Introduction:
First of all, this paper will be covering the types of companies in Egypt. In addition, it will show which type of companies will comply with the conditions that the Egyptian law stated for the foreign investors who want to start up their own business in Egypt.
According to the article (505), the Egyptian civil code defines the companies as” A contract where two or more persons undertake to participate in a financial project by providing a contribution of money or labor to share profits or losses of that project”. However, there is no specific definition of the company stipulated in Egyptian commercial law. From this, we can conclude that company law ( no. 159 of 1981) governs capital companies ( joint-stock companies), hybrid companies( limited liability companies, limited partnership by shares ).On the other hand, civil law governs civil companies and fills any gap in company law. The last two laws that govern companies are the capital market law and investment law (no. 72 of 2017) which states in article 1 that the provision of the law shall apply to local and foreign investments.
– Types of commercial companies under Egyptian law:
According to the laws stated above, there are 7 types of companies in Egypt which are:
- Personal companies:
- General partnership.
- Limited partnership.
- Silent partnership.
- Capital companies:
- Joint-stock company.
- Hybrid companies:
- Limited liability.
- Limited partnership by shares.
- One man companies.
-Companies in which foreigners can invest in Egypt:
According to the companies law that states the following types of companies that are applicable for the foreign investors for doing business in the Egyptian market:
- Branch offices
- Representative offices
- Joint stock companies and
- Limited liability companies
- Branches of foreign companies:
According to section number six in the companies law that stipulates the right of the foreign investor to register for a branch office , in case the foreign company have a contract with an Egyptian public or private sector.therefore, this type may engage in commercial and contractual activities
Registration:
The Egyptian law mentioned to register the branch office through the competent commercial registration office of GAFI, with such registration it shall be valid for five years.
Management:
The branch office shall be managed by a manager of any nationality to represent the foreign investor.
- Representative office:
Here, the foreign investor can open representative offices ,scientific or technical offices and other services for the purpose of studying the market or to see the expediency of a product without entering any commercial activities.
Registration:
According to the companies law and the commercial registry law that obliges the foreign investor to submit an application to the commercial department of the General Authority for investment and free zone (GAFI).
Management:
It shall be managed by a manager who does not need to be Egyptian.
- Joint-stock companies:
Joint-stock companies are the most preferable company. It is the most commonly used in Egypt, so it can be defined as the capital is divided into transferable shares in equal value with the limited liability of shareholders. and its name derived from its purpose. There are many reasons that can make this type of company preferable because there is no requirement for the company to pay the capital in full upon its establishment, the capital can be paid over five years. even though the issued capital may not be less than 250,000LE for closed companies but for the public, it shall be 1,000,000 LE . Also, a more organized management structure , it acquires the legal personality after 15 days from its registration in the commercial registry .
Number of the Shareholders:
The shareholders must be minimum three however, there is no maximum number. In case the shareholders reached hundered so in this case it has to switch to a public company and all the rules that are related to the public will be applied.
Bonds:
The bonds must be equal in value and have equal rights.
Management:
The number of the board of directors are minimum three and there is no nationality required for them.
Limited liability companies:
It is a company that is formed for small businesses and the minimum number of shareholders are two and the maximum number of shareholders shall not exceed fifty shareholders. Moreover, it is impermissible to share either the bonds or the shares to the public market. Its name is derived from its purpose and it may include one or more of shareholders’ names.
Share value:
Limited liability may not issue bonds. Even Though , there is something called quotas which must be of equal value and it can not be registered to the stock exchange.
Lastly, article 5 of the companies law states that it may not engage in insurance business or banking functions and others.
In conclusion, we have discussed above the types of companies that Egyptian law provided and the types of companies that are complying for the foreign investors in Egypt. The four types are
( representative offices, branch offices, joint-stock companies and limited liability). So the foreign investors know how to choose a suitable company for their business.
