How To Set Up A Limited Liability Company In Egypt? – Corporate/Commercial Law | #corporatesecurity |

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Egypt:

How To Set Up A Limited Liability Company In Egypt?


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The Limited Liability Company (LLC) is the most popular type
formed by foreigners in Egypt due to its distinctive legal system,
so the question is how to set up a limited liability company in
Egypt?

The Companies Law No. 159 of 1981 governs the formation,
acceptable activities, and dissolution of LLC’s as
follows:

  1. Registration:
  • Limited liability companies have to
    be registered in the Commercial Registry and are subject to the
    supervision and inspection of GAFI.
  1. Scope of
    Activities
  • Limited liability companies are
    precluded from activities in the areas of insurance, banking,
    savings, and investment management.

  • Apart from the preceding areas of
    activity, limited liability companies can carry out legal
    commercial activity similar to other business entities, subject
    only to the general limitations of applicable laws and
    regulations.
  1. Management and
    Control
  • There is no express provision
    indicating a maximum ceiling for ownership of capital by
    foreigners. Hence, a limited liability company may be 100%
    foreign owned
    .

  • However, it should be noted that,
    under Egyptian law, a limited liability company cannot be wholly
    owned by one entity. Consequently, there must be at least
    two partners. With respect to management, it is
    carried out by managers appointed by the partners.

  • The maximum number of shareholders
    allowed is 50. No restrictions exist regarding
    shareholders’ residency location or nationality. Shareholders
    may be natural persons or corporate bodies.

  • There may be one or more managers. It
    should be noted that before the last amendments, it was a
    requirement to have at least one Egyptian manager,
    but after the amendments, such requirement is
    omitted.
  • A security check
    shall be carried out for the foreign manager.
  • No minimum capital is required in
    LLC, however it is worth noting that if the foreigner needs to
    obtain work permit, then he shall submit a bank certificate proving
    that his contribution in the capital of the company is 35000 USD;
    in order to be able to apply for a work permit.
  • The Memorandum of
    Association
    must name all of the managers and specify the
    definite term of appoint length or if an indefinite period.
  1. Capital
  • There is no minimum capital for a
    limited liability company. Shares can be issued for non-cash
    consideration with the approval of a partners’ meeting.

  • Before the last amendments, it was a
    requisite to pay the total share capital in full upon
    incorporation, but now there is no need to pay the same.
  1. Taxes
  • Limited liability companies are
    subject to tax on companies’ profits.
  1. Supervisory
    Board
  • If the number of partners in the LLC
    exceeds 10, a supervisory board consisting of at
    least three partners must be created. The supervisory board
    maintains the right to request access to all accounting records,
    requires reports from the managers, verify all available cash and
    assets, and review all of the LLC’s financial statements
    before they are presented to the annual general meeting.
  1. Obligatory official
    documents
  • Opening an Insurance File; and

  • Issuing a Value Added Tax File.
  1. Required Documentation for
    the Company Formation
  1. A certificate of non-confusion of
    company name approved by the Commercial Register;

  2. Copies of relevant powers of attorney
    from all founders (minimum two founders) .It shall be noted that
    Original Powers of Attorney must be submitted for matching against
    the copies;

  3. Copies of valid personal ID of
    founders;

  4. An official original certificate
    obtained from the register of Accountants and Auditors to the
    effect that the company’s auditor is entitled to review and
    approve the budgets of the company. In case the original was
    previously furnished to GAFI, a copy must be submitted;

  5. A copy of the Bar Association Card of
    the lawyer who signs the articles of association;

  6. A security check on foreign founders
    and managers;

  7. The name and address of the
    company’s legal consultant (who must be a lawyer at least
    admitted before the Court of Appeal);

  8. Copies of the Birth Certificates for
    the managers; in order to be able to open an insurance file;
    and

In the event of sharing in-kind shares upon incorporation, the
report provided by the experts specialized in the professions
stated by the law, must be

Originally published 24 July, 2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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