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  • Form of entity

    Joint Stock Company (JSC)

    • A separate legal entity that may be a private company or a public company
    • It may offer its shares to public subscription, issue bonds, and convertible securities and offer them to public
    • The name of a JSC must derive from its purpose and may include the name(s) of any of its shareholders
    • Generally, there are no restrictions on foreign ownership and the JSC may be wholly-owned by foreigners, except for companies operating in Sinai (see below) and companies engaging in activities that are restricted by law for foreigners to participate in, such as
      • Commercial agency, which requires the company to be wholly-owned by Egyptians or persons who have acquired and held Egyptian nationality for at least 10 years
      • Importation activities for trading purposes which requires that 51% of the shareholders must be Egyptians and
      • Acquiring land and/or real estate in Sinai which requires that the company be wholly-owned by Egyptians
    • A company operating in Sinai must be established in the form of a JSC, 55% of its shareholders must be Egyptians, and it is subject to certain approval requirements. However, the foreign ownership restriction (ie, the requirement that 55% of the shareholders be Egyptians) may be waived for companies which conduct implementation of integrated development projects in Sinai, provided that the company has obtained a presidential decree, the required cabinet approval, and any required approval of the competent local authorities
    • Managed through a minimum of three board members appointed by the general assembly. The Board of Directors (BoD) is responsible for the company's management and performing the required activities to achieve its purpose. It may delegate powers to one or more of its members in order to
      • Perform certain act(s) and oversee certain aspects of the company
      • Exercise some of the BoD's powers and competencies and
      • Undertake the actual management of the company
    • All foreign BoD members must pass a security clearance, but the company can generally be incorporated and conduct business even before such security clearance has been obtained, provided that it has submitted a completed application that is pending approval. However, and by way of exception, board members of certain foreign nationalities (routinely subject to change) require the security clearance to be issued prior to starting the entity's business
    • Foreign employees cannot exceed 10% of all of the employees of the JSC

    Limited Liability Company (LLC)

    • A separate legal entity that is a private company and its quotas cannot be listed or traded on any stock exchange
    • An LLC may not issue bonds or other financial debentures that are offered to the public
    • Quotaholders appoint one or more managers to manage the LLC. The manager(s) may act individually or jointly in accordance with the terms of the LLC's Articles of Incorporation (AoI). Juridical persons may not be appointed as a manager of an LLC

    One-Person Company (OPC)

    • Newly introduced to the Egyptian market (Law No. 4 of 2018 amending the Companies Law1)

    • Formed by a sole founder, who can be either a natural or a juridical person

    • An OPC's equity cannot be listed or traded on any stock exchange

    • An OPC cannot issue bonds or other financial debentures that are offered to the public

    • Similarly to a JSC and LLC, there are generally no restrictions on foreign ownership except for activities that foreigners are prohibited from participating in (eg, commercial agency; importation activities for trading purposes; and acquiring land and/or real estate in Sinai)

    • Managed through the founder (sole proprietor) of the company or one or more appointed manager(s)

    • Companies Law states that the rules governing the LLC are applicable to an OPC, unless otherwise provided

    JSC, LLC & OPC collectively to be called: "Corporate Entities" or "Corporations" in some provisions in this guide.
    Corporate Entities are subject to the Companies Law. The Companies Law regulates, inter alia, the operations of the company's corporate bodies such as the board of directors/managers; the general assembly; and the matters related to the management and control of the company.
    Further, depending on the type of the undertaken activities, Corporate Entities may be established under the Investment Law No. 72 of 2017 and it Executive Regulations No. 2310 of 2017 (the "Investment Law"). In such case, the Companies Law would apply to the extent that the Investment Law is silent to a certain matter.
    There are other entity types in Egypt but the ones listed above are the most commonly used.

    Branch of a Foreign Corporation (Branch)

    • Not a separate legal entity
    • Foreign corporations can conduct business in Egypt via a local branch
    • A foreign-based company (ie, parent company) can establish a branch in Egypt by registering with the General Authority for Investment and Free Zones (GAFI) as a foreign company carrying on business in Egypt
    • A branch must be formed for the purpose of implementing specific public or private sector agreements in Egypt
    • One or more branch managers, whether Egyptian or foreign, must be appointed to run the business activities in Egypt
    • Business name must contain the name of a foreign-based company

     Representative Office (RO)

    • Not a separate legal entity
    • Can only be used for studying the feasibility of production or carry out market surveys
    • Cannot engage in any commercial activities or execute agreements with third parties on behalf of a foreign company

     

    1 Companies Law no.159 of /1981 and its Executive Regulations No. 96 of 1982 as amended (the "Companies Law").

  • Entity set up

    JSC

    • Minimum of 3 shareholders is required with no maximum limit

    • Foreign shareholders in JSC are permitted. Foreign shareholders must pass security clearance

    • Taxed on its annual net profits and on its distributed dividends

    • Typical charter documents include:

      • Articles of Association (AoA)
      • Bylaws
      • Organizational board resolutions
      • General assembly resolutions
      • Share certificates
      • Share ledger
      • Commercial register

    In an effort to achieve dematerialisation by moving to replace materialised share certificates (ie, physical shares) with centralized electronic book keeping, the amendments recently introduced to the Companies Law require all existing JSCs to register and deposit their shares with Misr ("Misr" means Egypt in Arabic language) for Central Clearing, Depository and Registry (the MCDR).

