EGYPT Law and Practice Contributed by: Nadia Abdallah, Zahra Ashraf, Beshoy Mounir and Yasmine Attia, Matouk Bassiouny & Hennawy
5.2 Primary Securities Market Regulators The primary securities market regulator in Egypt is the EGX. 5.3 Restrictions on Foreign Investments Restrictions on Foreign Investment Generally, foreigners can participate in the ownership of Egyptian companies, pursuant to the applicable Egyptian laws. There are, however, specific activities that trigger foreign ownership restrictions, including but not limited to the following: • Companies undertaking commercial agency activi- ties should be fully owned and managed by Egyp- tians up to the ultimate beneficial owner. • Projects operating in specific areas inside the Sinai Peninsula require at least 55% of their sharehold- ing to be held by Egyptian nationals. • Companies undertaking activities of private secu- rity and guarding services and transport of funds (ie, physical transport and safeguarding) must be fully owned by Egyptian nationals or by companies that are fully owned by Egyptian nationals. Foreign Direct Investment Filing All Egyptian companies with foreign shareholders or board members are required to submit a form to GAFI including information on, inter alia, foreign sharehold- ers and financial information no later than 45 days before the end of each quarter (and no later than 30 days in the event of any changes to the company). Failure to submit the required information to GAFI is punishable by a fine not exceeding EGP50,000, as per Article 91 bis of the Investment Law. It is worth not- ing that such penalty has not yet been implemented in practice. 5.4 National Security Review/Export Control National Security Review Foreign shareholders and foreign director or non- director delegates (individuals or entities) must obtain security clearance from the security authorities for such person/entity to become a shareholder or direc- tor in any Egyptian company. The security clearance process is conducted through GAFI by submitting a designated form along with notarised and legal- ised corporate documents. GAFI then contacts the security authorities to obtain their clearance. In most
ing documents and the submission of executed buy and sell orders. The transfer of shares is evidenced by virtue of an updated shareholders’ statement issued by Misr for Central Clearing, Depository and Registry S.A.E. As for limited liability companies, the transfer of quotas is executed by virtue of an extraordinary general assembly meeting (provided that the appli- cable attendance and voting quorum is met) and the annotation of the transfer in the quota ledger. Asset acquisitions are less common, as they typically involve longer procedures, with each asset potentially requiring approval from multiple authorities and com- pliance with distinct regulatory requirements. These acquisitions are generally accompanied by standard transaction documents, including a share purchase agreement, asset purchase agreement, and/ or a shareholders’ agreement. As part of the acquisi- tion process, both legal, financial and tax due dili- gence are generally undertaken. 5. Overview of Regulatory Requirements 5.1 Regulations Applicable to Energy and Infrastructure Companies Incorporating a new company in the energy and infra- structure industry is generally subject to the general regulations applicable to the establishment of compa- nies. The licensing requirements, process and timeline necessary prior to the commencement of operations would vary depending on the nature of the project. Typically, for companies undertaking industrial activi- ties, an industrial operational licence from the Industri- al Development Authority (IDA), along with registration in the IDA’s industrial register, is required. In addition to the above, an environmental approval from the Egyptian Environmental Affairs Agency is generally necessary. For energy projects, the genera- tion, distribution, and/or sale of electricity requires a licence from the Egyptian Electric Utility and Consum- er Protection Regulatory Agency.
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