Law No. 159 of 1981 on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies

Law No. 159 of 1981 dated 1981/10/01 Regarding the issuance of the Law of Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies

Article 1 The provisions of the accompanying Law shall apply to joint stock companies, partnerships limited by shares, limited liability companies, and single-owner companies.

The Law No. 26 of 1954 concerning certain provisions specific to joint stock companies, partnerships limited by shares, and limited liability companies is hereby repealed, as are Law No. 244 of 1960 concerning mergers in joint stock companies and Law No. 137 of 1961 concerning the formation of boards of directors of joint stock companies, as well as any provision conflicting with the provisions of the accompanying Law.

*The first paragraph amended by Law No. 4 of 2018. The text of the Article before amendment: The provisions of the accompanying Law shall apply to joint stock companies, partnerships limited by shares, and limited liability companies. The Law No. 26 of 1954 concerning certain provisions specific to joint stock companies, partnerships limited by shares, and limited liability companies is hereby repealed, as are Law No. 244 of 1960 concerning mergers in joint stock companies and Law No. 137 of 1961 concerning the formation of boards of directors of joint stock companies, as well as any provision conflicting with the provisions of the accompanying Law.

Article 2 The provisions of the accompanying Law shall not prejudice the provisions contained in laws specific to the public sector companies, or the investment of Arab and foreign capital, and free zones, or the regulation of the status of certain companies. The provisions of the accompanying Law shall apply to the companies mentioned herein in matters not covered by special provisions in the laws regulating them.

Article 3 The provisions of Law No. 113 of 1958 concerning appointment in positions in joint stock companies and public institutions, Law No. 113 of 1961 prohibiting any person from receiving more than five thousand pounds annually, and Law No. 73 of 1973 concerning the determination of conditions and procedures for the election of employee representatives on boards of directors of companies subject to the provisions of the accompanying Law shall not apply. Nor shall the provisions of Law No. 9 of 1964 concerning the allocation of a percentage of profits to employees in public institutions and other establishments apply to branches and representation offices of foreign companies in Egypt. The Council of Ministers may establish rules ensuring the determination of a maximum limit for wages in companies subject to the provisions of the accompanying Law.

Article 4 The competent Minister shall issue the executive regulations for the accompanying Law, as well as all organizational decisions, contract models, and systems referred to in the accompanying Law, after obtaining the opinion of the Capital Market Authority, within a period not exceeding six months from the date of publication of this Law.

Article 5 In applying the provisions of the accompanying Law, the term "competent Minister" refers to the Minister of Investment Affairs, referred to as the "Competent Minister" wherever it appears in the accompanying Law. The term "Competent Administrative Authority" refers to the General Authority for Investment and Free Zones, referred to as the "Authority" wherever it appears in the accompanying Law.

*Amended by Law No. 4 of 2018. The text of the Article before amendment: The President of the Republic shall determine, by decree, the Competent Minister and the Competent Administrative Authority for the application of the provisions of the accompanying Law.

Article 6 This Law shall be published in the Official Gazette and shall come into force six months from the date of its publication. This Law shall be stamped with the State seal and enforced as one of its laws. Issued at the Presidency of the Republic on 18 Dhu al-Qi'dah, 1401 (17 September 1981).

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Article 1 The provisions of this Law shall apply to joint stock companies, partnerships limited by shares, limited liability companies, and single-owner companies, whose main center is located in the Arab Republic of Egypt, or which conduct their main activity therein. Every company established in the Arab Republic of Egypt must establish a main center in Egypt. The company's founding contract shall specify the address of its main center where its administrative activities are conducted, and the company is obliged to publish any modification to the address of its main center; otherwise, measures may be taken, including issuing notices regarding the published address of the main center in the Commercial Register.

*The last paragraph added by Law No. 4 of 2018. *The first paragraph amended by Law No. 4 of 2018. The text of the Article before amendment: The provisions of this Law shall apply to joint stock companies, partnerships limited by shares, and limited liability companies whose main center is located in the Arab Republic of Egypt or which conduct their main activity therein. Every company established in the Arab Republic of Egypt must establish a main center in Egypt.

