Lex Africa Guide 2012 Full - Afrer.org

EGYPTNADOURY & NAHAS LAW OFFICESFirm InformationWebsite address: www.nadourynahas.comLanguages spoken: English and FrenchContacts: Mr. Ashraf Nadoury and Mr. Mourad NadouryCairo OfficeTelephone: +20 2 2795 9658/2794 7257Fax: +20 2 7950080Email: nadorynahas@link.netcairo@nadourynahas.comAlexandria OfficeTelephone: +20 3 487 3609/485 0964Fax: +20 3 487 5136Email: NadouryNahas@gmail.comalex@nadourynahas.comCountry InformationEgypt has a total surface area of 1 001 450 square kilometres anda population of about 80 million.Latest GDP Figures1 % (real exchange per annum).Inflation Rate10.5% (2010).Investment ClimateThe Egyptian government is generally positive towards foreigninvestment. One of the government’s objectives is to expandprivate sector investment. The government is most interested inforeign investment for projects relating to the reclamation andcultivation of desert lands as well as industry, tourism, housingand other projects that require modern technologies, anincrease in exports, decrease in imports or providesemployment. However Law No 121 of 1982 stipulates that onlyEgyptians may be granted a license to import products intoEgypt. No similar restriction applies to export licences. Recentpolitical turmoil has however negatively affected the economy.Investors interested in establishing a business in Egypt aresubject to the following laws:Corporate LawInvestment LawCapital Market lawNew Communities LawDesert Land Law.Forms of BusinessJoint stock companiesLimited liability companiesLimited liability partnership by sharesPartnership companiesLimited liability partnership companiesSole proprietorshipBranches of foreign corporation and representative offices.All companies established in Egypt are governed by corporatelaw, the investment law and the capital market law. Qualifyingforeign companies may receive incentives and guaranteesgranted by other laws.The main types of companies under the corporate law are thejoint stock company, the partnership limited by shares and thelimited liability company.Joint Stock CompanyThe joint stock company is a company where the capital isdivided into shares of equal value. The liability of eachshareholder is limited to the value of the shares it subscribes forand shareholders are not liable for the debts of the companyexcept to the extent of the shares they subscribe. The joint stockcompany must have at least three founders who are jointlyresponsible for the obligations they undertake as founders. Thefounders are required to subscribe for shares in the issuedcapital of at least LE250 000 (LE is the local currency, the Egyptianpound) or 10% of the authorized share capital, whichever is thehighest amount.The share capital of a joint stock company is divided into nominalshares of equal values. A joint stock company which offers itsshares for public subscription must have an issued shared capitalof at least LE500 000. Other joint stock companies must have anissued capital of at least LE250 000.The shares in a joint stock company constitute ”negotiable”shares and shares ”in kind”. ”Negotiable” shares constitute thenegotiable portion of the company’s share capital and a quarterof its nominal value must be fully paid up at the time of thecompany’s foundation and the balance is payable within 5 years.Shares ”in kind” are subject to the same rules as negotiableshares save that:their value must be fully paid up;they have to be evaluated correctly;they may not be transferred or ”negotiated” before theexpiry of two years from the foundation date of thecompany.There is a distinction between ”common shares” (which conferthe same rights on each shareholder) and ”preference shares”(which confer a preferential right to the company’s profits).Multiple voting shares (which grants a shareholder more thanone vote at the general assembly of shareholders) are alsopermitted.The most distinctive feature of joint stock companies is thatemployees must participate in the management of the company.This is done by means of:representation on the board of directors (which will notexceed a third of the members of the board);a distribution of participation shares that allow workers toelect, through a special assembly,representatives to#the board of directors and the generalmeeting of shareholders;#a support administrative committeewhose chairman attends meetings ofthe board of directors.29