How business is organized

How business is organized

1. Are there restrictions for foreign companies by type of business? Which business sectors are "closed" to foreigners?

Foreign companies can invest in most of the sectors in Egypt , but restrictions apply to certain sensitive areas such as defense, security, and national security. Foreign ownership is prohibited or limited in sectors like military production, certain border areas (e.g., Sinai or other border regions), and specific activities in mining, cybersecurity, and hazardous waste management (per Negative Investment List under Investment Law No. 72/2017).

2. What organizational-legal form can a foreign company choose to operate in the country depending on the type of business/activity chosen?

Egyptian law provides several vehicles through which business can be conducted. The choice of legal form depends on the size of the project, number of investors, liability considerations, and regulatory requirements.

• Limited Liability Company (LLC): The most commonly used structure for small and medium enterprises. It requires at least two partners and allows up to fifty. Liability is limited to each partner's capital contribution. There is generally no minimum capital requirement, and it is suitable for startups and family businesses.

• Joint Stock Company (JSC): Designed for larger enterprises and investment-heavy projects. It requires at least three shareholders, capital divided into shares, and a board of directors. Certain regulated sectors require this structure.

• One-Person Company (OPC): Allows a single natural or legal person to establish a limited liability company, combining simplified governance with limited liability protection.

Foreign companies may also establish a branch to conduct commercial activities linked to a parent company contract, or a representative office limited to liaison and market research functions. 

3. Company/branch or permanent establishment/joint venture – what are the specifics of each organizational-legal form that should be taken into account when choosing?

Establishing a branch for a foreign company in Egypt requires the following key documents (all must be translated into Arabic and legalized by the Egyptian consulate in the parent company's home country):

1. Board resolution of the parent company approving the branch establishment in Egypt, specifying its purpose, managers, their responsibilities, and salaries.

2. Commercial registry extract and memorandum/articles of association of the parent company, confirming authorization to open branches abroad.

3. Power of attorney delegating authority to the local agent or lawyer.

4. Underlying contract with an Egyptian public or private entity justifying the branch's purpose.

Starting a company in Egypt even if the shareholders are foreigners means that the company is an Egyptian company, in order to establish this kinds of companies with foreign shareholders, it differs according to the type of company chosen to be established, but mainly these papers shall be required:

1. Power of attorney, copies of passports of the shareholders and copies of their residencies in Egypt, if they are residents.

2. Security clearance on all foreign shareholders.

3. Bank deposit (refundable after establishment).

4. How complicated/easy is the process of company registration? What should be taken into account by representatives of foreign business?

The process of company registration remains bureaucratic due to multiple agency interactions and system updates, though legal barriers are minimal. Key steps include name reservation, drafting Articles of Association, capital deposit (if required), the General Authority for Investment (GAFI) submission, commercial registry, tax and VAT registration, social insurance, and sector-specific licenses. 

Representatives of foreign businesses should plan for flexibility, as timelines are not strictly enforced.  

GAFI tried to overcome bureaucracy by creating a VIP route that allows investors to register a company in 1 day, but the problem persists as the company has to register with the commercial registrar and taxation authority and other authorities according to the type of investment activity.

5. How long does it take to register a company in practice?

On the ordinary mode, for Egyptian shareholders, establishing a company could take 2-3 months. For a VIP mode, it could take 2-3 working days.

For foreign investors, it could take 3-6 months depending on the security clearances of the shareholders to be fulfilled. The prime minister has created a golden license mode that allows for foreign companies to get all the needed confirmations one shot by a simple decision from the prime minister of Egypt, but this requires the company to be investing in a mega project.

6. How is business structuring in free economic zones carried out?

Establishing a company in an Egyptian free zone requires the same mainland incorporation standards (Companies Law 159/1981 or Investment Law 72/2017) plus Free Zone Authority approval.  Companies in zones like Suez Canal Economic Zone (SCZone) follow LLC/JSC/OPC procedures, with added requirements: zone-specific business plan, operational zoning, and export focus verification. 

Zones provide tax/customs incentives (e.g., 0% corporate tax on exports) but mandate compliance with zone regulations.