1- What are the most commonly used company forms in Egypt?

State three forms comparing their main

characteristics/aspects, advantages, and disadvantages.

Limited Liability Company Sole Proprietorships

Types Joint Stock Company (JSC)2
(LLC)1 Company3

- Minimum and Maximum - Minimum and

- Minimum and Maximum Number of Shareholders: A JSC Maximum Number of
Number of Partners: An LLC requires at least 3 shareholders, Owners: A sole
requires at least 2 partners with no maximum limit, allowing proprietorship has a single
and cannot exceed 50 partners, expansion through adding new owner only, with no option
limiting the number of owners shareholders. for partnership or expansion
compared to a JSC. - Minimum Capital through additional owners.
- Minimum Capital Requirement: A minimum issued - Minimum Capital
Requirement: There is no capital of 250,000 EGP is Requirement: No
legally mandated minimum required for a private JSC, and minimum capital is required
capital for establishing an LLC, 500,000 EGP for publicly listed to establish a sole
giving partners flexibility to set companies. 10% of the capital proprietorship, and the
main capital according to their must be paid upon incorporation, owner determines the
characteristics/aspect financial needs and capability. with 25% within the first year, capital based on their needs
s - Ownership and Quotas: and full payment within five and personal estimate,
Ownership in an LLC is based years. allowing small businesses
on quotas, not shares, and - Public Trading: A JSC can to start without major
quotas are not tradable on the offer shares on the stock financial requirements.
public market. exchange, allowing it to raise - Ownership: The owner
- Management: An LLC can capital from the public through has full control over all
be managed by a general public offerings. assets and decisions of the
manager appointed from among - Management: A JSC is business.
the partners or externally, or by managed by a board of directors - Management: The
a board of directors based on consisting of shareholders or their business is directly
company size and partner representatives, providing a managed by the owner, who
needs. governance structure suitable for has complete freedom in
large corporations. decision-making.
Advantages - Limited Liability for Shareholders: Shareholders are - Full Control by Owner:
Partners: Partners' personal legally protected, with their The owner has complete
assets are protected from liability limited to the value of control over the business
company liabilities, limiting their shares, ensuring personal and its decisions, with
their liability to the value of assets are not at risk for the absolute freedom in

1
Companies Law No. 159 of 1981, which includes rules and regulations for company establishment, management,
and liquidation procedures.
2
Companies Law No. 159 of 1981 and Capital Market Law No. 95 of 1992, which regulates public stock trading
and shareholder rights
3
A sole proprietorship is subject to the Egyptian Civil Code and does not directly fall under corporate laws, as it is
owned by a single individual without partnership.
 their quotas. management.
- Flexible Management: An - Simple and Low-Cost
LLC allows for flexible company's debts. Setup: A sole
management, where a general - Ease of Raising Capital: A JSC proprietorship does not
manager or board can be can raise funds through public or require complex legal
appointed according to the private stock offerings, procedures or high setup
company's size and needs, supporting large projects and costs, enabling quick
making it suitable for small to business expansion. business start-up.
medium-sized businesses. - Business Continuity: A JSC - Low Administrative
- Lower Setup and Operating continues to operate regardless of Costs: No annual auditing
Costs: An LLC is simpler and changes in shareholders, with a or complex financial
less expensive to establish than legal entity that ensures ongoing disclosures are required,
a JSC, with no requirement for operations. making it preferred for
annual financial disclosure or small-scale businesses with
continuous auditing. simple operations.
- Unlimited Personal
- High Administrative Costs: Liability: The owner is
- Restrictions on Number of Operating a JSC requires high personally liable for all
Partners: The law imposes a administrative costs, including debts and obligations,
maximum limit of 50 partners annual financial audits and meaning personal assets
in an LLC, which may restrict comprehensive disclosures to could be at risk if business
the company's ability to expand ensure financial transparency and debts cannot be met.
by adding new partners. shareholder protection. - Difficulty in Raising
- Limited Fundraising - Complex Incorporation Capital: Sole
Options: As quotas cannot be Procedures: Establishing a JSC proprietorship owners often
publicly traded, an LLC cannot involves complex legal face difficulty in obtaining
disadvantages
raise capital through public procedures, including registration financing from banks or
offerings, limiting available and detailed documentation, investors, which may limit
financing options. increasing costs and required growth and expansion
- Limited Growth Potential: time. potential.
An LLC may face challenges in - Legal Liability for Board - Lack of Business
large-scale expansion due to Members: While shareholders Continuity: The business
restrictions on the number of have limited liability, board depends on the owner, and
partners and inability to trade members may face legal may cease operations upon
quotas. responsibility for any unlawful the owner's death or
actions or gross errors. retirement, limiting long-
term continuity.
2-What are the main differences between a board of directors meeting, ordinary general assembly, and extraordinary
general assembly? Who has the authority to send the invitations to such meetings? A focus on the invitation procedures
would be greatly appreciated.

