Decision of the Minister of Economy No. 96 of 1982 on the Executive Regulation of Law No. 159 of 1981 on Joint Stock, Partnership Limited by Shares, and Limited Liability Companies

Decision of the Minister of Economy No. 96 of 1982 dated 23/06/1982 regarding the issuance of the Executive Regulation of Law No. 159 of 1981 on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies.

Article 0 Preamble

After reviewing the Commercial Code, and Law No. 55 of 1951 concerning Commercial Names, and Law No. 388 of 1953 concerning Commercial Books, and Law No. 161 of 1957 concerning the General Regulation of Stock Exchanges, and Law No. 43 of 1974 concerning the Investment of Arab and Foreign Capital and Free Zones, and Law No. 34 of 1976 concerning the Commercial Register, and the Labor Law issued under Law No. 137 of 1981, and the Income Tax Law issued under Law No. 157 of 1981, and the Law on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies issued under Law No. 159 of 1981, and Presidential Decision No. 133 of 1982 designating the competent Minister to implement the provisions of Law No. 159 of 1981; and Minister of Economy Decision No. 375 of 1977 issuing the Executive Regulation of the Law on the Investment of Arab and Foreign Capital and Free Zones; and after obtaining the opinion of the General Authority for the Capital Market; and based on what the State Council deemed appropriate; It has been decided:

Article 1 Issuance

The provisions of the Executive Regulation of the Law on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies, and Single-Person Companies, issued under Law No. 159 of 1981 and attached to this Decision, shall be enforced. The title "Executive Regulation of the Law on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies, and Single-Person Companies" is replaced with "Executive Regulation of the Law on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies" wherever it appears in this Regulation or any other decision, as per Decision of the Minister of Investment and International Cooperation No. 16 of 2018. Also, the phrase "financial statements" is replaced with "profit and loss account" and the word "balance sheet" is replaced wherever mentioned in the Regulation pursuant to the aforementioned decision.

Article 2 Issuance

The following words, wherever they appear in the attached Regulation, shall carry the meaning next to each: The Law: The Law on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies issued under Law No. 159 of 1981. The Minister: The Minister competent for investment affairs. The Authority: The General Authority for Investment and Free Zones, except for the provisions of the second section of the first chapter and Articles (78, 94, 102, 138, 204, 300), which shall be implemented by the General Authority for the Capital Market within the limits of its jurisdiction. The Administration: The Capital Companies Sector at the General Authority for Investment and Free Zones. Amended by Prime Minister Decision No. 1212 of 2004.

Article 3 Issuance

This Decision shall be published in the Egyptian Gazette.

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Article 1

Who has the right to establish: Any natural person possessing the necessary legal capacity, as well as any legal entity whose purposes include establishing such companies, may establish a joint stock company or a partnership limited by shares. Except for single-person companies, the number of founding partners in joint stock companies shall not be less than three, and for partnerships limited by shares, it shall not be less than two, one of whom must be a general partner. If the number of partners falls below this quorum, the company must endeavor to complete it within a maximum of six months, or the remaining partners may request its conversion into a single-person company after notifying the Authority; otherwise, the company shall be deemed dissolved by operation of law. The remaining partners shall be liable with all their assets for the company's obligations during this period. Amended by Decision of the Minister of Investment and International Cooperation No. 16 of 2018.

Article 2

Model of the Preliminary Contract and Articles of Association: The model of the preliminary contract and the articles of association for both joint stock companies and partnerships limited by shares shall be in the form issued by a decision of the competent Minister. Founders or partners shall not omit including data regarding the company's name, purpose, capital value, number of shares it is divided into, their classes, the nominal value of the share, any restrictions on its trading, and other mandatory data stipulated by the model. Founders or partners may request the Committee referred to in Article (18) of the Law to exempt them from including some of the aforementioned data for reasons of necessity determined by the Committee. The company establishment contract shall specify its principal center address where its administrative operations are conducted, and the company shall be obligated to declare any modification to its principal center address; otherwise, measures may be taken, including directing advertisements to its principal center address registered in the Commercial Register. Amended by Decision of the Minister of Investment and International Cooperation No. 16 of 2018.

