EGYPT Law and Practice Contributed by: Nadia Abdallah, Zahra Ashraf, Beshoy Mounir and Yasmine Attia, Matouk Bassiouny & Hennawy
green transformation strategy and produce electricity from renewable energy sources. Furthermore, the Egyptian government has announced ambitious projects to produce green hydrogen in the Suez Canal Economic Zone, with the objective of utilising renewable resources in the region to gener- ate green hydrogen and export it to global markets. During COP27, held in Sharm El-Sheikh in November 2022, Egypt (acting through the New and Renewable Energy Authority, the Egyptian Electricity Transmission Company, the General Authority for Suez Canal Eco- nomic Zone, and the Sovereign Fund of Egypt Infra- structure and Utilities Sub-Fund) signed framework agreements with several national and international investors for the purpose of installing and operating green hydrogen and ammonia plants. Such agree- ments reflect the country’s efforts to attract foreign investments into green hydrogen production. Regarding conventional power sources, Egypt’s first major nuclear power plant at El Dabaa is expected to be a significant addition to the energy sector. 2. Establishing and Exiting Early- Stage Companies in the Energy and Infrastructure Industry 2.1 Establishing and Financing a New Company The key considerations when establishing a company in the energy and infrastructure industry are the pre- ferred corporate structure and investment vehicle as well as the required regulatory and licensing frame- work. In acquisition scenarios, it is common for investors to form a holding company in an offshore jurisdiction to take advantage of beneficial tax treatment and appli- cable treaty protections. This holding entity would then either acquire the shares of the Egyptian target or incorporate a local subsidiary to which the assets can be transferred. For energy and infrastructure projects in Egypt, which are currently quite common, the project company is usually set up as a joint stock company. The incor-
poration process generally takes up to ten business days, provided all required documentation is complete and accurate. Although the statutory minimum capital for establishing a joint stock company is EGP250,000, a higher capital amount may be required depending on the specific sector, whether the company is located in a special economic or free zone, and any capital requirements imposed under applicable bidding or tender procedures. Generally, such type of venture is common in Egypt. However, start-ups and early-stage companies would generally obtain venture capital financing from a com- bination of both local and foreign investors, whilst new entities acquiring an existing business can obtain external financing from banks and financial institu- tions, whether acquisition finance and/or project financing. 2.2 Liquidity Events Depending on the scale and maturity of their opera- tions, companies may consider several types of liquidity events, including: (i) an initial public offer- ing (IPO); (ii) a share sale, whether through a merger or acquisition; or (iii) an asset sale. For energy and infrastructure players, asset sales can be an effective and flexible strategy to unlock capital and reposition investment portfolios, albeit with potential complexity and extended timelines. Below is a brief overview of such liquidity events. IPO As a general rule, the listing of Egyptian companies is regulated under the Egyptian Capital Market Law No 95 of 1992 and its Executive Regulations (as amended) (Capital Market Law) as well as the Egyp- tian Exchange (EGX) listing and de-listing rules. Typically, a mature company is more likely to list its shares on the domestic exchange rather than pursu- ing a dual listing, in order to avoid additional obliga- tions – such as obtaining approvals from both domes- tic and foreign authorities – and to mitigate the risks and uncertainties of listing abroad. Private Sale of Shares Generally, the sale process (whether in the form of primary or secondary transactions) as a liquidation
110 CHAMBERS.COM
Powered by FlippingBook