    • BoD has overall day-to-day management responsibility

    LLC

    • Minimum of 2 quota-holders and a maximum of 50 quota-holders

    • Taxed on its annual net profits and on its distributed dividends

    • Typical charter documents include:

       

      • Articles of Incorporation
      • General assembly resolutions
      • Commercial register
    • The company's AoI sets forth how the business is to be managed. It must be managed by one or more managers appointed from its quota-holders or from third parties.

    OPC

    • Wholly owned by one person  can be a natural or juridical person

    • Taxed on its annual net profits and on its distributed dividends

    • Typical charter documents include:

      • AoI
      • Founder's resolutions
      • Commercial register
    • Founder has overall management responsibility in person or through appointed manager(s)

    Branch

    • No partners are required
    • GAFI approval is required to establish a branch and it must be registered with the Commercial Registration Department (CRD)
    • Typical charter documents include:
      • Commercial register
      • A foreign-based company's resolution of establishing a branch in Egypt
    • A branch must comply with applicable companies, taxation, labor, social insurance law and foreign exchange control regulations

    RO

    • No partners are required

    • A parent company submits an application to establish RO to GAFI and it must be registered with the CRD

    • Such application must specify foreign parent company's name, nationality, purpose, capital, head office location abroad, its Egyptian branch (if any) and the type of the RO required to be established in Egypt, its purpose and permanent/temporary address

    • All the aforementioned are to be attached with

      • The parent company's by-laws, AoA and a translation of their summary
      • The resolution of the parent company approving the establishment of the RO in Egypt
      • The name of the RO’s manager or temporary agent and
      • The proper fees
    • Typically, a charter document includes:
      • Commercial register
      • A parent company's resolution of establishing an RO in Egypt
    • RO must comply with applicable taxation, labor and social insurance law, and foreign exchange control regulations
  • Minimum capital requirement

    JSC

    Minimum capital required is EGP 250,000. However, the minimum capital of a JSC may vary depending on the company’s activity and the decrees issued regulating such activity. In respect of the JSCs whose shares are offered to public subscription, the required minimum capital is EGP 500,000.

    LLC

    No minimum capital requirement. It is determined by the quota-holders in the company’s AoI.

    OPC

    Minimum capital required is EGP 50,000.

    Branch

    Not applicable. The foreign-based company shall only deposit an amount equivalent to EGP 5,000.

    RO

    Not applicable. The parent company shall only deposit an amount equivalent to EGP 5,000.

  • Legal liability

    JSC

    Liability of JSC's shareholders remains limited to the value of their shares in a company and they are generally not liable for the debts of a JSC.

    LLC

    Quota-holders are generally not liable for the debts of an LLC aside from their individual contributions.

    OPC

    Founder is generally not liable for the debts of an OPC aside from his contribution to an OPC, unless:

    • Founder liquidates or suspends company's activity in bad faith prior to the end of its term or purpose
    • Founder enters into agreements under company's name prior to incorporation, where such agreements were not essential for incorporation or
    • Personal and company funds of the founder were co-mingled

    Branch

    A foreign-based company is generally liable for the debts and other financial dues on a branch.

    RO

    The parent company is generally liable for the debts of the RO noting that the RO must not engage in any type of taxable commercial activities to avoid immediate termination of its registration.

  • Tax presence

    Corporations

    • Corporate entity is subject to income tax at the rate of 22.5% of its annual net profits

    • Employees' salaries are subject to income tax

    • The company makes a withholding tax at the rate of 10% upon distribution of dividends. As an exception, shareholders/quota-holders who own 25% of the company's shares/quotas for at least 2 years are subject to a withholding tax at a rate of 5%

    • Corporate entities must make social insurance contributions from both the employers and employees

    • Corporate entities, which sell goods or provide services which are subject to Value Added Tax (VAT) according to the VAT Law no. 67 of 2016, and whose annual turnover exceeds the amount of EGP 500,000, must be registered with the Egyptian Tax Authorities (ETA) for VAT purposes. By way of exception to the abovementioned threshold, Corporate Entities may apply to be registered for VAT purposes even if their turnover does not exceed said threshold provided that:

      • Their annual turnover during the twelve months prior to filing the registration application must not be less than EGP 150,000 or its paid up capital must not be less than EGP 50,000
      • They have registered physical office space through which they perform their registered activity and
      • They have a valid tax card
    • VAT at the rate of 14%, generally, is applied to all taxable local and imported goods and services, except:
      • Those specifically exempted by the VAT Law
      • Machinery and equipment used in the production of such goods and services which shall be levied at 5% and
      • All other products listed in the annex to the VAT Law which specifies the percentage of tax levied on them

    Branch

    • A branch is subject to income tax at the rate of 22.5% of its annual net profits

    • Branch employees' salaries are subject to an income tax

    • The branch makes a withholding tax at the rate of 10% upon distribution of dividends and social insurance contributions from both the employers and employees

    • Branches, which sell goods or provide services subject to VAT and whose annual turnover exceeds the amount of EGP 500,000 must be registered with the ETA for VAT purposes

    • VAT at the rate of 14%, generally, is applied to all taxable local and imported goods and services, except:

      • Those specifically exempted by the VAT Law
      • Machinery and equipment used in the production of such goods and services which shall be levied at 5% and

      • All other products listed in the annex to the VAT Law which specifies the percentage of tax levied on them

    RO

    An RO's employees are subject to income tax and social insurance contributions from both employers and employees.

