EGYPT Law and Practice Contributed by: Mohamed Hashish, Heba El Abd, Mariam Rabie, Mohamed Selim and Abdelaziz Mohamed, Soliman, Hashish & Partners
corporate vehicle because an LLC has a simplified corporate structure compared to a JSC. However, it is worth noting that depending on the activity of the company, a specific corporate structure may be required for certain activities such as bank - ing activities. Further, depending on the company’s activities, a company may be formed under different laws, such as the Capital Markets Law No 95 of 1992. 3.2 Incorporation Process An incorporation application is submitted to the General Authority for Investment and Free Zones (GAFI), which is the regulatory authority overseeing the incorporation of companies in Egypt. Attached to such incorporation applications are a set of docu - ments including corporate documents related to the shareholders or partners, passports of the directors or shareholders, the auditor’s acceptance letter, certifi - cate of non-confusion of the company’s name, bank certificate and the lease agreement of the company’s premises. The Articles of Association and/or statutes of the com - pany are then issued by GAFI after the provision of the relevant details such as share capital, auditor’s infor - mation, address, duration of the company, directors/ managers and the company’s commercial register. The incorporation process may vary depending on the readiness of all necessary documents required to be submitted at the time of incorporation. However, once all documents are ready, the incorporation pro - cess usually takes from one to two weeks. However, GAFI offers VIP services for the incorporation process for an additional charge of EGP10,000 (equivalent to approximately USD192). 3.3 Ongoing Reporting and Disclosure Obligations Foreign investments are subject to review and screen - ing by GAFI. All companies incorporated in Egypt that are entirely or partially owned by non-Egyptian inves - tors (collectively, non-Egyptian-owned companies), regardless of the percentage of the ownership or the applicable legal regime, must regularly submit their Foreign Direct Investment (FDI) Data to GAFI, which includes information on, inter alia, foreign sharehold -
ers, corporate and financial information, pursuant to Decree No 2731 of 2019, as follows: • within 30 days of the incorporation date or the date of any change in the non-Egyptian-owned com - pany’s capital, purpose, shareholding structure or board members (as the case may be); • within 45 days of the end of each quarter of the calendar year; and • within four months of the end of the relevant non- Egyptian-owned company’s financial year. Further, failure to satisfy the FDI requirement will entail a penalty fine of EGP50,000 for non-Egyptian-owned companies, in accordance with the Investment Law No 72 of 2017. 3.4 Management Structures The one-tier management structure, where one gov - erning body is responsible for management and deci - sion-making, is widely considered the most common management structure in Egypt. For example, a JSC primarily consists of the board of directors, which is responsible for overseeing the operations of the com - pany and making major decisions; they are elected or appointed by the shareholders of such company. Further, the executive management may be chaired by a CEO or managing director who is responsible for the day-to-day operations of the company and execut - ing resolutions and decisions taken by the board of directors. Further, the general assembly of the com - pany generally has the authority to elect or dismiss directors, approve financial statements, increase the company’s capital and take other important decisions in relation to the company. 3.5 Directors’, Officers’ and Shareholders’ Liability The Companies Law No 159 of 1981, in general, does not recognise the concept of piercing the corporate veil, therefore, the liability of shareholders in a JSC or allotment holders in an LLC is strictly limited to the paid-in capital. However, the aforementioned rule is subject to certain exceptions, such as if the number of shareholders in a JSC becomes less than three, then the concept of piercing the corporate veil shall apply to the remaining
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