Article 2 Bis

Agreement Regulating Relations Between Shareholders or Partners: Shareholders or partners may, upon establishing the company or after establishment, conclude an agreement regulating their relations with each other. This agreement shall not apply to other shareholders or partners unless approved by the company's Extraordinary General Assembly by a majority of at least three-quarters of the capital, or a higher majority in the following cases: -1 If the agreement entails additional voting rights, profit distributions, or rights upon liquidation. -2 If the agreement is subject to the regulations of commutative contracts. -3 If the contract sets rules or restrictions on share trading or company management. Amended by Decision of the Minister of Investment and International Cooperation No. 16 of 2018.

Article 3

Formal Conditions of the Preliminary Contract and Articles of Association: The preliminary contract for a joint stock company and a partnership limited by shares, as well as their articles of association, must be signed by the founders or their legal representatives. The contract and articles must be transcribed onto an official document, or the signatures therein must be authenticated before the competent Real Estate Registration and Notarization Office, following the approval of the Committee referred to in Article (18) of the Law. The authentication fees for signatures regarding the contract and attached articles of association shall amount to one-quarter percent (0.25%) of the issued capital, capped at one thousand pounds, whether authenticated in Egypt or before Egyptian authorities abroad. Stamps and any other notarization fees are exempted for the aforementioned contracts and articles, as well as loan and mortgage contracts related to these companies' operations, for a period of one year from the date of registering the company contract and articles in the Commercial Register.

Article 4

Authentication in Cases of Necessity or Urgency: In cases of necessity or urgency as determined by the Director General of the General Companies Administration, authentication of the signatures in the preliminary contract and company articles may be conducted before him or his delegated employees in the aforementioned Administration, after paying the fees stipulated in the preceding article. Authentication shall be conducted via a record stating the following: (a) The name of the employee before whom the signing occurred, their position, and a statement of the delegation document if applicable. (b) The place and time of signing. (c) The names and nationalities of the signatories according to their identity verification documents. (d) The capacities of the signatories, and whether they sign in their personal capacity or as proxies for others, accompanied by proof of such proxy capacity (e.g., powers of attorney). An agent shall not sign the company's preliminary contract or articles of association unless their power of attorney explicitly permits it.

Article 5

Commercial Name of the Company: The company shall have a commercial name derived from its purpose of establishment, and the commercial name may include the name or title of one or more of its founders. For a partnership limited by shares, its title shall consist of the name of one or more general partners only. A company shall not adopt a name identical or similar to an existing company, nor one likely to cause confusion regarding the company's type or nature. Amended by Decision of the Minister of Investment and International Cooperation No. 16 of 2018.

Article 6

Minimum Issued and Paid-up Capital at Establishment: Without prejudice to provisions of special laws and regulations, the issued capital for both joint stock companies and partnerships limited by shares, and the amount paid upon establishment, shall not be less than the following limits: First: For joint stock companies offering shares to the public: The issued capital of a company offering shares to the public shall not be less than five hundred thousand pounds, and the founders' subscription shall not be less than half of the issued capital, or 10% of the authorized capital, whichever is greater. It is also required that the portion of shares offered to the public shall not be less than 25% of the total value of cash shares. Second: For joint stock companies not offering shares to the public and partnerships limited by shares: The company's issued capital shall not be less than two hundred and fifty thousand pounds. In all cases, the cash amount paid from the capital at establishment shall not be less than one-quarter. The provisions of this article shall not apply to joint stock companies and partnerships limited by shares existing on the date this law takes effect, nor to companies previously approved for establishment by the Investment Authority's board of directors before that date.

Article 6 Bis

The issued capital shall not be less than five million pounds for companies whose purpose includes all or part of the following: (1) Participating in the establishment of capital companies or increasing their capital. (2) Organizing the issuance and marketing of financial instruments and guaranteeing coverage for unsubscribed portions. (3) Trading in financial instruments. In all cases, the cash amount paid at establishment shall not be less than one-quarter. Added by Decision of the Minister of Economy No. 204 of 1991.

Article 7

Nominal Value of the Share: The company's articles shall determine the nominal value of the share so that it is not less than five pounds and does not exceed one thousand pounds. This provision shall not apply to companies existing as of April 1, 1982.

