GAFI: The latest decisions issued to develop procedures for investors in Egypt6 Jan 2018 2505 Views
In light of the remarkable development in the climate of investment in the Arab Republic of Egypt, which is working to attract investments, through establishing of companies and branches of companies and representative offices of major foreign companies, which led to the Minister of Investment and International Cooperation HE Sahar Nasr to issue numerous decisions and circulars to facilitate procedures for investment and assistance in the completion of services related to investors in the least time.
The most important of these decisions are listed and explained below:
Decision No. 208 of the year 2018: related to Encouraging the work of the Entrepreneurs Initiative “Fakretak mashroaak” ( “your idea is your project”) in this decision a company’s idea of entrepreneurship is explained to encourage the creation and development of entrepreneurship and start-up companies on the basis, the most important of which is the provision of the necessary funding and making use of the ideas of the project through launching successful projects and encouraging business accelerators. This is achieved through proposing and presenting programs of support for these projects. Moreover, the General Authority for Investment and Free Zones works towards providing spaces equipped with a state-of-the-art technology and tools to provide services for the Entrepreneurs Initiative- “Fakretak mashroaak”.
Decision No.527 Dated 6th September 2018 issued by the Chief Executive Officer of General Authority for Investment and Free Zones is related to the new amendments of the procedures of liquidation of companies, including obligation of companies to publish the status of the company under the liquidation procedures in the prospectus of the companies (earlier the procedure was to publish in two official gazette only) before the commencement of liquidation proceedings of the second stage of liquidation.
Decision No.736 Dated 12th November 2018 issued by the Chief Executive Officer of General Authority for Investment and Free Zones is related to the new regulation of obligation of joint-stock companies. Shareholder companies incorporated under Law No. 4 of the year 2018 as amended by Law No.159 of the year 1981 shall abide to regularize their position according to item (e) from the first paragraph of Article No. 17 replaced by this law within period not exceeding one year. And this is through registration of the shares of these companies in Misr Clearing, Depository and Central Depository and submitting the certificate of deposit of securities to the company.
Decision No.742 Dated 13th November 2018 is related to the regulations of the work of representative offices of foreign companies in Egypt which states in Article No.1 from the above-mentioned decision that General Authority for Investment and Free Zones obliges the representative offices in Egypt to submit to the authority at the being of every year a statement with names of all employees working in the representative office and the work initiated during the year and any amendments and what to send to the parent company and also committed to provide a timetable for the completed studies. According to Article No. 3, the renewal of the representative offices when the period ends depends on their compliance with Article One. Important amendment is that representative office incorporation certificates are renewed for not more than 3 years within which the mother company shall determine whether it will incorporation a Company or a branch in Egypt, otherwise the Representative Office of the Foreign Company will be removed from the Registry.
Coping with the technology, the authority issued Circular No. (4) Dated 17th October 2018 issued by the Chief Executive Officer of General Authority for Investment and Free Zones related to the regulations of participation of board members in the attendance of the boards of directors of companies through telephone or video calls or video conferencing call and this is according to the regulation sated by General Authority for Investment and Free Zones, the most important of which is:
- The Company’s Articles of Association shall include the provision which permits the Board of Directors Meetings to be held through telephone or video calls or video conferencing call and it shall be recorded; the minutes and discussions in the Board of Directors Meeting shall be recorded but this is under condition that the majority of the members of the Board of Directors stipulated in the Articles of Association attends;
- The proceedings of the Meeting Minutes must be recorded on CD and saved in the headquarters of the company and shall allow the company to organize all necessary procedures to ensure the safety and protection of the means of communication used in the participation of members;
- The signatures of the attending members of the board of directors should be stated in the attendance sheet so that the secretary should mention before the names of members who attended via telephone or video calls or video conferencing call the following statement (‘participated through telephone or video calls or video conferencing call’).
Circular No. (5) Dated 29th October 2018 issued by the Chief Executive Officer of General Authority for Investment and Free Zones is related to the regulations of the period of appointment of the board of directors’ members. The authority obliges joint stock companies with the following rules regulating the appointment of the Board of Directors of companies as following:
- The period of appointment of the board of directors members is 3 years with the exception of the first board of directors appointed by the shareholders of the company for 5 years;
- The calculation of appointment of the Board of Directors members starting from the date of registration of the company in the commercial registry or from the date of issuance of the decision of the General Assembly to choose the Board of Directors members.
In addition to other obligations the companies must put into consider duration the period of appointment of the Board of Directors of the company to maintain the company’s compliance with the laws and regulations.
Circular No. (18) Dated 26th December 2018 issued by the Chief Executive Officer of General Authority for Investment and Free Zones is related to the regulations of sending the invitation letters to the shareholders of joint stock companies. And this decision was issued specifically for the type companies which have a large number of shareholders who have difficulty accessing their addresses or sending invitations to them, these companies shall publish the invitations for General Assembly in two official gazettes. As for the other companies, they shall follow the ordinary regulations.
The Ministry of Justice of the financial department Decision No. 988 Dated 6 November 2018 related to the regulations of incorporation of companies under the law No. 72 of the year 2017 exempted incorporating companies under the abovementioned law of the notarization fees on the contract of incorporation contract. However, these companies amending their Articles of Associations will pay 0.5% from the capital of the company without maximum limit.
In addition to the above regulations the Authority issued new Decision that obliges companies to submit the Ordinary General Assembly, Extraordinary General Assembly and Board of Directors’ meeting to the General Authority for Investment and free Zone within one month after convening date and this is according to the last reminder from the Authority dated 2th January 2019.
The General Authority for Investment and Free Zone also discussed the way to improve the services by activating electronic signature technology for the certification of minutes for Ordinary General Assembly, Extraordinary General Assembly and Board of Directors’ meetings. However, the Authority did not specify the legal framework that will be followed in view of the changes that are occurring in an atmosphere of improved performance and services.
Meanwhile, effectiveness and efficiency of novel regulations and procedures are yet to be tested in practice.