Starting a company is a key step in making ideas real, starting a new phase with both challenges and chances. So, think about setting up your business in the heart of a nation where ancient history meets modern ambition, bustling with innovation, strategic global positioning and a rapidly evolving economy. This is what makes incorporating a company in Egypt such an exciting chance in any foreign entrepreneur’s path to find their own success. But before you can tap into the Egyptian vast market potential, understanding the process of the incorporation is crucial.

Main Types of Companies in Egypt

There are many types of companies with different legal structures that can be established in Egypt, including:

  1. Limited Liability Company (LLC)

An LLC is a popular form of business in Egypt that characterized by:

  • A closed structure where the liability of each partner is limited to their shares.
  • The number of partners can’t be less than two and can’t exceed fifty.
  • No trading of shares on the stock exchange.
  • The company name must include the phrase “limited liability company” and may include the name(s) of the partners.
  • No minimum capital requirement.
  • No limited for management and reasonable ease.

Learn how to establish a Limited Liability Company (LLC) in Egypt in just 5 simple steps in our detailed guide.

  1. Joint Stock Company (JSC)

  • Joint stock companies can be established in two ways:
    • Immediate incorporation in which the founders subscribe to the company’s shares without public offering.
    • Public subscription in which shares are offered to the public.
  • A minimum capital of EGP 250,000 is required.
  • A minimum of three shareholders is required.
  • The Board of Directors (BOD) plays a key role in managing the company, with members elected for three years (initial BOD members serve for five years).
  • Complex management due to regulations by both the Egyptian Financial Regulatory Authority (FRA) and the Egyptian Exchange.

Explore the full process of establishing a Joint-Stock Company (JSC) in Egypt, including legal requirements and registration steps.

  1. One-Person Company with “Limited Liability”

  • A one-person company is fully owned by a single entity, with liability limited to the allocated capital.
  • Minimum capital is EGP 1,000, which must be paid in full during incorporation.

To learn more about how to legally set up a one-person company in Egypt with limited liability, check out our full guide for solo entrepreneurs.

Benefits of a Joint Stock Company (JSC) vs. Limited Liability Company (LLC)

While both LLCs and JSCs offer liability protection and similar tax treatment, the JSC has distinct advantages:

  • Employee Incentives: JSCs allow for the transfer of equity based on performance and typically distribute 10% of revenue to employees.
  • Credibility: JSCs often enjoy greater credibility with third parties and investors. The Board of Directors (BOD) members are jointly responsible for company decisions, adding an extra layer of accountability.

Key Considerations During the Incorporation Process

There are a wide range of rules, steps and considerations that must be considered during the establishment of a company in Egypt in order to ensure its successful continuity, and these considerations include:

  1. Bank Account Requirement

    • Most companies in Egypt need to open a bank account, with the exception of LLCs.
    • A bank certificate from the capital depositor is necessary for all companies, except LLCs.
    • Some banks allow for temporary accounts during incorporation, which are activated once the company is established.

  2. Security Clearance for Foreigners

    • Foreigners involved in the incorporation process must undergo a security check.
    • This process can take between 6 months to a year.
    • If the security clearance is negative, the company may be frozen by the General Authority for Investments and Free Zones (GAFI), and the foreign partners may be required to withdraw from the company to unfreeze it.

  3. Lease Contract Requirement

    • Companies must have a valid place of business, with a notarized lease contract as part of the incorporation process.
    • Virtual or shared office spaces are acceptable for small businesses or startups.

  4. Appointment of an Auditor

    • Every company must appoint an auditor at the time of incorporation.
    • The auditor must be a registered Egyptian accountant and must submit a certificate of acceptance to GAFI.

  5. Documents Required for Foreign Shareholders

    • Foreign companies or individuals looking to invest in a business in Egypt need to provide the commercial register and articles of incorporation, legalized at the Egyptian consulate abroad, then further legalized in Egypt.
    • Some banks need these documents to show the owners and their ownership percentage, the company purpose, and the capacity of the managers especially for setting up a company abroad.

  6. Company Name Requirements

    • To determine the company’s name, a non-confusion certificate is required, which includes submitting three name suggestions.
    • The validity of the certificate lasts for 15 days, after which it must be renewed.

  7. Company Purpose

    • The company’s purpose must be clearly defined and may affect the required capital and licenses.
    • Some businesses may need specific approvals or permits depending on their sector.
    • The company purpose also determines the relevant industrial chambers.

  8. Company Capital Requirements

    • There is no minimum capital requirement for LLCs, with the exception of the JSC.
    • The purpose of the company often determines whether specific capital requirements apply.

  9. Management and Board of Directors

    • The company’s articles of incorporation must define the roles and responsibilities of the managers and BOD members.
    • A minimum of three board members is required for JSCs.
    • BOD members and managers could be shareholders and partners.

  10. Power of Attorney (POA)

    • A Power of Attorney must be issued by all partners to authorize representation during the incorporation process.
    • If issued abroad, the POA must be notarized at the Egyptian consulate.

Incorporation Timeline of Both LLC And JSC

The incorporation process for both Joint Stock Company (JSC) and Limited Liability Company (LLC) typically follows these steps:

  1. POA Issuance: Partners issue the POA, which is then authenticated and deposited in Egypt.
  2. Security Clearance: Foreign investors initiate the security clearance process which takes around 15 business days.
  3. “Consortio Law Firm” Preparations: Our firm prepares the r filing within 10 business days.
  4. Company Filing: The legal filing and submission process takes about 10 business days, including approvals from relevant governmental authorities.

What about Tax Implications?

Egypt enjoys providing a comprehensive and smooth tax system that stimulates foreign investment operations and attracts entrepreneurs to establish their businesses in the Egyptian markets. The tax benefits for companies in Egypt include:

  • All companies in Egypt are subject to a 22.5% tax rate on their annual net profits.
  • An annual tax is imposed on the total net profits of legal persons, whatever their purpose.
  • Companies must also withhold taxes for their employees and submit the payments to the tax authorities.

If you need to incorporating  a company in Egypt and hesitated about the complexities of regulations and laws, you now have the opportunity to get started just Contact our experts at “Consortio Law Firm” for more details:

📞 Contact us today via phone (002-01028806061) or via (WhatsApp) or email (Info@consortiolawfirm.com)