Doing business in: ("Egypt")




Egypt's Constitution in Arabic
Egypt's Constitution in English
Legal Forms in Arabic
Egypt Laws 
Civil and Commercial Laws
Sales Tax 
Labor Law
Arbitration
Egyptian Bar Association

N.B
For Egypt Governmental online services for Egyptians and work permits for expats, and to obtain other official documents such as issuance of IDs, marriage  and divorce certificates, certificates of birth , family registration and other civil register online services, where you can pay online by credit cards, or in cash upon home delivery, please click on this following link:
 http://www.cso.gov.eg/index.aspx?lid=11 

For Arabic legal forms and contracts, please click here



 

LEGAL GUIDE TO INVESTING IN EGYPT

I. Egypt

Egypt is ranked 128 in the World Bank Report of 2014 on doing Business.
Population: 76.5 million (June 2006 estimate)
Currency: Egyptian Pound (EGP)
Language: Arabic (official).
Capital: Cairo
Legislative Power: Egypt has a legislature, made of the elected People's Assembly (Parliament).
Member of International
Organizations:
Egypt is a member of ABEDA, ACCT,
AfDB, AFESD, AMF, AU, BSEC
(observer), CAEU, COMESA, EBRD,
FAO, G-15, G-24, G-77, IAEA, IBRD,
ICAO, ICC, ICCt (signatory), ICRM,
IDA, IDB, IFAD, IFC, IFRCS, IHO, ILO,
IMF, IMO, IMSO, Interpol, IOC, IOM,
IPU, ISO, ITSO, ITU, LAS, MIGA,
MINURCAT, MINURSO, MONUC,
NAM, OAPEC, OAS (observer), OIC,
OIF, OSCE (partner), PCA, UN,
UNAMID, UNCTAD, UNESCO,
UNHCR, UNIDO, UNMIL, UNMIS,
UNOMIG, UNRWA, UNWTO, UPU,
WCO, WFTU, WHO, WIPO, WMO,
WTO (Source: CIA World Factbook, as
of December 18, 2008)



II. The Legal System

The Egyptian Legal System is based on the French Civil Code
 (Code Napoleon), but later developed its own legal principles. The Egyptian legal system,
is based on a civil code that covers personal
rights, the law of contracts, obligations and elements of tort law.
In addition, there are specific codes dealing with other areas of law, such as
the Commercial Code, Companies Law, Investment and Capital Markets Laws, and the Code of Civil Procedures.
Egyptian administrative law is closely modeled on French
administrative law.
The Egyptian court systems are divided into civil and administrative courts.
The civil courts have jurisdiction in matters of private law, whereas the
administrative courts have jurisdiction in matters of public law. The hierarchy
of the administrative courts is referred to as the State Council (Conseil
d’Etat).
Egypt also has a written constitution that sets out constitutional principles to
which all legislation should adhere. A constitutional court handles
constitutional challenges to legislation and conflicts between civil and
administrative court’s judgments. Egypt has a recent Constitution click on this link to open the official constitution webpage http://dostour.eg/

III. Foreign Investment

Foreign individuals or corporations can make direct or portfolio investment in Egypt, either through investing in bonds and stocks at the Egyptian Capital Market:

Portfolio investment in stocks is also available to foreign and local companies and individuals through the Egyptian Stock Market and Registered Brokers at the Monetary Supervisory Authority. Some of them have electronic trading platforms. Most of the Stocks traded are T+2 settlement system. GDRs are also available for certain Blue Chips. Asset Management Funds manage assets for local and foreign investors.


A foreign investor may also directly invest by buying real estate or agriculture land, or through any of the alternatives of direct investment in Egypt by incorporating an Egyptian Company in any of the following forms:

1 Free Zones Investment
2 Inland Investment
3 Investment at the Special Economic Zones
4 Investment Zones


In order to carry out any activity in Egypt, the foreign investors must either establish a branch, or
an Egyptian subsidiary (entity). The Egyptian subsidiary can be fully-owned by foreigners
(except for some activity i.e. importation and investment in Sinai and certain strategic areas that
require a prior approval from the relevant authorities, however, limited liability companies must have an Egyptian Manager, Importers other than investment companies must be fully owned by Egyptians).

1)The Companies Law No. 159 of 1981 is the general Law governing business in
Egypt.
2)The Investment Guarantee and Incentives Law No. 8 of 1997 is the Investment Law that allows
certain activities to be privileged.
3)According to the Income Tax Law No 91 of 2005, the tax exemptions have been cancelled from
the Investment Law and the Corporate Tax rate has been reduced to become 20% instead of
42%. The investors can establish their projects either under the Investment Law or under the
Companies Law. The General Authority for Investment and free zone (GAFI) acts as the official regulator for project’s approval of their By-laws.
4)The above mentioned laws do not cover the activities related to capital market, finance lease,
Insurance, ..etc. as it should be practiced according to other Laws.
5)The companies shall comply with the provisions of the laws, regulations and decisions in force and
shall be committed to obtain the licenses necessary for practicing its activities.

Investment in Egypt, whether for foreign investors or Egyptian investors, is
governed and regulated by Companies Law No. 159 for 1981 (“Companies
Law”), Investment Law No. 8 for 1997 (“Investment Law”), and Capital
Market Law No. 95 for 1992 (“Capital Market Law”).
In general, foreign investors can invest in Egypt without any restrictions after
obtaining security clearances from the national security agencies. However,
the following activities are not open to direct investment by foreign investors:
 Importing for the purpose of trading in Egypt
 Acting as a commercial agent

In addition, certain regulatory approvals are required for foreign and local
investments in Egyptian banks and insurance companies. All foreign investment in the Sinai region is also subject to regulatory approval. Foreign investment in certain aviation activities is also
restricted.


IV. Investment Guarantees and Incentives

Pursuant to the Investment Law, entities (whether partnerships or companies)
established in Egypt as of the date of the coming into force of the law that are
active in certain fields enjoy certain guarantees and benefits. The fields in
question include the following: land reclamation, animal production,
manufacturing and mining, hotels, motels, hotel apartments, tourist resorts,
tourist transportation, cold storage and transportation of agricultural and
industrial products, air transportation and services relating thereto directly,
maritime transportation, petroleum services supporting drilling, exploration,
and transportation and delivery of gas, housing projects for non-furnished and
non-office rental, infrastructure projects for potable water, sewage, electricity
and communications, hospitals, medical centers which provide 10% of their
capacity for free treatment, and computer software programs and systems.
If an entity has, in addition to the activities covered under the Investment
Law, other activities, the guarantees and incentives would only be applicable
to the activities covered under the law.
The guarantees and benefits provided under the Investment Law include
without limitation:
 Immunity from nationalization or expropriation;
 Immunity from administrative attachment or freezing of assets;
 The right to acquire ownership of land and buildings required for
carrying on the activity in question or increasing its scope;
 The right to directly import equipment, raw materials, and
transportation vehicles appropriate for the nature of its activity;
 The right to export directly;
 Exemption from certain provisions of the Companies Law (including
the distribution of 10% of profits to employees);
 Exemption from stamp tax;
 Exemption from notarization and registration fees on the company’s
articles of incorporation, and loan and mortgages agreements related to
its business, for a period of five years starting from the date of its
registration at the Commercial Registry;
 Registration of title of land required for the company’s activities is also
exempted from the same taxes and fees; and
 A unified customs duty of 5% on import of all machinery, equipment,
and tools used to set up the company.
The General Authority for Investment and Free Zones (GAFI) has authority
over the application of this law, and issues decrees for the establishment of
entities benefiting from the Investment Law.

V. Exchange Controls

Egypt adopted, in 1976, a liberal foreign exchange policy, enacting Foreign
Exchange Law Number 97 of 1976. This has been replaced by Law Number
38 of 1994 which was consequently replaced with the Banking Law Number
88 of 2003. The Law gives any natural or juristic person the right to retain
and transact with foreign currency generated from operations in Egypt. Such
transactions must be done through banks registered with the Central Bank of
Egypt (the “CBE”) or franchised dealers.

VI. Legal Structures of Companies

Direct investment in Egypt (except for Free Zone investment) is subject to the
general corporate and commercial system in Egypt; and in certain cases, the
entity in question may benefit from additional investment guarantees and
incentives pursuant to the Investment Law if it invests in certain fields. The
most common legal vehicles used by foreign investors in Egypt are:
 Limited liability companies
 Joint stock companies
 Foreign branch office
 Representative Office
The following is a brief summary of each vehicles and the limitations and
rules that apply to each type of company.
Sole Proprietorships, simple partnerships, and limited by shares, civil companies of professionals (like lawyers, auditors) also may be incorporated by registration of its contract at the Notary Public Office.