  • Incorporation process

    Corporate entities, branches and ROs require an approval from the GAFI or the Financial Regulatory Authority (FRA) (in case of capital market activities) to establish them after submitting required documents. Moreover, they must be registered with the CRD.

    Work and residence permits for foreign employees, managers or officers must be obtained prior to starting any work in Egypt.

  • Business recognition

    JSC

    Well regarded and widely used.

    LLC

    Well regarded and widely used.

    OPC

    New entity form based on an attractive single founder structure.

    Branch

    Regularly used where there is a foreign company which requires a specific contract to be carried out in Egypt.

    RO

    Regularly used where the goal is to carry out market exploration and analysis as opposed to carrying out commercial activities.

  • Shareholder meeting requirements

    JSC

    • The shareholders supervise the management of the company through the general assembly. The general assembly shall be held upon the invitation of the company's chairman and shall be divided into ordinary general assembly (OGM) and extraordinary general assembly (EGM) (each of which shall have its competences)
    • Each shareholder shall have the right to attend the general assembly whether in person or by proxy by virtue of a written power of attorney or authorization. The shareholder who is not a member of the company's BoD shall not be entitled to appoint one of the board members to attend the general assembly on behalf of him/her
    • The meeting of the general assembly shall be held at least once every financial year within the three months succeeding the end of the financial year of the company. The attendance and voting quorums of the OGM and EGM are determined in the AoA of the company in accordance with the Companies Law
    • The OGM is held to:
      • Approve the appointment and removal of the board member(s)
      • Supervise and release the board member(s) from liability
      • Approve the financial statements
      • Approve the BoD's report regarding the company's activity
      • Approve the distribution of dividends and
      • Decide on the matters proposed by any of the board members, GAFI or shareholders holding 5% of the capital of the JSC
    • The EGM is held to:
      • Decide on any amendment of the AoA of the company, taking into consideration the restrictions provided under the Companies Law
      • Consider the dissolution or continuation of the company in case its losses amounted to half the value of the shareholders' shares according to the recent financial statements and
      • Issue preferential shares and increase the capital

    LLC

    • Similar to a JSC, the quota-holders of an LLC supervise the management of the company through the general assembly (ie, the OGM and EGM each of which shall have its competences). The general assembly shall be held upon the invitation of quota-holders representing at least one quarter of the company's capital
    • Each quota-holder shall have the right to attend the general assembly whether in person or by proxy by virtue of a written power of attorney or authorization. Quota-holders shall be entitled to appoint a third party (who is not a manger) to attend the general assembly on behalf of him/her unless otherwise is provided under the AoI of the company
    • The meeting of the general assembly shall be held, at least once every year, during the three months succeeding the end of the financial year of the company. The attendance and voting quorums of the OGM and EGM are determined in the AoI of the company in accordance with the Companies Law
    • The OGM shall be held to:
      • Approve the appointment and removal of the manager(s)
      • Supervise and release the manager(s) from liability
      • Approve the financial statements
      • Approve the managers' report on the company's activity
      • Approve the distribution of dividends and
      • Decide on the matters proposed by any of the manager(s), GAFI or quota-holders holding 5% of the capital of the LLC
    • The EGM shall be held to:
      • Decide on any amendment of the AoI of the company, taking into consideration the restrictions provided under the Companies Law
      • Consider the dissolution or continuation of the company in case its losses amounted to half the value of the quota-holders' quotas according to the recent financial statements and
      • Increase the capital

    OPC

    Not applicable, as the founder supervises the management of the company and has all powers of the general assembly. The founder of the company has the authority to decide on all company matters and, in particular, the following:

    • Amendment of the AoI of the company
    • Liquidation or dissolution of the company
    • Increase or decrease the capital of the company taking into consideration the minimum required capital for the OPC as provided under the Executive Regulations
    • Merging of the company and its transformation into another form of company and
    • Appointment of one or more managers of the company and decide their competencies and authorities

    All actions of the founder shall not be effective before a third party prior to its annotation in the commercial register.

    Branch

    Not applicable for this jurisdiction.

    RO

    Not applicable for this jurisdiction.

     

  • Board of director meeting requirements

    JSC

    At least three of BoD members must attend the meeting. The BoD shall meet at the invitation of its chairman or the majority of its members in case of a vacancy of the position of the chairman.

    A third of the board members may submit a written request to the chairman to hold a meeting. If the chairman fails to invite the Board within ten days from the date of submitting the request, they shall invite the Board to a meeting themselves and notify GAFI with such meeting. The meeting may be held outside the company's headquarter or by means of teleconference, video conference or circulation, including electronic signature, in accordance with the regulations specified by the Companies Law.

    LLC

    BoD meeting is not applicable under the Egyptian Laws for LLCs, but the quota-holders appoint manager(s) to manage a company. If the number of quota-holders is more than ten, control must be entrusted to a Board of Control (BoC) consisting of at least three quota-holders as determined in the AoI. Such BoC may require manager(s) to present reports, audit the books and documents of a company, take an inventory of treasury and financial stocks, and request to show that the company validly exists and is in good standing. Moreover, the BoC controls financial statements of the company, annual report, develops a distribution of profits strategy and sends its report to quota-holders not less than 15 days before the next general assembly's meeting.

