Starting a business in Egypt has never been easier, especially with the government's efforts in digitizing the economy. Minister of Communications and Information Technology Amr Talaat mentioned that the Digital Egypt Platform currently offers more than 125 government services. Most of these services facilitate starting a new venture in Egypt.
If you are still unsure about starting a new business in Egypt, we have already shared why it is the perfect time for investment in Egypt. We have also discussed the services your business needs to grow your investment in Egypt.
Egypt is becoming a favored destination for investors and entrepreneurs because of the ease of starting a new business; you can go through most of the process online through GAFI.
Here is Kreston's guide on how to ensure a smooth launch of your investment in Egypt. We will share the most important aspects to consider from our local experience and knowledge.
- Determine the type of legal entity
Choosing the right legal entity and corporate structure for your investment is essential. The optimal structure determines the tax burdens and protects the founders' assets. The Egyptian Commercial Companies Law offers various legal structures to meet the requirements of every investor and business. We will discuss the most common ones.
- Limited Liability Company (LLC)
LLC is one the most common legal entity forms for companies in Egypt. This form of a company consists of a few shareholders, who are legally responsible for the company's debts with a percentage equivalent to the percentage of their share. To incorporate an LLC in Egypt, the number of partners should not be less than two. It should not exceed 50 partners, with the documents and fees of incorporation, which are determined based on the company's capital.
- Branch of a Foreign Company
The Egyptian Companies Law in Egypt allows international companies to open their branches in Egypt to perform contractual work. For a foreign company to open a branch in Egypt, it must be awarded a local contract to conduct projects and activities in Egypt. The foreign company must also designate a manager Egyptian or foreigner to represent the company in Egypt. The branch will be treated as an Egyptian company in all matters except corporate governance.
- Joint Stock Companies
Joint-stock companies are considered the most commonly used legal entity for businesses in Egypt. It is mainly used for major manufacturing projects established in Egypt that require significant investments. Joint-stock companies maintain a better-organized management structure and strict corporate governance requirements. To incorporate a joining stock company, you need a minimum of 3 partners with no restrictions on their nationalities.
- Taxes and Legal Regulation Compliance
All types of legal entities for companies in Egypt are subject to the Commercial Companies Law No. 159 of 1981 and must comply with all of its regulations.
The Companies Law defines all corporate governance regulations, controls management and control issues and fiscal policies, in addition to the company’s tax and corporate requirements such as the board of director’s meetings, ordinary general meetings and extraordinary general meetings.
Each type of company is formed according to the kind of activities it will carry out in Egypt, and based on that, it must meet specific rules and regulations to comply with the Egyptian law for this form.
- Finding the Right Business Partner in Egypt
No matter what type of company you choose and the line of business for your investment, it is always advisable to work with a local business partner to protect your investment in Egypt. With Egypt updating its investment and company laws and regulations periodically, it is best to work with a company like Kreston with extensive experience in Egypt's local market with a vast global network. Ahmed Mamdouh, Kreston Egypt will work with you on every aspect of the business, starting with choosing the right legal entity and form for incorporation and ensuring compliance with all laws. In addition, we provide support for all sorts of accounting and bookkeeping services, so you do not need to hire an in-house team with added overhead costs.
Our accounting services cover bookkeeping services, payroll management and all sorts of financial reporting according to GAAP & IFRS. In addition to tax preparation and filing according to the legal form of the business.
Our team’s vast experience in local and global markets ensures smooth run of business with compliance in different locations for your business.
- Corporate Maintenance
Finally, as discussed before, to ensure the success of your investment in Egypt, you are required to meet specific obligations. Your company must file annual reports on specific dates, in addition to paying renewal fees for the company's legal entity. You will also need to have regular shareholder meetings and keep minutes of those shareholder meetings. This is essential to avoid any penalties and to comply with regulations.
Many companies prefer to hire a local expert to carry out these complex activities to mitigate the penalty risk and avoid wasting time away from their core business. Ahmed Mamdouh & Co. Kreston Egypt offers such corporate services for its clients with expert consultants, with minimum hassle for the client.