Limited Liability Company

An Egyptian limited liability company is a closed company where the liability
of each of its partner is limited to the value of their stake in thecompany.
1) Registration
Limited liability companies have to be registered in the Commercial
Registry and are subject to the supervision and inspection of GAFI.
Any amendments to the articles of incorporation and by-laws must be
reported to and approved by GAFI.
2) Scope of Activities
Limited liability companies are precluded from activities in the areas
of insurance, banking, savings, and investment management. Apart
from the preceding areas of activity, limited liability companies can
carry out legal commercial activity similar to other business entities.
3) Management and Control
There is no express provision indicating a maximum ceiling for
ownership of capital by foreigners. Hence, a limited liability company
may be 100% foreign owned. However, it should be noted that, under
Egyptian law, a limited liability company cannot be wholly owned by
one entity. Consequently, there must be at least two shareholders.
With respect to management, it is carried out by managers appointed
by the shareholders. There may be one or more managers. In all cases,
there must be at least one Egyptian manager. Major decisions are
taken through the shareholders’ meeting, wherein either a simple
majority or a super majority may be required.
Managers and persons who are considered representatives of the
company can be held personally liable for breach of their fiduciary
duties and for certain violations of the law by the company.
Parent companies cannot be held liable because of their separate and
independent legal personality.

4) Capital
Minimum capital is 1000 EGP. Shares
can be issued for non-cash consideration with the approval of a
shareholders' meeting. However, a formal valuation is required in
certain cases where the value of the capital exceeds LE 1,000,000.
5) Taxes
Limited liability companies are subject to income and sales tax on companies’ profits and sales.
6) Profit-Sharing
As long as the capital of the limited liability company does not reach
LE 250,000 (which is the minimum capital for a joint stock company),
there is no obligation for the distribution of part of the profits to
employees. If the capital reaches the aforementioned figure, 10% of
the net profits is to be distributed to employees, provided that such
10% does not exceed the annual total value of salaries and wages
payable to such employees, provided that cash dividends has been distributed to shareholders.

Joint Stock Company

An Egyptian joint stock company may be a closed company or a listed
Company (at the stock exchange), where the liability of its shareholders is limited to the value of their
shares in the company and may not be extended to their personal money.
1) Registration
A joint stock company must be registered in the Commercial Registry
and is subject to the supervision and control of GAFI, like limited
liability companies. The Egyptian Financial Supervisory Authority
(EFSA) should be informed of the issuance of any stocks or bonds,
which should only be issued if EFSA has not objected within three
weeks of its notification. Public issues are supervised by EFSA.
Furthermore, the registration of companies working in certain fields
such as securities or factoring requires a license from EFSA. Any
amendments to the articles of incorporation and by-laws must be
reported to, and approved by GAFI (and the competent authority, in
the case of banks and insurance companies). Moreover, The company
must keep accounts and publish its semi-annual or annual audited
accounts and financial statements, duly audited by a qualified Egyptian
auditor registered at the legal auditor’s association.
2) Scope of Activities
A joint stock company can carry out all commercial activities.

3) Management and Control
There must be at least three shareholders. The management of the
company is through a board of directors comprising at least
three directors elected by the shareholders for a three-year term. The
first board of directors is elected by the incorporating shareholders and
has a term of five years. A corporate or other legal entity could be
elected as a member of the board, in which case a representative of the
legal entity is to be nominated to attend the board meetings.
Directors can be held personally liable for breach of their fiduciary
duties. In addition, persons who are considered legal representatives of
the company, such as the chairman or the managing director, can be
held personally liable for certain violations of the law by the company.
Parent companies cannot be held liable because of their separate and
independent legal personality.
4) Capital
Shares may be closely held or offered to the public. The minimum
issued capital required for a company not offering its shares to the
public is LE 250,000, of which 10% is to be paid at the time of
incorporation, to be increased to 25% within three months, and the
remaining amount of the nominal value of the shares is to be paid up
within five years. The minimum capital of a joint stock company
offering its shares for public subscription is LE 20,000,000, fully paid
up. However, in case of holding companies established for the
purposes of stock dealings and investment, the minimum capital is LE
5 million, of which at least 25% must be paid on incorporation. The
remaining amount of the issued capital is to be paid up within five
years of the date of incorporation according to the procedure and at the
rate set by the board of directors. The authorized capital is not to
exceed 10 times the issued capital. If the shares are to be offered to the
public, this must be done through a bank licensed to receive
subscriptions, a company established for this purpose, or a company
licensed by EFSA to deal in securities. Shares can be issued for noncash
consideration with the approval of an extraordinary general
shareholders' meeting. However, a formal valuation is required in
certain cases where the value of the capital exceeds LE 1,000,000.
In general, there are no limitations to the percentage of the capital that
can be owned by foreigners. However, there are some exceptions to the
previous rule. For example (as mentioned earlier) certain regulatory
approvals are required for foreign and local investments in Egyptian
banks and insurance companies exceeding 10% of the issued shares. In
addition, companies established for executing investment projects in
the Sinai Peninsula must have at least 55% Egyptian capital.
5) Taxes
Joint stock companies are subject to 20% income tax on company profits.
6) Profit-Sharing
At least 10% of the net profits are to be distributed to employees,
provided that cash dividends has been distributed to shareholders, the amount to be distributed shall not exceed the total value of the wages and salaries annually paid to the company’s
employees, however, the Labor Office has taken the
position that foreign employees are not entitled to such a distribution.

Procedures for Incorporating a Company in Egypt

No.
Procedure
Time to Complete
Associated Costs
1
Obtain a Certificate of Non-Confusion from the Commercial Registry to reserve the company name.
1 day
EGP 25
2
Obtain a Bank Certificate from an authorized bank after deposit is made
7 days
EGP 300-500
3
Submit documents to the Department of Companies and obtain invoice
1 day
see comment
4
Notarize company’s contract
1 day
included in procedure 2
5
Obtain the certificate of incorporation
1 day
no charge
6
Register for taxes
1 day
no charge
7
Open a company file and Register employees with the National Authority of Social Insurance
2 days
no charge

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Egypt, Arab Rep.. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
This information was collected by the World Bank as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2013.
No.
Procedure
Time to Complete
Associated Costs
1
Obtain a Certificate of Non-Confusion from the Commercial Registry to reserve the company name.

Entrepreneurs must reserve a company name at the General Authority for Free Zones and Investment (GAFI) one-stop shop. The Incorporation Department will first check the legality of the proposed company name. If the name is deemed to be legally admissible, the entrepreneur will then go upstairs to the Commercial Registry office in the GAFI one-stop shop to pay the required fees and obtain the certificate of non-confusion (shahadat adam al-iltibas) bearing the official government stamp (khetm el nesr).
1 day
EGP 25
2
Obtain a Bank Certificate from an authorized bank

The Bank of Alexandria branch at the General Authority for Free Zones and Investment (GAFI) issues and delivers the certificate in 1–2 days. The cost to open a bank account and obtain a bank certificate is between EGP 300 to EGP 500, depending on the bank. This certificate can also be obtained from other authorized banks.
1 day
EGP 300-500
3
Submit documents to the Department of Companies and obtain invoice

The founder submits the company documents at the reception desk of GAFI, where they are reviewed immediately by a lawyer. These documents include:

1. Original certificate of non confusion.
2. Original Bank Certificate of opening an account with an authorized bank.
3. A copy of the powers of attorney from the founders to their representative.
4. A copy of the founders' I.D. cards or passports.

5. Original certificate indicating that the company's auditor is listed at the Registry of accountants and auditors.
6. The application provided by GAFI.
7. Stamped articles of association.

A registry employee reviews the documents, and issues a detailed invoice for all fees associated with the company's establishment.


Fees for company establishment:

• Notary public fee: 0.25% of capital ( minimum of EGP 10 and a maximum of EGP 1,000 )
• Establishment fees: 0.1% of capital (minimum of EGP 100 and maximum of EGP 1,000 according to Article 17 (d) of the Companies Law)
• Commercial Syndicate fee: EGP 125 (for capital less than or equal to EGP 500,000) or EGP 250 (for capital more than EGP 500,000)
• Publication fee: EGP 150 (for a limited liability company in Arabic) or EGP 300 (for a limited liability company in Arabic and English)
• Chamber of Commerce fees: 0.2% of capital (minimum of EGP 24 and maximum of EGP 2,000)
• Commercial registration: EGP 56
• Issuance of operation certificate: EGP 29

1 day
see comment


4
Notarize company’s contract

The articles of association must be registered and certain documents deposited at the Investment Notarization Office on the first floor of the GAFI one-stop shop.

No stamp duty is levied, according to the amendments (published on July 1, 2006) to the Stamp Duty Law (No. 111 of 1980). Required are the original copies of the articles of association and the powers of attorney.
1 day
included in procedure 2
5
Obtain the certificate of incorporation

When the articles of association are submitted, the competent authority must ratify them and issue a certificate of incorporation approving the establishment of the company. This certificate is issued within 24 hours. Further, the applicant obtains the approval of the Chamber of Commerce and fills an application in order to obtain an extract of the commercial registry (at this point the company becomes an established legal entity and does not need to wait the full 15 days to start business operations). Within the 15 days if the competent authority has no objection, the Department of Companies is thereafter responsible for publishing the notice of incorporation in the Investment Gazette at the company's expense.
1 day
no charge
6

Register for taxes

Upon incorporation, the company can complete tax registration and obtain the tax card at the one-stop shop’s tax counter on the first floor. The tax cards are sent via courier to a central location in Cairo (located near the one-stop shop) for printing. If the request for a tax card is submitted before noon, the tax card will be printed out and issued on the same day. Requests submitted after noon will be processed on the following day.