    OPC

    Not applicable for this jurisdiction. However, the founder appoints manager(s) to manage the company, determines their authorities, and ratifies their signatures. Such manager(s) shall represent the company before courts and third parties and shall be responsible before the founder.

    Branch

    Not applicable for this jurisdiction.

    RO

    Not applicable for this jurisdiction.

  • Annual company tax returns

    Corporations

    Annually file enterprise tax returns with tax authorities in addition to the required schedules and data within 60 days subsequent to the filing due date. By way of exception to the aforementioned, the Income Tax Law no. 91 of 2005 provides for certain circumstances whereby the company shall be exempted from the obligation of submitting the tax returns. In regards to VAT, Corporate Entities are generally required to file tax returns on monthly basis.

    Branch

    Annually file enterprise tax returns with tax authorities in addition to the required schedules and data within 60 days subsequent to the filing due date. By way of exception to the aforementioned, the Income Tax Law provides for certain circumstances whereby the branch shall be exempted from the obligation of submitting the tax returns. In regards to VAT, branches are generally required to file tax returns on monthly basis.

    RO

    Filing enterprise tax returns with tax authorities is not applicable for ROs under Egyptian Laws as they cannot be engaged in commercial activities.

  • Business registration filing requirements

    Corporations

    Corporate Entities require initial registration. It shall be registered in the commercial registry office by virtue of the establishment certificate issued by GAFI.

    According to the Companies Law, GAFI is required to issue an establishment certificate upon being notified by the Corporate Entities provided that the required documents are attached to the establishment notification.

    There are additional obligations to file yearly audited financial statements as well as amendments to by-laws, AoI(s) and AoA(s) each time they are made.

    Branch

    A branch’s establishment requires an initial approval from GAFI and must be registered in the CRD. Moreover, it must annually (within three months from the lapse of its financial year) submit to GAFI

    • A copy of its financial statements and an audit report
    • Names and nationalities of its manager(s)
    • Number, nationalities, titles and total payroll of its employees and determine the payroll of the Egyptian employees and
    • Its profits and the distributed proportion to its employees

    RO

    An RO’s establishment requires an initial approval from GAFI and must be registered in the CRD. Its registration certificate shall be issued for a period not exceeding one year and shall be subject to an annual renewal provided that the RO must be obliged to annually (at the beginning of each financial year) submit to GAFI (as may be requested)

    • Tts employees' names, titles, nationalities and total payroll and determine the ratio of the Egyptian employees’ payroll
    • Additional information concerning the RO's activities during the financial year and any amendments in relation thereto
    • Evidence that the parent company has been notified with the aforementioned
    • Decisions of the parent company in relation to the activities undertaken by the RO during the financial year and
    • A timeline schedule for the pending and finalized studies required to be done by the RO
  • Business expansion

    JSC

    • Minimum three shareholders with no maximum limit
    • No need to change as business expands
    • If number of shareholders drops below the minimum required number of persons, the entity may convert to an OPC corporation or increase the number of shareholders to not less than three natural or juridical persons

    LLC

    • Minimum of 2 and maximum of 50 quota-holders
    • If number of quota-holders exceeds 50 persons, must convert to a JSC corporation or decrease the number of quota-holders to 50 persons
    • If number of quota-holders drops below the minimum required number of persons, must convert to an OPC corporation or increase the number of quota-holders to 2 persons

    OPC

    Used exclusively for a sole proprietor entity. The whole structure of this type of company is based on one founder. Therefore, if more than one natural or juridical person becomes a founder in an OPC, the entity must convert to an LLC or JSC as applicable.

    Branch

    No need to change as business expands, to the extent that the purpose remains within the scope of activities mentioned in the commercial register.

    RO

    Not applicable for this jurisdiction, as ROs are prohibited from engaging in commercial activity.

  • Exit strategy

    Corporations

    Shareholders'/quota-holders'/founder's meeting approval (ie, the general assembly resolution) or court decision on dissolution and winding up an entity. Liquidator(s) will be assigned to run the liquidation process.

    Branch

    Parent company must submit a declaration to GAFI together with other required documents, stating its decision to close a local branch.

    RO

    Parent company must submit a declaration to GAFI together with other required documents, stating its decision to close the RO.

    A new comprehensive bankruptcy code has been adopted and implemented that codifies and organizes the liquidation process of an entity incorporated in the Arab Republic of Egypt. 
  • Annual corporate maintenance requirements

    JSC

    Annual shareholders' meeting (ie, the general assembly meeting) to approve appointment of independent financial auditor, financial statements and limit liability of and hold the board harmless when it acts within the scope of its authority. The meeting should be held, at least once every year, during the three months succeeding the end of the financial year of the company.

    LLC

    Annual quota-holders' meeting (ie, the general assembly meeting) to approve appointment of independent financial auditor, financial statements, and limit liability of and hold the manager(s) harmless when they act within the scope of their authority. The meeting should be held, at least once every year, during the three months succeeding the end of the financial year of the company.