Article 1 Bis Without prejudice to the provisions of the Capital Market Law issued by Law No. 95 of 1992, the Law of Special Nature Economic Zones issued by Law No. 83 of 2002, and the Investment Law No. 72 of 2017 mentioned herein, the Authority shall provide establishment and post-establishment services for companies subject to the provisions of this Law. The Authority is obliged to computerize these services and unify their procedures in accordance with Article 50 of the Investment Law issued by Law No. 72 of 2017. Electronic establishment procedures shall apply exclusively to the exclusion of other procedures provided in any other law once activated. The executive regulations of this Law shall determine the rules of work for the electronic establishment and services system for companies and establishments subject to its provisions.

*Added by Law No. 4 of 2018.

Article 2 A joint stock company is a company whose capital is divided into equal shares that can be traded as specified in the Law, and the liability of the shareholder is limited to the payment of the value of the shares subscribed to, and they are not liable for the company's debts except to the extent of their subscription. It shall have a trade name derived from the purpose of its establishment, and the trade name may include the name of one or more of its founders or a title.

*The third paragraph amended by Law No. 4 of 2018. The text of the Article before amendment: A joint stock company is a company whose capital is divided into equal shares that can be traded as specified in the Law, and the liability of the shareholder is limited to the payment of the value of the shares subscribed to, and they are not liable for the company's debts except to the extent of their subscription. The company shall have a trade name derived from the purpose of its establishment, and the company may not adopt the names of the partners or the name of one of them as its title.

Article 3 A partnership limited by shares is a company whose capital consists of one or more shares owned by one or more general partners, and equal shares subscribed to by one or more shareholders, which can be traded as specified in the Law. The general partner or partners are liable for the company's obligations with unlimited liability, while the shareholder partner is not liable except to the extent of the value of the shares subscribed to. The company's name shall consist of the name of one or more of the general partners only.

Article 4 A limited liability company is a company in which the number of partners does not exceed fifty partners, and none of them is liable except to the extent of their share. The company may not be established, its capital increased, or borrowings made on its behalf through public subscription, nor may it issue shares or bonds tradable on the market. The transfer of partners' shares is subject to the withdrawal of partners according to the special conditions contained in the company contract, in addition to the conditions prescribed in this Law. The company may adopt a special name, which may be derived from its purpose, and its title may include the name of one or more partners.

Article 4 Bis A single-owner company is a company whose capital is entirely owned by one person, whether natural or legal, in a manner consistent with its purposes, and the founder of the company is not liable for its obligations except to the extent of the capital allocated to it. The company shall adopt a name indicating that it is a single-owner limited liability company, derived from its purposes or the name of its founder, and this name must be placed at its main center and branches (if any), and in all its correspondence.

*Added by Law No. 4 of 2018.

Article 5 Partnerships limited by shares or limited liability companies may not undertake insurance, banking, savings, or deposit-taking activities, or invest funds on behalf of others.

Article 6 All contracts, invoices, trade names and addresses, advertisements, and all other papers and printed materials issued by companies must bear the company's title, indicating its type before or after the title in clear, legible letters, along with the statement of its main center and the stated capital according to its value in the last balance sheet. Anyone who acts in the name of the company without observing the provisions of the previous paragraph shall be personally liable for all obligations arising from such act. If the statement regarding capital is exaggerated, third parties may consider anyone acting in the company's name liable for paying the difference between the actual value of the capital and the estimate stated in such statement, to the extent necessary to satisfy the third party's right.

Article 7 Anyone who actively participates in establishing a company with the intention of bearing the liability arising therefrom is considered a founder, and the provision of Article 89 of this Law shall apply to them. Specifically, anyone who signed the preliminary contract, requested permission to establish the company, or contributed an in-kind asset during its establishment is considered a founder. Anyone who participates in the establishment on behalf of the founders, such as professionals and others, is not considered a founder.

Article 8 Except for single-owner companies, the number of founding partners in joint stock companies shall not be less than three, nor less than two for other companies subject to the provisions of this Law. If the number of partners falls below this quorum, the company shall be considered dissolved by operation of law unless they proceed to complete this quorum within six months at the latest, or the remaining partners request to convert it into a single-owner company within this period. The remaining partners shall be liable with all their assets for the company's obligations during this period.

*Amended by Law No. 4 of 2018. The text of the Article before amendment: The number of founding partners in joint stock companies shall not be less than three, nor less than two for other companies subject to the provisions of this Law. If the number of partners falls below the quorum mentioned in the previous paragraph, the company shall be considered dissolved by operation of law unless they proceed to complete this quorum within six months at the latest. The remaining partners shall be liable with all their assets for the company's obligations during this period.