Upon obtaining the card, the company may choose to register for sales tax, provided that they have started production. Companies are obliged to register for sales tax only once they reach at least EGP 54,000 in sales for industrial activities and EGP 150,000 in sales for commercial activities. The required documents include the articles of association and the powers of attorney, the bank signature authentication (to be issued to the appropriate person by the manager having the power to sign on behalf of the company), the tax card, an original extract from the company’s commercial register, and the original copy of the company’s lease agreement for its premises.
1 day
no charge
7
Open a company file and Register employees with the National Authority of Social Insurance

Social insurance provides compensation for disability, retirement (pension), unemployment, and work-related injuries. By law, employers are required to subscribe to the social insurance system. Otherwise, they may be subject to sanctions.

The following documents must be submitted to the competent authority’s office:

Company’s commercial register.
• Company’s tax card.
• Company’s articles of incorporation.
• Deed or lease agreement for company premises.

• Employer to fill in Form No. 2.
• Employer’s bank signature certificate.
• Employer’s graduation certificate.

• Employees’ to fill in Form No. 1.
• Employees’ copy of identification card.
• Employee’s graduation certificate.
• Employees’ birth certificate (copy) if they do not have a social insurance number; or Form No. 6 for clearance/termination from employees’ previous jobs.

The company premises are then subject to inspection by relevant authorities - such as the National Authority for Social Insurance and GAFI. Inspection takes place in practice only if there is any complaint filed against the company, or suspicion that the company is an image organization that does not actually conduct business as claimed in its submitted documents. Companies registering for sales tax will undergo inspection.


Foreign Branch Office
Under the Companies Law, a foreign company may establish a branch office
in Egypt to undertake certain commercial activities. Practically, the branch is
treated as an Egyptian company in all matters except corporate governance.
1) Registration
Any foreign company, whatever its legal form, which carries out any
commercial, financial, industrial or contracting activity in Egypt has to
be registered as a branch in the Commercial Registry and GAFI.
2) Scope of activity
A branch can undertake any form of legal activity in Egypt for which it
is registered in the Commercial Registry provided that it has a signed
contract with an Egyptian entity to provide the services encompassed
by such activity.
3) Management and control
A branch can be managed by a foreign manager. A branch is under the
full control of its parent company. Branch offices’ activities are subject
to review by GAFI to ensure compliance with laws and regulations.
4) Capital
Branch offices are not subject to a requirement of a minimum capital
investment. However, initial capital investments must be made in
foreign currency transferred to Egypt through a registered Egyptian
bank.
5) Taxes
The net profit of a branch is subject to corporate tax at the same rate as
Egyptian companies.
6) Profit-Sharing
Branches are bound to distribute at least 10 % of their annual net
profits to their employees (not exceeding the total annual wages and
salaries paid to workers and employees of the branch).

Representative Office

Pursuant to the Companies Law and its Executive Regulations, a foreign
company may establish a representative office in Egypt for the purpose of
performing market study and research for the benefit of the foreign company.

1) Registration
A representative office must be registered with GAFI. Bank
representative offices must be registered with the CBE. Furthermore, if
an office is designated as a “technical” representative office, it must be
registered with the Ministry responsible for its field of activity. For
example, a technical office relating to pharmaceuticals must be
registered with the Ministry of Health.
2) Scope of activity
Pursuant to Article 316 of the Regulations for Companies Law, the
sole authorized activity for a representative office is to conduct market
research, market surveys, and production studies. In the case of a
“technical” representative office, the scope also includes technical
review of products in the market.
3) Management and control
Management can be handled by a foreign manager for the
representative office. A representative office is under the full control of
the parent company. Activities of a representative office are subject to
review by GAFI to ensure compliance with laws and regulations.
4) Capital
There is no requirement for any capital investment. The parent
company pays for the expenses of maintaining the representative
office.
5) Taxes
Since a representative office is legally not involved in any commercial
activities, it does not realize any profits and as such is not subject to
taxation. Employees are subject to applicable taxes on their
employment income.
6) Limitation of Scope
Given that the scope of activity for a representative office is very
limited, a representative office may be useful to monitor commercial
activities undertaken by some other form of business entity
undertaking the actual commercial activity on behalf of the foreign
entity in Egypt. For example, a foreign entity's representative office
may be used to monitor the activities of a foreign entity’s distributor or
agent in Egypt. The office may, indirectly, assist the distributor
through the undertaking of market research and market surveys.


VII. Commercial Agreements

This section deals with arrangements whereby foreign producers or suppliers
market their products indirectly in Egypt. In other words, the producer does
not incorporate or establish a separate Egyptian entity, but carries out its
marketing activities through some form of representation in Egypt.






Agency

Agency agreements are governed by Agency Law No. 120 of 1982 and the
new Egyptian Commercial Law No. 17 of 1999.
Commercial agents must be registered at the Commercial Agents' Registry,
which issues a certificate confirming the registration. The agent must be
Egyptian or a 100% Egyptian owned company. The agency agreement must
be registered with the Egyptian Chamber of Commerce.
A commercial agent can obtain compensation if both:
 The agency agreement is terminated (or not renewed) without good
cause and without notice (or at an unreasonable time), even if the
termination was provided for in the terms of the agency agreement. All
contractual provisions to the contrary are null and void; and
 The agent has not committed an error or omission in the course of its
duties, and its activities are proven to have led to evident success in
promoting the sales of the commodity or increasing the number of
customers for the principal.
1 1
A Decree from the Minister of Trade (Number 362 for the Year 2005) placed
pressure on foreign principals who have ongoing disputes with local
commercial agents to settle such disputes amicably. The Decree holds that no
new agent can be registered unless compensation due to the terminated
commercial agent is settled. If the terminated agent fails to notify the
competent authority with a copy of the writ of its court action or request for
arbitration within 60 days of initiating such action or arbitration, there is no
restriction on the registration of a new agent.

Importation

Under Egyptian law, the importation of goods or products from abroad
requires an importation license. An importation license grants the licensee the
right to carry out such importation activity. Similarly to commercial agents,
importation licenses are only granted to Egyptian individuals or partnerships
wherein all the partners are Egyptian, or companies wherein all the
shareholders are Egyptian. It is the usual practice that the commercial agent
itself holds the importation license. Thus, the commercial agent carries out the
marketing, as well as the importation activities.
The importation of foreign products from abroad by a person holding an
importation license takes place through letters of credit that are opened for the
full value of the imported products. In certain instances, the customer buying
the products would itself have the importation license and would import
directly from the foreign producer. Some parties, such as certain public sector
entities and governmental organizations, may be exempt from importation
restrictions, and may then be able to import directly from the foreign supplier.
In such cases, payment by transfers or other means may be possible.

Distribution

A distributor is a person who sells products in the country on its own account.
In other words, a distributor would buy the products directly from the foreign
supplier or from the foreign supplier’s agent and re-sell at a profit. There are
no specific laws governing distribution and franchising agreements. These
are governed by the general provisions of the Egyptian Civil Code and the
Commercial Code. There is no need to register as a distributor, as long as the
distributor does not carry out marketing activities on behalf of the foreign
supplier. In other words, as long as the distributor is selling for its own
account, it does not need to be registered as an agent. Thus, a foreign producer
may appoint a distributor in Egypt that would buy the products directly from
the foreign producer (with an importation license), who would pay for the
products and re-sell the products for its own account, for its profit.
Alternatively, the foreign producer may appoint both an agent and a
distributor, which is common. The agent would carry out the marketing on
behalf of the foreign producer as well as the importation process, and the
distributor(s) would buy from the agent and re-sell for their own account.
There are no nationality restrictions for distributors. The foreign producer
may itself form part of the distributor entity that buys the product from the
agent and resells within the country (by setting up a 100% owned subsidiary
or through a joint venture). The distributor entity, in which the foreign
producer may be involved, as mentioned earlier, may itself provide the aftersales
support and maintenance. Naturally, the distributor is subject to taxation
on its net profits.

Franchising

Franchising agreements are treated the same way as distributor agreements
(See above, Distribution.) In addition, if a franchise agreement involves a
transfer of technology, it must be governed by Egyptian Law and any disputes
in connection with that agreement must be resolved by the Egyptian courts or
by arbitration in Egypt under the Egyptian Arbitration Law No. 27 of 1994.

