How to establish a Limited-Liability Company in Egypt?

These are trust companies of a mixed nature, as they combine both partnerships and trust companies in terms of the responsibility of the partners. They are not based on the financial consideration of the partners, although the capital is divided into shares and not stocks; and they are managed by a director.

A limited-liability company is also featured by the fact that its shares can be easily traded among partners and can be managed by one director where any partner can manage. It can be converted into a joint-stock company and an OPC. It is also a legal entity that is suitable for a small number of partners, as the minimum number of founders is two (2) and the maximum number is fifty (50) founders. Foreigners are allowed to establish companies with 100 percent full ownership without a certain capital for the establishment. No bank deposit certificate is required upon incorporation as no deposit will be made The capital is at the time of incorporation, but it is deposited only in case of any increase, as the capital is divided into equal shares in rights and privileges. However, a share in the work is not allowed. Also, the responsibility of the partners is personal, as they are accountable for their shares only. The company’s trade name may be derived from the name or title of one of its partners or some or all of them as its name, and it may be taken from the company’s activity. All natural and legal persons may establish a limited-liability company, except for persons prohibited from practicing business. For incorporation, companies subject to the Companies Law 159 of 1981 may add any number of activities, even if they are stemmed from other laws, provided that the requirements of such activities are met. As for companies subject to Law 72 of 2017, the company’s activity shall be limited to such activities as mentioned in the Executive Regulations of the same law, while other activities may be added outside the regulations.

Required Documentation for Limited-Liability Company Incorporation:

1. If the incorporation is processed through a proxy, a copy of the power of attorney shall be submitted, along with the original, which shall be submitted for review and verification.
2. The power of attorney shall be issued by all partners; and the number of partners shall not be less than two and not more than fifty.
3. - The power of attorney shall provide for powers including the incorporation of companies and signing of the articles of incorporation, before the Investor Service Center (ISC). If the proxy is a shareholder, the power of attorney shall provide for “contracting with oneself and third parties in the incorporation of companies.”
4. Valid and clear copies of the national ID cards of the partners, along with the original for review and verification.
5. For Egyptians: National ID card.
6. For foreigners: Passport
7. An official extract of the register of accountants and auditors proofing their eligibility to review and approve the financial statements of trust companies, in addition to an acknowledgment of acceptance of appointment if the accountant previously submitted this certificate to the Authority.

8. A copy of the registration card with the Bar Association for the lawyer who ratifies the MoA before the Bar (at least a first-instance court attorney. The card shall be valid to date).

9. Security inquiry forms for foreign partners and directors.
10. Stating the name and address of the company's legal advisor. However, the degree of registration shall not be less than that of an appellate attorney.
11. Valid and clear copies of the national ID cards of the proxy, along with the original for review and verification.

• For Egyptians: National ID card.
• For foreigners: Passport

12. Approval of the competent authorities if the purposes of the company require obtaining certain approvals under the provisions of the applicable laws (prior approval).

13. In the case of an in-kind share at the time of incorporation, a report shall be submitted by experts and professionals as regulated by law, according to the type of each share.
14. In the case of incorporation of a company under the free zone regulations in accordance with the provisions of Investment Law 72 of 2017, the above-mentioned documents shall be submitted, in addition to:

• In the case of a public free zone: Obtaining the approval of the Authority before incorporation. The approval is issued by the Board of Directors of the free zone in which the project is to be established.
• In the case of a private free zone: - Cabinet approval shall be obtained.

- Management of limited-liability companies

• The company is managed by one or more directors, who may be from among the partners or others. There is no maximum number of directors, who are appointed either under the company’s articles of incorporation or in any amendment thereto.
• It is a requirement that the director of the company be a natural person and may not be a legal person. However, one of the partners may be a legal person.
• Among such acts undertaken by the management is to prepare administrative reports, according to administrative decisions or meetings of directors and the ordinary and extraordinary general assembly, as we will explain in detail as follows:
• How is the decision to amend a limited-liability company taken? It is taken in three ways, which are as follows:

1. An administrative decision or managers’ meeting: It is a decision taken by the directors under the powers granted to them and stipulated in the company’s articles of association and the commercial registry. Among the most important decisions that can be taken under the administrative decision or the managers’ meeting are:
2. Opening branches of the company; appointing, dismissing, or replacing branch managers, or closing branches of the company.
3. Relocating the company’s head office, if it is inside the governorate.
4. Appointing and dismissing employees, imposing penalties, etc.
5. Appointing an auditor until presentation to the ordinary general assembly.

2. Ordinary General Assembly means a meeting that is held regularly during the three months following the end of the fiscal year. It includes an agenda to be discussed in the presence of the partners and directors.

- Examples of decisions that are discussed and taken under the ordinary assembly are:

1. Examining the Financial Statements and the auditor’s report for the ended financial year;

2. Examining the report of the board of directors and releasing the board of directors from liability for the ended fiscal year;

3. Considering the formation of the board of directors, determining its powers, renewing its appointment, and determining remunerations and allowances for the board of directors;

4. Considering renewing the appointment of the company's auditor for the ended fiscal year;

5. Reviewing approval of donations and dividends; and

6. Reviewing approval of the final liquidation outcome in the event of the company's liquidation, or extending the liquidation period.

3. Extraordinary General Assembly: It is a meeting that takes place in the event of an amendment to the company’s articles of association, i.e., an amendment to any text of the company’s MoA, or liquidation of the company, according to the agenda set to be discussed in the presence of the chairman of the board of directors, members of the board of directors and shareholders.