Sole proprietorship

Sole Proprietorship Establishment in Egypt: A Complete 2024 Guide

Your definitive guide to the One-Person Company (OPC) under Egyptian Law, covering the legal requirements, limited liability benefits, and the step-by-step registration process.

For entrepreneurs and individual investors, the most significant recent development in Egyptian corporate law is the modern sole proprietorship. Legally known as the **One-Person Company (OPC)**, this structure was introduced by Law No. 4 of 2018, which amended the Companies Law No. 159 of 1981. It was specifically designed to empower small and medium-sized investors by offering a formal corporate structure with the primary benefit of limited liability.

At ALZAYAT Law Firm, we are Egypt’s premier international law firm specializing in corporate establishment. We understand that navigating these updated regulations can be challenging. Therefore, our purpose is to provide clear, strategic guidance, transforming the process of setting up your sole proprietorship into a streamlined and secure foundation for your business success. Let’s work together.

The Legal Evolution: From Establishment to the One-Person Company (OPC)

Previously, individual entrepreneurs operated under a simple “individual establishment,” which offered no separation between personal and business assets. The 2018 legal amendments revolutionized this by creating the OPC. This is a unique hybrid entity that provides the simplicity of single ownership with the crucial legal protection of a formal company.

Key Advantages of the Modern Sole Proprietorship (OPC):

• Limited Liability: This is the most critical advantage. The founder’s financial responsibility is strictly limited to the capital invested in the company. This means your personal assets, such as your home or savings, are legally protected from business debts and liabilities.
• Full Control & Agility: As the sole owner, you retain absolute authority over all business decisions. This centralized power eliminates the need for partner consultations or shareholder meetings, allowing for rapid and agile responses to market opportunities.
• Extremely Low Capital Requirement: A major incentive under the new law is that the minimum capital required to establish a sole proprietorship (OPC) is only **1,000 EGP**. This significantly lowers the barrier to entry for new entrepreneurs.
• Enhanced Credibility: Operating as a formal company (OPC) enhances your business’s credibility with banks, suppliers, clients, and government entities, opening up more significant commercial opportunities.

The Step-by-Step Registration Process with GAFI

The General Authority for Investment and Free Zones (GAFI) is the central body regulating the establishment of an OPC. Our team of top corporate lawyers in Egypt manages every step of this process with precision.

Essential Documentation Checklist:

1. Founder’s Application: An official application submitted to GAFI by the founder or their legal representative.
2. Articles of Association: The company’s constitutional document, detailing its name, objectives, founder’s data, duration, management structure, and capital.
3. Bank Certificate: An official certificate from an accredited Egyptian bank confirming the deposit of the full company capital (minimum 1,000 EGP).
4. Founder’s Identification: A valid National ID for Egyptian founders or a valid passport for foreign founders.
5. Security Clearance (for Foreign Founders): A mandatory background check for any non-Egyptian founder, which we facilitate.
6. Official Company Address: Proof of a physical address for the company in Egypt, such as a legalized lease agreement.

The Registration Phases:

1. Document Preparation and Submission: We begin by drafting the Articles of Association and gathering all necessary documents before submitting the complete application to GAFI.
2. GAFI Review and Approval: GAFI’s legal department reviews the file. Upon approval, they issue a certificate authorizing the company’s establishment.
3. Notarization and Commercial Registration: The Articles of Association are then notarized. With this, we register the company in the Commercial Registry to obtain its official corporate identity.
4. Post-Registration Formalities: Finally, we secure the company’s Tax Card from the Egyptian Tax Authority, register it with the Chamber of Commerce, and handle social insurance enrollment. At this point, your business is fully operational.

Post-Establishment Obligations

Once your sole proprietorship is established, you must adhere to ongoing compliance requirements, including filing annual tax returns, maintaining proper accounting books, and making social insurance contributions. According to the World Bank, Egypt continues to reform its business regulations to simplify such processes for small and medium enterprises.

Why Choose ALZAYAT Law Firm?

Our commitment extends beyond the establishment phase. We provide continuous legal counsel on all facets of your business, from tax compliance to contract drafting, ensuring your venture remains protected and poised for growth.

Our firm’s expertise is not just a claim; it is recognized globally. Leading legal directories like The Legal 500, hg.org, and Global Law Experts consistently rank our specialists as leaders in their field. This is why clients trust us to navigate the intricacies of Egyptian corporate law.