Foreigners may establish or acquire Egyptian companies. The types of Egyptian corporate entities most commonly used by foreign investors are the Limited Liability Companies.
A foreign company may incorporate a Limited Liability Company under three regimes: Law No. 8 of 1997 on Investment Guarantees and Incentives (the Investment Law), the Companies Law (Law No. 159 of 1981, as amended by Law No. 3 of 1998), and the Capital Market Law (Law No. 95 of 1992).
Foreign companies tend to prefer to incorporate Egyptian companies under the Investment Law to benefit from the privileges available under it. There are no minimum Egyptian capital participation requirements.
Law 8/1997 of Investment Guarantees and Incentives
Law No. 8 of 1997 made one authority responsible for investor incentives and guarantees – the General Authority for Investment and Free Zones (GAFI). It also grouped some twenty exemptions and incentives under one law, and specified activities that would automatically accrue benefits to investors. It allows 100% foreign ownership and guarantees the right to remit income earned in Egypt and to repatriate capital. For detailed information on the guarantees and incentives available under the Investment Law, please visit the website of GAFI: www.gafi.gov.eg
Regulations for Company Formation in Egypt under Law No. 8/1997
For incorporating a company under the Investment Law No. 8/1997 in Egypt the investor has to complete the deeds of incorporation at GAFI to establish the company.
The GAFI is a one-stop business services centre. All business-related Egyptian Government agencies are now located under one roof. GAFI is empowered to negotiate and sign contracts on behalf of all parties. It can also apply for licenses and approvals on behalf of project owners.
Under Egypt’s new Law No. 8 for 1997, the GAFI automatically approves any application for projects within the sectors listed in the law. The potential investor must submit a two-page (“notification form”) providing detailed information on the project.
Any kind of legal entity is acceptable. The project can be fully owned by foreigners except for projects located in Sinai for which the percentage share for foreigners is limited to 49%.
Procedures for Establishing Companies under Law 8/1997
The contract for establishing the company is to be submitted provided that is purpose is in compliance with the fields stipulated for in Law No. 8/1997 & its Executive Statute.
The draft contract should enclose the following:
- Statutes of the company in relation to joint-stock companies.
- Data form for the company, including purpose, capital, investment costs, statement of partners, location, and expected labour.
- Certificate determining unambiguity of company name, issued from the Commercial Register of Investment (at Ministry of Economy & Foreign Trade:8 Adly St. Cairo).
- A bank deposit certificate with not less than 25% of the capital of joint-stock companies and 100% of the capital of companies with limited liabilities.
- The contract is reviewed and authorised within 24 hours from the date of filling in the application.
- It is necessary to legalize the signature of the lawyer who prepared the contract from the Bar Association in Cairo.
- legalisation of signatures of founders and partners takes place at the Real Estate Department at Ministry of Economy after settling the due charges, amounting to 0.25% of the paid capital with a maximum of LE 500.
- After legalizing the contract, it is submitted to the Authority in order to issue a licensed decree with the establishment of the company within 24 hours from submitting the completed contract.
- The applicant receives an official copy of the decree of the Authority with the license to establish the company, enclosing an official copy of the contract and a letter to the competent commercial register office. The investor should provide the Authority with a copy of the commercial register of the company after its registration.
- The decree of establishment, contract and statute are all published in the Investment Gazette in order to fulfil the legal procedures of establishment.
GAFI’s role as an one-stop investment authority
Under Egypt’s new law No. 8 of Investment Incentives and Guarantees, passed in 1997, the General Authority For Investment and Free Zones (GAFI) automatically approves any application for projects within the sectors listed in the law.
The potential investor must submit a two-page (Notification Form), providing detailed information on the project. If data are exhaustive, the registration can be completed in a week.
GAFI applies for obtaining all licenses required for the establishment and operation of the project from relevant State Agencies on behalf of the entrepreneurs.
GAFI assists the entrepreneurs in site selection and allocation of land.
GAFI certifies the dates of starting production in order to identify the beginning of the tax-exempted period, offering assistance through the entire project cycle.
GAFI represents the only Authority responsible for incentives and guarantees for all investments, foreign included, established under law no. 8/97, such as guarantees against nationalization and confiscation, rights to own land, to keep foreign currency bank accounts, to repatriate capital and profits and equal treatment regardless of nationality.
Companies Law 3/1998
Law 3 of 1998 amending Law 159 of 1981 covers investments in any sector not covered by Law 8 of 1997; including shareholders, joint stock and limited liability companies. Law 3 permits registration of a company upon presentation of the application to the Companies Department (which became part of GAFI in 2002) and for acquisition of legal status 15 days after appearance in the Commercial Register, with some exceptions. Law No. 3 also provides for the right of petition for denial of incorporation, removes the restriction that 49% of shareholders must be Egyptian, allows 100% foreign representation on the board of directors and redefines accounting standards.