Egypt – Latest Amendments in Companies Law

25 January, 2018

Egyptian Companies’ Law Undergoes Amendments

New amendments were made to the Egyptian Companies’ Law as circulated on January 16, 2018. These new amendments effectively introduce a new type of company in order to promote and ease investment in Egypt. This effort is to update the existing laws by introducing the Sole Person Company with limited liability.

Sole Person Company

In accordance with the Egyptian legislative reform and with the aim to reach the specification of global investment laws, The Egyptian legislator declared a milestone law No. 4 for the year 2018 amending the Companies law No. 159/1981 to enhance the investment environment within Egypt. These new amendment laws brought a radical change in the corporates available structure by adding the sole person company to the current structures.  The capital sole person company -or the sole partnership in other jurisdictions- is owned by either a natural person or legal entity and is to be incorporated in the form of Limited Liability Company with obligation of appointing legal auditor. The liability of the Sole person Company is limited to its capital only with certain restriction to split between the Company’s capital and the founder’s personal wealth.  This limitation on liability encourages investors via retaining their control without great financial risks.

Benefits

1. Companies can now raise their capital by way of Ordinary General Assembly, excluding companies listed in the stock market. 2.  Eliminating the lock-up period that spun-off companies (which may now take multiple forms) needed to adhere to before trading their shares. 3. Allowing for electronic attendance and signatures to replace in-person attendance at the meetings of the board of directors.

Limitations 

The Sole Person Company may not establish another sole person company or issue shares.

Recognition of Joint Venture and Shareholders Agreements 

The amendments allowed the founders to include their own agreement regulating their relationship during the incorporation or after. By this new rule all the Joint Venture and shareholders Agreements signed between the founders can be included in the Company’s bylaws.

Accumulated Voting power The new law grants the shareholders the right to have the accumulated voting power in electing the board member by granting each shareholders number of votes equal to his or her shares. Such votes can be distributed between the numbers of board member candidates’.

Dividing in existing companies into two or more companies 

Article 135 added the ability to divide any existing company into two or more companies formed in accordance with the current law but sole person company, after following the required procedures.

For more information in regards to these amendments or help in establishing a Sole Person Company please do not hesitate to contact us with any queries at our main mail address: mail@eldib.com or our key contacts: Abdel Aziz Zaki, Partner and Head of Corporate Department at abdelaziz.zaki@eldib.com  and Mohamed Eldib, Partner at mohamed.eldib@eldib.com

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