What is the main source of law authorising this entity form?

Single-shareholder Limited Liability Company

Executive Regulation of Joint Stock and Limited Liability Companies No.96 of 1982.

Give a brief summary of this entity form, including

Does the entity possess separate legal personality?

A single-shareholder LLC has a juristic legal personality.

(Maximum) period of existence

A single-shareholder LLC term is 25 years commencing from the date of acquiring its juristic personality and may be renewed indefinitely.

Governing document(s)

Articles of Association, commercial registration and tax card.

Liability of incorporators / shareholders

Liability is limited to the company’s assets.

(Governing) bodies

General authority for investments and free zones (GAFI) and commercial registration.

Other particularities

NA

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Yes.

Can this type of entity be publicly listed or held?

Yes.

Can this type of entity be used for a non-profit or charitable organization?

No.

Give a brief summary of the process of incorporation, formation, or organization, including

Main documents required

The main documents are:

The key document is a power of attorney from the founder either notarised in Egypt or legalised by an Egyptian consulate. If the power of attorney is issued in a language other than Arabic, it has to be translated by a government department. The translation process takes about 10 business days.

Involvement of notary, company register, governmental authorities

A bank account is opened after receipt of an Arabic language power of attorney and the founders are required to transfer the initial capital. The timing starts from the date on which the bank issues a certificate evidencing said deposit. The bank account is opened by the attorney on behalf of the founders.

Timing (estimate)

From the date on which the bank certificate is issued, the process takes a maximum of three (3) business days.

Main costs, including registration and similar fees (excluding legal fees)

Foreign shareholders must submit their passport copies, residential addresses and particulars of any shares or bank accounts they hold in Egypt for the purposes of security clearance.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The government fees are highly variable and have changed more than three (3) times in less than one year. Fees vary depending on the company’s issued capital, object and geographical operation area.

The company’s object (business purpose) has to be stated and disclosed in the incorporation process.

Minimum number of incorporators / shareholders and residency requirements

A single-shareholder LLC is a new type of company whereby an individual, whether a natural or juristic person, may solely establish a company (no residency requirements). It has only one (1) single-shareholder.

Minimum number of directors (or other applicable officers) and residency requirements

One.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum share capital is 1 ,000 EGP to be fully paid at the time of incorporation, as amended by the Ministerial Decree 2928 of 2022.

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

No, incorporation of a single-shareholder LLC may be carried out by virtue of a power of attorney.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

A tax number is issued to the company once incorporated as part of the incorporation process.

What is the title of the applicable company registry?

The Commercial Register.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles , Ownership identification (direct and/or indirect ownership, 'beneficial owners') , Group structure , Share capital , Directors , Accounts , Insolvency, good-standing, liquidation , Liens and encumbrances on the shares , Liens and encumbrances on assets of the entity , Other (e.g. litigation, tax matters)

No, documents are not publicly available, however, an extract of all the information described above must be filed at the commercial register and updated whenever modifications occur. The only public data available is the data set forth in the commercial register. The commercial register is a publicly accessible document that shows, inter alia, the names of the board members and managers, and the company’s capital, duration, object, registration number and headquarters.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The manager.

The manager has full authority to represent the company vis-a-vis third parties, unless such authority is limited or qualified by the articles of association.

How are the members of the executive body appointed, dismissed and replaced?

By virtue of a shareholder’s resolution.

Is it possible to appoint corporate directors or must all directors be natural persons?

Yes an entity may be a director.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

No.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The shareholder.

The single-shareholder of the company will be empowered alone to hold general meetings, take decisions relating to increases/decreases in capital, appoint and replace managers as well as convert the company to another type or liquidate it.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Not applicable.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Not applicable.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Companies are required to submit their audited balance sheets to GAFI annually.

Is the entity permitted to determine its own financial year?

Yes.

Is the entity subject to any statutory (external) auditor obligations?

Yes, it has to retain a chartered accountant as a statutory auditor.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

The company must also retain a legal counsel who is accepted to plead before the Court of Appeals.

What is the title designated for ‘ownership interests' (e.g. shares, quota, interests, membership)?

Parts.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

No.

What documentation is required for the transfer of ownership interests?

Yes, but only in its entirety as the introduction of other shareholders will change the legal form of the company.

A share purchase agreement and amendments to the Articles and by-laws.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The share purchase agreement must be notarised and the amendment ratified by GAFI.

Are there any applicable stamp duties imposed when transferring ownership interests?

No

How are shares issued? (including information on payment obligations, registration requirements)

By capital increase.

Further information on equity contributions, e.g. , Non-cash payments on shares; (Share premium) contributions without issuance of shares , Can partially paid shares/ownership interests permitted and what are the restrictions on them?

Not applicable.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Not applicable.

Any requirements with respect to distributions to shareholders?

No distribution to shareholders since it is only a single-shareholder LLC.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Not applicable.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The company has to pay an annual subscription to the Egyptian chamber of commerce.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

All companies in Egypt are subject to corporate income tax at the rate of 22.5% of their net profits.

Summary of any specific matters, e.g. recent or prospective major legal developments

A synopsis of legislative developments in Egypt:

• Egypt has recently issued a New Investment Law; and the government introduced some amendments to the Companies law No. 159/1981 (Companies’ Law). On 16 January 2018, the Egyptian President issued Law no. 4/2018 (New Amendments); three (3) weeks later, the Ministry of Investment and International Cooperation issued the Executive Regulation (ER) of the New Amendments. The enactment of the New Amendments was to ameliorate Egypt’s ranking in international reports of doing business and to help bring the economy to its full potential. The New Amendments introduced some new provisions and amended others; these amendments cover subjects ranging from introducing a new type of company, to amending companies’ incorporation provisions, in addition to granting extra powers to the General Authority for Investment (GAI).
• On 19 February 2018, Egypt issued a new Bankruptcy Law no. 11/2018 (New Law). The New Law replaces and revokes the bankruptcy rules set out in chapter 5 under the Commercial Code No. 17 of 1999 (Commercial Code). The New Law introduces a new philosophy. For a long time, Egyptian bankruptcy regulations used an approach that deals with the bankrupt as a criminal. However, it looks like the New Law is trying to change this entrenched belief by introducing new mechanisms like reorganisation and by mitigating strictness with the debtor like mitigating the imprisonment penalty for non-fraudulent bankruptcy.
• New amendments were issued to the Capital Markets Law (CM Law) on 14 March 2017. The Capital Markets Law new amendments (CM Law Amendment) aim to increase competitiveness and create an inclusive economic climate. The law briefly introduced more protection to minority stakeholders, especially in acquisition cases. It gives the power to the Egyptian Exchange to lower registration fees in case of small businesses to encourage small companies to compete in the market. Moreover, the law introduces Sukuks to the exchange market; which are bonds compliant with Sharia law. The law provided the foundation for establishing a union for securities companies. The said union is composed of all companies operating in an activity pertaining to securities (e.g. securities brokerage, portfolio management, venture capital, holding companies, depositaries etc.). Also, the amendments include a harsher punishment for crimes related to financial malpractice including any action that compromises trading fairness.

On the other hand, it introduces commodities exchange and futures trading to the Egyptian market. The recent amendments also allow for unwinding stock market trades in case of international money laundering suspicions.