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Business in Egypt
For further information please refer to "Library Section" |
Business Organizations [I] EGYPTIAN COMPANIES Investors establish or acquire Egyptian companies. The types of Egyptian corporate entities most commonly used by investors are Joint Stock Companies and Limited Liabilities Companies. An investor incorporate an Egyptian Joint Stock Company or a Limited Liability Company either under the Investment Guarantees and Incentives Law, (the “Investment Law”) or the Companies Law. Investors tend to prefer to incorporate Egyptian companies under the Investment Law to benefit from the privileges available under it (see below). There are no minimum Egyptian capital participation requirements. Incentives for Special Zone of Development [i] The Investment Law The Investment Law provides certain incentives for foreign investors who carry out activities in Egypt in accordance with its provisions. To qualify for these benefits, and in order to receive Government consent, GAFI must approve the foreign investor’s application. The Insurance Law Since 1995, new laws have led to a more investor friendly policies. The Insurance Law has been amended in 1998 to permit foreign investors to own up to 100% of the shares of Egyptian insurance companies. Any direct insurance transactions should be via an insurance company governed by Egyptian insurance law .Nevertheless, The Insurance Authority might authorize insuring via an insurance company that is not governed by Egyptian insurance law only if the insurance can not be executed locally. In all cases insuring via an insurance company that is not governed by Egyptian insurance law is governed by the rules stated by the boards of directors of the Insurance Authority. Banking Law The Banking Law regulates the activities of the banking system. The Central Bank Law as amended, regulates the activities of the CBE. The Minister of Economy in consultation with the Board of Directors of the CBE may grant a branch of a foreign bank that deals only in for approval to deal in local currency, without the need for the foreign bank to form an Egyptian banking subsidiary. Capital Markets Law The Capital Markets Law regulates the capital markets in Egypt. Under the Capital Markets Law, any company intending to issue securities must notify the Capital Markets Authority (CMA), which then has three weeks in which to review the proposed securities issuance. For a public issuance of securities, a company must prepare a prospectus approved by the CMA and must provide the CMA with periodic reports and information relating to such a public issuance. A Company offering part of its shares in a public offering, or trading a minimum of 30% of its shares on the stock exchange, must inform all shareholders owning at least 1% of the company’s capital of any other shareholder wishing to increase its shareholding above 10%. The Capital Markets Law also allows the issuing company to set a return on securities that exceed the limits established to other laws (i.e. 7% ceiling in the Civil Code) The Capital Markets Law provides that securities transactions may only be undertaken by financial services companies licensed by the CMA. Board members of such companies must have a minimum of five years’ experience in the field of securities or must have four years’ experience and have participated in a training course set up by the CMA Labor Law The Labor Law and Articles 674 to 698 of the Civil Code of 1948, contain the most significant rules governing the relationship in Egypt between employers and employees. The Anti- Dumping Law In line with its obligations under the World Trade Organization (WTO) of which Egypt is member, Egypt introduced an Anti–Dumping Law. This law was designed to protect Egypt’s national economy from the consequences of detrimental practices carried out in international commerce. The Anti-Dumping Law already lead to a series of decisions by the Ministry of Trade & Supply in which anti-dumping penalties are imposed and collected. The Anti-Dumping Law grants the ministry of Trade and Supply powers to protect the national economy from the damaging consequences of subsidies, dumping or unjustified increases in importation of goods. Its responsibilities include providing studies and all other necessary data needed to evidence the above mentioned types of incidents. The Ministry of Trade and supply shall apply the instructions of the article of regulations of the antidumping law to WTO non-member countries. Individuals and public authorities responsible for investigating a complaint must maintain the confidentiality of the information provided to them by the parties as evidence. Violation of this confidentiality obligation may result in a fine of between LE 10,000 and LE 50,000 Intellectual Property Rights Egypt adopted an integrated IPR law on June 02, 2002. The said law integrate the following laws: 1- Patents, Patents, Trademarks and Copyright [i] Patents and Industrial Designs The Patents and Industrial Designs Law, closely modeled on the TRIP’S agreement, allows inventors to obtain patent protection for 20 years from the date of application. The patent-holder has the exclusive right to exploit the invention, including the right to pledge, assign or license the patent. Provided the employee receives a fair remuneration, the employer has all the patent rights resulting from his employee’s inventions invented during the work link or within the scope of the contact between them and for 1 full year following thereof. After 20 years, the patent-holder’s exclusive rights end and the invention enters the public domain. Manufacturing process, and final are patentable. A separate office and register is maintained for the