Company registration in Egypt: what you should know
Understanding company registration in Egypt plays a significant role in successfully establishing a business in the region. Egypt was ranked first as the recipient of foreign direct investment in 2019, enhanced by the adoption of the economic reform program.
These monetary reforms have made it one of the prime investment destinations in Africa. But why invest in Egypt?
The country has seen a significant increase in retail market sales and a product flood from big multinational firms, as Egypt draws many worldwide brands. As a result, the enormous population and the high consumption tendency of many age groups are motivating factors for any investment in the Egyptian market.
However, many foreigners who wish to establish a business in Egypt do not know much about company registration in Egypt. In this article, you will know the types of companies you can choose from and how to register them in Egypt.
But, before that, you need to know the laws governing company registration.
Laws Governing Company Registration in Egypt
The Law of Commerce No. 17 of 1999 and the Companies Law No. 159 of 1981, along with their interpretive framework, govern company registration in Egypt.
The Law of Commerce primarily governs sole proprietorships and primary partnerships, but the Companies Law governs cooperative corporations, limited partnerships by shares, and limited liability companies in great detail.
Here are the types of companies you can register as listed in these laws.
Types of Companies as per Egyptian Law
You can form many types of companies in Egypt, as per Companies Law No. 159 of 1981. Differentiating between these types is essential in understanding company registration in Egypt. Here are the most common company types you can register as investors in Egypt.
Foreign Branch Office
Foreign enterprises interested in establishing a business in Egypt may also establish a branch office, provided they have a contract with an Egyptian party. The agreement allows the overseas branch office to engage in commercial, financial, and industrial operations. The branch office must have its yearly financial accounts audited by an Egyptian audit firm, and foreigners are permitted to make up 10% of its workforce.
Joint Stock Company (JSC)
Subject to Egyptian laws and regulations, an Egyptian JSC can engage in any commercial activity. After completing their business setup in Egypt, JSCs are obliged to submit their yearly financial accounts, which an Egyptian auditor audits. An Egyptian joint stock company must have at least three shareholders, and the partners’ liability is limited to the shareholders’ value. The JSC might be either closed or publicly traded.
Limited Liability Company (LLC)
A Limited Liability Company (LLC) is a popular business entity in Egypt. According to the country’s company formation rules, LLCs in Egypt can engage in any business or industrial activity. At the time of firm formation, you must designate at least two shareholders. The partners’ obligation is restricted to the value of their equity.
One Person Company
A one-person company is a company entirely held by a single individual, whether neutral or legal, operating for the reasons it was founded. The company’s liabilities are not responsible to the founder until they exceed the assigned share capital.
Besides that, the responsibility of the company’s owner must be restricted to the company’s capital. The limited liability of the firm’s founder indicates that they have designated a portion of their inheritance for the business activity and are therefore accountable to the extent of their shares in the company capital.
Although an Egyptian representative office might be entirely foreign-owned, it is not permitted to perform direct sales in Egypt. According to Egyptian Company Law, such an office can only do tasks unrelated to conducting business, such as market research.
Documentation for company registration in Egypt
The General Authority for Investment and Free Zones (GAFI) is the primary regulatory body responsible for establishing companies in Egypt. The following are the documents necessary to register each form of business entity:
Required documents for establishing a joint-stock and limited by share entity
- You need to provide an authorized authentication document of non-confusion for the Commercial Register.
- Provide a bank authentication document indicating a commitment of at least 10% of the shares issued.
- Provide documentation of all founders’ applicable legal agreements (minimum of three founders). For comparison, you should produce the original powers of attorney.
- You should offer copies of the founders’ legitimate identification.
- Provide an authentic original certificate received from the Register of Accountants and Auditors stating that the company’s auditor is authorized to evaluate and approve the company’s budgets. If you previously provided the original to GAFI, you must give an acceptance declaration.
- Provide a copy of the attorney who signs the terms of the association’s Bar Association Card;
- To provide a background check on foreign entrepreneurs;
- Provide the contact details of the business’s licensed lawyer.
- If you wish to incorporate a firm to operate under the Free Zones System, you need to provide the aforementioned required paperwork together with the following:
- Before incorporation, you require GAFI clearance for the public free zone.
- Before incorporation, the Cabinet must approve the private free area.
The documentation needed to form a Limited Liability Company (LLC)
- Provide a lawyer’s written consent powers from all collaborators (a minimum of two partners) are required to be legalized by the Egyptian official.
- Produce copies of the founders’ legitimate IDs or passports;
- Issue an original accredited document acquired from the finance register to evaluate and authorize the company’s financial statements. If you provided the original previously provided to GAFI, you must give an acceptance statement.
- Provide the Commercial Register has authorized an authentication of non-confusion of the company name;
- Provide the contact details of the business’s licensed lawyer.
- If you are distributing in-kind shares upon formation, You need to present the report produced by specialists trained in the professions specified by law.
The paperwork required to establish a Limited Liability Company (LLC)
- Provide a completed authorization that the Egyptian official must approve.
- You need to choose the name of the company.
- You need to transfer the company’s capital to extract the bank verification.
- Please include a document of the owner’s identification.
- Include a verification from the business’s assessor.
Registering a company in Egypt should not be too difficult with the right service provider. Hence, I strongly recommend that you take appropriate amount of time to perform your benchmark of potential business partners to assess correctly the service provider. Getting the right partner and information will contribute to the success of your business launch and growth in Egypt.
Should you have any question on the above article, please do not hesitate to contact me via email at firstname.lastname@example.org