Law no. 4 of 2018, amending the Companies Law no. 159 of 1981
On January 16, 2018, new amendments were made to the Companies Law aiming to ease and enhance corporate operations in Egypt with the aim to make Egypt's business environment more attractive and competitive and to reach the specification of global investment laws.
The highlight of said amendments was introducing a new type of company to be established, namely, Sole Partnership Company.
The Sole Partnership Company allows all entities, whether corporations or individuals, to establish an individually owned company, with liability limited only to its capital, which encourages investors via retaining their control without great financial risks. The creation of a Sole Partnership Company also allows local and foreign investors to incorporate their businesses without risking major financial losses beyond the capital of the company, while still remaining full control. However, the liability of the founder may be extended beyond the company's capital in some cases, mainly if the founder does not separate between the company's capital and the founder's own capital.
However, the Sole Partnership Company shall refrain from carrying the activities stated hereunder:
- Establishing another Sole Partnership Company;
- Initial Public Offering, whether upon establishment or upon increasing its capital;
- Dividing the company's capital in the form of negotiable stocks;
- Borrowing through issuing negotiable securities;
- Carrying out the activities of insurance, banking, saving, receiving deposits or the investment of funds for third parties;
Aside from Sole Partnership companies, the new law also introduced some general provisions for the benefit of the investor; companies now may raise their capital by virtue of an Ordinary General Assembly, provided that said company is not listed on the Egyptian Stock Market.
The new law also allows the members of the board of directors and shareholder to hold Board Meetings without the necessity of being physically present by allowing electronic attendance and signature. Moreover, the amendments allowed the founders to include their own agreements regulating their relationship during the incorporation or after. Accordingly, all Joint Venture Agreements and Shareholders Agreements signed between the founders can be included in the Company's Articles of Association.
Activating the Electronic Signature.
On January 26, 2018, the Information Technology Industry Development Agency ("ITIDA") declared that they began with the process of activating the Electronic Signature services at GAFI, as well as solving all pending problems regarding ITIDA licensed companies.
Moreover, the Ministry of Investment and Internal Cooperation has declared the Electronic Signature system, once activated, as a method for registering new companies at GAFI as one of the procedures which shall contribute in facilitating and easing the company's registration process on one hand, and facilitate the reinforcement of the Investment Law and its Executive Regulation on the other.
It is to be noted that such system, once activated, shall ease all procedures with regard to incorporating new companies, as well as help reducing fraud.
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