industrial designs. Industrial Designs are granted protection for 10 years from the date of registration, renewable for two similar periods International Agreements Egypt is a signatory to the Paris Convention and PCT Treaty. If a patent application is made in a member country of the Paris Convention or in any other country offering reciprocal treatment, the applicant has a priority right to apply for a patent in Egypt within one year of the related application abroad. If a patent application is made in a member country of the PCT treaty or in any other country offering reciprocal treatment, the applicant has a priority right to apply for a patent in Egypt within 30 months of the related application abroad. Sale of Goods [i] Vienna Convention Egypt, along with many trading nations, is party to the United Nations Convention on Contracts for the International Sale of Goods, also known as the Vienna Convention. The Vienna Convention is based on elements of both common law and civil law, and regulates contractual terms for international transactions for the sale of goods between nationals or residents of member states. The Vienna Convention rules concerning contracts and contract interpretation differ from local rules. Importers and exporters from states that are party to the Vienna Convention should carefully review their sales contracts in light of the Vienna Convention to ensure that the Convention’s rules do not conflict with the intentions of the party. If they do, the parties can opt out the application of the Vienna convention by an express provision in their agreement. Public Tender Law The Public Tender Law governs all supply, service and construction contracts entered into with an Egyptian governmental entity. Government contracting must be by way of public tenders or by public negotiations between the government entity and the contractor. The following cases are exceptional ways in contracting • limited negotiations may be used where items manufactured are only available from certain contractors or the nature of the items or its purpose requires obtaining it from its production locations or where technical works require certain specialists, or where national security dictates confidentiality, • direct contracting, but in extraordinary cases. There is no standard Government contract. Each Ministry or Government agency uses its own form of contract (conforming to the provisions of the Public Tender Law). Public tenders must advertised in a daily newspaper locally or abroad, depending on the nature of the contract and must ensure equal opportunity and free competition. Although a government contract must be awarded on the basis of the most qualified and lowest bid, an Egyptian domestic contractor is accorded priority if its bid does not exceed the lowest foreign bid by more than 15%. Each tender must be accompanied by the payment of a provisional deposit of up to 2% which is returned to unsuccessful tenders. A final deposit of up to 5 % from the value of the contract must paid by the winner within 10 days of their tender being accepted. The contract may be cancelled if payment of the final deposit is not made, and any losses suffered by the government entity as a direct result may be recovered. A maximum fine of up to 10% of the value of construction contracts and up to 3% of the value of supply contracts and technical assistance contracts may be levied on contractors for late performance or late delivery. The Public Tender Law Permits Government entities to terminate contracts where the bidder has acted fraudulently, declared bankruptcy. Tenders may be rejected upon receipt due to (among others): • For reasons of public interest and welfare, A contract may be terminated by the Government entity at any time if the contractor party defaults. Any losses incurred may be recovered. In cases of late-performance or non-performance the concept of force majeure is recognized in accordance with principles of the Egyptian Civil Code under which certain types of hindrances must be clearly stated in the contract if they are to be considered force majeure (e.g. the unavailability of materials, strikes and shipping delays.) Environmental Law There has been a heightened level of concern by the Egyptian public and government over environmental issues over the past few years. This trend is due to an awareness Disputes Egypt is civil law legal system with a constitution that is fully independent. Egypt has two levels of civil courts of primary jurisdiction: the Summary Courts generally hear cases where its value don’t exceed 10,000 and it also include Urgent Matters Courts. Courts of First Instance generally hear cases where its value exceed 10,000 and also hear criminal, labor and commercial matters. Courts of First Instance hear appeals from the Summary Courts and appeals from the Court of First Instance are made to the main Courts of Appeal which are located in the principal cities of Egypt. A separate judicial system for administrative disputes exist and operate under the jurisdiction of the Council of state (Conseil d’Etat) )) The administrative courts are empowered to hear challenges to the validity of decisions issued by administrative entities as well as disputes involving contracts with the Government. The Council of State also has a Legislative Department that reviews draft legislation and Government contracts and renders legal opinions for the Government. The Constitution, provides that the Supreme Constitutional Court is “vested solely with judicial control over the constitutionality of laws and regulations”. The Constitutional Court also reviews administrative decisions and conflicts of jurisdictions between the civil and administrative courts. |
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