One of the most critical decisions for any new business, especially when establishing a company in Egypt, is choosing the legal form of companies in Egypt suitable for this business. An idea for a venture could be easy but how to formulate it onto a legally functioning entity is a different thing. There is no right or wrong in this area specifically; founders have to weigh in the pros and cons of each legal form, consider their objectives for the business growth in the long run, and consult with a legal and tax firm in Egypt to determine the appropriate form for the business in this stage.

Overview of The Legal Forms of Companies in Egypt and its Laws

Investors interested in establishing businesses in Egypt are subject to four laws:

  • Corporate Law No. 159 of 1981.
  • Investment Law No. 8 of 1997.
  • New Communities Law No. 59 of 1979.
  • The Desert Land Law No. 143 of 1981.

The Law of Commerce No. 17 of 1999 and Companies Law No. 159 of 1981 establish Egypt’s legal business structures. The Law of Commerce covers sole proprietorships and basic partnerships generally, while the Companies Law governs joint stock companies, limited partnerships by shares, and limited liability companies extensively.

The limited liability company and the joint stock company are two structures that restrict stockholders’ liability. Other corporate structures are less common, since they imply unlimited liability for at least one of the owners or partners.

In Egypt, the four most frequent legal forms of companies are:

  1. Joint Stock Company.
  2. Limited Liability Company.
  3. Representation office.
  4. Foreign Branch.

Undoubtedly, each legal form mentioned above has specific terms and conditions in the manner set forth in the Egyptian Companies’ Law and Commerce Law as indicated in detail below:

  1. Joint stock company

Having shares divided into equal values, and without responsibilities for possible debts, a joint stock company in Egypt is a preferred business entity by numerous investors who want to place their businesses on the market under a joint stock company.

A Joint stock company in Egypt can be set up with at least 3 shareholders who are mutually answerable for the obligations and responsibilities of the company.

It is good to know that at least 49% of the shares in a joint stock company must be placed to public subscription once they have been founded and registered.

  1. Limited liability company

A limited liability company is the most common company type registered in Egypt. Such companies are permitted to engage in any business activities with the exception of banking, insurance, saving, receiving or investing funds in favor of third parties, or any other activity explicitly restricted by law.

As defined under the provisions of the Egyptian Companies’ law, the minimum number of the LLC’s partners shall be not less than 2 partners and not exceeding 50 partners.

If you have decided for a limited liability company in Egypt, it is good to know that each stockholder is in charge of his/her limit of shares in the company, but considering that bonds and shares are not negotiable.

A limited liability company in Egypt can be 100% foreign owned, but the board of directors should have at least one national. The minimum share capital when registering an LLC in Egypt is set at 50,000 Egyptian Pounds.

  1. Representation office

A representative office is a temporary business entity that is not a legal entity in its own right. It is typically used by foreign companies to conduct market research, promote their products or services, and build relationships with potential customers and partners.

According to the investment Law No. 742 of 2018, representative office is permitted to operate solely for the purposes of conducting market studies and research, and are prohibited from taking part in any trading activities.

Foreign companies or establishments may not establish scientific, technical, consultative or other service offices, unless these companies or establishments have an appointed commercial agent in Egypt, according to the provisions of the Commercial Agents Law No. 120 of 1982.

  1. Foreign Branch

A branch is a legal entity that is separate from the parent company, but it is subject to the control and direction of the parent company. A branch of a foreign company can carry out any lawful activity that is consistent with Egyptian laws and regulations.

Setting up a branch in Egypt complies with the provisions of the Corporate Law No 159 of 1981. One should know that branches in Egypt are exempt from taxation for 10 years if they:

  • Hire nationals.
  • Develop in new communities.

Choosing the legal form of companies in Egypt that appropriate for your new business requires extensive research and deep knowledge of the Egyptian laws and regulations, so it is better to consult with an expert legal and tax firm to help make the best decision for your business.

“Consortio Law Firm” provides a seamless and efficient service for individuals and entities looking to establish companies in Egypt using the advanced technology offered by the Egyptian government to choose the legal form of companies in Egypt suitable for your business.

For further inquiries, Contact us Now via the phone number 002 01028806061 or send us a WhatsApp or email Info@consortiolawfirm.com.