Corporate Structuring
What are the major languages spoken in Egypt?Arabic is the official language of Egypt although English is widely used in business circles and French as a third language.
What is the current GDP of the country, and how has it been trending in recent years?Egypt's economic growth has been resilient during the COVID-19 pandemic, recording a positive growth rate of 3.6% in 2020, the second highest in the world.
The Gross Domestic Product (GDP) in Egypt was worth 477 billion US dollars in 2022, according to official data from the World Bank. The GDP value of Egypt represents 0.21 percent of the world economy.
What are the factors contributing to the country's economic growth or decline?
Egypt's economic growth has been influenced by several factors, such as magnitude of the population infrastructure projects, foreign investment, and trade agreements.
There are Government's policies that focus on mega infrastructure projects, tourism, and improvements to economic policy.
In terms of the World Bank’s doing Business Report, Egypt ranked 122 out of 189 countries in the latest report, compared to 131 out of 189 last year.
One of the factors that has contributed to Egypt's economic growth is the diversification of its trade and investment partners, especially in the Middle East and Africa regions
Which industries or sectors play a significant role in driving the country's economy?Egypt's economy relies mainly on tourism, the Suez Canal, agriculture and industries.
Are there any emerging industries or sectors that are becoming increasingly important?Healthcare, Education, Fintech and Renewable Energy.
How does the government support or promote key industries for economic development?The government of Egypt supports or promotes key industries for economic development through various policies and incentives, such as the relaxation of foreign investment restrictions and tax exemptions..
What is the official currency of the country, and how is it currently valued against major international currencies?The official currency of Egypt is the Egyptian pound (EGP). The current exchange rate is 1 USD = 31 EGP.
What is the government system in Egypt, and who holds key positions within this system?As a republic, Egypt has three branches of government with a system of checks and balances that ensures that no branch oversteps their boundaries. The legislative branch informs the executive and judicial branches, while the judicial branch implements the law and protects the constitution against abuse by either branch.
What policies has Egypt implemented to encourage foreign investment, and how do these policies impact foreign ownership and incentives for businesses?Incentives for foreign investorsThe Investment Law no.72 of 2017 (“Investment Law”) that was issued on 31 May 2017, canceled/replaced the previous Investment Guarantees and Incentives Law no.8 of 1997. The Investment Law introduced new incentives for investors. The Executive Regulations followed on October 2017.The Investment Law introduced notable amendments such as returning back the private free zone which was previously abolished, moreover it provides several incentives such as tax incentives, unified customs rate and free lands.
What existing trade agreements does Egypt have with other countries or regional blocs, and how do these agreements impact international trade for businesses?Egypt has several existing trade agreements with other countries and regional blocs that impacted international trade for businesses. Some of these agreements are:
Agadir Agreement: Egypt is a member of the Agadir Agreement, which includes Egypt, Jordan, Morocco, and Tunisia. This agreement aims to promote trade liberalization and economic integration among its member states, facilitating the flow of goods and services within the region.
Greater Arab Free Trade Area (GAFTA): Egypt is a member of GAFTA, which is a regional trade agreement among Arab League member states. GAFTA aims to reduce tariffs and other trade barriers among its member countries, promoting intra-Arab trade.
COMESA-EAC-SADC Tripartite Free Trade Area: Egypt is part of the Tripartite Free Trade Area (TFTA), which includes the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC). The TFTA seeks to create a single market for goods and services among its member states.
European Union Association Agreement: Egypt has an Association Agreement with the European Union (EU), which includes provisions for trade and economic cooperation. This agreement grants Egypt preferential access to the EU market and supports economic integration.
Qualifying Industrial Zones (QIZ) Agreement with the United States: Egypt has a QIZ agreement with the United States. Under this agreement, Egyptian products manufactured in designated zones can enter the U.S. market with preferential access, subject to certain conditions and rules of origin.