Article 8

Company Identification in Correspondence and Publications: All contracts and documents issued by the company and directed to third parties, such as correspondence, invoices, advertisements, papers, and publications, must bear the company's title preceded or followed by the phrase "Egyptian Joint Stock Company - J.S.C." or "Partnership Limited by Shares" as applicable, in clear, legible letters, along with the company's principal center and issued capital according to its value in the latest financial statements. The above applies to advertising the company's name and address, whether at its headquarters, branches, or elsewhere. If the company's capital increases by no more than 10% of its value—through converting the company's issued bonds into shares or converting certain company reserves into shares distributed to shareholders in cases permitted by law—the mention of this increase in the company's publications and fixed advertisements may be omitted for one year from the date of the increase decision or until the publications are exhausted and advertisements changed, whichever is sooner. Amended by Decision of the Minister of Investment and International Cooperation No. 16 of 2018.

Article 9

Conditions for Subscribing to Capital: Subscription to the issued capital of joint stock companies and shares of partnerships limited by shares shall either be offered to the public, or subscribed to by founders, partners, and other persons who do not meet the criteria for public subscription. In all cases, the validity of subscription—whether public or private—requires the following conditions: -1 It must be complete, covering all company shares representing the issued capital in joint stock companies, or partnership shares and shares in partnerships limited by shares. -2 It must be final, not conditional, immediate, and not deferred. If conditional, the condition is void and the subscription is valid, binding the subscriber. If deferred, the deferral is void and the subscription is immediate. -3 It must be serious, not merely nominal. -4 Each subscriber must pay at least the percentage specified in Article (6) of this Regulation regarding the nominal value of cash shares in joint stock companies and partnerships limited by shares. -5 Shares representing in-kind contributions must have their full value fulfilled. All of the above according to the detailed provisions in the following articles:

Article 10

Definition of Public Subscription: Shares are offered for public subscription when unspecified persons are invited to subscribe to those shares in advance, or if the number of subscribers in the company exceeds one hundred. The portion of the company's shares offered for public subscription shall not be less than the limits stated in Article (6) of this Regulation. A company is considered a public subscription company if it offers shares for subscription according to this article, even if the offered shares are not fully covered. In this case, the value of unsubscribed shares must be covered by the founders, a bank, or a company established for this purpose or licensed to trade financial instruments. The provisions of this article do not prejudice the provisions of Article (11) of this Regulation.

Article 11

Percentage to be Offered in Public Subscription to Egyptians: 49% of a joint stock company's shares at establishment or capital increase must be offered in a public subscription restricted to Egyptians (natural or legal persons) for a period of one month. The following cases are exempt: (a) If this percentage is subscribed to by Egyptian founders before offering shares to the public. (b) If the aforementioned percentage is completed by Egyptian participation during the subscription period before the one-month period expires. (c) Joint stock companies established under the Law on Investment of Arab and Foreign Capital, to the extent permitted by that law regarding foreign ownership of the mentioned companies' capital. If the percentage stipulated in the first paragraph is not met after offering it for public subscription, the company may be established without fully or partially meeting it.

Article 12

Subscription Prospectus and Data: Shares shall not be offered for public subscription until the Authority approves the subscription prospectus addressed to the public. The prospectus must contain, at a minimum, all data listed in Annex No. (2) of this Regulation.

Article 13

Submission of Prospectus to the Authority: Founders must submit the original prospectus, signed by all founders or their legal representatives, to the Authority before commencing the subscription process. The prospectus must be accompanied by a report from an external auditor verifying the accuracy of the data and its compliance with legal and regulatory requirements, as well as the preliminary company contract and draft articles of association, signed by founders or their legal representatives. Depositing the original prospectus and attachments with the Authority shall be against a receipt indicating the deposit date.

Article 14

Completion of Prospectus Data: The Authority may object, within two weeks from the prospectus deposit date, to the inadequacy or inaccuracy of the data contained therein. During this period, the Authority may also require founders to complete the aforementioned data, correct it, or provide any additional data, explanations, papers, or documents. Objections or requests for data completion shall be directed to founders or their legal representatives, with a copy served to the bank or company through which the subscription is conducted. If two weeks pass from the prospectus submission date or from the date of the last requested document/explanation without the Authority objecting within that period, founders may proceed with public subscription procedures.

Article 15

Amendment of Prospectus Data: If, between the prospectus submission date and the completion of subscription, changes occur in the material facts or legal acts contained therein that affect the integrity or accuracy of the information, founders must submit a request to the Authority to amend the prospectus data within a maximum of two weeks from the date of the mentioned change. Submitting this request shall suspend the subscription (if commenced) for ten days from the amendment request date. Founders must notify subscribers and all prospectus recipients of the amendment after Authority approval within the specified period.

