Key points
- The legal form decides liability, management and how ownership changes.
- An LLC needs two to fifty partners. A joint stock company needs at least three.
- A one person company gives a single founder limited liability.
- Check activity restrictions and nationality rules before signing.
Which laws apply?
Most companies are set up under the Companies Law No. 159 of 1981. It covers joint stock companies, partnerships limited by shares, limited liability companies and, since a 2018 amendment, one person companies. Partnerships such as general and limited partnerships follow separate rules.
A company can also be set up under the Investment Law No. 72 of 2017 to benefit from its guarantees and incentives. In practice, the General Authority for Investment and Free Zones (GAFI) handles incorporation for most company forms.
What is a limited liability company (LLC)?
The LLC is a common choice for small and medium businesses. It needs at least two partners and no more than fifty. Each partner's liability is limited to their share of the capital.
It is run by one or more managers, who may or may not be partners. Its capital is divided into quotas, not shares, and they cannot be offered to the public. When a partner sells to an outsider, the other partners have a right to buy the quota first.
An LLC cannot carry on certain activities, such as insurance, banking, savings, taking deposits or investing funds for others.
The company contract sets out the managers' powers, how profits are shared and what happens if a partner wants to leave or dies. These clauses often matter more than founders expect, because they decide how a disagreement is resolved.
What is a joint stock company?
A joint stock company suits larger projects and businesses that plan to bring in investors or list on the stock exchange. It needs at least three shareholders, and each shareholder's liability is limited to their shares.
It is run by a board of directors and has a general assembly of shareholders. Its shares are generally transferable, which makes it easier to bring in new investors. It also carries more formal requirements than an LLC, such as board meetings, regular general assemblies and stricter disclosure.
The law and its executive regulations set a minimum capital for each form. These figures have changed over time, so confirm the current ones before you plan.
What is a one person company?
Since 2018, a single owner, whether an individual or a company, can set up a one person company. The owner's liability is limited to the capital set aside for the company.
It suits a founder who wants limited liability without a partner. Activity restrictions similar to those of an LLC apply, and the owner must keep the company's money separate from their own.
What about partnerships?
In a general partnership (sharikat tadamun), all partners are personally and jointly liable for the company's debts, without limit. In a limited partnership (sharikat tawsiya basita), at least one general partner carries that unlimited liability, while the limited partners risk only their contribution.
Partnerships are simple to set up and suit family businesses and small trades. A general partner's personal assets can be pursued for the partnership's debts. The unlimited liability is the main reason many founders choose another form.
What are the main steps to incorporate?
The exact steps depend on the form and the activity. The usual sequence is:
- Choose the form and the activity, and check whether the activity needs a licence or special approval.
- Obtain a certificate from the commercial register that the trade name is available.
- Open a bank account and deposit the capital as the law requires, then obtain the bank certificate.
- Draft the company contract or articles of association and sign them at GAFI.
- Register in the commercial register and obtain the tax card, then register with social insurance when you hire staff.
- After incorporation, keep proper accounts, file tax returns on time and hold the meetings your company form requires.
When should you speak to a lawyer?
Foreign founders can own the whole company in most activities, but some activities, such as importing for trade, carry nationality conditions, and some foreign founders need security clearance. Check these points before you sign.
Speak to a lawyer before you sign the company contract, because the form and the drafting decide how disputes between partners are handled later. Al-Amthal Law Firm in Nasr City, Cairo, advises on company formation and commercial matters, its founder is admitted before the Economic Courts, which hear many company disputes, and its offices in Kuwait and Dubai give consultations to Gulf investors planning a business in Egypt.
This guide is general information, not legal advice. Procedures and deadlines change, so get advice on your own case.
Common questions
Can a foreigner own 100% of a company in Egypt?
In most activities, yes. Egyptian law generally allows full foreign ownership. Some activities carry nationality or approval conditions, for example importing for trade, and some locations have special rules. Check your specific activity before you choose the structure of the company.
What is the difference between an LLC and a joint stock company?
An LLC suits a smaller group of two to fifty partners and is simpler to run, but its quotas cannot be offered to the public and the other partners can buy first when one sells. A joint stock company suits larger investment, has a board of directors and transferable shares, and has more formal requirements.
Do I need to be in Egypt to set up a company?
Not necessarily. Founders abroad can usually act through a lawyer under a power of attorney issued or authenticated at an Egyptian consulate. Some steps, such as opening the bank account, may need extra paperwork, so prepare the documents early.
This guide gives general information about Egyptian law. It is not legal advice, and procedures and deadlines change. Speak to a lawyer about your own case.