Structure for Doing Business in Egypt


 STRUCTURE FOR DOING BUSINESS IN EGYPT

Foreign investors wishing to conduct business in Egypt have various establishment options available to them, discussed hereinafter the most prevalent options.

Joint Stock Company (“JSC”)

An Egyptian JSC is a regulated company of which its capital is divided into shares and the liability of each shareholder is limited to the paid up value of his shares. The minimum number of shareholders of a JSC is three (3) and a JSC may be wholly owned by non-nationals, with a few exceptions for certain activities that should be wholly owned by Egyptian persons, for example importation companies, commercial agencies and companies operating within the region of Sinai.

The minimum share capital for a JSC whose shares are not offered to public subscription is EGP 250,000. If shares are offered to the public, the minimum capital is EGP 1,000,000 and each share must have the same nominal value. While preferential shares may be issued, these are less commonly used.

The shares of a publicly listed JSC can be traded on the Egyptian Stock Exchange (EGX). The annual net profit of a JSC can be repatriated after appropriating 5% thereof to constitute the legal reserve up to 50% of the company’s share capital in accordance with the provisions of Companies Law No. 159 of 1981 (“Companies Law”).

A JSC is managed by a board of directors and there are no nationality requirements for directors. However, non-Egyptians directors are required to undertake a security clearance. Provided it does not conflict with public order or morality in Egypt.

According to the Companies Law, shares of the JSC are transferable. The articles of incorporation of the JSC may regulate the process of transfer of shares without depriving any of the shareholders of the right to transfer shares within the provisions of the applicable law.

Limited Liability Company (“LLC”)

An LLC is a company with limited liability, where the numbers of members may not exceed fifty and should not be less than two. An LLC may be wholly owned by foreigners, saving the activities which are not allowed to be performed by non-nationals.

The articles of incorporation of an LLC determine the minimum capital to be paid in full upon incorporation and the value of quotas. All quotas must have the same face value of no less than EGP 100. The members’ liability is limited to the extent of capital contributions.

An LLC cannot raise funds through public offerings. An LLC may conduct a variety of business activities, with the exception of insurance, banking, savings, receiving deposits or investing funds on behalf of others, each of which must be conducted by a JSC.

The day to day management of an LLC is vested in one or more managers and the members have the right to appoint managers, at least one of whom must be Egyptian.

Branch Office

Foreign companies are allowed to open branches in Egypt to carry out construction works, hotel management, commercial, financial and industrial activities or generally to execute works of a contractual nature. A branch does not have a separate legal existence from its parent company. Accordingly, the establishing foreign company is fully liable for all the obligations and liabilities of the branch.

The equivalent of a minimum of EGP 5,000 must be transferred in foreign currency to a bank account in Egypt in the name of the branch.

A branch general manager shall be appointed to manage the branch and to legally represent it in all matters related to its activity and existence. The manager may be a foreign national.

Representative Office

Foreign companies can establish representative or liaison office. The object of such offices is limited to studying and exploring the Egyptian market without performing any kind of commercial or income generating activity.

The equivalent of a minimum of EGP 5,000 must be transferred in foreign currency to a bank account in Egypt in the name of the representative office. The manager of the representative office can be a foreigner.

 

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