can be an excellent way to accelerate market entry, acquire know-how or develop an existing business. But the value of an acquisition does not depend only on the target's turnover or profitability. It also depends on the quality of its assets, the strength of its contracts, its regulatory compliance, its tax and employment position, and the absence of hidden liabilities that could affect the investment. Legal due diligence makes it possible to identify those risks before signing and turn them into contractual protections. For an investor, a well-prepared acquisition is therefore not merely a financial transaction: it is a legal operation that must be structured, verified and secured before closing.