Technology Transfer and Licensing Agreements

The foreign producer or supplier may also enter into a technology transfer or
licensing agreement with an Egyptian enterprise. In such cases, an agent is
not required as there is no marketing of foreign products within the country.
Rather, the Egyptian enterprise that is producing under license from the
foreign enterprise would be marketing its own products. However, the
royalties payable to the foreign enterprise are subject to Egyptian taxation at
the rate of 20%, and are to be withheld at the source. However, some double taxation
treaties to which Egypt is a party (e.g., with the United States) reduce
the rate to 15%. (See Section XII for further detail on intellectual property
rights in Egypt).

VIII. Free Zone Investment

The Investment Law sets the framework for the establishment and
management of general free zones in Egypt. These are created pursuant to
Cabinet decrees (a number of free zones were already established and in
operation prior to the law, including the Alexandria Free Zone and others).
GAFI sets the policies for free zones and establishes the conditions for
granting licenses for entities to operate in the free zones, and the regulations
for occupying land and buildings therein. Each free zone has a Board of
Directors that manages it, and licenses for operation are granted pursuant to
decrees of the Chairman of the Board. Companies working in the fields of
fertilizers, iron and steel and production, petrol production and liquefying and
transporting natural gas do not benefit cannot be granted a private free zone
status [Article 10 of Law 114/2008].
Free zone projects are not subject to taxes. However, an annual fee is payable.
The fee is 1% of the value (CIF port of arrival) of goods entering the free
zone for storage projects, and 1% of the added value (cost of manufacture or
assembly) of goods exiting the free zone for manufacturing and assembly
projects. Trade in transit products (with determined destination) is exempt
from this fee. Projects whose main activity does not involve the entry or exit
of goods are subject to an annual fee equal to 1% of total revenue realized by

the project as set out in accounts certified by an auditing firm. The above fee
is in addition to an annual service fee at the rate of 0.5 per mille of the capital
costs of the project, with a minimum of US $100 and a maximum of US
$1,000. The minimum and maximum are likely to change often and should be
checked per annum. Oil refining projects are not subject to the 0.5 per mille
annual fee; they are obliged to pay an annual services fee of 0.005% of the
project’s investment costs with a cap of USD 100,000. Also, such projects are
not exempt from taxes[Law No. 133/2010].
Free zone projects are generally exempt from import/export regulations, and
all equipment, machinery, and transportation required for the activities thereof
are exempt from customs duties and sales tax (with the exception of cars).
In addition to general free zones, GAFI may set up private free zones which,
if necessary, may be limited to one project. It may also grant approval for the
transformation of an in-land project to a private free zone (specific conditions
are set out in the Executive Regulations to the Investment Law, including the
requirements that the project is already active, and that it exports at least half
of its production output).

Free Zones Investment System:
There are two types of the Free Zones:

Public Free Zone.

Private Free Zone.

Exemptions:
1)
The projects established in the free zones and their profits shall not subject to the provisions of laws of taxes and duties applicable in Egypt (so long as such projects limit their activities to that included in their practice activity license).
2)
Goods exported abroad or imported by the free zones projects toexercise their activities shall not subject to imports or exports rules, or customs procedures related to exports and imports. It shall also not subject to the customs taxes, sales tax or any other taxes or duties.
3)
Except for the passenger cars, all the equipment, supplies, machines and transportation vehicles necessary for exercise the activity licensed for the projects in the free zones shall not subject to the customs taxes, sales tax or any other taxes or duties.
4)
The articles of incorporation of the companies and establishments as well as the loan and mortgage contracts related to their works shall be exempted from the stamp duty and the notarization & registration fees for (5) years from the date of registering in the Commercial Registry, the contracts of registration the land which are necessary for establishing the companies and establishments, within the private free zone system, shall also be exempted from the aforementioned tax and fees.

Guarantees & Incentives:
1)
The companies and establishments shall not be nationalized or confiscated.
2)
Sequestration shall not be imposed administratively on the companies and establishments nor shall their property and funds
be distained, seized, retained in protective custody, frozen or confiscated.
3)
No administrative quarter shall interfere in pricing the companies and establishments’ products, nor in determining their
profits.
4)
No administrative quarter shall cancel or
stop the license granted for using the realties of which the usufruct rights is
licensed to the company or the establishment wholly or partially, except in case of infringing the license conditions.
5)
Contracts of incorporation of
companies and establishments and loan and mortgage contracts related to their business shall
be exempt from the stamp tax as well as notarization and publication fees for a period of five (5) years. Contracts of
registration of lands necessary for the establishment of companies and establishments shall also be exempted from the
above mentioned tax fees.
6)
The companies and establishments shall have the rights to
possess and own building’s lands and properties as necessary
for exercising their activities and expanding them, whatever th
e nationality or place of residence of the partners, or the
percentage of their partnership.
Free Zones’ projects are located in Egypt but are considered offshore areas. Projects operating according to the Free Zones are committed to export more than 50% of their total production.

7)
The companies and establishments shall have the right to import
by themselves or via third parties whatever they need for their establishment, expansion or operation, comprising production inputs and requisites, materials, machines, equipment,
replacement and spare parts, and means of transport as suitable
to the nature of their activities, without need for recording
in the Register of Importers.
8)
The companies and establishments shall have the right as
well to export their products by themselves or through
middlemen without being licensed therefore
and without need for recording themselves in the Register of Exporters.
Financial Liabilities of the free zones projects:
1)
Charges against services rendered by GAFI:
2)
Financial guarantee to cover the project liabilities:
3)
Annual charges:
Free zones companies’ pays charges against services at an annual rate
of 0.5% of the project investment costs at a minimum amount of US $ 100 and maximum of US $ 1000 or its equivalent in foreign currency.
Prior to issuance of the resolution licensing the practice of the activity, the companies should provide GAFI with a financial
guarantee to cover its liabilities before GAFI either in cash or by
L/G issued by a bank registered in CBE, the value of L/G shall be
determined as follows:
For industrial projects
: 1% of the project investment costs at a
minimum of US $ 5000 and maximum of US $ 50000.
For storage projects
: 2% of the project investment costs at a
minimum of US $ 10000 and maximum of US $ 100000.
For other projects
: 1% of the project investment costs at a
minimum of US $ 10000 and maximum of US $ 100000.
The financial guarantee shall be abated by 15% in case of cash p
ayment, provided that it does not fall below the prescribed
minimum amount.
For industrial projects:
1% of the cost value of manufacturing portion intr
oduced there into or the assembly process made to
them.
For storage projects:
1% of the commodity value upon the entry of the commodity (CIF) on their entry.
For service projects:
1% of total realized annual revenues to GAFI
as per the accounts approved by a public accountant


IX. Banking and Financial Facilities

Investment banking services and products in Egypt are regulated by various
governmental agencies. Banking and financial services activities require a
license from the CBE. Investment banking services require a license or the
approval from the Egyptian Financial Supervisory Authority (EFSA).
The following laws and the executive regulations thereof regulate investment
banking companies and activities:
 Law No. 159 of 1981 on Commercial Companies
 Law No. 88 of 2003 on Central Bank, Banking Sector and Money
 Law No. 80 of 2002 on Anti Money Laundering
 Law no. 95 of 1992 on Capital Markets
 Law No. 93 of 2000 on Central Depository and Custody
 The Egyptian Commercial Code, Law No. 17 of 1999
 Law No. 91 of 2005 on Income Tax
As a general matter, cross border activities in Egypt should be conducted in a
way that would not be considered a “public offering” of such product or
service in Egypt (conducted on a one-on-one basis, without public advertising
and consistent with private placement principles). There are no restrictions on
engaging in investment banking activities for individuals or entities as long as
such is included in the purposes or activities of such entities.
Interest rates are determined by the CBE. However, a bank and its client may
contractually agree on an interest rate that is higher than the declared rate of
interest. Furthermore, the determination of fees and commissions is based on
agreement between each bank and its clients.
All the shareholding structures of Egyptian investment banks and capital
market related companies are reported and approved as the case may be to
EFSA. In addition, all the shareholding structures of Egyptian banks are
reported and approved as the case may be to the CBE.

X. Labor Law and Employment

The Law Governing Employment Matters

Employment issues in Egypt are governed by the Egyptian Labor Law No. 12
for the year 2003 (“Labor Law”), which governs all employees working in
Egypt regardless of their nationality. In addition to the Labor Law, several
ministerial decrees also govern the employment relationship and are
considered complementary to the Labor Law. The Labor Law and all relevant
ministerial decrees aim at increasing private sector involvement and achieving
a balance between employee and employer rights.


