How can a foreigner open a company in Egypt

Egypt has implemented a number of comprehensive measures to support foreign investment and the establishment of enterprises owned by foreigners. According to the legislation of the country, foreign citizens have the right to fully own their companies. Foreign investors are granted some benefits, but there are also a number of restrictions and requirements, such as obtaining a residence permit and registering a company with local authorities.

The country has laws and regulations that regulate their activities, these include the law on corporations (Companies Law No. 159 of 1981), on investments (Investment Law No. 72 of 2017), commercial law (Capital Markets Law No. 95 of 1992) and others.

General Organization for Free Zones and Investments under the Ministry of Investments of Egypt (GAFI) — this is a structure that registers companies and individual entrepreneurs in the country.

Examples of legal forms of companies in Egypt:

• Shareholder company — joint-stock company;
• Joint Stock Company — open joint stock company;
• Limited Liability Company — limited liability company;
• Partnership Limited by Shares — share limited partnership;
• Branch — branch;
• Representative Office — representation.

According to Egyptian law, the name of the company must be checked for uniqueness during registration. The name of the LLC must be derived from the purposes of the company and may include the name of one or more of its members/shareholders. The name must also include the words "Limited Liability Company". (in accordance with the Ministerial Decision Implementing the Commercial Companies Law).

Requirements for registering a company in Egypt

1. Reserve the name of the company in the Commercial Register (at least 3 names).
2. Get a bank statement.
3. Certify the required documents.
4. Register a company with GAFI.
5. Register with the Egyptian tax authority.
6. Register with the National Social Security Administration.

It is important to note that neither originals nor copies of company documents can be apostilled in Egypt due to the fact that the country is not a party to the Hague Apostille Convention (1961). For the procedure of registering a company in Egypt and the subsequent use of documents of an Egyptian company in other countries, legalization of documents may be required. The legalization procedure takes place at the consulate of the country in which they are planned to be used.

It is obligatory to have a registered office (legal address) in the country.

To be classified as Egyptian residents, foreign companies and partnerships must meet one of the following conditions:

• Legal entity established under Egyptian law.
• Government or public authority owns more than 50% of the capital of the enterprise.
• The actual place of management is in Egypt. Egypt is considered a place of management if the organization meets any two of the following conditions:
• Daily management decisions are made in Egypt.
• Members of the board of directors hold their meetings in Egypt.
• At least 50% of the board members or managers live in Egypt.
• The major shareholders (owners of more than 50% of the shares or voting rights) reside in Egypt.
• Permanent Establishment

Legal organizational and legal forms of commercial companies in Egypt:

Private business

It is possible to open by one individual, the limits of the authorized capital are not set. If the trading capital is less than 20,000 Egyptian pounds, then accounting records may not be kept. The founder must be an Egyptian citizen (exception for those involved in export activities). A self-employed person (PE) with a trading capital of LE 20,000 or more must maintain appropriate accounting records in the prescribed form.

Limited Liability Company

Minimum share capital: LE 1000, the amount must be deposited 100% in the bank before the establishment of this type of company.

Number of partners: at least 2 partners, founders can be foreign persons, each founder is liable within the limits of the contribution made to the authorized capital of the company.

Management: one or more managers, one of them must be an Egyptian citizen, the manager has the status of a director.

Joint stock company

Minimum share capital: 250,000 Egyptian pounds, 25% bank deposit, sums can be paid in two stages, 10% — before the establishment of the company and 15% within 3 months, and the rest must be paid within 5 years.

That is, at least 50% of the authorized capital must belong to the founders, at least 25% of the share capital must be paid during the formation of the company, the rest of — up to 5 years.

Number of partners: 3 partners minimum, founders can be foreign citizens, each founder is responsible within the limits of the contribution made to the authorized capital of the company.

Branch or representative office

In Egypt, a foreign company has the opportunity to open its branch or representative office. But there are a number of some restrictions — the company can study the market conditions, conduct preparatory operations for implementation, but it is forbidden to independently engage in intermediary or commercial activities in the country. When a foreign company needs to organize a service, sales network, promote its goods or services in Egypt, it is required to conclude an agreement with a commercial agent (dealer, distributor), and also register its representative office in accordance with the Law of Egypt "On Commercial Agencies".

A wide range of opportunities opens up due to the fact that Egypt provides the right to register a company in one of the special economic zones (Free Zone, Industrial Zone, Commercial Zone, etc.) to obtain certain tax advantages.

Free Zone — the right to sell products only for export, and not within Egypt. What is produced or imported is not subject to customs duty and VAT on export (1%-3% annual VAT).

Industrial Zone — the right to produce, export and sell in Egypt. What is produced or imported is exempt from customs duty and VAT when exported, when sold in Egypt, only VAT is refunded.

Commercial Zone has no factories, workers, or machinery. There is no import of materials and production in such zones. Non-manufacturing commercial firms are usually registered here.