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Establishing companies in Egypt and branches for foreign companies



Establishing companies in Egypt and branches for foreign companies



First: The regulating rules for establishing companies in Egypt:

Trade law no. 18 has been issued in 1999 and it states on canceling Trade law that was issued in 1883 except the chapter related to the partnerships and this is the issued law in 1883, the procedures of establishing partnership companies shall be governed. Trade law shall handle all kinds of commercial business and commercial contracts, and shall determine the commercial transactions and the tools to meet the commercial transactions including the commercial documents (Bills- Cheque- Typed of all bonds). Trade law states the obligations, responsibility and rights of traders and shall establish the provisions governing individual enterprises especially those who engage in trade generally, whether corporate or juridical person. The Trade Law shall set general provisions that regulatesexercising commercial activity without determining specific commercial activities, and shall set the provisions that are relating to liquidating the existing commercial activities, insolvency, and leaving the trade of the companies or individual entities, whether capital companies or partnership companies.

Trade law no. 159 of the year 1981 shall regulate the composition standards and the procedures of the establishment of capital companies (Joint Stock company, limited partnership by shares and  limited liability companies) as well as it shall regulate how the composition and distribution of capital profits and losses for these companies, the management and the responsibilities of the department in charge of administrationhow to manage the legal responsibilities arising from the establishment, how to take a decision, merging capital companies. Companies law shall not include the text of certain commercial activities; however it shall exercise commercial activities under the umbrella of companies law.

The investment guarantees and incentives law no.8 of the year 1997 shall regulatewhat guarantees and incentives are granted to those who invest in the fields of investment generally, including the industrial investment activities specified in Article 1 of the Law, individual or companies enterprises, whether they are capital companies or partnership companies, enjoy the benefits of the law, if the benefits of the law are:

First: Reclamation, Land Cultivation, Animal, Poultry and Fish Production:

  1. Reclamation and cultivation of barren and desert lands or either of them.
  2. Animal, poultry and fish production.
  3. Genetic engineering at plants and animals fields'.

Second: Industry and Development of Industrial Zones:

  1. Manufacturing and mining.
  2. The integrated industrial development for industrial zones or completing the development or marketing or management of industrial zones established due to the prime minister’s decree.

Third: Tourist Investment:

  1. Hotels, motels, hotel apartments, tourist villages, tourst camps and tourist transportation.
  2. Touristic marketing and administration for hotels, hotels, apartments and touristic villages.
  3. Establishing and administration of the integrated services of the Nile ports that is entailed for their functions and safety.
  4. Establishing and administration of Golf yards, diving centers and other integral and related activities.
  5. Projects of monuments & museums which help on publish of monuments culture.

Forth: Transportation:

  1. Refrigerated transportation of goods, refrigerators for the purposes of storing crops, manufactured products and foodstuffs, container stations and grain soils.
  2. Air transport and directly related services.
  3. Overseas maritime transport.
  4. Transportation from/to urban zones.

Fifth: Specialized services:

  1. Petroleum services in support of drilling, exploration as well as gas transport and delivery.
  2. Hospitals, medical and therapeutic centers that offer 10 % of their capacities free of charge.
  3. Development of new urban zones.
    • Planning & establishing the new urban zones and supply them with infrastructure.
    • All services projects' which practiced completely at the new urban zones.
  4. The gathering of rubbish and wastes of production and services activities and their treatment.

Sixth: Infrastructure:

Infrastructure operation including potable water, sewage, electricity,roads and communications beside underground multi-story garages, undergrowned trains and trains.

Seventh: Funding and financial Evaluation for Projects :

  1. Financial Lease.
  2. Underwriting Of Subscription To Securities.
  3. Venture Capital .
  4. Credit Classification .
  5. Deductions .

Eighth: Computer System and Technological :

  1. Software designing and producing the electronic content.
  2. Designing and production of computers .
  3. Designing and building data base .
  4. Establishment , management of technological zones .

Ninth: Housing :

  1. Housing complexes for the purposes of full , unfurnished lease for non-commercial uses.
  2. Construction  investment  at  the  industrial  zones  or  the  urban zones or remote zones

Tenth: Social Monetary Projects :

Projects concerning small or integrated industrials which  is funded from social monetary fund .

Eleventh: Marketing and Promotion for investment fields :

Marketing and Promotion for attracting investors in reclamation, cultivation, tourstic, and industrial development and dry, Nile and internal ports according to the roles declared by the minister in question.

