Choosing the Right Legal Entity for Company Formation in Egypt

Sadany & Khalifa Law Firm offers guidance on selecting the suitable legal structures for company formation in Egypt according to Egyptian law and investment regulations. Options include Joint Stock Company, Limited Liability Company, and One Person Company, each with specific requirements and benefits. The process also involves specific documentation, such as notarized powers of attorney and identification papers, to ensure proper incorporation.

• Legal entity
• Company formation
• Egypt
• Business law
• Investment regulations

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1. SADANY & KHALIFA - LAW FIRM - THE TEAM YOU CAN FULLY RELY ON ! THE TEAM YOU CAN FULLY RELY ON !

2. COMMERCIAL LEGAL FORMS OF THE COMPANIES ACCORDING TO THE EGYPTIAN LAW AND THE INVESTMENT LAW: 1 - Trade Law no. 17, of 1999: ( Partnership company Simple Partnership company Branch of Foreign company). 2 Companies law no. 159, of 1981: (One-person company Limited liability company Joint Stock company). 3 Investment Law no. 72, of 2017: (One-person company Limited Liability company Joint Stock company Shares limited company). Investment law is applicable for one of four regimes: Inland Investment, Investment Zones, Technological Zones and Free Zones. Under Investment Law no. 72 there are two types of legal entities that could be incorporated : (Joint venture company and Simple Partnership company. Regarding establishing a company in Egypt, you can check below the most common types of companies that we strongly recommend our client to choose based on the needs of each client , as follows:

3. (I) Joint Stock Company (JSC); (II) Limited Liability Company (LLC); (III) One Person Company. We prefer to choose between the above-mentioned types of legal entities as the liability of the partners are limited to their shares in the capital only and the difference between those companies are as follows:

4. The minimum number of partners is 3. (I) JOINT STOCK COMPANY (JSC); The minimum capital requirement is EGP 250000 to be deposited on three payments, 10% is to be paid at the time of incorporation of the entity, to be increased to 25% within three months, and the remaining amount of the nominal value of the shares is to be paid up within five years

5. The minimum number of partners is 2. No minimum capital requirement, so the investor can incorporate the company with any amount capital. Moreover, it is not required to deposit the capital at the time of incorporation. (II) LIMITED LIABILITY COMPANY (LLC); There is a sole partner in such entity. (III) ONE PERSON COMPANY. The minimum capital requirement in this entity is EGP 50 000 to be paid in full at the time of incorporation

6. CONCERNING THE REQUIRED DOCUMENTS TO INCORPORATE A COMPANY IN EGYPT: There are some documents that the client is kindly requested to prepare from his side which are as follows: 1. Notarized powers of attorney to be legalized at the Egyptian Consulate in your jurisdiction if you are outside Egypt and you can make it here in the ARE but you will need a translator with you. 2. Copies of valid ID or passports of the shareholders, however, if the shareholder is a juristic person, then, we will need the following documents for this juristic shareholder as follows: A- The Article of association of the juristic shareholder B- Commercial Register of the juristic shareholder C - If the owners of the juristic shareholder are juristic owners, then, we will need the Article of association and the extract from the Commercial Register of those owners. D- Power of Attorney of the legal representative of the juristic person. E- All the above-mentioned documents should be legalized at the Egyptian consulate. 3. Deposit the capital of the company (applicable for OPC and Joint-Stock Company).

7. WE SHALL PREPARE THESE DOCUMENTS FROM OUR SIDE: 1 An official original certificate obtained from the Register of Accountants and Auditors in order to review and approve the balance sheet of the company. In case the original was previously furnished to GAFI, then the declaration of acceptance shall be submitted; 2. A certificate of non-confusion of company name approved in the Commercial Register; 3. A copy of the Bar Association Card of the lawyer who signs the Articles of Association; 4. A security check on foreign founders and managers; 5. The name and address of the company s legal consultant (who must be a lawyer at least admitted before the Court of Appeal); 6. In the event of sharing in-kind shares upon incorporation, the report provided by the experts specialized in the professions stated by the law, must be submitted.

8. BRANCHES OF COMPANIES kindly be advised that a branch of a foreign company can be only registered in Egypt to carry a certain project according to a contract concluded with any Egyptian entity either the Egyptian Government, or a Private Company. Although the branch can engage in commercial, financial, industrial and contractual activities. the activities that the branch will carry out will be limited to those stated in its contract in Egypt.

