Definition of a Company

According to Article 505 of the Egyptian Civil Code No. 131 of 1948, a company is defined as a contract whereby two or more persons undertake to contribute to a project aimed at generating profit, by providing a share of capital or work, in order to share the resulting profits or losses.

Types of Commercial Entities

Economic establishments are divided into two legal forms:

1. Sole Proprietorship: A commercial enterprise owned and managed by a single individual, which is not considered a company and does not possess legal personality.
2. Commercial Companies, which are further classified into:
   • Partnerships, governed by the provisions of the Commercial Law issued by Royal Decree on 13 November 1883 (as amended) and the New Commercial Law No. 17 of 1997.
   • Capital Companies, under the Companies Law No. 159 of 1981.
   • Companies subject to the Investment Law No. 72 of 2017.

Sole Proprietorship

• Owned and managed by a single individual, who acquires the status of a trader and must meet the legal capacity requirements for commercial activity (21 years of age, or 18 with court authorization).
• The trade name may be derived from the owner’s name.
• There is no minimum capital requirement, and the enterprise cannot be converted into another legal entity or admit additional partners.
• The owner bears unlimited personal liability for the debts of the business.
• Foreign ownership is permitted, except for activities restricted to Egyptians or where foreign participation limits apply.
• The enterprise terminates upon the owner’s death and is automatically converted into a partnership among heirs, following valuation and incorporation procedures.

I. Partnerships

These companies are based on personal trust among a limited number of partners and are generally dissolved in the event of death, incapacity, bankruptcy, or withdrawal of a partner.

Types of Partnerships:

1. General Partnership (Shirka al-Tadamun)

• Formed by two or more partners for commercial purposes, with joint and unlimited liability.
• The trade name must include the names of the partners with “& Co.” or “and Partner” as applicable.
• Minimum capital: EGP 300,000.
• Management is vested in the partners, individually or collectively, with the possibility of appointing an external manager.

2. Limited Partnership (Shirka al-Tawsiyah al-Basita)

• Composed of general partners with unlimited liability and limited partners whose liability is restricted to their capital contribution.
• Limited partners may not participate in management.
• Minimum capital: EGP 300,000.
• Management is exclusively the responsibility of the general partners.

II. Capital Companies

These companies are based on financial contribution, and personal circumstances of partners, such as death or bankruptcy, do not affect the company.

Types of Capital Companies:

1. Joint-Stock Companies

• Capital divided into tradable shares of equal value; shareholders’ liability is limited to their subscribed shares.
• Minimum capital: EGP 250,000; 10% must be paid upon incorporation, with 25% completed within three months.
• Minimum number of founders: three (natural or legal persons).
• Foreign participation is allowed up to 100%, except for certain activities restricted to Egyptians.
• Managed by a Board of Directors of at least three members; members may be non-shareholders or foreigners.

2. Partnership Limited by Shares

• At least two founders, with one or more general partners bearing unlimited liability.
• Minimum capital: EGP 250,000; 10% payable at incorporation.
• The company’s name must include at least the general partner’s name.

3. Limited Liability Companies

• Minimum of two and maximum of fifty partners, with liability limited to each partner’s share.
• Name may be derived from one of the partners or the company’s purpose.
• No minimum capital unless specified in the Articles of Association.
• If the number of partners exceeds ten, a supervisory board of at least three non-managing members must be formed.

4. Single-Member Limited Liability Company

• Established by one natural or legal person, with a special name derived from its purpose or founder, indicating it is a single-member LLC.
• Minimum capital: EGP 1,000, fully paid upon incorporation.
• Acquires legal personality upon registration in the commercial registry.
• Provisions applicable to LLCs apply unless otherwise specified.
• Foreign founders are permitted, subject to activity restrictions.
• Liability of the founder is limited to the company’s capital.

Authority of the General Authority for Investment

• Companies subject to Investment Law No. 72 of 2017.
• Companies governed by Companies Law No. 159 of 1981.

General Conditions for Establishment:

• Engage in one or more activities listed in Article 1 of the Executive Regulations of the Investment Law, with the possibility of adding additional activities within legal limits.
• Define the company’s commercial activity, capital distribution, and management structure.

Investment Activities under Law No. 72 of 2017:

1. Industry (excluding tobacco and alcoholic beverages).
2. Agriculture, livestock, poultry, and fisheries.
3. Commerce (must be a joint-stock company except in remote or new urban areas).
4. Education.
5. Health.
6. Transport (subject to prior approval for certain activities).
7. Tourism.
8. Housing, construction, and building.
9. Sports (joint-stock company).
10. Electricity and energy (joint-stock company if involved in production and distribution).
11. Petroleum and natural resources.
12. Water (construction, operation, and maintenance of treatment plants and distribution networks).
13. Information and communications technology.

Required Documents and Data for Company Formation

Documents:

1. Certificate of non-conflicting trade name (for capital companies).
2. Bank certificate for capital deposit (10% for joint-stock companies, 100% for single-member companies).
3. Power of attorney from founders, if applicable.
4. Identification documents for founders, shareholders, directors, and board members; birth certificates for minors; commercial registry for Egyptian legal persons; power of attorney for foreign legal persons.
5. Security clearance for foreign partners.
6. Appointment of statutory auditor (capital companies only).

Data:

• Company’s registered office.
• Trade name and commercial designation.
• Capital and its allocation among partners.
• Activity description.
• Board of directors or managers, and their powers.
• Legal counsel for the company (capital companies only).