Commercial Agency Law of Egypt

Youssry Saleh & Partners 10 Aug 2016 5990 Views

Foreign companies or establishments may not establish scientific, technical, consulting or other services unless they have a commercial agent in Egypt in accordance with the Egyptian laws and regulations. Such companies and establishments can carry out any act of commercial agency or mediation only through a registered agent or commercial intermediary.

Law no. 120 of the year 1982 and the Ministry of Economy Decision No. 342 of 1982 set out the general principles of the Commercial Agencies and intermediaries in Egypt and the Commercial Law no. 17 of the year 1999 which states the substantive regulations, in addition to the general laws and regulations stipulated in the Civil Code.

The Role of Commercial Agents

A Commercial Agent is as a natural person or a legal entity carrying out the business of submitting tenders or concluding purchase, sale or lease contracts on behalf of and for the account of producers, manufacturers or distributors. Such person or entity must be recorded in the Register for Commercial Agents maintained at the Ministry of Economy and Foreign Trade.

Requirements for registering a commercial agency

A commercial agent must be either an Egyptian national or an Egyptian juristic entity whose name has been registered with the Commercial Agents and Intermediaries Register at the Ministry of Economy and Foreign Trade (MEFT). Furthermore, the person/entity must meet specific requirements, such as:

With regards to natural persons:

1. To be reputable and who has never been sentenced to a felony or a penalty restricted to freedom in a crime against honor or in any of the crimes stipulated in the law or the laws of import or export, customs, taxes or taxes supply, companies or trade unless he has been rehabilitated.
2. He shall not be bankrupt unless he has been rehabilitated.

3. He shall not be an employee of any local governmental units or public bodies or companies and units of the public sector. And not to be a relative of the first degree of an employee of the rank of General Director or any level of members (Purchasing, selling or deciding committees in such unites and bodies).

With regard to companies’ registration:
1. The company’s Headquarter shall be in Egypt.
2. Undertaking the work of commercial agencies or mediation shall be one of the company’s objectives provided in its Articles of Association.
3. The capital shall be wholly owned by the Egyptian partners, taking into account at least ten years in the case of obtainment of Egyptian nationality by naturalization.
4. The capital of the company shall not be less than 20,000 (Twenty Thousand Egyptian pounds).

Under Article 165 of the Egyptian Companies Law, the provisions of this part are applicable to foreign companies which do not have the headquarter of their administration or of these principal activities in Egypt, but have a center for exercise of business whether as branch or industrial establishment or management office, or some other branches. Agencies managed by such companies in Egypt will be analogous to branches, agencies, or offices referred to in the following cases:
a) If the foreign company is managing itself or entrusting the direction to its staff.
b) If the agent has authority for conclusion of contracts on behalf of the company.
c) If the agent has in his hands goods or products of the company of which he undertakes the disposal according to instructions of the company or in execution of its contracts.
Commercial agents, in other than the preceding cases will not be considered as branches of foreign companies.

Termination or Non-renewal

The registration shall be renewed every five years from the date of registration or the date of the last renewal, provided that the application shall be submitted within the 90 days preceding the expiry duration. However, the renewal shall be accepted if submitted within the 90 days following the expiry of the period if the applicant has paid the fees. In this case, the fees will be multiplied.

The registration of the agent or mediator shall be canceled in case of failure to submit the renewal request within the 90 days referred to.

Obligations & Penalties

The commercial agent shall keep regular books of accounts that include true data, and he shall record in these books all the commissions due to him and the banks where such amounts are deposited.
The commercial agent shall also notify the competent department in the Commercial Agents and Mediators Register when he ceases his activities within 30 days from the date of such cessation.
Without prejudice to a stricter penalty stipulated in any other law, a penalty of imprisonment for a period not less than 6 months and a fine not less than 500 EGP and not exceeding 10000 EGP or any of these two penalties shall be inflicted upon any person who commits any of the following;
– practice the profession of commercial agency or carry out any activity of commercial mediation without being registered in the Commercial Agents and Mediators Register.
– record or renew his registration in the Commercial Agents and Mediators Register based on untrue information concerning the fulfillment of the conditions of entry.
A penalty of imprisonment for a period not more than 6 months and a fine not more than 5000 EGP or one of two penalties shall be inflicted upon any commercial agent or mediator continues intentionally to practice his activity after lapse of any of the requirements.