Establishing a business company in Egypt “Factors to be considered”

We’ll teach you how to start establishing a business company in Egypt and what sorts of businesses you may register in this post.

Establishing a business company in Egypt

In the context of establishing a business company in Egypt, we have to realize that Egypt is one of Africa’s three largest economies, and its strategic location at a crossroads between East and West has made it a significant participant in international commerce in international commerce the Middle East and Africa.

The Suez Canal, which connects the Mediterranean Sea with the Red Sea and is a vital artery in world trade, is located in Egypt.

Egypt covers 1,001,450 square kilometers, with land covering 995,450 square kilometers and the sea covering 6,000 square kilometers.

In 2019, the population of Egypt surpassed 100 million people, according to the Egyptian Central Agency for Public Mobilization and Statistics.

There are 27 governorates, 217 cities, and 4617 villages in Egypt.

Cairo (10.8 percent), Giza (8.6 percent), and Sharqiyya (10.8 percent) have the most people (7.4 percent ).

Laws of Establishing a business company in Egypt

One of establishing a business company in Egypt, the Companies Law No. 159 of 1981, governs company creation, investment methods, types of companies, and the conditions for forming a company in Egypt.

All of these issues will be covered in the following order:

First, the Regulatory Framework and the Different Types of Businesses:

The General Authority for Investment and Free Zones is the principal regulatory organization in Egypt in charge of forming the most popular sorts of businesses.

The Companies’ Law No. 159 of 1981 and the New Investment Law No. 72 of 2017 were both enacted in 1981, and the Capital Market Law are all critical pieces of legislation.

Their executive rules are the governing laws that control and administer the business from its formation to dissolution.

• A foreign company’s branch
• Joint Stock Company (JSC); or (iii) Limited Liability Company (LLC)
• Limited
• Limited Liability Corporation (LLC)
• One-Person Business
• Office of a representative

The primary characteristics of each kind may be summarised as follows:

Branch:

A foreign firm’s branch can only be registered in Egypt to carry out construction work or other contractual activity under a contract with an Egyptian organization, whether the Egyptian government, the public sector, or a private corporation.

Even though the branch can engage in commercial, financial, industrial, and contractual activities, the branch’s activities in Egypt will be limited to those specified in its contract, which means that the branch will be treated as an Egyptian company in all respects except corporate governance.

Registration:

Regardless of its legal status, any foreign firm that does commercial, financial, industrial, or contracting business in Egypt must register as a branch with the Commercial Registry and the General Authority for Investment and Free Zones.

The scope of the project:

A branch can engage in any legal activity in Egypt for which it is registered in the Commercial Registry. It has a written contract with an Egyptian firm to deliver the services.

Establishing a business company in Egypt with Control and management:

A foreign manager can oversee a branch.

The parent firm has complete authority over a component.

The General Authority for Investment and Free Zones monitors the actions of branch offices to guarantee compliance with laws and regulations.

Offices in the capital:

They are not required to make a minimum capital commitment.

On the other hand, initial capital investments must be made in foreign currency and transferred to Egypt via a registered Egyptian bank.

Taxes:

The net profit of a branch is taxed at the same rate as that of Egyptian corporations.

Profit-Sharing:

Branches are required to give at least 10% of their annual net revenues to their employee (not exceeding the total annual wages and salaries paid to workers and employees of the branch).

JSC (Joint Stock Company):

When Establishing a business company in Egypt, we should know that an Egyptian joint-stock corporation can be either closed or publicly traded, with participants’ liability limited to the value of their shares in the firm.

Registration:

GAFI supervises and controls a joint-stock corporation, which must be registered with the Commercial Registry.

Any stock or bond issuance shall be reported to the Egyptian Financial Supervisory Authority (EFSA), which should only be released if EFSA has not protested within three weeks of notice.

EFSA is in charge of overseeing public problems.

Furthermore, enterprises engaged in particular industries, such as securities or factoring, must get an EFSA license before they may register.

Activities’ Scope:

Except for agency and importing operations, a joint-stock corporation can engage in any commercial activities subject to the constraints set by applicable laws and regulations.

At least three partners are required for management and control.

The firm is managed by a board of directors consisting of at least three individuals elected by the partners for a three-year term.

Shares of Capital:

Before Establishing a business company in Egypt, a business not issuing its shares to the public must have a minimum published capital of LE 250,000, of which 10% must be paid at the time of formation, increasing to 25% within three months. The remaining amount of the nominal value of the shares must be paid up within five years.

A fully paid-up capital of LE 20,000,000 is required for a joint-stock corporation to offer its shares for public subscription.

However, holding companies formed for stock trading and investing must have a minimum capital of LE 5 million, and of incorporation, at least 25% must be paid.

Taxes:

Profits earned by joint-stock firms are subject to taxation.

Profit-Sharing Employees are to receive at least 10% of net earnings. The amount distributed does not exceed the total value of wages and salaries paid to the company’s employees in a given year.

The legality of such a distribution for foreign employees is up for discussion.

On the other hand, foreign employees are not entitled to such distribution, according to the Labor Office.

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