Article 9 The preliminary contract concluded by the founders shall be according to the model issued by the Competent Minister by decree. The contract may not include any conditions exempting the founders or some of them from liability arising from the establishment of the company, or any other conditions stipulated to apply to the company after its establishment unless included in the founding contract or the articles of association.

Article 9 Bis Without prejudice to the provision of Article 9 of this Law, shareholders or partners may, at the time of establishing the company or thereafter, conclude an agreement regulating the relationship between them. This agreement shall not apply to other shareholders or partners unless approved by the Extraordinary General Assembly of the company by a majority of at least three-quarters of the capital, or a larger majority in cases specified by the executive regulations of this Law.

*Added by Law No. 4 of 2018.

Article 10 The founders shall be jointly liable for what they have committed. The founder who committed an act on behalf of another shall be personally liable if they did not state the name of their principal in the company establishment contract or if it became clear that the power of attorney provided was void.

Article 11 The founder must exercise the care of a prudent person in their dealings with the company under formation or on its behalf. The founders are jointly liable for any damages that may befall the company or third parties resulting from a violation of this obligation. If the founder receives any funds or information belonging to the company under formation, they must return such funds and any profits they may have obtained from the use of such funds or information to the company.

Article 12 No act performed between the company under formation and its founders shall apply to the company after its establishment, unless this act is approved by the board of directors if all its members have no connection to the founder who performed the act or have no interest in the act, or by a resolution of the General Assembly of the company in a meeting where interested founders have no voting rights. In all cases, the interested founder must place all facts related to the aforementioned act before the authority approving the act.

Article 13 Subject to the provisions of the previous article, contracts and acts performed by founders in the name of the company under formation shall apply to the company after its establishment if they were necessary for the establishment of the company. In other cases, such contracts and acts shall not apply to the company after establishment unless approved by the authority mentioned in the previous article.

Article 14 If the company is not established due to the fault of its founders within six months from the date of notification of its establishment, any subscriber may request the judge of urgent matters to appoint someone to return the paid funds and distribute them among the subscribers. The subscriber may recourse against the founders jointly for compensation if necessary. Any subscriber may also request the refund of the value of their subscription in the capital of the company under formation if one year has passed from the date of subscription without the company taking steps to establish it. The word "notification" in the first paragraph of Article 14 was replaced by Law No. 3 of 1998 - Official Gazette No. 3 Bis on 1998/1/18, and it was previously "request for permission".

Article 15 The preliminary contract of the company and its system, or its founding contract, must be official or authenticated. It must include, for each type of company, the data specified by the executive regulations. These regulations shall also determine the resolutions and certificates attached to the company contract, as well as the procedures for authenticating signatures before the Competent Administrative Authority.

Article 16 A model for the establishment contract of each type of company or its system shall be issued by a decision of the Competent Minister. Each model shall include all data and conditions required by law or regulations in this regard. It shall also specify the conditions and procedures that founding partners may adopt or delete from the model, and they may add any other conditions that do not conflict with the provisions of the law or regulations. Departure from the provisions of the model is not permitted except in the aforementioned cases. The model shall be issued after approval by the Legislation Department of the State Council.

**Amended by Law No. 3 of 1998, and the phrase "except with the approval of the Committee mentioned in Article 18 of this Law" appearing in the penultimate paragraph of Article 16 was repealed by Article 4 of Law No. 3 of 1998.

**Issued by Decision of the Minister of Investment and International Cooperation No. 7 of 1982 and published in the Egyptian Gazette No. 214 Supplement on 1982/9/16, including models for the establishment contracts of each type of company subject to Law No. 159 of 1981, prepared by the Authority in a separate book for reference if necessary.

Article 17 The founders or their representatives must notify the Authority of the establishment of the company, and the following documents must be attached to the notification: (a) The preliminary contract and the articles of association for joint stock companies and partnerships limited by shares, or the founding contract for limited liability companies and single-owner companies. (b) Approval from competent authorities if the practice of any of the company's purposes requires obtaining special approvals under the provisions of another law. (c) A certificate from one of the licensed banks confirming the completion of subscription to all shares or shares of the company, and that the value required to be paid, at least for cash shares or shares, has been paid and placed at the disposal of the company until it acquires legal personality. Limited liability companies are exempt from providing this certificate. (d) A receipt for the payment of a fee of one per thousand of the issued capital for joint stock companies and partnerships limited by shares, and of the paid-up capital for limited liability companies and single-owner companies, not less than one hundred pounds and not more than one thousand pounds. (e) A certificate from one of the licensed Central Depository and Clearing companies confirming the deposit of securities for joint stock companies and partnerships limited by shares with the Central Depository and Clearing company.

