An important step has been taken towards the liberalization of the Egyptian market. Amendments to the Importers` Registry Law (Law No. 121 of 1982) were introduced on March 4, 2017 (Law No. 7 of 2017) (hereinafter the "Amendment Law"). The long-awaited amendments to Law No. 121 of 1982 entered into force on March 8, 2017 and have substantially liberated the Egyptian market for foreign investors. The corresponding Executive Regulations came into force on June 22, 2017 per Decree No. 846/2017.
While the old law required importers to be wholly owned by Egyptians, the new law has relaxed these restrictions. The Amendment Law allows non-Egyptians to hold up to 49% of a trading company importing into Egypt. This applies for limited liability companies and joint stock companies.
In addition, manufacturing and service companies operating in Egypt may be 100% foreign owned and do not need to be registered in the Importers Registry in order to import goods which are needed for their business.
To register a trading company as an importer under the new Amendment Law, there are three options:
a. The first option is to set up a new company (called “NewCo”) as a Joint Stock Company or a Limited Liability Company.
- The paid-in capital of a NewCo must be at least EGP 5 million for joint stock companies (under the old law it was EGP 15,000) and EGP 2 million for limited liability companies (under the old law its was EGP 250,000);
- The NewCo must have been registered with the Commercial Registry for at least one year prior to applying for registration with the Importers` Registry;
- The NewCo must have an annual turnover of at least EGP 5 million as shown in its tax returns in the year prior to its application for registration with the Importers` Registry;
- The manager(s) of the NewCo must be Egyptian nationals;
- The NewCo must be established under Egyptian law and have its legal domicile in Egypt;
- At least 51% of the shares of a joint stock company respectively the allotments of a limited liability company must be owned by Egyptians; and
- The NewCo must provide with its application for registration with the Importers` Registry a cash deposit or a bank guarantee in the amount of EGP 200,000 as security for fulfilling the requirements of the Amendment Law.
b. The second option is to amend the scope of activities of an existing Joint Stock Company or Limited Liability Company:
Should (a) foreign investor(s) already own an Egyptian subsidiary, either in the form of a Joint Stock Company or in the form of a Limited Liability Company, which fulfills the requirements as listed above for a NewCo, then such subsidiary may amend its scope of activities in the articles of association to include importation of goods for the purpose of re-sale and apply for the registration as an import company with the Importers` Registry.
c. The third option would be to acquire an existing trading company, which is already registered with the Importers` Registry:
Under the precondition that the trading company to be acquired is registered in the Commercial Registry for at least one year and also registered in the Importers` Registry, the foreign investor may (i) directly acquire 49% of the shares resp. the allotments of such company and (ii) indirectly acquire the remaining shares respectively allotments of 51%. Is the paid-in capital of the acquired company, which is a limited liability company, less than EGP 2 million respectively less than EGP 5 million if it is a Joint Stock Company, then the acquired company must increase its capital accordingly within six (6) months as of March 8, 2017 for a Joint Stock Companies and within six (6) months as of June 22, 2017 for a Limited Liability Companies.