The most important benefits that the Investment law provides are the following guarantees:

  1. Companies or establishments shall not be nationalized nor shall their property be confiscated .
  2. Administrative Guardianship shall not be imposed on companies or establishments, nor shall their property and funds be distrained, seized, retained, in protective custody, blocked or confiscated .
  3. No administrative  authority  shall  interfere at company's pricing policy nor in determining company's profits.
  4. No administrative authority shall cancel or suspend in whole or in part, a license granted to a company for the use of real estate except in case of a breach of the license conditions .
  5. No criminal  suit  shall  be  initiated  against any company without first taking the opinion of the authority firstly .
  6. Disputes shall be settled amicably with the investor or according to the international conventions between Egypt and the country of the investor, or according to the convention concerned with the settlement of disputes as per Act No. 90 of 1971 or by arbitration .

Small and Medium enterprise development law has been issued to facilitate the establishment of small and micro enterprises and to exempt them from some establishment fees, whereas the law established a standard for their capital of the enterprise or the micro company shall not exceed 50,000 Egyptian pounds, regarding the enterprises and small contracts that its capital s not less than 50,000 Egyptian pounds and shall not exceed One Million pounds and the number of employees shall not exceed fifty employees.

Social Fund for Development shall establish in its offices administrative units for serving the small enterprises and the micro enterprises. These units shall take all the necessary registration and licenses procedures to exercise the commercial activities within a duration that shall not exceed 30 days from the date of applying the full documents to the administrative body.

Second: Types of companies in Egypt:

Individual enterprise:

The basic concepts of individual enterprises:

Person companies:

We shall take into consideration in the person companies the following provisions:

The definition of Joint Partner Company:

The definition of Limited Partnership Company:

Capital companies:

The legal features of the capital companies with it kinds (Joint stock company, Limited liability company and limited partnership by shares):

The definition of the limited liability company:

The definition of the Joint Stock company:

The definition of the limited partnership by shares:

Third: The required documents for establishing companies in Egypt:

  1. A company registry application.
  2. The possession contract or the allocating dead of the project land (or present an act for presenting it during one year from the establishing date).
  3. A Legalized power of attorney from Real Estate publicity Department (for Egyptian companies) or a legalized power of attorney at the Egyptian Consulate (For foreigner companies).
  4. A copy of the identity cards or the passports of the partners or the owner and the birth certificate for minors if any.
  5. Criminal declaration in case the company includes foreigners.
  6. In case of establishing persons companies: Providing the origin of the company’s contract signed by the partner, the criminal record of the partners, And the receipt of electricity bill payment for the headquarters of the company with a new date that does not exceed 3 months with the name of the tenant partner.
  7. In case the company is located in Sinai, a map of the company's location is submitted in addition to the approval of the chairman of GAFI.
  8. For Industrial Projects: A prior approval has to be obtained from General Authority for Industrial Development before establishment.
  9. For Capital Companies :
    • Non confusion certificate include the company name.
    • A bank certificate proving that 10% of the issued capital has been deposited .In case of limited liability companies, the amount of capital is paid in full.
    • In case the company's auditor is dealing with GAFI for the first time, a certificate from the Ministry of Finance (General Registry of Accountants and Auditors) is required which states that he has the right to sign capital companies' balance sheets.

Forth: Establishing Branches of foreign companies in Egypt:

For approval on registration and/or cancellation of registration of branches of foreign companies in the com- mercial register in accordance with the provisions of the Commercial register Law 34  of the year 1976 and the Corporation Law 159 of the 1981.

The required documents for establishing Branches of foreign companies in Egypt:

  1. A letter from the director of the Commercial Register Office addressing head of the Investment Service complex.
  2. Photocopy  of the statute of the mother company  abroad.
  3. A copy of the decision  issued by the mother company  abroad to open a branch in Egypt.
  4. A copy of the decision  issued by the mother company  abroad to appoint a Branch Manager in Egypt.
  5. A copy of the decision  issued by the mother company  abroad that no other  branch has previously been opened in Egypt.
  6. A photocopy of a bank certificate proving the transfer of what is equivalent to L.E5000 (five thousand Egyp- tian pounds)  in free currency at the official rate  under  the name of the branch.
  7. A copy of the lease contract or the title deed of the premises.
  8. A copy of the construction contract or agreement concluded for the execution of any operation in Egypt.

The contract should  state a set objective, duration and value.