EGYPT Law and Practice Contributed by: Arig Ali and Lana Abd El-Rassoul, Zaki Hashem, Attorneys at Law
7. Regulation 7.1 Securities Offerings
when Prime Minister’s Decree No 1120 of 2024 amending certain provisions of the Executive Regulations of Competition Law entered into force. Failure to obtain this approval may result in financial penalties. Certain sectors also require specific regula - tory approvals/notifications when acquisitions are carried out. For example, in the e-payment sector, Banking Law No 194 of 2020 imposes different obligations on both acquirers and tar - gets in connection with transfer of ownership. If the stake to be acquired exceeds 5% of the issued share capital of an e-payment compa - ny, the acquirer is subject to a post-acquisition notification obligation from the CBE. If the stake exceeds 10% of the issued share capital, or vot - ing rights, or any percentage that leads to con - trol of the e-payment company, prior approval of the acquisition from the CBE will be required. Failure to observe these conditions may result in penalties, financial or other. According to FRA Decree No 178 of 2024, similar rules apply to acquisitions of NBFS companies, but under the umbrella of the FRA. Additionally, as stated in 3.1 Due Diligence , conducting a due diligence exercise on e-payment or NBFS targets requires prior regulatory approval. As for currency restrictions, it should be noted that there are no restrictions on the repatriation of funds. However, this is dependent on the availability of foreign currency in the investor’s Egyptian bank, and is subject to the CBE’s prior - ity guidelines.
With respect to companies conducting VC activities, for the POF and GP/LP allowed under Decree 2018, see 2.1 Fund Structure in relation to the information memorandum (IM). Addition - ally, certain criteria are required for founders of NBFS companies, such as a holding company (at least 25% of the capital must be owned by financial institutions and two-thirds by Qualified Investors), as well as criteria required from inves - tors (see 2.3 Fund Regulation ). If the investment is made at the level of the port - folio companies, the offering of their securities does not require an IM as they are closed enti - ties. However, if they are structured as LLCs, the Companies Law provides that they can have no more than 50 partners. 7.2 Restrictions Foreign investments face ongoing regulatory challenges, including currency restrictions and sector-specific acquisition requirements, despite recent improvements to the regulatory frame - work. Law No 175 of 2022, amending certain provi - sions of Egyptian Competition Law No 3 of 2005, introduced a pre-merger control regime extend - ing the powers of the Egyptian Competition Authority to pre-approve acquisitions that meet various criteria in terms of turnover and control. This regime was implemented as of 1 June 2024,
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