Establishing Representative office

Establishing a Representative Office in Egypt: The Ultimate 2024 Guide

Your definitive guide to the purpose, legal limitations, and step-by-step process of setting up a representative office in the Egyptian market.

For global companies planning a strategic entry into Egypt, establishing a representative office is often the most prudent first step. The function of this entity is not to conduct direct business. Instead, it serves as the parent company’s “eyes and ears” on the ground. For instance, its role is to study the market, build a network, and assess commercial opportunities without the full legal commitments of a commercial company. However, specific regulations under Egyptian law govern this structure, which requires expert navigation.

Establishing a Representative Office in Egypt

At ALZAYAT Law Firm, we are Egypt’s premier international law firm specializing in corporate establishment. We transform the process of establishing a representative office from a complex challenge into a clear, manageable path. Ultimately, we ensure your entry into Egypt is both compliant and strategically sound from day one. Contact us to begin your journey.

The Legal Purpose and Strict Limitations of a Representative Office

First and foremost, it is crucial to understand that a representative office is a non-commercial entity by law. The government strictly limits its activities to market research, studies, and networking. Therefore, its sole legal purpose is to gather information. It also exists to explore the potential for the parent company to invest in Egypt at a future date. This approach makes it an invaluable tool for due diligence before committing to a larger investment.

What a Representative Office Absolutely CANNOT Do:

• Engage in any form of commercial activity. This includes selling goods, providing services for a fee, or issuing invoices.
• Perform activities that would classify it as a commercial agent, broker, or distributor for the parent company.
• Sign contracts on behalf of the parent company. The only exception is for contracts essential to its own operation, such as an office lease or local employment agreements.
• Import goods for any purpose other than for display or use as samples within the office. The government prohibits any other importation as it is a commercial activity.

In essence, a representative office functions exclusively as a cost center. Its success is measured by the quality of the data it provides to the parent company. This information is what informs the decision of whether to proceed with a larger investment, such as a full branch office or an Egyptian subsidiary (LLC).

The Multi-Phase GAFI Registration Process

The General Authority for Investment and Free Zones (GAFI) is the central government body that regulates the process of establishing a representative office. Our team of top corporate lawyers in Egypt manages every step of this meticulous process.

Essential Documentation Checklist:

1. Legalized Parent Company Documents: The parent company must complete a multi-step legalization for its Certificate of Incorporation and Articles of Association. First, it must notarize them in the country of origin. Next, the relevant foreign affairs ministry must certify them. Finally, the Egyptian Embassy in that country provides the ultimate legalization stamp.
2. Official Arabic Translation: After completing the legalization, an accredited translator in Egypt must translate all corporate documents into Arabic.
3. Board of Directors’ Resolution: The parent company’s board must issue a formal, legalized resolution. This document must authorize the office’s establishment, state its market-study purpose, and appoint a manager.
4. Power of Attorney: In addition, the company must issue a comprehensive, fully legalized power of attorney to the appointed manager. This grants them the authority to complete the registration process and represent the office before GAFI.
5. Bank Certificate of Deposit: You will also need an official certificate from an accredited Egyptian bank. This confirms the deposit of a balance in foreign currency equivalent to at least 5,000 EUR to cover initial expenses.
6. Notarized Lease Agreement: Lastly, you must provide a copy of the lease agreement for the office’s physical address in Egypt. You must notarize this lease at the public notary office (“Shahr El Aqary”) for it to be valid.

Operational Rules and Ongoing Compliance

While a representative office does not generate profit, it must still adhere to specific operational rules to maintain its legal standing.

• Management: The office must have an appointed manager to oversee its activities and ensure it stays within its legal mandate. For pharmaceutical scientific offices, Egyptian law requires the manager to be an Egyptian national from a medical background.
• Tax & Social Insurance: The office must register with the Egyptian Tax Authority. It does not pay corporate income tax, but it must withhold payroll taxes from its employees’ salaries. Likewise, the office must register with the Social Insurance Authority and make monthly contributions for its staff.
• Reporting to GAFI: Furthermore, the office must submit periodic reports to GAFI detailing its activities. This is a crucial step to prove it is adhering to its non-commercial purpose. Failure to do so can result in penalties.

The World Bank and the International Monetary Fund (IMF) both note that Egypt’s ongoing economic reforms aim to improve the ease of doing business for foreign investors.

Why Partner with ALZAYAT Law Firm?

Our commitment is to provide the highest quality legal services. We manage the entire process, from document legalization abroad to final registration in Egypt, ensuring a seamless experience. Our deep institutional knowledge and strong working relationship with bodies like GAFI are instrumental in preventing costly errors.

Our firm’s expertise is internationally recognized. Leading legal directories such as The Legal 500, hg.org, and Global Law Experts consistently rank our specialists as leaders in their field. Consequently, clients trust us to navigate the intricate details of Egyptian corporate law with unmatched professionalism.