General Considerations

Minimum Wage
According to Article (34) of the Labor Law, the National Counsel for Wages
undertakes to set minimum wage levels taking into consideration the cost of
living and striking a balance between wages and prices (currently EGP 1,200/month minimum wage and EGP 42,000/month maximum). The Counsel also sets
the minimum annual increase which must not be less than 7% of the basic
salary which is used to calculate the social insurance.
Working Hours
The working hours according to the Labor Law are a maximum of 8 hours per
day or 48 hours per week in the case of a six-day work week. However, the
employee may, from time to time, be required to work additional hours when
necessary.
Annual Leave
According to Article (47) of the Labor Law, the duration of the employees’
annual leave is 21 days per year for those who have worked one year in the
service of an employer. For those who have worked more than 10 years in the
service of one or more employers, the annual leave is 30 days. Also,
employees that are over 50 years of age are entitled to annual leave of 30
days. As for employees that have worked less than one year in the service of
an employer, their annual leaves shall be pro-rata to their period of service,
provided that they have spent 6 months in the service of the employer.
Sick Leave
According to Article 54 of the Labor Law, if an employee is sick, he or she is
entitled to sick leave as determined by the concerned medical authority.
During sick leave, the employee shall be entitled to his or her salary as
stipulated in the Social Insurance Law. An employee who has been proven to
be sick shall be entitled to a paid sick leave at the rate of 75% of his or her
wage upon which social insurance payments are calculated, for a period of 90
days, to be increased to 85% thereafter for the following 90 days. Sick leaves
will be payable to the employee for up to 180 days. The employee has the
right to benefit from his/her accumulated annual leaves and also to convert
his/her annual leaves into sick leaves if he/she has a balance of such leave.
Minimum Number of Nationals
According to the Companies Law, only 10% of the employees in a company
can be foreigners, and their salaries shall not exceed 20% of the total salaries.
Furthermore, according to the Investment Law, only 25% of the employees in
a company established in any of the free zones can be foreigners.

Hiring and Dismissal of Employees

Hiring
Pursuant to the Labor Law, the employer has the right to collect personally
identifiable information that may be used in connection with the application
for employment, compensation, benefits, and other services offered by the
employer. The employer should have a file for each employee including
certain information which is required for appointment (i.e. the employee’s
qualifications, certificates, his/her social status, and a copy of his/her ID or
passport, a certificate from the employee’s former employer). The employer
should maintain in such file information regarding the employee’s work
history, work performance, and disciplinary history during his/her
employment with the employer.
Employment contracts, whether for foreigners or Egyptians, are required to be
in writing and in Arabic.
Dismissal
If the employer wishes to terminate a definite period employment contract at
any time during its term, without a justified cause, (i.e., if the employee has
not committed a grave fault as illustrated below), the employer will be liable
for the full wage the employee would have been entitled to throughout the
entire period of the contract. In this case, the applicable notice period will be
as agreed upon in the definite period employment contract.
If an indefinite period employment contract is terminated by the employer
without a justified cause, the employer will be liable to compensate the
employee for the harm caused because of the termination as follows: no less
than two months’ full salary for each year of service, in addition to other
entitlements (e.g., accrued leaves, bonus, etc.). In this case, a two months’
notice period should be sent to the employee if the employee’s service with
the employer has been less than ten years, and a three months’ notice period
should be sent to the employee in case the employee’s service with the
employer has been more than ten years.
According to the Labor Law, the employer, in general, is not entitled to
terminate the employment contract unless the employee breaches the contract
by committing a “grave fault”, as explicitly stated in Article (69) of the Labor
Law. “Grave Fault” circumstances include the following:
 Assuming a false identity or submitting forged documents;
 Continually violating safety instructions;
 Absence from work for more than 20 non-consecutive or ten
consecutive days in any one year;
 Divulging the employer's secrets, causing a material loss;
 Competing with the employer in the same line of work;
 Being intoxicated during working hours; and
 Assaulting the employer, the general manager or any of his superiors
In addition, the employer can terminate the employment contract for
professional incompetence.
If the employee is unfairly dismissed, he/she can claim compensation.
Compensation for unfair dismissal is decided by the competent court, but
must not be less than two months' full wages for each year of service, or in the
case of a definite term agreement, the salary for the remainder of the contract
period.
Any employer can declare redundancies for economic or other reasons,
including reduction or cessation of activities, after obtaining the approval of a
committee affiliated with the Ministry of Labor and Emigration.

Safety Standards
In general, the Labor Law stipulates that the provisions regulating emissions,
sound pollution and matters of that nature that are outlined in the
Environmental Law have to be respected by the employer. In particular,
Article (208) to (211) of the Labor Law stipulates that the employer should
provide all the necessary means to protect its employees from hazardous,
chemicals, machinery, infections, noise and sound pollution at the work place.
Furthermore, Articles (212) and (214) of the Labor Law provide that the
employer has the obligation to equip the workplace with the necessary first
aid and fire presentation measures.

Workers’ Unions

Any establishment that hires more than fifty employees should have an
Employees’ Union to represent the establishment’s employees. However,
regarding establishments that hire less than fifty employees, the negotiations
will be carried by representatives of the General Union and the Employer’s
representatives.
The main objectives of unions are as follows:
 Settlement of individual and group disputes related to its members;
 Participation with the General Union in drafting collective employment
contracts;
 Participation in the discussions related to the establishment’s production
plan and assisting in the execution thereof;
 Consultation on penalties’ regulations and other internal regulations
related to the establishment's employees at the time of drafting and
amendment;
 Execution of the service programs approved by the General Union; and
 Contribution to the social activity in which the employees participate.

XI. Work Permit Requirements

Foreign employees may not work in Egypt unless they obtain a residency
permit, which includes a work permit (called a non-tourist resident permit).
The required documents for obtaining a resident permit in Egypt include:
 Copies of the letters of the Head of the Head of the Central Authority
for Employment and Labor Market Information which are addressed to
the Passports, Emigration and Nationality Administration and the
competent administrative authorities for the approval of recruitment of
the employee and granting him/her a work visa;
 A copy of the foreign employee’s passport;
 A copy of the employer’s Social Insurance Form 2 (most recent
version);
 A letter issued by the employer stating the total salaries and the number
of Egyptian and foreign employees (in Arabic);
 Experience Certificate for the foreign employee comprising his/her
experience in the field where he/she will be working, to be notarized by
the competent authorities and the Egyptian Embassy in that country. An
official Arabic translation is required;
 Foreign employees work permit forms numbers 1 (stamped by the
company’s stamp) and 2;
 A postal order in the favor of the head of the competent governmental
authority of an approximate value of LE 1,500 (some foreign employees
are exempt from such fees);
 Extract of the commercial registration form and the tax card of the
Egyptian company;
 HIV test to be taken in Egypt (some foreign employees are exempt from
taking the test); and
 An acknowledgement (in Arabic) from the foreign employee stating that
he/she neither previously worked in Egypt nor obtained a work permit
 8 passport-size photographs of the foreign employee.
It should be noted that foreign technical experts must have two Egyptian
employees as assistants. Also, employees working in certain fields (such as
tourism and education) need to submit additional documents and procure
specific approvals in order to obtain a work permit.
Once all required documents are submitted, the Labor Office will issue a
temporary slip to be attached to the employee’s passport, which will allow the
employee to start work. After security clearance procedures, which take
approximately 2 months, the work permit and the residence visa are issued.
The process of obtaining work permits costs approximately LE 3,000.
It should be noted that a work permit is always temporary. No permanent
work permit is granted. The employee must renew it every year or every six
months, depending on the term of the work permit.

XII. Taxation

Tax Law Number 91 for the year 2005 drastically simplified the Egyptian
taxation system. Generally speaking, there are now two types of taxes
applicable in Egypt:
 An income tax applicable to individuals; and
 A tax on company profits applicable to all types of juristic persons
(companies and partnerships).
These two types of taxes are briefly outlined below:

Income Tax
The tax on income is in general applicable to the income of natural persons
resident in Egypt for the majority of a year in a residence whether owned or
rented or if he/she has a commercial office, a place of business, a factory or
other places where a natural person undertakes work in Egypt or resides in
Egypt for more than 183 continuous or interrupted days within 12 months.


Also, an Egyptian who performs his duties outside Egypt and the source of his
income is the Egyptian Treasury is liable to pay an income tax.
The tax covers four sources of income:
 income from commercial and industrial activity;
 Salaries and wages;
 income from non-commercial professions; and
 income realized from real estate property.
Income from Commercial and Industrial Activity
Tax from commercial and industrial activity includes the net profit realized
from any commercial or industrial activity, even if such activity is limited to
one transaction. It also includes profits realized by brokers and agents and, in
general, all profits realized by any person, agency, or office that acts as a
broker, mediator, or agent for the sale, purchase, or lease of real estate
property or any kinds of goods, services, or stocks. It also includes profits
realized from real estate development, and rental of commercial and famished
property.
Salaries and Wages
The salaries and wages tax covers salaries, wages, bonuses, and annuities,
excluding pensions and social insurance payments paid to individuals residing
in Egypt or individuals residing abroad on account of services rendered in
Egypt.
Income from Non-Commercial Professions
Tax on income from non-commercial professions includes net profits realized
from the professions where the income is basically generated by the
taxpayer’s non-commercial work. This also includes profits realized from
professional work abroad if the main or permanent center for the taxpayer’s
professional practice is in Egypt. This category in effect also includes revenue
derived from any profession or activity not expressly covered by the law, i.e.
this is the default tax category.
Income Realized from Real Estate Property
Tax on revenue from real estate wealth includes revenue from exploitation of
agricultural land and buildings.
Deductions
The categories outlined above include a number of deductions, exemptions,
and the like, and these should be reviewed individually. Income tax is payable
on the excess of LE 5,000 of the total net income realized by the resident
taxpayer during the year.
The tax rates on the net annual income of natural persons are as follows:
 More than LE 5,000 up to LE 20,000: 10%.
 More than LE 20,000 up to LE 40,000: 15%.
 More than LE 40,000 up to LE 10,000,000: 20%.
 More than LE 10,000,000: 25%


Tax on Company Profits

Tax on company profits is applicable to the profit realized by all juristic
persons operating in Egypt. This tax is also applicable to banks and public
sector companies and units, as well as foreign banks and companies operating
in Egypt, whether directly or through branches registered in the country. The
general tax rate is:
 Up to LE 10,000,000: 20% of the net profits.
 More than LE 10,000,000: 25%.
There are two exceptions to the general tax on profits:
 The profits realized by oil exploration and production companies are
subject to a higher tax rate of 40.55%; and
 The profits realized by the Suez Canal Authority, the Egyptian
Petroleum Authority, and the Central Bank of Egypt are subject to a
higher tax rate of 40% of their profits.
Generally, the profits of a foreign subsidiary need not be imputed to a tax
resident parent company, because there are no controlled foreign company
rules.

