Investment Guarantees and Incentives in Egypt

As the investment regulations in the Arab Republic of Egypt aims at attracting investors to invest and establish economic and commercial projects that help enhance the State ‘s economic performance, the State granted the investor many guarantees and incentives.

 Typically, before incorporating a company, the investor should be aware  of ​​the laws governing companies under the Egyptian laws. They shall seek knowledge about the advantages, disadvantages, and guarantees of each law relating to this matte, so that they become fully familiar with all aspects before starting implementing the investment project. In this respect, all projects established in the Arab Republic of Egypt receive fair and equitable treatment.

Further, the State guarantees foreign investors a treatment similar to that granted to the national investor, applying the principle of reciprocity. Among the Egyptian laws relating to this matter are Law 159 of 1981, Companies Law, and Investment Law 72 of 2017. They provide guarantees and incentives that help the investor in carrying out the project smoothly. If the investor establishes the company under one of the two laws and finds that some of the guarantees he wants are not available, the General Investment Authority provides therefore the opportunity to transfer from acting under the law under which he has incorporated the company to the other law. Further, the Authority regulated the transfer procedures to work on increasing the efficiency of the investment wheel in the State.

In this regard, the Egyptian Legislator issued Law 159 of 1981 concerning companies so that it applies to joint-stock companies, limited liability companies, and companies limited by shares. 

The companies subject to the provisions of that law enjoy the guarantees and incentives stipulated in Law 8 of 1997, repealed by Law 72 of 2017, which stipulates provisions to the effect that:

Companies established under Law 159 of 1981 shall enjoy the guarantees and incentives stipulated in Law 8 of 1997, which are as follows:

1. Companies and establishments may not be nationalized or confiscated.
2. The company may not be placed under guardianship, and its funds may not be seized or confiscated.
3. No administrative body may interfere in determining the company's profits or pricing the company's products.
4. No administrative body may cancel or suspend a license to use the real estate allocated to the company, except in the event of a violation of the terms of the license.

The decision to cancel or suspend shall be issued by the Prime Minister based on the presentation of the competent administrative authority.

5. Companies shall have the right to own construction lands and built real estate necessary to carry out or expand their activity.
6. Without prejudice to the provisions of laws and regulations, the company may import, by itself or through third parties, what it needs for its establishment or expansion in terms of production requirements, materials, machinery, equipment, spare parts and means of transportation suitable for the nature of its activity without the need to be registered in the Importers Register.

Further, companies and establishments may also export their products by themselves or through third parties without a license and without the need to register them in the Exporters Register.

The Egyptian legislator, in the matter of investment in the Arab Republic of Egypt, has introduced Law 72 of 2017 which abolished the Investment Guarantees and Incentives Law promulgated by Law 8 of 1997 whose provisions apply to local and foreign investment whatever its size. Accordingly, investment is subject to the provisions of this law which aims at addressing the investment system in order to facilitate business to investors before whom the full picture will unfold.

In order to enjoy the benefits and guarantees, it is necessary to define what is meant by investment, who is the investor, and what is meant by the investment project?

Article 1 of Law 72 of 2017 stipulates as follows:

- Investment: Investment is the use of money to establish, expand, develop, finance, own or manage an investment project in a way that contributes to achieving comprehensive and sustainable development for the State.

- Investor: The investor is a natural or legal person, whether Egyptian or Non-Egyptian, regardless of the legal system to which he is subject, who invests in the Arab Republic of Egypt in accordance with the provisions of this law.

- Investment Project: This means practicing an investment activity in the sectors of industry, agriculture, trade, education, health, transportation, tourism, housing, construction, building, sports, electricity, energy, natural resources, water, communications, and technology.

The minister concerned with investment affairs, in coordination with the concerned ministry or ministries may add other sectors in accordance with the State’s economic development plan. The Executive Regulations of this law shows the conditions, scope and controls of the practice of such activities.

From this, it is clear that the Egyptian legislator with this text has expanded the activities available to be practiced in accordance with the investment law, which makes it easier for the investor to proceed with incorporation.  Further, with the exception of those activities, other sectors or activities may be added in coordination with the concerned ministry or ministries.

Investment Objectives and Principles:

Articles 2 of Law 72 of 2017 stipulates that:

Investment in the Arab Republic of Egypt aims to raise the State's economic growth rates, increase local production rates, provide job opportunities, encourage exports, and increase competitiveness, in a way that contributes to achieving comprehensive and sustainable development. All competent State agencies are working to attract and stimulate local and foreign investments.

Investment shall be governed by the following principles:

1. Equality in investment opportunities and taking into account equal opportunities, regardless of the size and location of the project, without discrimination based on gender.
2. State support for start-ups and increasing businesses and micro, small and medium enterprises to empower youth and small investors.
3. Taking into account all aspects of the social dimension, environmental protection, and public health.
4. Freedom of competition, prevention of monopolistic practices, and consumer protection.
5. Adhering to the principles of governance, transparency, prudent management, and non-conflict of interests.
6. Working on the stability and consistency of investment policies.
7. Speed ​​up the completion of investors’ transactions and facilitate business for them to achieve their legitimate interests.
8. The right of the State to preserve national security and public interest.

The aforementioned investment principles shall apply to the investor and the State, respectively.