    OPC

    A founder has all powers of a general assembly; therefore, he/she annually submits audited financials, appoints an independent auditor, names managers etc.

    Branch

    A branch must annually submit a copy of its financial statements and an audit report, names and nationalities of its manager(s), number, nationalities, titles and total payroll of its employees and determine the payroll of the Egyptian employees, its profits and the proportion of the profit that was distributed to its employees to GAFI.

    RO

    An RO must annually submit to GAFI (as may be may requested), at the beginning of each financial year:

    • Its employees' names, titles, nationalities, total payroll and determine the ratio of the Egyptian employees’ payroll
    • Any additional information regarding RO’s activities during the financial year and any amendments in relation thereto
    • Evidence that the parent company has been notified with the aforementioned
    • Decisions of the parent company in relation to the activities undertaken by the RO during the financial year and
    • A timeline schedule for the pending and finalized studies required to be done by the RO
  • Director / officer requirements

    JSC

    • Minimum of three board members appointed by the general assembly for three years. As an exception, the term of the first appointed BoD can be five years from the date of incorporation
    • Management is typically named by the BoD
    • The BoD usually appoints, among its members, a chairman and vice-chairman to the company. The chairman represents the company before courts
    • The powers and responsibilities of the company's chairman, executive chairman, board members and employees are usually provided under the company's AoA and its internal by-laws

    LLC

    • At least one manager is required who is appointed for the first time by the quota-holders by virtue of a decision issued by the general assembly
    • The manager(s) shall have the responsibility to represent the company, unless otherwise provided under the company's AoI
    • The removal of the manager(s) shall be by virtue an EGM resolution. Such resolution is issued by the majority of three quarters of the quotas represented at the meeting

    OPC

    A founder can be a manager or can appoint manager(s).

    Branch

    One or more managers must be appointed to run the business activities in Egypt.

    RO

    At least one manager. A manager does not need to be an Egyptian national.

  • Local corporate secretary requirement

    Not applicable for this jurisdiction.

  • Local legal or admin representative requirement

    The Egyptian laws provide for local representative requirements in regards to certain activities including, inter alia, the following:

    • Importation activities for trading purposes: manager(s) of the company conducting the importation activity and  51% of its shareholders must be Egyptians
    • Commercial agency activities: manager(s) and board members of the JSC participating in such activity are required to be Egyptians or have held Egyptian nationality for at least 10 years. Additionally, it should be wholly owned by Egyptians or persons who have held Egyptian nationality for at least 10 years
    • Acquiring lands and/or real estates' in Sinai: the company is required to be wholly owned by Egyptians and
    • Operating in Sinai: the company must be established in the form of JSC and 55% of its shareholders must be Egyptians

    Further, with regard to the Egyptian employees' ratio in Egyptian companies, the Companies Law provides that the number of the Egyptian employees should not be less than 90% of the manpower in corporate entities.

  • Local office lease requirement

    An owned or leased registered physical office space is required for all types of entities.

  • Other physical presence requirements

    Corporations

    Corporate entities and their branches must have a registered office in Egypt.

    Branch

    Must have a registered office in Egypt.

    RO

    Must have a registered office in Egypt.

  • Sufficiency of virtual office

    A physical presence is necessary for all types of entities.

  • Provision of local registered address by law firm or third-party service provider

    Not applicable for this jurisdiction.

  • Provision of local director or corporate secretary by law firm or third-party service provider

    Not available in this jurisdiction.

  • Nationality or residency requirements for shareholders, directors and officers

    Shareholders/quota-holders/founders

    • There are no restrictions on foreign ownership. A company may be wholly owned by foreigners except in the event that the company participates in any activity that is restricted for foreigners by law:
      • A commercial agency which is required to be wholly owned by Egyptians or persons who have held Egyptian nationality for at least 10 years
      • Importation activities for trading purposes whereby 51% of the shareholders must be Egyptians and
      • Acquiring of lands and/or real estate in Sinai whereby the company is required to be wholly owned by Egyptians
    • Security clearance must be obtained for foreign shareholders, quota-holders and founders
    • For foreign companies operating in Sinai and/or acquiring lands/real estate, certain security clearances may be required

    Directors and officers

    JSC

    • All board members may be non-Egyptians including the chairman and the managing director
    • Security clearance must be obtained for foreign board members
    • Work and residence permits for foreign employees including the board members must be obtained if they will reside and work in Egypt
    • An entity may conduct business while its security clearances are pending. However, and by way of exception, some foreign nationalities (routinely subject to change) require the security clearance to be issued prior to starting the entity’s business. The time required to obtain the security clearance is subject to the discretion of the competent authority after the submission of all requested documents
    • There are some restrictions regarding the appointment of directors of some activities under the Egyptian laws which require the managers to be Egyptians such as importation for trade purposes and commercial agency

    LLC

    • A company must be managed by manager(s) appointed by quota-holders whether Egyptians or foreigners
    • Security clearance for a foreign manager(s) must be obtained
    • An entity may conduct business while its security clearances are pending. However, and by way of exception, some foreign nationalities (routinely subject to change) require the security clearance to be issued first prior to starting the entity’s business. The time required to obtain the security clearance is subject to the discretion of the competent authority after the submission of all requested documents
    • Work and residence permits for foreign manager(s) must be obtained
    • There are some restrictions regarding the appointment of directors and some activities under the Egyptian laws require the managers to be Egyptians (eg, importation for trade purposes).

