Starting a business

How to start your business in Egypt

Generally, foreigners form their businesses under either Law of Commerce 17 (1999) or Companies Law No. 151 (1981).

Most foreign companies operating in Egypt are joint stock or limited liability companies. There are sole proprietorships (such as restaurants and boutiques), but they are more difficult to establish (due to the numbing amount of permits and paperwork required) and are therefore less common.

Regardless of what type of business you are starting, you will first have to register it with the General Authority for Investment (GAFI). The man GAFI office is located in Nasr City in Cairo, but there are also branches in Ismailia, Assiut and Alexandria. Your lawyer will be able to help you prepare the appropriate paperwork.

Sole proprietorships

A sole proprietorship is a company or business with a single owner. These may seem fairly common at first (given the large numbers of shops, restaurants and kiosks located throughout major Egyptian cities), but can in fact be quite a trial for a foreigner to establish.

If you are intent on establishing a business that serves food, in particular, be prepared for an avalanche of paperwork. Permits are required for nearly every aspect of the business (for things as sensible as hygiene and safety and others that are patently absurd. One expat interviewed by the magazine Business Today said she was forced to apply for a special permit just to play music in her restaurant! Questions included: What kind of music was to be played? At what volume would it be played? What device would be playing it, exactly?)

Joint stock companies

To form a joint stock company, you will need at least three shareholders. Companies require a minimum issued capital of LE250,000 (around US50,000). At least 25% of the issued capital must be paid at the time of incorporation and the remainder within ten years, and the incorporation must be approved by the Capital Markets Authority (CMA). At least 49% of the company must be available to the Egyptian public on the Egyptian Stock Exchange (EGX) (www.egyptse.com), and employees must have some role in company management. In addition, Employees must be distributed a minimum 10% of net profits.

Limited liability companies

Limited liabilities are not allowed to participate in banking, finance or insurance activities. Their minimum issued share capital is LE50,000 paid upon incorporation. An “expert” must value the capital contribution, it does not require the Capital Market Authority’s approval (you did remember to find that lawyer, right?) One in three managers must be Egyptian, but a limited liability company does not need to share profits with employees unless the capital grows to more than LE250,000.

Further reading

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