Article 16

Advertising the Prospectus: The prospectus, its amendments, and the external auditor's report shall be advertised, after Authority approval as outlined in Articles (14) and (15) of this Regulation, in two daily newspapers, at least one in Arabic, and in the Investment newspaper at least fifteen days before subscription begins, or within ten days from the date of approving the prospectus amendment, as applicable. The Authority may provide copies of the prospectus and attachments to any member of the public upon payment of the actual cost of those copies. Amended by Prime Minister Decision No. 1212 of 2004.

Article 17

Promotion and Advertising for Subscription: After submitting the prospectus to the Authority, founders may: (a) Distribute advertisements, periodic brochures, letters, or other materials related to the prospectus and its basic data, specifying the person or entity from which interested parties can obtain the prospectus. (b) Distribute the prospectus. (c) Survey interested parties' willingness to subscribe after providing them with a copy of the prospectus. All aforementioned documents must clearly indicate that the prospectus is submitted to the Authority for approval.

Article 18

Time of Subscription: Subscription to shares shall not be conducted if six months have passed from the date the Authority approved the prospectus. However, subscription may proceed for up to one year from that date if founders submit a request to the Authority detailing any changed circumstances, and the Authority approves.

Article 19

Duration of Subscription: Subject to Article (11) of this Regulation, subscription shall remain open for a minimum of ten days and a maximum of two months from the specified opening date. The company shall not be established unless the entire capital is subscribed. If the entire capital is not subscribed within this period, the Authority President may extend the subscription period by up to two additional months.

Article 20

Entities Through Which Subscription is Conducted: Shares must be offered for public subscription through a bank licensed by the Minister to receive subscriptions, or through companies established for this purpose, or companies licensed to trade financial instruments under their regulatory framework. Banks or companies may subscribe to unsubscribed shares in case of under-subscription, and may re-offer subscribed shares to the public without being bound by: (a) The requirement to offer at least 49% of joint stock company shares to Egyptians. (b) The prohibition on trading shares given for in-kind contributions or subscribed by the bank/company if they are founders. (c) Restrictions on trading subscription certificates, whether before or after the company's registration in the Commercial Register.

Article 21

Subscription Certificates: Subscription shall be conducted via subscription certificates stating the subscription date and signed by the subscriber or their agent, with the number of subscribed shares written in letters. A copy of the certificate shall be given to the subscriber. Subscription certificates shall contain the following data: (1) Name of the company under establishment. (2) Company type. (3) Company capital and the portion offered for public subscription. (4) Company purpose in general terms. (5) Date of Authority approval to offer shares for subscription. (6) In-kind contributions, if any. (7) Type of shares subscribed to. (8) Name of the bank or entity where subscription amounts are paid. (9) Subscriber's name, address, nationality, and number of subscribed shares.

Article 22

Closing Subscription Early and Distribution Method: Subscription may be closed before the scheduled date once the value of offered shares is fully covered. In all cases, if subscription exceeds the offered shares, they shall be distributed among subscribers according to the method specified in the company's articles. If the articles do not specify a distribution method, shares shall be allocated to each subscriber based on the ratio of offered shares to subscribed shares, ensuring no subscriber is excluded regardless of the number of shares subscribed. Rounding shall favor small subscribers. In this case, the subscriber shall submit the certificate referred to in the preceding article to the subscription entity to prove the allocated shares and paid amount, and the excess paid shall be refunded.

Article 23

Ruling on Under-subscription: The company shall not be established if the subscription period and its extension expire without full coverage of the issued capital shares, and the banks or companies referred to in Article (20) do not subscribe to the unsubscribed portion. In this case, the bank that received subscription amounts must refund them in full, including issuance fees, upon request.

Article 24

Preparation of Subscriber List After Closing: Founders and the entity managing the public subscription must prepare a list of subscribers' names, nationalities, addresses, amounts paid, subscribed shares, and allocated shares. This list shall be submitted to the Authority within fifteen days following the closing of the subscription. Interested parties may obtain a copy from the Authority upon paying the fee determined by the Authority for actual preparation costs.