9. Below are the required documents in order to register the branch: 1. An application addressed to GAFI (we will draft and submit it there) 2. Power of Attorney issued by the Mother Company (this Power of Attorney shall be notarized in your country and legalized at the Egyptian Consulate in the client s country, then we will legalize it at the Ministry of Foreign Affairs in Egypt, and file it at the competent Notary Public in Egypt) 3. A copy of the Mother Company s Articles of Association or an extract of the commercial register of the mother company (to be legalized at the Egyptian Consulate in the client s country and then we will legalize it from the Ministry of Foreign Affairs in Egypt and translate it). 4. A resolution issued by the Mother Company to open a branch in Egypt (to be legalized at the Egyptian Consulate in the client s country and then we will legalize it at the Ministry of Foreign Affairs in Egypt, translate it and submit it accordingly). 5. Company s resolution of appointing the manager of the branch in Egypt (to be legalized at the Egyptian Consulate in the client s country and then we will legalize it at the Ministry of Foreign Affairs in Egypt and translate it). 6. A statement from the Mother Company mentioning that It has not opened a BRANCH in Egypt before (to be legalized at the Egyptian Consulate in the client s country and then we will legalize it at the Ministry of Foreign Affairs in Egypt and translate it). 7. Opening a Bank Account in the name of the BRANCH. 8. A Certificate from the bank, proving the transfer in dollar currency, an amount equivalent to 5000 EGP. 9. A Lease Contract or the Ownership Deed for the premice of the branch s location to be notarized at the Egyptian Notary Public: 10. Original contract concluded with the Egyptian authority should be stamped with the seal of the Egyptian Republic. 11. Drafting and submitting security checks for the Mother Company and the manager of the branch in case s/he is a non-Egyptian. 12. All the documents should be translated into the Arabic language.

10. WE SHALL PREPARE THE FOLLOWING DOCUMENTS FROM OUR SIDE: An official original certificate obtained at the register of Accountants and Auditors in order to review 1. and approve the balance sheet of the company. In case the original was previously furnished to GAFI, and an acceptance declaration shall be submitted; 2. A certificate of non-confusion of company name approved in the Commercial Register; 3. A copy of the Bar Association Card of the lawyer who signs the Articles of Association; 4. A security check on foreign founders and managers; 5. The name and address of the company s legal consultant (who must be a lawyer at least admitted before the Court of Appeal); 6. In the event of sharing in-kind shares upon incorporation, the report provided by the experts specialized in the professions stated by the law, must be submitted.

11. THE EGYPTIAN LAW PROHIBITS FOREIGNERS FROM FULLY OWNING IMPORT COMPANIES IN EGYPT AND THE FOREIGNERS ARE ONLY ENTITLED TO OWN 49% OF THE COMPANY S SHARES. MOREOVER, THE COMPANY SHALL BE REGISTERED AT THE MINISTRY OF TRADE AND INDUSTRY GENERAL ORGANISATION FOR EXPORT AND IMPORT CONTROL BEFORE STARTING IMPORT ACTIVITY. IT IS WORTH TO MENTION THAT THERE ARE TWO STAGES FOR THE COMPANIES TO BE CONCLUDED IN ORDER TO BE REGISTERED IN THE GENERAL ORGANISATION FOR EXPORT AND IMPORT CONTROL THE FIRST STAGE: INCORPORATION OF A COMPANY WITH AN ACTIVITY OF IMPORTATION FOR THE SECOND STAGE: REGISTRATION OF THE COMPANY IN THE GENERAL ORGANISATION FOR EXPORT AND IMPORT CONTROL AND THE MAIN REQUIRED DOCUMENTS TO REGISTER THE COMPANY AT THE SAID REGISTER ARE AS TRADING PURPOSES. FOLLOWS:

12. A document issued by GAFI in the official commercial register stating that the importation of the goods is one of purposes of company and that it has been registered for at least for a year (i.e. the client cannot register his company in the General Organisation for Export and Import Control upon incorporation and he shall wait for a year at least to submit the company s documents). An official extract from the Company s Articles of Association and the amendments thereto, provided that this contract and the amendments thereto are registered in the Commercial Register. A document proving that the paid-up capital is not less than 2 million Egyptian pounds, either by presenting a certified copy of the last budget provided by the company to the Tax Authority or by submitting a certificate from a bank registered with the Central Bank of the ARE stating that the capital is paid. (i.e. The client shall deposit capital of 2 million EGP at least before registering its company at the General Organisation for Export and Import Control An official extract from Certificate of Birth for the manager responsible for the import activities or the naturalization card of the Egyptian national if he/she is of foreign origin (i.e. the client shall appoint an Egyptian manager). Certificate of import practice for the Egyptian manager in charge of importation, issued by the Ministry of Trade and Industry (General Organisation for Export and Import Control) A certified copy of the last tax statement for the previous year to submit for the registration application stating that the volume of business is not less than five million Egyptian pounds and the legislator exempted from those conditions, the companies that obtained import cards before applying ???? the new regulation. (i.e the client shall practice real business in Egypt with a cash flow of 5 million EGP). A statement that the Egyptian partners own 51% of the company s shares. Depositing cash security or a bank guarantee letter in an amount of 200 000 Egyptian pounds.

13. Therefore, it is clear that companies cannot import products for at least one year, however, the client has two following options: 1. Purchase a ready-made company providing that 51% of the company will be owned by a trusted Egyptian national. 2. Using a name of an Egyptian company to import under its name till registration of the company in the General Organisation for Export and Import control.