General Tax on Sales
In accordance with Law Number 11 of 1991, a new general tax on sales is
applicable. The tax applies to the sale of goods (some goods are exempted)
and certain types of services (mainly tourist, telecommunications, and
entertainment services). Goods imported from abroad for commercial
purposes are also subject to the tax. The tax rate for goods ranges from 10%
(the general rate) up to 50% for certain specified goods. The tax rate for
services ranges from 5 to 10%. The tax is added to the price of the goods or
services in question, i.e. is payable by the consumer at point of sale and
remitted by the billing entity to the tax authorities.
Egypt does not have transfer pricing rules. However, if the price is
substantially below the market price and/or the price used in other
transactions, it may give the impression of tax evasion.

XIII. Product Liability

The manufacturer and/or seller can be liable on the grounds of:
 Tort, for damage caused as a result of a defective product;
 Breach of contract; or
 Product liability.
Tortious liability
The manufacturer of a defective product is liable in tort if a defective product
causes any personal damage, injury or death. The statute of limitation is 3
years from the date the claimant becomes aware of the damage and, in any
event, claims are barred after 15 years from the date the tortious act occurred.
Contractual liability (warranty against hidden defects)
A seller warrants that the product sold conforms to the specifications
acknowledged by the seller and is responsible for, and warrants the purchaser
against, any hidden or latent defects for one year from the date of delivery to
the purchaser (Civil Code).
The purchaser must prove:
 That the product was defective;
 That the defect could not have been discovered by the purchaser at the
time of delivery and that, if the purchaser had known of such defect, he
would not have purchased the product; and
 The actual damage suffered and profits lost as a direct result of the
defect.
Commercial Code
The Commercial Code recognizes the notion of product liability of both
manufacturer and seller. Any person suffering from direct material or physical
damage resulting from a defective product, has the right to claim damages by
filing a product liability claim against the manufacturer, distributor or both
severally. The statute of limitations is the same as for tortious liability.
Consumer Protection Law
The Consumer Protection Law No. 67 of 2006 (the “CPL”) and its Executive
Regulations set out obligations for suppliers of products and services (as
defined under the CPL) and various guarantees for consumers. In the event of
a breach, the Consumer Protection Authority can suspend the suppliers'
activities or seize defective products until investigations are concluded or
court judgments are passed.

XIV. Competition

The Competition Law No. 3 of 2005 and its Executive Regulations establishes
the Egyptian Competition Authority to monitor compliance. The Competition
Law prohibits, among other things:
 Agreements or contracts between competing persons that are likely to:
o increase, decrease or fix prices;
o divide product markets or allocate them on certain grounds (for
example, geographical areas);
o result in concerted participation in tenders, auctions, negotiations and
other calls for procurement;
o restrain production, distribution or marketing operations, or limit the
service distribution; and
o restrict competition.
 A person holding a dominant position from abusing that position; and
 Acts committed outside Egypt that may prohibit, restrict or impair free
competition in the Egyptian market.
Unilateral (or single-firm) conduct
Single firm conduct is likely to come under the abuse of a dominant position
under the Competition Law. An entity holding at least 25% of the market
share enabling it to affect the prices or what is on offer in the market is
considered as having a dominant position if its competitors have unequal
power in the market and are therefore unable to prevent this dominance
(Article 4 of the Competition Law).
A person holding a dominant position in a market is prohibited from
undertaking specific practices that are considered detrimental to competition
(Article 8 of the Competition Law). Such practices include:
 Preventing the manufacture, production or distribution of a product for a
certain period (or periods) of time;
 Refraining from entering into transactions with any person or totally
ceasing to deal with him in a manner that results in impairing that
person's freedom to access or exit the market;
 Limiting the distribution of a specific product, to, for example, certain
geographic areas or to a type of customer base;
 Discriminating between sellers or buyers having similar commercial
positions in relation to sale or purchase prices or the terms of the
transaction;
 Refusing to produce or provide a product that is circumstantially scarce
when its production or provision is economically possible;
 Selling products at prices lower than their marginal cost or average
variable cost;
 Obliging a supplier in not dealing with a competitor; and
 Imposing the acceptance of obligations or the purchase of products that
are unrelated in their nature to the original transactions or agreements or
as opposed to relevant commercial custom.
Control over Mergers and Acquisitions
Under the Egyptian Companies Law, in a merger between Egyptian
companies, prior approval is required from the Ministry of Investment. The
approval is automatic and is not considered to be an impediment to the
merger.
Notification to the Egyptian Competition Authority is required where either:
 An entity with a turnover exceeding LE 100,000,000 acquires assets or
merges into another entity; or
 The sum of the respective annual turnover of the parties concerned with
an acquisition (the sum of the annual turnover of the acquirer, the
acquired party and all related parties in Egypt) exceeds LE 100,000,000.
The law defines related parties as two or more separate legal entities, where
the majority or the total of a related party's shares are owned by the other or
an entity subject to the actual control of another entity.
The law does not specify its application to foreign-to-foreign mergers, but it is
likely that the notification requirement only applies where the:
 Transaction will have an impact on the Egyptian market.
 The parties operate directly or indirectly in the Egyptian market.
 One or more related parties of the acquirer or the acquired party are
Egyptian entities.
If the parties have no legal establishments (that is, subsidiaries or branches) in
Egypt, and only sell through a distributor, no notification is required, even if
the distributor's turnover is over LE 100,000,000 in the previous year. No
other foreign exemptions exist.

XV. Intellectual Property

Intellectual property rights and rules of protection are set out in The
Intellectual Property Rights Law No. 82 of 2002 (“IPR Law”). The
following is a summary of the main intellectual property rights capable of
protection.
Patents
Nature of right. To be patentable, an invention must:
 Be original and novel;
 Involve an inventive step;
 Be capable of industrial application; and
 Not be specifically excluded by the IPR Law.
How protected. Applications for registration must be made to the
Egyptian Patent Office. The IPR Law sets out the rules for protection.
How enforced. Criminal sanctions are imposed. Both the patent owner
and the competent governmental body can bring a case in the courts
seeking protection. In addition, the patent owner is entitled to civil
remedies, such as damages or injunctions.
Length of protection. Subject to certain exceptions, protection lasts for
a maximum of 20 years, provided that renewal fees are paid annually
from the fifth year after filing.
Trade marks
Nature of right. Trade mark protection is available for trade, industrial
and service marks. To be registered as a trade mark, a sign must:
 Be capable of graphical representation; and
 Distinguish the goods or services of one undertaking from
another.
How protected. Applications for registration must be made to the
Egyptian Authority for Commercial Registration (EACR). The IPR Law
sets out the rules on protection. Unregistered marks can also be
protected through unfair competition actions.
How enforced. The methods of enforcement and the remedies available
are the same as for patents (see above, Patents).
Length of protection. Protection lasts indefinitely, subject to renewal
every ten years.