Article 25

Deposit of Subscription Amounts and Withdrawal Conditions: Amounts paid by shareholders shall remain with the bank managing the subscription or the entity receiving contributions and shall not be withdrawn until the company's legal representative provides proof of the articles' registration in the Commercial Register. Exceptionally, the depositing bank must refund all subscription amounts to subscribers in the following cases: (a) If a summary court judge issues a ruling appointing someone to withdraw and distribute these amounts to subscribers, due to the company's failure to be established because of founders' fault within six months of submitting the establishment license request to the competent committee. (b) If one year passes from the subscription closing date without founders or their representatives submitting an establishment license request to the competent committee, proven by a negative certificate from the committee's secretariat. (c) If the subscription period and its extension expire without full coverage through methods stipulated in the law and this regulation. (d) If all founders agree to abandon the company's establishment and submit a declaration to the bank with authenticated signatures.

Article 26

Preliminary Valuation of In-Kind Contributions: If in-kind contributions (material or intangible) form part of the capital of a joint stock company or partnership limited by shares, or upon capital increase, founders or the board of directors shall conduct a preliminary valuation of these contributions. They may consult qualified experts such as accountants, after reviewing all documents related to these contributions. Valuation must comply with Egyptian Financial Valuation Standards for Enterprises and Real Estate Valuation Standards, as applicable. Founders or the board of directors, after signing the preliminary contract and before the cash share subscription closing deadline (with sufficient notice for the board), shall submit a request to the Authority to verify whether the in-kind contributions were valued correctly. The request shall include all data and facts related to the contribution, the name(s) of the contributing partner(s), full company details, and a copy of the preliminary contract, draft articles, and the preliminary valuation report prepared by founders or the board. Interested parties shall pay the amount determined by the Authority for valuation work and the competent committee's fees. Amended by Decision of the Minister of Investment and International Cooperation No. 16 of 2018. Amended by Prime Minister Decision No. 1212 of 2004.

Article 27

Committee Competent for Valuing In-Kind Contributions: The request in Article (26) shall be referred to the Committee specified in Article (25) of the Law, formed by a decision of the competent Minister based on the Authority's Executive President's proposal. This committee shall follow accounting and economic rules, procedures, and standards, and comply with Egyptian Real Estate Valuation Standards and Enterprise Financial Valuation Standards. The committee shall deposit its report within a maximum of sixty days from the date of referring the documents. If the in-kind contribution is owned by the State, a public authority, or a public sector company, a representative of the public owner chosen by the competent Minister according to regulations issued by the Prime Minister's decision must participate in the valuation. The committee's report must include a precise description of the in-kind contribution, the contributor's name, the preliminary valuation prepared by interested parties or the board, the basis for it, the committee's opinion on this valuation and the basis for its report, and any other data deemed necessary. Amended by Decision of the Minister of Investment and International Cooperation No. 16 of 2018. Amended by Prime Minister Decision No. 1212 of 2004.

Article 28

Distribution of Committee Report to Subscribers and Founding Assembly Partners: Founders or the board of directors shall distribute the committee report specified in Article (27) to subscribers, partners, and founding assembly members (or extraordinary general assembly members, as applicable), as well as to the Central Agency for Accounting if the in-kind contributions are owned by the State, public legal entities, public sector companies, or public business sector. This shall be done at least two weeks before the company's founding assembly meeting or extraordinary general assembly meeting. Distribution shall be conducted by sending a copy of the report via registered mail to interested parties, or depositing the report at the company's designated office and advertising this in two widely circulated daily newspapers, with a copy delivered to any subscriber or partner requesting it. Amended by Prime Minister Decision No. 1212 of 2004.

Article 29

Competence of the Founding Assembly to Approve In-Kind Contributions: The founding assembly or extraordinary general assembly shall approve the valuation of in-kind contributions by a majority holding two-thirds of the shares or cash contributions, excluding those owned by the contributors in cases of establishment, capital increase, and division. Contributors shall not have voting rights on this matter, even if they hold shares or cash contributions. If it becomes apparent that the approved valuation is less than one-fifth of the value for which it was submitted, the issued capital and number of in-kind shares shall be reduced by an amount equivalent to this shortfall, respecting the minimum limits in Articles (6) and (6 bis) of this Regulation, unless the contributor pays the difference in cash for cash shares, or may withdraw from the company. The right to in-kind contributions forming the company's capital must be fixed for the contributor, undisputed, and fully transferred to the company. In this case, the contributor shall receive shares equivalent to the final valuation approved by the founding assembly or extraordinary general assembly, and these shares shall be fully paid. Amended by Prime Minister Decision No. 1212 of 2004.

Article 30

Other Competences of the Founding Assembly: In addition to the founding assembly's competence to approve the valuation of in-kind contributions...