*The first paragraph amended by Law No. 4 of 2018. The text of the Article before amendment: The founders or their representatives must notify the Competent Administrative Authority of the establishment of the company, and the following documents must be attached to the notification: a - The preliminary contract and the company system for joint stock companies and partnerships limited by shares, or the founding contract for limited liability companies. b - Approval of the Council of Ministers to establish the company if its purpose or among its purposes is to work in the field of satellite activity, issuing newspapers, remote sensing systems, or any activity involving a purpose or work mentioned in the Law on Associations and Private Institutions. c - A certificate from one of the licensed banks confirming the completion of subscription to all shares of the company or its shares, and that the value required to be paid, at least for cash shares or shares, has been paid and placed at the disposal of the company until it acquires legal personality. d - A receipt for the payment of a fee of one per thousand of the issued capital for joint stock companies and partnerships limited by shares, and of the paid-up capital for limited liability companies, with a minimum of one hundred pounds and a maximum of one thousand pounds. The Competent Administrative Authority shall issue a certificate to the notifier when all the documents mentioned in the previous clauses are complete, and the company shall be registered in the Commercial Register based on this certificate without the need for any other condition or procedure, regardless of the percentage of non-managing partners. The company shall be published and acquire legal personality after fifteen days from the date of its registration in the Commercial Register, unless the Competent Administrative Authority decides to grant it legal personality before the expiration of this period. Exceptionally, companies and establishments that do not conduct their activity in the Sinai Peninsula shall not acquire legal personality except by a decision of the President of the General Authority for Investment and Free Zones, nor shall any modification to its articles of association or trading of its capital shares be conducted except after the approval of the President of the mentioned Authority.

(*)The last paragraph of Article 17 added by Law No. 94 of 2005 Official Gazette No. 24 Bis on 21/6/2005.

**Replaced by Law No. 3 of 1998 – and a part was added to the last paragraph by Law 94 of 2005.

))The Constitutional Court ruled in Constitutional Case No. 25 of 2001, session 2001/6/2, that the clause (b) of Article 17 of the Law of Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies issued by Law No. 159 of 1981 as amended by Law No. 3 of 1998 is unconstitutional, specifically the requirement for Council of Ministers' approval to establish a company whose purpose is issuing newspapers.

Article 18 The Competent Administrative Authority may, within ten days from the date of notification of the company's establishment, object to its establishment by registered letter to the company's address indicated in the documents attached to the notification, sending a copy of the letter to the Commercial Register for endorsement on the company's registration data. The objection must be reasoned and include the necessary measures to remove the grounds for objection. The Competent Administrative Authority may not object to the establishment of the company except for the following reasons: (a) The preliminary contract, founding contract, or company system violates the mandatory data in the model or includes matters contrary to the law. (b) The company's purpose is contrary to the law or public order. (c) One of the founders lacks the necessary capacity to establish the company.

Replaced by Law No. 3 of 1998 - Official Gazette No. 3 Bis on 1998/1/18.

Article 19 The company must, within fifteen days from the date of being notified of the objection, remove the grounds for it or appeal to the Minister of Economy; otherwise, the Competent Administrative Authority must issue a decision to strike the company's registration from the Commercial Register. The expiration of fifteen days from the submission of the appeal without a ruling thereon shall be considered acceptance of it, removing the effects of the objection. If the company's appeal is rejected, it shall be notified by registered letter to remove the grounds for objection. If not removed within ten days from the date of notification of the rejection, the Competent Administrative Authority shall issue a decision to strike the company's registration from the Commercial Register. In all cases, the legal personality of the company ceases from the date of the striking decision. Interested parties may appeal this decision before the Administrative Court within sixty days from the date of their announcement or knowledge of it, and the court must rule on the appeal urgently. The founders shall be jointly liable with their personal assets for the consequences or damages incurred by third parties resulting from the striking of the company's registration from the Commercial Register, without prejudice to criminal penalties prescribed.

Replaced by Law No. 3 of 1998 - Official Gazette No. 3 Bis on 1998/1/18.