    OPC

    • A company must be managed by manager(s) appointed by a founder. Manager does not need to be an Egyptian national
    • Security clearance for foreign manager(s) must be obtained
    • An entity may conduct business while its security clearances are pending. However, and by way of exception, some foreign nationalities (routinely subject to change) require the security clearance to be issued first prior to starting the entity’s business. The time required to obtain the security clearance is subject to the discretion of the competent authority after the submission of all requested documents
    • Work and residence permits for foreign manager(s) and employees must be obtained
    • There are some restrictions regarding the appointment of directors and some activities under the Egyptian laws require the managers to be Egyptians (eg, importation for trade purposes)

    Branch

    A branch must be managed by a manager(s); manager does not need to be an Egyptian national.

    Security clearance must be obtained for foreign manager(s).

    Work and residence permits must be obtained for foreign manager(s).

    RO

    An RO must be managed by a manager(s); manager does not need to be an Egyptian national.

    Security clearance must be obtained for foreign manager(s).

    Work and residence permits must be obtained for foreign manager(s).

  • Restrictions regarding appointment of nominee shareholders or directors

    Corporations

    None with respect to shareholders, quota-holders and founders except that all foreigners must obtain security clearance.

    There are some restrictions regarding appointment of directors, such as no minors, insolvent persons and no persons with criminal records.   

    Branch

    A security clearance must be obtained for foreign-based companies.

    There are some restrictions regarding appointments of managers, such as no minors, insolvent persons, and no persons with criminal records.  

    RO

    Security clearance must be obtained for parent company.

    There are some restrictions regarding appointment of managers, such as no minors, insolvent persons and no persons with criminal records.  

  • Summary of director's, officer's and shareholder's authority and limitations thereof

    Corporations

    JSC's chairman, vice- chairman, managing director and, in case of LLCs and OPCs, their respective manager(s), shall represent and manage the company.

    JSC

    The Companies Law and AoA may reserve certain powers to the general assembly meeting, such as approving the financial statements, appointment and resignation of board members and amending AoA. All other powers, unless otherwise required by law, will be attributed to the BoD.

    LLC

    The Companies Law and AoI may reserve certain powers to the general assembly meeting, such as approving the financial statements, appointment and removal of managers, and amending of AoI.

    Unless otherwise required by applicable law, all other powers will be attributed to managers.

    OPC

    Founder of an OPC reserves all powers of a general assembly meeting and may appoint and remove manager(s).

    Branch

    Manager(s) represent a branch and run it under supervision and guidance of foreign-based company and in accordance with applicable Egyptian Law.

    RO

    Manager(s) represent the RO and operate it under supervision and guidance of a parent company and in accordance with applicable Egyptian Law.

  • Public disclosure of identity of directors, officers and shareholders

    JSC

    Identities of the board members and officers of the company are disclosed in a company's commercial register. Where a company is a publicly listed company on the Egyptian Stock Exchange, identities of shareholders are publicly disclosed. Identities of shareholders of private, non-listed companies are not publicly disclosed.

    LLC

    Identities of quota-holders and manager(s) are disclosed in a company's commercial register.

    OPC

    Identities of a founder and a manager(s) are disclosed in a company's commercial register.

    Branch

    Identities of a foreign-based company and its manager(s) are disclosed in a company's commercial register.

    RO

    Identities of a parent company and its manager(s) are disclosed in a company's commercial register.

  • Minimum and maximum number of directors and shareholders

    JSC

    • Minimum of 3 shareholders and no maximum is required
    • Minimum of 3 board members

    LLC

    • Minimum of 2 quota-holders and a maximum of 50
    • If number of quota-holders is more than 10, control must be entrusted to a BoC, consisting of at least 3 of quota-holders
    • Minimum 1 manager

    OPC

    • Wholly owned by one person, can be a natural or juridical person
    • Founder has overall management responsibility and may appoint manager(s)

    Branch

    • Shareholders are not applicable
    • At least one manager

    RO

    • Shareholders are not applicable
    • One manager
  • Minimum number of shareholders required

    Please refer to Section (Minimum and Maximum Number of Directors and Shareholders) above.

  • Removal of directors or officers

    Corporate entities

    Generally, shareholders/quota-holders/founders may remove directors/managers at any time by virtue of a decision issued by the general assembly or they can resign. Managers and directors who are appointed in accordance with a labor contract governed by Labor law cannot be removed unless in accordance with the Labor Law.

    With regard to LLCs, the removal of the manager(s) shall be by virtue an EGM resolution. Such resolution shall be issued by the majority of three quarters of the quotas represented at the meeting.

    Branch

    A foreign-based company can remove manager(s) at any time, and subject to applicable provisions of Labor Law (if appointed in accordance with a labor contract that is governed by Labor Law).

    RO

    A parent company can remove manager(s) at any time, and subject to applicable provisions of Labor Law (if appointed in accordance with a labor contract that is governed by Labor Law).

  • Required and optional officers

    JSC

    Minimum of 3 board members. The general assembly meeting must be attended by at least 3 board members. A company's AoA may provide the number of BoD meetings to be held per year.