Authority to
Meeting Type Purpose Invitation Procedures Meeting Protocols
Convene
Manage Chairman of the Quorum as specified in the Articles of
Invitations sent to all
company Board; if one-third of Association; decisions by majority
board members,
affairs, set members request a vote; minutes recorded and signed by
including agenda,
Board of policies, and meeting and the attendees, companies are required to
date, time, and venue;
directors make Chairman does not document the minutes and have them
electronic
meeting4 executive respond within ten approved by General Authority for
communication
decisions. days, they may Investment and Free Zones (GAFI)
methods are
convene it
permissible.
themselves.

Approve Board of Directors; Notices issued at least 15 Valid with the presence of
financial must also convene if days before the meeting, shareholders representing at least one-
statements, requested by the including agenda, date, time, quarter of the capital; decisions by
distribute auditor or and venue; for companies majority vote; minutes recorded and
profits, shareholders with a large number of signed by the Chairman and secretary,
ordinary appoint representing at least shareholders, invitations can companies are required to document
general auditors, and 5% of the capital, be published in two widely the minutes and have them approved
assembly4 elect board provided they state circulated daily newspapers. by General Authority for Investment
members. their reasons and and Free Zones (GAFI)
deposit their shares at
the company's
headquarters or an
accredited bank.
extraordinary Address Board of Directors; Notices issued at least 15 valid with the presence of
general significant must also convene if days before the meeting, shareholders representing at least half
assembly4 matters requested by including agenda, date, time, of the capital; if the quorum is not
requiring shareholders and venue; for companies met, a second meeting is held, which
special representing at least with a large number of is valid with the presence of
resolutions, 10% of the capital for shareholders, invitations can shareholders representing one-quarter
such as serious reasons, be published in two widely of the capital; decisions require a two-
amending the provided they deposit circulated daily newspapers, thirds majority; minutes recorded and
Articles of their shares at the invitations must include signed by the Chairman and secretary,
Association, company's agenda, date, time, and venue, companies are required to document
increasing or headquarters or an following the company's the minutes and have them approved
decreasing accredited bank. Articles of Association for by General Authority for Investment
4
The Egyptian Companies Law No. 159 of 1981 and its amendments regulate the main company
meetings.
 capital, or communication methods. and Free Zones (GAFI)
dissolving the
company.

3-Can we establish a company in Egypt with 100% foreign ownership?

Yes, it is possible to establish a company in Egypt with 100% foreign ownership. The Egyptian Investment Law No.72 of 2017
allows foreign investors to fully own companies in most sectors, aiming to encourage foreign investment by offering various
incentives and guarantees.

 Investment Law No. 72 of 2017:

-This law defines the legal framework for investment in Egypt, granting foreign investors equal rights with local investors,
including full ownership of companies.

-Article (3) of the law states: "Foreign and local investors shall enjoy the same rights and obligations in all investment fields."

 Executive Regulations of the Investment Law:

-These regulations clarify the procedures and details related to the application of the Investment Law, including conditions for
establishing companies and investor rights.

 Exceptions and Restrictions:

While full foreign ownership is permitted in most sectors, there are certain exceptions and restrictions in specific areas, such as:

 Specific Geographical Areas:

In regions like the Sinai Peninsula, there are restrictions on land and property ownership for non-Egyptians due to national
security considerations.

 Strategic Sectors:

Certain strategic sectors, such as military industries or media, may require special approvals or partnerships with local entities.

4-What is an escrow account?

An escrow account is a financial arrangement where funds or assets are held by a neutral third party, known as the "escrow
agent," to ensure the fulfillment of specific conditions agreed upon between two parties. The funds or assets are released to the
beneficiary only when the stipulated conditions are met.

Common Uses of Escrow Accounts:

 Real Estate Transactions: Escrow accounts are utilized to ensure the transfer of property ownership after all conditions,
such as payment and contract registration, are satisfied.

 Joint Ventures: Contributions from partners are deposited into an escrow account to ensure their use aligns with the joint
agreement.

Legal Framework in Egypt:

 While there isn't a specific legal provision in Egyptian legislation that directly regulates escrow accounts, they are managed
based on general contract principles outlined in the Egyptian Civil Code No. 131 of 1948.

Relevant Legal Provisions:

 Article 103 of the Egyptian Civil Code: Defines agency as a contract whereby the agent undertakes to perform a legal act
on behalf of the principal. The escrow agent can be considered an agent for both parties in executing the contract's terms.

 Article 106 of the Egyptian Civil Code: States that the agent must execute the agency within its defined limits, implying
that the escrow agent is obligated to fulfill the conditions agreed upon by the parties.