EGYPT Law and Practice Contributed by: Arig Ali and Lana Abd El-Rassoul, Zaki Hashem, Attorneys at Law
qualified and experienced advisors, such as law - yers, accountants, and technical experts. Furthermore, due to increased regulation in sec - tors such as fintech, which have stringent tech - nology-related requirements, certain sectors, including e-payments and NBFS, require prior regulatory approval (from the CBE in the event of e-payment or the FRA for NBFS) before due dili - gence can proceed, affecting overall timelines. Additionally, the Egyptian Competition Author - ity has recently issued guidelines governing the exchange of information between competitors during the due diligence process, particularly in the context of transactions that may result in economic concentration. 3.2 Process Engagement of Counsels In investment rounds, it is customary for both the investor and the company to engage sepa - rate legal counsel. Where multiple investors are involved, each may also choose to retain its own advisor rather than appointing a single rep - resentative. While Egypt has a well-established community of experienced practitioners in pri - vate equity, the market for VC remains relatively nascent in terms of the number of professionals with deep, specialised VC expertise (whether legal, financial or technical). This evolving land - scape may, at times, influence the pace and execution of financing rounds, particularly in the absence of dedicated, locally adapted VC tem - plates such as those developed by the National Venture Capital Association (NVCA) and the Brit - ish Venture Capital Association (BVCA). Expected Timeline The duration of financing rounds in Egypt can vary widely depending on the maturity of the company, deal complexity, and number of stake -
holders involved. VC transactions no longer take a few months to be concluded. Currently, VC transactions – particularly those involving international investors and multiple legal layers – may extend to twelve to fifteen months. This extended timeline, driven primarily by rigorous due diligence requirements and negotiations and execution of agreements overriding any existing contractual arrangements concluded between the founders, among themselves, or with early investors, has resulted in more frequent use of When investments are structured directly at the level of Egyptian companies, it is common for savvy founders to anticipate future fund - ing rounds during their initial negotiations with early investors. At this stage, they often seek to include clauses in the original agreements that facilitate the entry of future investors – such as provisions requiring existing shareholders to waive their pre-emption rights in capital increas - es dedicated to onboarding new investors (sub - ject to certain contractually agreed criteria). This approach ensures that future investors can acquire their desired stake in the company with - out being constrained by proportionate partici - pation rights. 3.3 Investment Structure In light of prevailing offshore acquisition trends, many investment structures tend to reflect inter - national standards. Domestically, however, share classes and preferences are governed by the Companies Law, which provides an exhaustive list of permissible preferences – namely, voting rights, dividend entitlements and liquidation pro - ceeds. The law further prohibits combining vot - ing and liquidation preferences, and mandates equal treatment of shares within the same class in terms of rights, obligations, and limitations. tranche-based funding structures. Facilitation of New Investor Entry
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