Limited Liability Companies

The Egyptian limited liability company is a closed company where the liability of each of its partners is limited to the value of his shares (called quotas) in the company. The number of partners of a limited liability company cannot be less than two persons and cannot exceed fifty. The shares or quotas of the limited liability company cannot be traded in the stock exchange. The trade name of the limited liability company is usually derived from its object, but may also include the name(s) of one or more of its partners. Additionally, the words "Limited Liability Company" must be included in the name

The founding shareholders of the company must submit an application requesting permission to incorporate a limited liability company. The ministerial decision implementing the Commercial Companies Law outlines the mandatory provisions that must be included in the Memorandum of Association.

The company is incorporated once it is registered in the Commercial Register. The company must also maintain a Register of Partners in its head office, which must contain the names, nationalities, domiciles and occupations of the partners; the number of shares owned by each partner; the sum paid by each; and the assignment or transfer of shares and related relevant information (Article 275 of the Executive Regulation of the Companies Law).

Limited liability companies cannot raise funds through public offering. Also such companies may conduct a variety of business activities, with the exception of insurance, banking, savings, receiving deposits or investing funds on behalf of others.

Management

The management of a limited liability company may be assigned to one or more managers. At least one manager must be of Egyptian nationality (Article 281 of the ministerial decision implementing the Companies Law). The manager(s) must be named in the Memorandum of Association but need not be a shareholder(s). The manager(s) may be appointed for a definite term (which must be specified in the Memorandum of Association) or for an indefinite term. The manager(s) shall have full authority to represent the company; unless such authority is limited by the Memorandum of Association.

The manager of the limited liability company has the same legal status of the director of the joint stock company. The remuneration of the manager, after certain deductions, is subject to a salary at rates 10% and 2%

If the number of the partners of a limited liability company exceeds ten, the partners should form a supervisory board consisting of at least three of them. The supervisory board has the right to check the accounting records of the company, ask the managers to provide reports upon request, count the company's cash and other assets, and review the company's financial statements before being submitted to the partners general meeting.

Apart from the above, the provisions related to joint stock companies apply to limited liability companies.

Financial Requirements

The minimum equity capital of a limited liability company is LE 50,000. The equity capital should be fully paid up on foundation. The nominal value of the share or quota cannot be less than LE 100.

The quotas cannot be traded in the stock exchange, however, any partner can sell his quotas to outsiders, given that he has already offered them to the other partners and they declined to buy them.

Foreigners can own 100% of the equity capital of a limited liability company, but they have to pay the value of their shares in foreign convertible currencies.

If a foreign partner(s) in a limited liability company wishes to repatriate his capital out of Egypt, he has to sell his quotas or liquidate the company (if he actually owns all or most of it), deposit the proceeds of sale or liquidation in an account at one of the accredited banks in Egypt, and the bank will realize the required repatriation of the funds, free of any taxes or duties.

A limited liability company which has a share-capital equal to or exceeding the minimum share-capital of a closed joint stock company (i.e. LE 250 000) has to allocate at least 10% of the profit to be distributed among its partners to its employees as profit-sharing, but with a maximum of 100% of their annual salaries.