    LLC

    At least 1 manager is required who is appointed for the first time by the quota-holders. If the number of quota-holders is more than 10, then control must be entrusted to a BoC, consisting of a minimum of 3 quota-holders as determined in the AoI. No minimum number of meetings per year.

    OPC

    Not applicable for this jurisdiction. However, the founder appoints manager(s) to manage the company, determines their authorities, and ratifies their signatures. Such manager(s) will represent the company before courts and third parties and be responsible to the founder.

    Branch

    Not applicable for this jurisdiction.

    RO

    Not applicable for this jurisdiction.

  • Board meeting requirements

    Please refer to Section (Board of Director Meeting Requirements) above.

  • Quorum requirements for shareholder and board meetings

    JSC

    Shareholders:

    • Ordinary General Assembly Meeting (OGM):
      • Shareholders representing at least one quarter of the company's capital must attend the OGM. The AoA of the company can stipulate a higher mandatory attendance not exceeding 50% of shareholders (ie, the company's capital). If this minimum is not met at a first meeting, the OGM will be called to a second meeting within 30 days subsequent to the first meeting

      • The invitation of the first meeting may determine the date of the second meeting (if the required minimum attendance of the shareholders is not met) unless otherwise is provided under the AoA of the company

      • A second meeting will be deemed valid regardless the number of shares represented in the meeting

      • Resolutions of the OGM shall be issued by an absolute majority of the shares represented at the meeting (50% + 1 share of the attending shareholders)

      • The OGM must be attended by a minimum of 3 board members

    • Extra-Ordinary General Assembly Meeting (EGM):
      The provisions regulating the OGM under the Companies Law apply to the EGM and take into consideration the following:
      • The company's BoD may invite the EGM to be held upon the request of the shareholders representing at least 10% of the company's capital provided that such shareholders must deposit their shares at the company's headquarter or in any approved bank. The shares should not be withdrawn except after dismissal of the EGM. If the board does not convoke the EGM during one month from the date of submitting the request, the applicants may recourse to GAFI which will address the invitation itself

      • Shareholders representing at least half of the company's capital must attend the EGM. If this minimum quorum is not present in a first meeting, then shareholders are invited to a second meeting to be held within 30 days from the date of a first meeting.

      • A second meeting will be considered valid if attended by a number of shareholders representing at least one quarter of the company's capital

      • Resolutions of the EGM are issued by a majority of two thirds of the shares represented in the meeting

      • In case of the resolution being related to the increase of the authorized capital; the diminution of the capital; the dissolution of the company before its term; changing its purpose; its merging or splitting, in these cases, the voting majority shall be three quarters of the shares represented in the meeting

      • The EGM must be attended by a minimum of 3 board members

    LLC

    Quota-holders:

    • Ordinary General Assembly Meeting (OGM):
      • Quota-holders representing at least half of capital must attend an OGM (unless the AoI of the company stipulates a higher proportion). If this minimum is not met at a first meeting, then an OGM will be called to a second meeting within 30 days after the first meeting

      • A second meeting will be deemed valid regardless of the represented number of shares

      • Resolutions of the OGM shall be issued by an absolute majority of the quotas represented at the meeting (50% + 1 quota of the attending quota-holders)

      • The OGM must be attended by at least one manager and the auditor

    • Extra-Ordinary General Assembly Meeting (EGM):
      • Shareholders representing at least half of capital must attend the EGM. If this minimum quorum is not present in a first meeting, then shareholders are invited to a second meeting to be held within 30 days from the date of a first meeting

      • A second meeting will be considered valid if attended by a number of shareholders representing at least one quarter of capital. Every shareholder/quota-holder in JSC or LLC is entitled to attend the general assembly, personally or by a written proxy (ie, written power of attorney or authorization)

    Every Shareholder in JSC or LLC is entitled to attend the General Assembly of Shareholders, personally or by written proxy.

    OPC

    Not applicable for this jurisdiction.

    Branch

    Not applicable for this jurisdiction.

    RO

    Not applicable for this jurisdiction.

  • Must a bank account be opened prior to incorporation, and must the bank account be local?

    Corporations

    Yes.

    Branch

    Yes.

    RO

    Yes.

  • Auditing of local financials. If so, must the auditor be located in local jurisdiction, and must the company's books be kept locally?

    Corporations

    Applicable to this jurisdiction. The provisions relating to the auditor of the JSCs shall also apply to LLCs and OPCs. In this regard, the company must appoint one or more certified auditors by its general assembly.

    The auditor has, at all times, the right to examine all the books, registers, and documents of the company and to demand information and explanations which is deemed to be essential for the fulfillment of the auditor's duties.

    Branch

    The provisions relating to the auditor of the JSCs shall apply to a branch.

    RO

    Not applicable for this jurisdiction.

  • Requirement regarding par value of stock

    JSC

    Minimum par value per share is one Egyptian Pound (EGP 1) and maximum one thousand Egyptian Pounds (EGP 1,000).

    LLC

    Quotas have to be equal in value.

    OPC

    Single founder with all equity issued to be of equal value.    

    Branch

    Not applicable for this jurisdiction.

    RO

    Not applicable for this jurisdiction.

  • Increasing of capitalization if needed

    Corporations

    Capital can be increased any time after incorporation. It requires an EGM's resolution and must be reflected in the AoI or AoA of the company and its commercial register.

    Branch

    Not applicable for this jurisdiction.