African Continental Free Trade Area (AfCFTA): Egypt is a member of the AfCFTA, a landmark trade agreement that aims to create a single market for goods and services across the African continent. This agreement has the potential to significantly boost intra-African trade.
Could you provide information on bilateral investment treaties and their implications for foreign investors looking to invest in our country?Egypt has bilateral trade agreements with several countries, including Turkey and China.These agreements establish the terms of trade and economic cooperation between Egypt and its individual trading partners.The impact of these agreements on international trade for businesses in Egypt varies depending on the specific agreement and the industries involved. Generally, these agreements can offer several benefits to businesses, including:
Reduced Tariffs: Trade agreements often lead to the reduction or elimination of tariffs on certain products, making it cheaper for businesses to export and import goods.
Market Access: Agreements like the EU Association Agreement and QIZ agreement with the U.S. provide Egyptian businesses with improved access to large and lucrative markets.
Increased Competition: Trade agreements expose businesses to increased competition, which can drive innovation and efficiency.
Regulatory Harmonization: Some agreements involve the harmonization of regulations and standards, simplifying compliance for businesses.
Supply Chain Integration: Regional agreements like GAFTA and the TFTA can facilitate supply chain integration and enhance trade within the region.
Egypt follows a civil law system, which draws its principles from the Islamic Shari'a and the Napoleonic Codes. Historically, the Islamic Shari'a has played a more prominent role in personal matters, while specific legislation has been enacted to regulate commercial activities. The key laws governing the establishment of a legal entity include the Investment Law, Companies Law no. 159 of 1981 (as amended by Law no. 4 of 2018), the Capital Market Law no. 95 of 1992, and their respective Executive Regulations. Additionally, the Antitrust Law no. 3 of 2005 is relevant in this context.The Constitution of 2014 holds the highest legislative authority, followed by relevant laws and executive regulations, which serve to provide clarity, completeness, and explanations for the law.
Egypt's court system is structured as follows:
Common Court System: This system comprises three levels: courts of first instance, courts of appeal, and courts of cassation. These courts handle disputes between private individuals and entities.
Administrative Courts (State Council): These courts have jurisdiction over disputes involving the government or any of its bodies or authorities when they act as sovereign powers.
Courts of Special Jurisdiction: This category includes the Supreme Constitutional Court, Economic Courts, Family Courts, and Military Courts, each with jurisdiction over specific types of cases.
While Egypt's legal system does not strictly rely on legally binding case law precedents, previous judicial decisions do carry persuasive authority. Certain courts may, in practice, be influenced by the principles and precedents set by the Court of Cassation in civil, commercial, and criminal matters, as well as by the Supreme Administrative Court in administrative and other public law matters.
High level overview of foreign ownership restrictions in EgyptUnlike many other Arab countries, there is no law against foreigners holding exclusive control of a company incorporated in Egypt, with very few exceptions.
What are the business structure options available in Egypt?
There are 3 main types of corporations that are recommended to be established in Egypt:
Limited liability company (LLC),
Joint stock company (JSC),
Single member company (SMC)
An LLC is recognized by its simple structure and the ease and swiftness of its incorporation before competent authorities.
How is an LLC established? An LLC must be established by two or more partners and no more than 50 partners. The partners may be either judicial persons or natural persons.
Are there restrictions on the nationality of partners in an LLC?Applicable laws do not stipulate any restrictions on the nationality of the partners.
Are there any foreign ownership restrictions on an LLC?It be fully owned by foreigners as a general rule, with few exceptions.
What are the capital requirements?As for their capital, the law does not require a minimum capital for the establishment of an LLC.
What are the requirements for the management of an LLC?With respect to the management of LLCs, it is carried out by managers and not a board of directors. Such managers may be either judicial persons (represented by individuals) or appointed individuals.