14. Firstly, the company should obtain a commercial registration from the Commercial Register Authority, and the company cannot practice exportation activity, unless acquiring the registration card from Exporters Register in the Ministry of Trade and Industry, General Organization for Export and Import Control as a second stage. EXPORTATION The person responsible for exportation must undertake the exportation training course organized by the General Administration of Exporters Affairs in the same Ministry, upon completion of the course a Certificate will be issued by the said ministry. The registration card will be valid for 5 years, however, if the person didn t submit the Certificate of the completion of the course then the card will be valid for 3 months only.

15. Industrial regulations Industrial regulations

16. THE PROCEDURES TO OBTAIN THE INDUSTRIAL ACTIVITY LICENSE: First step: Owning industrial unit: 1 When the investor submits a request to participate in the tenders offered by the Egyptian government, he should attach a basic technical study based on the standards set by the government. 2 After reviewing the basic technical study, the government allocates the industrial land to the selected investor. 3 After receiving the Industrial land, the file of investor will be added in the Industrial Development Authority website in order to obtain the investment activity guide.

17. Second step: request for issuing operating license: 1 The investor submits the request to issue the operating license to the Authority, the request should include originals or certified copies of the following documents: A Updated extract from the commercial register. B Receipts for payment of all the administrative fees and expenses. C - Certificate of registration in the Federation of Industries. D Ownership document for the land. 2 The Authority will review the submitted documents by the investor, and give him at the same day a certified copy for the submission of the request to issue the operating license stamped by Republic Seal. 3 An inspection will be made 90 days following the submission of the request. - In case the investor has fulfilled all the requirements: the Authority will issue a lifelong operating license for practicing the activity in Egypt. - In case the investor did not fulfill the requirements: the investor will have a period of 365 days renewable for one time in order to fulfill the necessary requirements.

18. The Egyptian Labor Law The Egyptian Labor Law

19. A The Egyptian law stipulates regulations to issue the approvals for the admission of the Expats to get employed in companies, (i.e. work permits): 1 The company should have a insurance file in the Social Insurance Office affiliated to the Ministry of Social Solidarity. 2 The ratio of number of employees should be: in order to employ one Expat the company should employ 10 Egyptian citizens at the same time, and 2 Expats against 20 employees and so on. 3 The job title of the Expat should not compete with the job title of the Egyptian citizen. 4 The company should open a file in the Ministry of Manpower. 5 The Expat should have a certificate of experience of 3 years at the same field that he will be employed at in Egypt. 6 Some nationalities require an employment contract along with the admission documents. 7 The required corporate documents which are to be provided by the company: extract from the Commercial Register, Tax Card, Social Insurance Print Out, Social Insurance Form II, copy of Articles of Incorporation. 8 In some cases the company can submit an exemption from admission request for the expat if he was born in Egypt, or graduated from an Egyptian University, or married to an Egyptian wife/ husband, or worked before in Egypt and didn t travel abroad. 9 The company should appoint 2 Egyptian assistants for the expat. 10 In some cases if the company is participating in a national project and have a contract with the Egyptian Authorities, we can secure for them am exemption from the Quota of the Social Insurance, mentioned in paragraph 2.

20. B To issue a work permit for foreign shareholders in the Egyptian company: 1 To issue a work permit for the foreign shareholders, the company s capital should be USD 35,000 to be paid at the time of incorporation, and USD 50,000 for two shareholders. 2 After the security clearance, issued by the Security Authorities, we can submit the work permit request for the foreign shareholder. 3 The shareholders are exempted from the submission of experience certificates, and from the social insurance quota that mentioned in paragraph 2.

21. Insurance of the Egyptian employees Insurance of the Egyptian employees

22. The Egyptian law stipulated requirements for the companies to follow in order to insure their employees and enjoy the benefits of the insurance law.

23. The required documents for the company to open a Social Insurance file: 1 Extract from the Commercial register. 2 Tax Card. 3 Articles of Association. 4 Copies of the ID cards of the managers and partners. 5 - Three Original Forms 11 issued by the bank where the company has account signed by the Employer and certified by the Bank. 6 - Form 7 issued by Social Insurance Office for the managers to be signed by the main manager and stamped by the company s stamp. 7 - Notarized Rent contract for the premises or certified copy of ownership deed. 8 - Original Form II issued by Social Insurance Office to be filled by the employer and the employees. 8 Original Fixed- term employment contract between the company and the employee. 9 Copies of the ID cards and the Syndicate membership cards of the employees. 10 Copy of the graduation certificate of the employees. 11 Copy of the birth certificate of the employees. 12 Extract from the insurance file for workers to obtain the insurance number. 13 Form 1 issued by the Social Insurance Office that should indicate the employee s salary, signed by the employer and the employee.

24. Contact us: Sadany & Khalifa Law Firm Phone: +201069460940 Landline no: +0223846003 What's app no: +201069460940 Website: www.sadanykhalifa.com/ Email: info@sadanykhalifa.com Address:Office no. 805, Elmamoura Towers, Tower C, 7th District,Nasr City, EG