Registered designs
Nature of right. To qualify for registration, a design must:
 Be original and novel;
 Have an individual character; and
 Relate to the appearance of all or part of a product resulting from
certain features of that product or its ornamentation.
How protected. Applications for registration must be made to the
EACR. The IPR Law sets out the rules for protection.
How enforced. The methods of enforcement and the remedies available
are the same as for patents (see above, Patents).
Length of protection. Protection lasts for a maximum of 15 years,
subject to the payment of renewal fees after the first ten years.
Unregistered designs
Nature of right. To be protected, the design must relate to an aspect of
shape or configuration of the whole or part of an article, and must not be
commonplace.
How protected. There is no formal procedure for protecting
unregistered designs.
How enforced. The design owner must file an unfair competition claim.
In addition, civil remedies such as damages and injunctions are
available for the design owner.
Length of protection. Protection lasts for an indefinite period.
Copyright
Nature of right. Copyright subsists in original works, such as:
 Literature (including software and databases);
 Drama;
 Music;
 Art;
 Sound recordings; and
 Cinematographic films.
How protected. Protection subsists automatically from the moment the
work is created. The rules on protection are set out in the IPR Law.
How enforced. The methods of enforcement and the remedies available
are the same as for patents (see above, Patents).
Length of protection. Protection lasts for:
 Literary, dramatic, musical and artistic works: 50 years after the
death of the author;
 Cinematographic films: 50 years after the death of the last
surviving author of the film.
 In relation to neighboring rights, protection lasts for:
 Producers of sound recordings: 50 years from the year of
publication or recording;
 Broadcasting organizations: 50 years from the first broadcast;
 Performers: 50 years from the first performance or recording.
Confidential information
Nature of right. This is protected under the IPR Law. To be protected,
the information must be:
 confidential in nature and not in the public domain or common
knowledge; and
 communicated in circumstances importing an obligation of
confidence.
How protected. There is no formal procedure for protection.
How enforced. The injured party must bring a court action for breach
of confidence based on breach of confidentiality. Criminal sanctions
are imposed. The copyright owner is entitled to civil remedies, such as
damages or injunctions.
Length of protection. There is no fixed term, but the information must
remain confidential for it to be protected.
Integrated circuits and their topography
Nature of right. To be protected, an integrated circuit must be:
 Original and novel; and
 Non-obvious.
How protected. Applications for registration must be made to the
Egyptian Patent Office.
How enforced. The methods of enforcement and the remedies available
are the same as for patents (see above, Patents).
Length of protection. Protection lasts ten years from the date of filing
in Egypt or the first exploitation in Egypt or abroad, whichever is
earlier. A maximum term of 15 years from the design date is imposed.

XVI. Customs

Customs are regulated under Egyptian law No. 66 for the Year 1963. Imports
are subject to custom tariffs at variable rates depending on the product. No
custom tariffs are collected for exports. The competent authority in
implementing the law and regulating the customs field is the Egyptian
Customs Authority as a part of the Ministry of Finance. The Ministry of
Finance issues decrees dealing with custom tariffs for each imported product.

XVII. Dispute Resolution
Overview of Court System
The Egyptian Court system is composed of a number of tiers: Courts of First
Instance, Court of Appeal, and the Court of Cassation. Large commercial
disputes in civil and commercial matters are heard before the First Instance
Full Court, and appeals from there are heard before the Court of Appeal. The
branches of the First Instance Full Court and Court of Appeal used are those
with local jurisdiction depending on where the defendant is domiciled (for
example, Cairo, Giza and Alexandria). Further appeals can be made before
the Court of Cassation. In 2008, special economic courts were set up to
expedite litigation in commercial disputes (Law No. 120 of 2008). These
courts became active towards the end of 2008 and early indications are quite
positive.
Commercial disputes arising from administrative contracts (that is, contracts
concluded with governmental authorities relating to public works) are heard
in the first instance before the Administrative Court (equivalent to the Court
of Appeal in the civil and commercial jurisdictions) and appeals from there
are heard before the High Administrative Court (equivalent to the Court of
Cassation). Conflicts in jurisdiction and contradictory judgments (between
the civil and commercial court system and the administrative court system)
are resolved before the Constitutional Court.
Some investment disputes are subject to optional amicable settlement. Such is
the case, for example, with the ministerial committee that has been formed in
order to amicably settle investment disputes arising from contracts concluded
between private investors and any State or governmental entity. Also, investor
complaints regarding obstacles imposed by the State or governmental
authorities hindering their investments can be submitted before a ministerial
committee that has the power to issue binding decrees removing such
obstructions and therefore settling potential disputes. Further, the Investors’
Dispute Resolution Center has been established under the auspices of GAFI to
amicably settle corporate and investment related disputes arising between
company shareholders, partners or companies. It should be stressed; however,
that recourse to such committees is optional and is by no means a prerequisite
for litigation, arbitration or any other dispute resolution mechanism.

Enforcement of Local Judgments

Enforcement is made by obtaining a writ of execution from the Execution
Judge and the judgment is enforced through court bailiffs. Numerous
methods are available to delay execution, including a contestation case (which
temporarily stops execution for a few months) and third party recovery claims
in relation to secured assets. Delays can be up to one year or more in some
cases.

Enforcement of Foreign Judgments
Egyptian courts will generally recognize and enforce foreign judgments if the
following conditions are satisfied: (a) Egyptian courts do not have jurisdiction
over the dispute, and the foreign court which rendered the judgment has
jurisdiction pursuant to its rules on international jurisdiction; (b) the parties
have been notified of the proceedings and validly represented before the
competent court; (c) the judgment or award is final and binding pursuant to
the rules prevailing under the law of the foreign court; and (d) the foreign
judgment is not in conflict with a prior award or judgment rendered by
Egyptian courts and is not in contravention of the prevailing public policy
considerations.
Arbitration

Since the introduction of the Arbitration Law (Law No. 27 of 1994),
arbitration has become an important and effective means of dispute resolution
in Egypt. The trend has been an increasing resort to arbitration in commercial
disputes. Arbitration is, in many cases, preferred to court litigation,
particularly when the parties are seeking a relatively speedy resolution, and
can afford the much higher arbitration costs.
The most prominent arbitration organization in Egypt is the Cairo Regional
Center for International Commercial Arbitration (CRCICA). The CRCICA
basically applies the United Nations Commission on International Trade Law
(UNCITRAL) Arbitration Rules.
An agreement to arbitrate must be in writing. No separate agreement is
required. Judges have generally accepted and supported arbitral proceedings
and an arbitral award. The Arbitration Law makes it clear that courts shall not
accept a case if there is an agreement to arbitrate (unless the defendant waives
its right to arbitration). The court rules these cases inadmissible.

Enforcement of Arbitral Awards

Arbitration awards are final, binding and subject to no appeal on the merits.
However, awards can be challenged in actions of nullity, and can be declared
null and void. Grounds for nullity are set out in the Arbitration Law, and
include lack of jurisdiction, breach of public policy, failure to grant a party a
right of defense, and excluding the application of the agreed law governing
the merits of the claim.
Enforcement is made through depositing the award with the courts and
obtaining a writ of execution. An arbitration award is then enforceable in the
same way as a court judgment, through court bailiffs. There are procedures
that need to be undertaken, and a 90-day period to grant the other party the
right to bring a nullity action. A nullity action does not stop enforcement.
There are procedural defenses to delay enforcement for some time, perhaps
even a year or longer, but ultimately an award that is not annulled will be
enforced in due course.
At the end of 2008, the Ministry of Justice imposed some new regulations
governing the deposit of awards for enforcement. These regulations
potentially cast serious doubt over enforceability. The author of this article
believes that these regulations are contrary to the Arbitration Law and
therefore unconstitutional. It is hoped these regulations will be withdrawn
before long.




Enforcement of Foreign Arbitral Awards

Under the New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (1958) to which Egypt is a signatory, a foreign
arbitration award is enforceable in a similar way to an award issued in Egypt,
by deposit and obtaining a writ of execution. At the stage of recognition or
enforcement, arbitral awards, like foreign judgments, are not reviewed on
their merits.

Mediation
Apart from arbitration, there is no formal statutory recognition of other
alternative dispute resolution mechanisms (for example, mediation). The
CRCICA has rules for mediation and conciliation, but these processes are
only subject to contractual enforcement. Recently, interest has grown in
mediation and the Egyptian ADR Association was established in 2007.
However, mediation remains subject to contractual agreement, and is not
formally governed by legislation.

XVIII. Limitation of Scope

The information provided herein is general and for informational purposes.
The information is provided as of January 2014, and is subject to change and
updates as a result of new legislation, laws, statutes, regulations, rules,
decrees, ordinances, and other applicable governmental laws. The
information does not purpose to be exhaustive and should not be relied upon
as a substitute for legal advice on any specific matter.

Shaheen Law Office
Tel (202) 01222 473006












 Firm Overview:

Profile










Prepared by:

Mohamed E. Shaheen
Partner




Shaheen Law Office
Agents for

("SLO")

Address: 3 Abou El Feda St, Zamalek, Cairo, Egypt.
Tel: 002 01222473006 




 






2014





Table of Content

No
Subject
Page

I
Statement of Confidentiality and Non-Disclosure
3
II
Expression of Interest
3
III
SLo Background
3
1
2
3
4
5
6
Specialty and Services
SLO Memberships and Associations
SLO's Clients
SLO's representative and Experience
Scope of Work
Disclaimer
4
4
5
5
   5-6
6




















I – Statement of Confidentiality and Non- Disclosure

This document contains proprietary and confidential information. All such information submitted to your company is provided in reliance upon its consent not to use and/or disclose any information contained herein except in the context of its dealings with SLO exclusively.

The recipient of this document agrees not to duplicate or distribute or permit others or its employees or representatives to duplicate or distribute any information contained herein in whole or in part without SLO prior express written consent.