What are the FDI restrictions for a JSC?Save as necessary permit and license that may be required in relation to certain types of activities, (e.g. industrial projects which require the pre-approval of the Industrial Development Authority ). Generally, there are no restrictions on the purposes of a JSC provided that it does not conflict with public order or moral in Egypt.
What are the Shareholding requirements for a joint stock company in Egypt? A JSC must be established with at least 3 (three) shareholders at all times which may be judicial or natural persons. There is no maximum number of shareholders set out.
What are the foreign ownership restrictions for JSC companies?As a general rule, a JSC may be fully owned by foreign investors with the exception of some activities explicitly mentioned by law and requires a specific percentage of Egyptian national ownership.
What are the capital requirements for the incorporation of a JSC?
The minimum capital of a JSC is EGP 250,000 (two hundred and fifty thousand Egyptian pounds).
A JSC shall be incorporated upon depositing at least 10% of its issued capital, and subsequently, this percentage must be increased to 25% within 3 (three) months from the date of issuing its commercial register.
The remaining amount of the issued capital must be paid within a period of 5 (five) years from the date of incorporation.
Please note: A higher capital may be required for specific activities such as importation for trading activity.
How is a JSC managed?JSC is managed by a board of directors which should be composed of at least 3 (three) members who is in charge of the daily operation of the JSC.
What is the board composition for a JSC?The board of directors could be judicial or natural persons.
Is there a requirement that the board be Egyptian? No, there is no such requirement. They could also be non-Egyptians or Egyptians. (save for activities requiring appointment of Egyptian nationals to be appointed such as commercial agency).
How is the registration of shares dealt with?
Depository and registration of JSC’s shares at Misr for Central Clearing, Depository System (M.C.D.R)
JSC’s are required to be register at the MCDR upon registration of the company in commercial register.
The Shareholders must deposit their shares with a custodian company listed at MCDR
The Companies Law was amended by law no. 4 of 2018 to introduce the legal basis for the establishment of SMCs.
According to these amendments, individuals or companies can individually establish an entity with limited liability.
SMC’s are generally subject to the same provisions applicable to LLCs.
Note that the share capital requirements differ to an LLC
What are the share capital requirements of a SMC?The capital shall be paid in advance in full with a minimum capital of EGP 1,000.
What are the restrictions on activities that these types of entities can undertake?This type of company is prevented from certain activities such as insurance, banking, receiving deposits and investing capital on behalf of others.
Other types of structures:
A representative office
A foreign branch
Representative Office (RO)The activity of a RO is limited to conducting market study without performing any commercial activity.
Can foreign companies establish an ROA foreign company is allowed to establish a RO or a scientific office in Egypt to carry out a market study.
What is the management structure of a RO?A RO is managed by a manager which his/her authorized powers are determined by its parent company.
RO compliance requirements?The ROs in Egypt must submit a report to the General Authority for Investment and Free zones (GAFI) at the beginning of each year. This report must include:
Detailed information on all its employees
It's market study
Any decisions made from the parent company in that regard
A time frame for the completed and remaining.
Note: The parent company of the RO has to take a decision to establish a legal entity in Egypt, a company or a branch within (3) years as of the date of its registration.
What are the registration requirements?The RO shall be accorded a registration certificate from the date of its registration that shall not exceed one year. This certificate is renewed annually subject to the RO’s compliance with applicable laws and regulations.
A foreign company could operate in Egypt by establishing a foreign branch.
What is the purpose of a branch?The purpose of the branch is limited to implementing a specific contract in Egypt
What are the capital requirements for a branch?The minimum capital required to establish a branch is EGP 5,000 (five thousand Egyptian pounds).
Cultural and Social ConsiderationsBuilding trust and rapport is essential for doing business in Egypt, as Egyptians prefer to deal with people they know and like. Business meetings may start with small talk and inquiries about personal and family matters, which should be answered politely and reciprocally. Business relationships may also involve social invitations, such as lunches, dinners or coffee, which should be accepted as a sign of respect and friendship.
