Egypt: One Person Company: A New Form Of Companies Introduced In The Companies' Law No. 159 Of 1981!

Last Updated: 18 October 2019
Article by Dahlia Hakim
Most Read Contributor in Egypt, October 2019

The One Person Company is a new type of companies that was introduced in the Companies Law No. 159 of 1981 after its last amendments done in 2018; as by this type of companies, the small investor becomes able to establish, by his own, a company in a unique form of companies. These companies are applied in many countries and it achieved great results, because of its limited liability that is restricted to the value of the shared capital, which protects the investor from any risks that may reach his fortune. Besides its role in reducing the phenomenon of establishing simulated companies to meet the multiple partners condition.

In this Article, we will define the one-person company, characteristics that distinguish it from other kinds of companies, conditions imposed for establishing it. Then we will illustrate the weakness and strengths points of it. Finally, we will stipulate the required documents in establishing the same.

First: Definition of a One Person Company

One Person Company is a company that is wholly owned by a single person, whether natural or juristic, within the purposes that it's established for, and the founder of the company shall not be liable for the company's obligations unless within the allocated shared capital.

This company may be, initially, established by one partner, or may be transformed into a one-partner company with one partner remaining. And in that way, it is considered an exception to the principle, which should have at least two parties because the company, in general, is a contract that is concluded by two or more persons; however a one-person company is a company consisted of only one person.

The limited liability of the founder or the owner of the company means that he has specified part of his patrimony for the company's activity, and therefore he shall be liable only to the extent of his shares in the company's capital. Accordingly, any losses arising from the business shall not exceed to the founder's funds, and the founder of the company shall enjoy limited liability vis-a-vis third parties. The company shall be fully responsible for any liabilities to others.

Second: Characteristics of One Person Company

one-person company needs only one partner or founder, so it gives the opportunity to a large number of small investors to have a company without the need to obtain a certain number of partners or shareholders. Since a one-person company is the owner-partner in which is liable for his share only by the amount of the company's capital, the presence of limited liability of the partner leads to credit impairment. Therefore, the others who deal with the one-person company take this into account.

One more advantage of establishing a One Person Company is the ease of decision making within the company as the owner of one-person company exercises all the powers that granted to the board of directors and the powers of the ordinary and extraordinary general assembly, being the only partner. It is not limited to taking the approval of anyone. Therefore, it is granted to the owner of the company to manage it in a distinct manner. And be independent in the management, control and the issuance of decisions will be easily and quickly and gives a sense of the value of the effort and care of that company and the development of his funds.Besides the ease of conversion of the company to be transformed its position or merger with others because of its easy decision-making as we mentioned earlier.

Third: Conditions of establishment and work of a one person company

  1. The company of one person shall be established by one natural or legal person only. Therefore, if the number of founders or partners is more than one, it shall not be one person company, but any other type of companies.

    If the founder of the company is one of the persons of public law, the approval of the Prime Minister or the competent minister, as the case may be, must be obtained by the company.
  2. The company of one person shall be established with an application submitted by its founder or his representative to the Authority. The one person company shall have its internal regulation that includes its name, purposes, the data of its founder, duration, how it is managed, the address of its head office, branches, the amount of its capital and the company liquidation rules. And any other data specified by the Executive Regulations.
  3. The company's capital shall be paid in full upon the establishment of the company.
  4. The founder of the one person company shall, in the case he dealt with the whole capital to another natural or legal person, take measures to amend the company's data and the commercial register within a period not exceeding three months from the date of disposal, in accordance with the procedures and rules specified by the Regulations. In all cases, the act shall not be effective against third parties except from the date of registration in the commercial register.

Fourth: Required Documents for establishing one person company:

  1. A non-confusion certificate authenticated from the Commercial registry;
  2. A Banking certificate by depositing 100% from the capital;
  3. A copy of the national identification or the passport (with having a valid residence visa);
  4. A power of attorney;
  5. A security check application for the company's owner or and/or the foreign manager;
  6. A copy of the bar association card of the lawyer;
  7. Determining the name and address of the legal consultant of the company;
  8. The Certificate of the Auditor of the company; and
  9. A possession deed of the company's headquarter or the lease contract of the same.

Fifth: The difference between a sole proprietorship and One Person Company

The sole proprietorship shall be established in accordance with the provisions of the Investment Law No. 72 of 2017. And exercises one or more of the activities stipulated in the first article of the said law. It shall be established by one natural person who shall be considered as a trader in the law. A minimum capital of the sole corporation is required which is one hundred thousand Egyptian pounds. The sole proprietorship shall not acquire a legal personality independent of its owner, and the latter shall be liable for all the debts of the corporation in his own funds.

The minimum capital of the one-person company is EGP 50000 , and the founder of the company enjoys limited liability within the capital of the company and subject to the rules which described in this research.

It should be noted that the provisions of the limited liability companies mentioned in the Companies Law No. 159 of 1981 are applied to one person companies when no provision was provided for the one-person company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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