SET UP A BUSINESS
There are many legal forms of businesses in the Arab Republic of Egypt, but the most common of them are:
⇒ Legal Entities
Joint Stock Company
The capital of such companies is divided into shares with equal value. The shareholder is not accountable for the company’s debts except within the limit of the shares they have subscribed in.
It is worth noting that the number of founders should not be less than 3; moreover, the issued capital shall conditionally, be fully subscribed and each subscriber shall pay at least (10%) of the nominal value of the cash shares upon incorporation, to be increased to (25%) within a period not exceeding 3 months from the date of incorporation, providing the balance of that value (75% of the shares value) shall be settled within a period not exceeding five years from the date of the company’s incorporation. The company shall be managed by at least three BOD members.
Limited Liability Company
They comprise two or more partners (not less than 2 and not exceeding 50 partners), each partner shall only be liable for the shares he owns (they are not liable for the Company’s debts), noting that the capital is paid in full at incorporation. The company shall be managed by a manager or managers.
Sole Proprietor Company
Every natural or juridical person may –within the limits of the objectives for which it was established- a corporation- individually incorporate a company in the form of a sole proprietor company, which shall be of limited liability. The law stipulates that the minimum limit of the capital of a sole proprietor company is fifty thousand pounds. The company is deemed under liquidation by force of law if part of the capital of one or more persons is disposed of and the status is not reconciled within 90 days, provided the authority must be notified; this company is a limited liability company except for in certain cases.
Branch of the Foreign Company
The branch acquires the legal form of the parent company, and it is managed by the appointed manager in implementation of decisions of the parent company. It is worth noting that opening a branch for a foreign company requires the existence of a transaction or a contract, the execution of which entails the existence of a branch for the foreign company.
Representation Offices
Foreign companies may open a representation office, the task of which shall be restricted to studying the Egyptian market, forming the relation network as a prelude to commence investment in Egypt. The representation office is prohibited from conducting any commercial business, and in financing its expenses, it relies on the funding it receives from the head office.
⇒ Investment Guarantees and Incentives:
Some activities may be established under Investment Law, where the State guarantees for the investor treatment, which is similar to that granted to the national investor, together with some exceptions given to the foreign investor. The State grants residence to the foreign investor in Egypt throughout the period of the project, respecting and enforcing the concluded contracts, in accordance with the provisions of the law.
It is worth noting that investment projects, subject to this law, enjoy the general incentives, with the exception of the projects established under the free zones system. They are exempted from stamp tax, registration and real estate notarization charges on incorporation contracts, credit facilities contracts and mortgage contracts related to their businesses, for five years from the date of their registration with the Commercial Registry.
As for investment projects that are established under the umbrella of Investment Law, they are granted a special investment incentive, deducting from the net profits that are subject to tax, as per the following:
– A 50% discount off the investment costs of Sector (A). This sector includes the geographic locations which most urgently need development, in accordance with the Investment Map.
– A 30% discount off the investment costs of Sector (B). This sector covers the rest of the areas in the Arab Republic of Egypt, in accordance with the distribution of the investment activities.
Activities and Fields Subject to the Provisions of the Investment Law:
→ First: Industry Sector which includes the following:
1. Industrial activities, which involve the transformation of substances and raw materials.
2. Designing or manufacturing of industrial machinery, equipment, and production lines.
3. Activities of the cinema industry, such as constructing, or leasing of motion picture studios and laboratories.
4. Integrated industrial development of industrial zones, or completion of development process, marketing, or management of industrial zones.
→ Second: Agricultural and Animal, Poultry and Fish Production Sector, including the following:
1. Reclamation and cultivation of wastelands or desert lands.
2. Animal, Poultry and Fish Production.
3. Genetic engineering in plant and animal fields.
→ Third: Trade Sector, which includes projects investing in the area of internal trade development.
→ Fourth: The Education Sector, of all types and levels.
→ Fifth: The Health Sector, which includes the following:
1. The establishment of specialized, integrated or general hospitals.
2. Diagnostic or therapeutic medical centers.
→ Sixth – Transport Sector, which includes the following:
1. Mass transport within, and from/to the cities and urban communities according to the following controls.
2. The river, maritime and coastal transport to the ships operating under the Egyptian flag and overseas.
3. Air transportation and directly-related services.
4. Land transport of goods.
4. Land transport of goods.
5. Refrigerated land transport of goods and refrigerators for storing the crops, the industrial products and foodstuff.
→ Seventh: Tourism Sector, which includes the following:
1- Hotels, safari yachts, motels, serviced apartments, resorts, tourist camps and tourist transportation, including the following:
a. Floating and non-floating hotels, safari yachts.
b. Tourist camps, provided that their rating must not be less than 3 stars.
c. All specialized means of tourist transportation.
d. Integrated tourism development projects.
2. Tourist management and marketing of hotels, motels, serviced apartments and resorts.
3. Establishing, operating and managing Nile berths with all relevant services necessary for their tourist operation and security.
4. Building and operating yacht marinas, golf courts and diving centers.
5. Medical tourism for patients through organizing the procedures of reserving places in hospitals, medical and therapeutic centers.
6. Eco-tourism through the establishment and management of environmental hostels, locations of watching the birds and coral reefs.
7. Service companies at the archeological sites and museums.
→ Eighth: Housing, Construction and Building Sector, which includes the following:
Housing projects that all the units thereof are leased for non-administrative housing purposes, social housing projects and real estate investment in cities, new urban communities, the infrastructure of potable water, sanitation, electricity, roads, communications, etc.; planning, establishment and development of the urban areas.
→ Ninth: Sports Sector: It includes all the services provided through the sports field.
→ Tenth: Electricity and Energy Sector: It includes designing, construction, production or management and operation and maintenance of electricity and energy generating plants.
→ Eleventh – Petroleum and Natural Resources Sector, which includes the following:
1. Auxiliary oil services of drilling and exploration operations.
2. Construction or management of the natural gas receiving.
3. Activities related to the natural or artificial saline.
→ Twelfth: Water Sector
→ Thirteenth: Communications and Information Technology Sector, including:
1. Information technology and communication industry including the industrial activities, designing and developing the electronics, data centers.
2. Design and production of computer equipment.
3. Design, implementation and management of information and communication infrastructure projects.
4. Communications and internet services.
5. The projects investing in the development of intellectual property rights.
6. Establishment of audio, video and data transfer networks.
7. Establishment or management and operation and maintenance of telecommunication stations.
8. Scientific research and development projects for development.
9. Construction and management of training centers for preparing researchers.
10.Construction and management of consultation and study centers specialized in information and communication areas.
11. Activities related to the conversion of the conventional content of sound, image and data to digital content.
*Disclaimer: This material has been prepared for general informational purposes only and is not intended to be relied upon as legal, accounting, tax or other professional advice.