Amendments Of The Investment Law

user Habiba Shaheen calender 26 Jun 2024 views 159 Views
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The Prime Minister issued Executive Regulation No. 1203 of the year 2024 to amend some provisions of the final regulations of Investment Law No. 72 of 2017 to define the text of the second paragraph of Article (10) and the texts of Articles (41), (42) and (43) of the aforementioned Investment Law with the aim of increasing and expanding projects and facilitating the licensing of investment activity. The ministerial authority has approved the expansion of the scope of the golden license to all investors and multitude of activates it was limited to companies executing strategic or national projects only.

According to the old regulation of article 11 of the Investment Law follows the projects were located in the geographical scope of sectors (A and B) which defined by applying the rules of Article (11) of the Investment Law:   Sector (A) contains the Suez Canal Economic Zone, the Golden Triangle Economic Zone, and other places in need of development as designated by the Council of Ministers, due the new features and changes that occurred in Ras Al-Hikma and the administrative Capital, this allowed investment free zones to create major development projects.

In accordance with Article 10 – second paragraph:

“First – Sector (A), which includes the Suez Canal Economic Zone, the Golden Triangle Economic Zone, the New Administrative Capital District, and the Ras El Hekma District, other areas most in need of development are determined by a decision of the Council of Ministers and are characterized by the following:

1- Low levels of economic development and domestic product and an increase in the size of the informal sector;

2- Low employment levels, available job opportunities, and high unemployment rates.

3- The following social indicators:

a- A clear increase in population density.

b- Low quality of education and increased illiteracy rate.

c- Weak level of health services.

d- High poverty rates

According to the old provision No. 2310 of 2017, the conditions for classifying a project as strategic or national were determined by a Council of Ministers decision based on a joint presentation by the competent and concerned ministers, and these conditions were amended and updated on occasions in accordance with the state’s economic development plan. Based on Article (41) of  the new Executive Regulation companies mentioned in Article (20) of the Investment Law may obtain a single permit from the Council of Ministers to develop, operate and manage the project, including obtaining building permits and allocating the necessary real estate. This approval will be sufficient in itself without requiring any other procedure, provided that the Council of Ministers decides on the areas and requirements of strategic and national projects after considering the joint proposal from the relevant ministers and specialists. In addition these sectors and standards will be reviewed and amended periodically in accordance with the State’s economic growth strategy.

Before the new amendment, the investor who applies to invest in a project must work to obtain a single approval stipulated in Article (20) and he must be required to consider the following conditions:

1- It must be structured as an Egyptian joint stock company in line with the Investment Law, with issued capital equal to at least 50% of the project’s investment expenses. 2- The investor must commit to submitting a general plan that is from one of the licensed, reputable national or international expert houses

3- He must agree to provide a timeline for project implementation.

4- Commitment to providing all infrastructure facilities (roads, water, sewage, electricity, communications, waste treatment).

5- Submit an acknowledgement of compliance with all regulations and controls connected to the company’s activities in accordance with the legislation.

 

After the new resolution the conditions are very simple, the application for obtaining a single approval shall be submitted on the form prepared by the Authority for this purpose, accompanied by the following documents and declarations in accordance to Article (42) of the new regulation:

  • Evidence that the company has the financial stability required to carry out the project in compliance with the guidelines established in this respect by the Board of Directors of the Authority.
  • An initial feasibility assessment conducted by a licensed national or international expert house for the project
  • A schedule for accomplishing the project.
  • A statement from the company confirming that it would supply all infrastructure-related services (roads, water, sewage, electricity, communications, and waste treatment).
  • An acknowledgment by the company of its commitment to all requirements and controls related to its activity in accordance with the laws and the applicable regulations.
  • The company’s confirmation that it will pay to the Authority any fees and other amounts imposed by law on behalf of the relevant authorities within thirty days of notification of those costs and amounts. In addition the Authority will review the application and attachments to ensure that the aforementioned papers and statements are complete. Moreover the Authority’s CEO will propose the company’s application to the responsible minister, who will then bring it to the Council of Ministers for decision.

Accordance to article 43 of the new regulation One or more committees shall be formed within the Authority, headed by a consultant from the Authority, which shall monitor the extent to which the establishments that have obtained one approval adhere to the necessities and controls of establishing the project, and their keenness to implement and use the submitted declarations and complete the implementation of the tasks according to the specified timetable.

In the event that a commercial establishment violates the controls, the investor will be warned by a registered letter accompanied by acknowledgment of receipt of the violations attributed to him or his institution, and a period of six months must be given to correct the violation.

If the closing date expires without the company correcting the error, the committee will stop the implementation of the project or its activity and stop it enjoying incentives according to the severity of the violation for a specific period not exceeding one year. The commercial establishment may also register a complaint before the date of the Grievances Committee stipulated in Article (83) of the law.

 

A new paragraph has been added to Article (76 bis) in accordance with Article (2) of the Executive Regulations of the Investment Law. It follows that private service free zone projects may include light industry sub-projects. These projects must be part of a partnership or investment contract between one of the state agencies approved by the Council of Ministers. To clarify, the private service free zone must cover an area of ​​no less than one million square meters, and adhere to the conditions stipulated in the contracts in consultation with the Ministry of Finance.

It can be concluded that the presence of new large areas and regions, such as Ras Al-Hekma and the Administrative Capital, helps for investing and building huge and distinctive projects. In addition, the Minister of Investment agreed that the investors must keep a single approval to establish, operate, and manage the project, containing all the details of the project, the timetable for implementing the project, and the amount proposed for work. Finally this application must be submitted to the Authority for inquiring the project before the investor obtains approval.