EGYPT Law and Practice Contributed by: Mohamed Hashish, Heba El Abd, Farida Rezk, Omar Aboul-Ella, Mariam Rabie and Mohamed Selim, Soliman, Hashish & Partners
2.2 Procedure and Sanctions in the Event of Non-Compliance Prior to engaging in any business in Egypt, upon the incorporation application of the company, or upon the approval of a general assembly meet - ing for changes in the shareholding structure, a security clearance application is submitted to the relevant authority indicating all relevant data of the foreign investor. Generally, investing in Egypt without obtain - ing a security clearance or any other neces - sary approvals for engaging in business may have legal ramifications, which could include legal penalties such as fines or other sanctions imposed by the relevant regulatory authority, restrictions on business operations and activi - ties through a suspension imposed by the rel - evant governmental authority and the eventual disruption of any business plans the foreign investor may have made, severe financial losses, and contractual issues where certain contracts may be deemed null and void due to the lack of obtaining the necessary approvals, all of which may result in severe reputational damage to the business. 2.3 Commitments Required From Foreign Investors In certain circumstances, the regulatory authori - ties may require certain conditions such as: • a minimum capital for obtaining certain approvals and licences; • the creation of a minimum number of jobs for Egyptian nationals; and • requiring foreign investors to use a minimum percentage of local resources in their prod - ucts.
2.4 Right to Appeal Foreign investors have the right to appeal and review such decisions by way of referral to an administrative court, which has exclusive over - sight over any administrative matter. Further, foreign investors may refer any dispute to inter - national arbitration subject to certain conditions under the relevant Bilateral Investment Treaty (BIT), whereby any award issued in favour of investors will be enforceable vis-à-vis any assets owned by the Egyptian government outside Egypt. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity Both the Companies Law and the Trade Code provide several legal forms of business, similar to those legal forms that are available in North The two most common types of companies selected by investors in Egypt are JSCs and LLCs, whereby the capital of a JSC shall be owned by at least three shareholders and consti - tute a minimum capital of EGP250,000. Where - as, for an LLC the minimum number of partners is two and no minimum capital is required. An LLC is usually the most recommended corporate vehicle because an LLC has a simplified corpo - rate 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 banking activities. Further, depending America and Europe, such as: • branch of a foreign company; • joint stock company (JSC); • limited liability company (LLC); and • one-person company (OPC).
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