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German Legal Expertise in the Middle East since 1981

Investment progress in Egypt

Guiding Principles

This article is shading some light on the progress of investment in Egypt and the legal form of companies in Egypt.

A. General remarks
The Ministry of Investment published on the weekly report that within 5 days, between November 28 and December 02, 2010, 120 companies were established with capitals that had reached 223 million Egyptian pounds between foreign and domestic. In addition, the week before 135 companies were established with also a variety of legal forms with capitals that had reached 272 million Egyptian pounds. Those significant numbers clearly show that many companies tend to start business in Egypt nowadays.

B. Legal Forms
With regard to the legal forms of the companies being established in the 1st week according to this report, the Limited Liability Companies L.T.D.1 was the most popular legal form chosen by companies. In total 44 limited liability companies have been established. The Joint Stock Companies S.A.E.2 came on 2nd place with 32 registered joint stock companies in Egypt after the limited liability companies with no significant gap between them. On the 3rd place came the legal form of Individual Enterprises. 30 companies were formed as Individual Enterprises. Finally, 11 companies were formed as limited companies.

The Egyptian government had given to the investors in Egypt incentives which would explain generally this significant attraction in the past year. In the past the main problems that were facing investment in Egypt were 1-financing and provision of credit which the central bank of Egypt is working on solving this problem, 2-long litigation periods and dispute settlement that the establishment of the commercial courts have helped a lot with that, 3-bureacracy and corruption which were significantly limited by formation of GAFI (Governmental Agency for Investment), 4- the required lands for investment. One of the most effective incentive that were given to investors in the past year were supplying investors with land that would be in investment zones for rent or usage for a limited period of time that may reach 25 years which have solved the problem. This option has solved one of the biggest problems that usually face both foreign and domestic investments.

In addition to that, there is a project for a Consolidated Companies Law3 that will join together both laws no.159/1981 and no. 8/1997. This Law includes the establishment of companies and its regulations in general and the investment incentives. It will also address the issue of bankruptcy and liquidation of companies explicitly. Liquidation will be addressed in a separate chapter along with mergers and changing the legal formation of the company. This Consolidated Companies Law is not in action yet but will be discussed before the Egyptian parliament soon.

January, 2011  Mansour Elaraby
  Meyer-Reumann & Partners, Alexandria Office
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