By acceptance of this document, the recipient hereby agrees to be bound by the aforementioned Statement of Confidentiality and Non- Disclosure and should so bound its employees and representatives.

II- Expression of Interest

We hereby express our interest in providing our legal support to corporate clients on following assumptions:

a-    That we do not have any conflict of interest with any foreign or local company or branch engaged in such transactions.
b-    That a duly authorized representative of the client or its local office in Cairo agrees in a written lawyer retainer contract with SLO under which the client shall agree on SLO’s fees, to be proposed in due course, in consideration for legal assistance to be rendered by SLO within the scope of work mentioned in your Request for Expressions of Interest.

III- SLO’s Background

SLO is an Egyptian Law office located in Zamalek, Cairo, Egypt with strong network of local and regional correspondent offices active in the entire middle-east and north African jurisdictions, providing legal services to leading multi-national corporations in the region since 2000. For more information concerning our legal services please visit:

In 2009, Shaheen Law Office, managed by Attorney Mohamed E. Shaheen, has become an agent for De Vittori of Switzerland, international business lawyers and consultants with offices active in over 200 jurisdictions, which has enriched the strong liaison with leading international legal and consultancy firms. For more information please visit:



1- Specialty and Services

SLO provides full-integrated corporate legal services in terms of legal consultancy, litigation, mediation and international arbitration, on and off shore companies, real estate, insurance and investment funds, international finance transactions, major corporate and investment contracts, banking, representing both debtors and creditors in matters involving credit transactions, foreign currency transactions, financial restructuring operations,  portfolio investments and capital market transactions, banking, loans and syndications, factoring,  letters of credit and guarantee, mortgages and pledges, aircraft financing and leasing, Global Depository Receipts, ADRs, and Global Share Investment Programs, aviation, labor, taxation, financial lease, tourism and hotels management agreements, maritime, insurance and real estate contracts, securitization, registration and mortgage. Advising on pre-contract negotiations, obtaining and registering official authorizations and licenses. Corporate Governance and corporate transactions, including shareholders agreements, joint venture and partnership agreements, preparing and drafting of articles of incorporation, statutes and by-laws, supply, technical assistance, management, employment, sale and lease, license, franchise, transfer of technology, anti-dumping and unfair competition, construction contracts, major industrial agreements, and commercial agency and distribution agreements.

In addition to Commercial International Arbitration, International and local Litigation, commercial and trade criminal cases and appearing before Courts of First Instance, Courts of Appeal and Supreme Courts.

Our firm offers premier legal and procedural services related to intellectual and industrial property registration and protection including copyright, trademarks, patents, and industrial designs, filing and defending against oppositions, performing searches, drafting and registering assignment and licensing agreements, and litigating infringement and unfair competition cases. In addition we provide commercial information including due diligence, legal audit, fraud and anti-counterfeit investigation and litigation services.

For more information, please visit Business in Egypt section in our website:




2- SLO Memberships and Associations

            MELC and its team of lawyers are active members in the following associations:
International Bar Association, Egyptian Bar Association, Association of European Lawyers, INTA, AIPPI, PTMG, les, Arab Lawyers Association, Egyptian Society for International Law, Egyptian Association for Protection of the Industrial Property.
            Further, MELC's Partner, Mohamed Shaheen is Agent for and in association with De Vittorri of Switzerland, International Business and Legal Consultants.


3- SLO’s Clients

Mohamed Shaheen and SLO served leading multi-national corporations including: AK Asset Management, Atos Origin, BMW, Boots Company, Beecham Group PLC, Barella, Borak Holding, British International School, Capital Driling, Ezz Group, Elite International Trading, Glaxo Group, Government of Singapore Investment Corporation GSIC, OER Likon AG, Passific International, Reckitt Benckiser, PI Capital, Smithkline Beecham Corporation, Stofford-Miller Limited, Sapesco, Sahara Oil & Gas, Trust Group for Securities, Unilever PLC, Valve & Tools, Just Falafel, Torab and Motion Pictures.



4- SLO’s Representative and Experience

MELC's Partner Mohamed E. Shaheen, Attorney at Law, shall be handling your potential account with MELC.

For more information about Mohamed Shaheen and our team of lawyers, please visit:


Mohamed  Shaheen was acting lawyer in the following transactions:

4-1      Legal Due Diligence on Pico Oil Group, Egyptian United Bank, Cairo International Airport, National Bank for Development for the account of: SOG, Egyptian Gulf Bank, Fraport and Commercial International Bank.
4-2Negotiation and Drafting of Fraport Management Agreement with Cairo International Airport.
4-3Drafting of Waste Management Agreement between Ama Arab, Municipality of Rome and Arab Contractors Joint Venture and Dakahlia Governorate.
4-4Drafting of Egytian Cotton International Marketing Contract between Weber- Schandwick Promo Seven and the Ministry of Exterior.
4-5Representing the International Finance Corporation, World Bank Group with the Egyptian Institute of Directors, the Ministry of Investment of the Government of Egypt, in the Corporate Governance Project for the Middle East and North Africa.
4-6Representing Egypt as delegate and legal advisor in the United Nations conference on clean development mechanism in Tunisia.
4-7Drafting of management contract for Hostmark Hotels Chain.
4-8Member of the defense team in Ghurgada Airport Arbitration case with Artoc-Swiss.





5- Scope of Work

This Document is proposed on the assumption that the subject matter and the scope of the potential work required from SLO and its representative is:

5-1         Undertaking of legal due diligence reporting of all legal and contractual issues associated to a public owned enterprise on behalf of a private commercial foreign company in the context of a transaction in Egypt or any market where we practice.                                             
5-2         Drafting or reviewing all corporate, business and commercial legal and contractual documents and agreements in relation to the transaction or project.
5-3         Provide the potential client with legal advise and consultancy on corporate, business and commercial under Egyptian Law and Jurisdiction, including evaluation of bids, bids preparation and revision, negotiations, tender documents, and all other corporate, commercial and business legal issues related thereto.  

6- Disclaimer

This document is prepared by SLO solely for the intended Client as mentioned above and for its exclusive use for sole purpose of the afore mentioned transactions and may not be read as extending by implication or otherwise, to any other matter and may not be distributed to any third party without SLO prior written consent. SLO has assumed that it has at this stage of the potential transaction obtained information from newspapers which could be expected to be supplied at this early stage and that SLO has not independently verified such information. SLO, in preparing this document, have neither raised queries nor otherwise investigated any information in relation to the potential transaction, and accordingly expresses no legal opinion or offer to contract. This document is not and nor is not to be intended to be a recommendation as to whether SLO should be retained or appointed to handle or to complete the potential transaction. SLO liability in relation to this document shall not increase due to any contractual liability of any other party.



3 comments:

mohamadino said...

there are of course several other laws and decrees, should you need any further rule or regulation, please do not hesitate to contact me.

Dee said...

Great idea and very useful, it would be great if you added something about employment law as so many people are unaware of the rights they should receive and many are equally unaware of what action they can take if not treated fairly by an employer. Whilst the doors of freedom are open and people have the chance to take their rights, the advice you offer here can help to guide them in the right direction, well done.

mohamadino said...

Thanks for your comment Dee i really appreciate it :-)
your comment is noted and currently working on it and shall post it as soon as possible.. to help employees know their rights..it a good idea..
Labor law is employment law in Egypt, which is posted hereinabove..
however, i will write something focused on employees rights and obligations in more details for you...or anyone interest in the subject..I am sure there should be a lot of interested employees and employers alike...

to give you a general idea, employees are entitled for compensation in the event of unjustifiable or for no reason termination by employer...

in practice, the fired employee should file a complaint to the competent employment office, usually it is the office which is located in the city where the head office of his employer is located...in fact there are offices in all the major cities within Egypt...

the office form a committee of five persons representing all stakeholders, i.e, labor unions, employers associations...etc

in most of the cases i worked in, the committee rules in favor of the employee...the compensation for termination is approximately about the salary of a month in each year of service the employee has spent in office before being fired...

going to this committee is mandatory before going any court....

however, if the employee or employer is not satisfied with the final decision of the committee he can file a lawsuit against the company and its chairman in his capacity as Chairman of the concerned company....

also in practice in most of the cases I have presented the court also renders its judgment in favor of the employees.....as they sought to be the weaker party of the employment or labor relationship....

of course the employment contract may have specific terms and conditions, which should be applied by the committee and the court in the event it does not conflict or contradict with the employment or labor law....

that was the general framework assuming the employee has not committed a crime or a wrongdoing indicated in the employment contract or the labor law...

for specific conditions or circumstances you should have a look on the labor law under egyptian laws and regulation pages in this blog...

any concerned employee or employer should not rely on the above general concepts or information without consulting his lawyer who must be licensed, specialized and experienced in the subject matter and jurisdiction in question..

i hope that the above meet with your satisfaction, i promise to finish writing something more detailed and post it as soon as i possible can....

should you need any further query or legal information, please do not hesitate to contact me.

best regards,

mohamed E. shaheen

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