    RO

    Not applicable for this jurisdiction.

  • Summary of how funds can be repatriated from your jurisdiction (ie dividends or redemption)

    No restrictions on the repatriation of funds of all entities outside of Egypt. Banking regulations will apply including Anti-Money Laundering requirements and providing legitimate reason for any transfer as may be required. However, it is worth noting that the exportation of Egyptian Pounds is prohibited if it exceeds an amount of EGP 5,000. Accordingly, funds exceeding the aforementioned EGP amount must be converted into any foreign free hard currency prior to repatriation.

  • Restrictions on transferability of shares

    JSC

    Shares can generally be transferred between shareholders or third parties, provided that the transfer of the in-kind shares is not made by founding shareholders within the first two financial years of the company and before the publication of the relevant financial statements and other related documents. By way of exception, subscribed shares may be assigned/transferred between the shareholders or to a board member if such subscribed shares are to be presented as a guarantee for his/her company's management, or from one of the board member's heirs to other shareholders except when there is restriction on the transferability in the AoA (such as: the pre-emption right). For the transfer of shares to be complete in accordance with Egyptian law, the Egyptian Stock Exchange (EGX) and MCDR must be notified.

    LLC

    Quotas can generally be transferred between quota-holders or third parties without the other quota-holders having the right of redemption of such transferred quotas unless provided otherwise under the company's AoI. The company's AoI may provide that such transfer should be made by virtue of a written agreement which should be notarized at the notary public office.

    Unless otherwise agreed in the AoI, there is a preemptive right for existing quota-holders to buy quotas offered for sale.

    The quota-holder wishing to sell/transfer quotas is obliged to first notify the manager(s) of the company of the desire and the terms of the quota transfer/sale agreement, and then must notify the other quota-holders who can then either exercise their right to substitute the buyer or waive such right.

    OPC

    A founder can transfer or sell equity to any person (natural or juridical person) via a written agreement. If a founder transfers or sells the equity to more than one person, then a company must be registered as an LLC or JSC as applicable within 90 days from the date of transfer or sale. In any case, the transfer of equity will not be valid unless registered in the company's commercial register.

    Branch

    Not applicable for this jurisdiction.

    RO

    Not applicable for this jurisdiction.

  • Obtaining a name and naming requirements

    In general, a corporation may have any name that is not currently used by another company or that infringes on an existing registered trademark or trade name or cause confusion or misunderstanding to the company’s purpose or nature. An entity may submit its chosen name to GAFI for pre-approval.

    JSC

    A company's name can be derived from its purpose (refer to its activity) or from the names of its shareholders. A Joint Stock Company must have words "Joint Stock Company" or "JSC" as part of its name.

    LLC

    A company's name can be derived from its purpose or from a name of its quota-holders or any one of them.  A Limited Liability Company must have words "Limited Liability Company" or "LLC" as part of its name.

    OPC

    A company's name may be derived from its purpose or from a name of its founder.

    Branch

    A branch must have the same name as a foreign-based company. A sentence "a branch of (name of foreign-based company)" must be added to a branch's name.

    RO

    An RO must have the same name as a foreign-based company. A sentence "an RO of (name of foreign-based company)" must be added to an RO's name.

  • Summary of "know your client" requirements

    Not applicable for this jurisdiction.

  • Approval requirements for amending charter document

    Approval from GAFI and the FRA is required as applicable.

  • Licenses required to conduct business in jurisdiction

    Corporations

    Egyptian Law may provide for certain types of activities which require licenses, such as importation of goods for trade purposes, tourism and operating in Sinai.

    LLC

    LLC companies cannot engage in:

    • Banking activities
    • Deposit taking
    • Insurance business
    • Investment funds of third parties
    • Savings
    • Any other activity restricted by virtue of the provisions of law

    OPC

    OPC companies cannot engage in:

    • Banking
    • Deposit taking
    • Insurance business
    • Investment funds of third parties
    • Savings
    • Incorporation of an OPC

    • Public subscription (whether upon its incorporation or increasing its capital)

    • Division of the company's capital into exchangeable shares

    • Borrow by issuing tradable securities

    Branch

    A branch must be formed for the purpose of conducting specific public or private sector agreements in Egypt. Only certain types of activities require license, such as construction and building.

    RO

    An RO may not conduct commercial activities or execute agreements with third parties on behalf of a foreign company and can only conduct studying activities such as studying the feasibility of production or carry out market surveys.

  • Process of purchasing and utilizing a shelf company

    Not applicable for this jurisdiction. 

  • Key contacts
    Mahmoud Bassiouny
    Mahmoud Bassiouny
    Partner Matouk Bassiouny [email protected]

Minimum and maximum number of directors and shareholders

Egypt

JSC

  • Minimum of 3 shareholders and no maximum is required
  • Minimum of 3 board members

LLC

  • Minimum of 2 quota-holders and a maximum of 50
  • If number of quota-holders is more than 10, control must be entrusted to a BoC, consisting of at least 3 of quota-holders
  • Minimum 1 manager

OPC

  • Wholly owned by one person, can be a natural or juridical person
  • Founder has overall management responsibility and may appoint manager(s)

Branch

  • Shareholders are not applicable
  • At least one manager

RO

  • Shareholders are not applicable
  • One manager