Article 19 Bis Without prejudice to the provisions of the Capital Market Law issued by Law No. 95 of 1992, the Authority may not object to an increase in capital unless it is proven that the increase was made by fraud, prejudice to the rights of third parties or shareholders, in violation of Egyptian accounting standards, or due to a fundamental violation of the provisions of this Law and the rules and procedures for increasing capital. The Commercial Register Office shall endorse the objection. The company must, within fifteen days from the date of being notified of the objection, remove the grounds for it, and may appeal to the Appeals Committee mentioned in Article 160 Bis of this Law; otherwise, the Commercial Register Office must strike the endorsement of the capital increase. The expiration of sixty days for the Authority from the date of submitting the appeal without a ruling thereon shall be considered acceptance of it, removing the effects of the objection. In case of rejection of the appeal, the Authority shall notify the company and the Commercial Register Office of the procedures specified by the executive regulations of this Law, and the company must remove the grounds for objection within ten days from the date of notification; otherwise, the Commercial Register Office must strike the endorsement of the capital increase.

*Added by Law No. 4 of 2018.

Article 20 The amounts paid on behalf of the company under formation must be deposited in one of the banks licensed for this purpose by a decision of the Competent Minister. The company may not withdraw these amounts until one month after publishing its system or founding contract in the Commercial Register.

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Article 21 The executive regulations shall organize the procedures for publishing the company contract and its system in the Official Gazette or the special bulletin issued for this purpose, or by other means. Publication shall in all cases be at the company's expense. The authentication fees for signatures for contracts of companies subject to the provisions of this Law shall be one-quarter percent of the capital, with a maximum of one thousand pounds, whether authenticated in Egypt or before Egyptian authorities abroad. Contracts for the establishment of these companies, as well as loan and mortgage contracts related to the activities of these companies, are exempt from stamp duties and notarization and publication fees for one year from the date of publishing the company contract and system in the Commercial Register.

**The first paragraph of the Article replaced by Law No. 3 of 1998.

Article 21 Bis Repealed.

**Added by Law No. 212 of 1994, then repealed by Law No. 3 of 1998. (Text of the Article before repeal: Companies approved by the Committee mentioned in Article 18 shall pay fees for inspection and establishment services at a rate of one per thousand of the issued capital for joint stock companies and partnerships limited by shares, and of the paid-up capital for limited liability companies, with a minimum of one hundred pounds and a maximum of one thousand pounds.)

Article 22 Repealed.

**Repealed by Law No. 3 of 1998. (Text of the Article before repeal: The company contract and its system must be published in the Commercial Register. The legal personality of the company is not established, and it may not begin its activities except from the date of publication in the Commercial Register.)

Article 23 Repealed.

**Repealed by Law No. 3 of 1998. (Text of the Article before repeal: After publishing the company contract and system in the Commercial Register, the company may not be challenged on the grounds of invalidity due to violation of provisions related to establishment procedures.)

Article 24 The special conditions and procedures for establishing the company shall be observed when amending its system, in the cases specified by the executive regulations.

Article 25 Subject to the provision of Article 28, clause 1 of this Law, if the capital of a joint stock company or a partnership limited by shares includes, or when increasing the capital of either, in-kind shares (tangible or intangible), the founders or the board of directors, as appropriate, must request the Authority to verify whether these shares have been correctly valued. A committee formed within the Authority, chaired by a counselor from one of the judicial bodies or entities, and comprising at most four experts in economic, accounting, legal, and technical specialties chosen by the Authority, shall be competent to conduct this valuation. This committee is obliged to follow the rules, procedures, and standards determined by the executive regulations, as well as Egyptian real estate valuation standards and financial valuation standards for establishments, as appropriate. The committee shall deposit its report within a maximum period of sixty days from the date of referral of the documents to it. If the in-kind share is owned by the State, a public entity, or a public sector company, a representative of the public owner chosen by the Competent Minister must participate in the valuation, according to the guidelines issued by a decision of the Prime Minister. The valuation of such shares shall not become final until approved by the group of subscribers or partners by a numerical majority holding two-thirds of the shares or shares. The valuation shall not be final for cash shares after excluding those owned by the providers of the aforementioned in-kind shares, and the providers of these shares shall not have the right to vote on the approval even if they are owners of cash shares or shares. If it becomes apparent that the valuation of the in-kind share is less by more than one-fifth of the value for which it was provided, the company must reduce its capital by an amount equivalent to this deficiency. Nevertheless, the provider of the share may pay the difference in cash, or they may withdraw. In-kind shares may not represent shares or shares whose value has not been fully paid. The provisions of this Article shall apply to what is subscribed in in-kind shares in every increase in capital before the expiration of the period specified in the first paragraph of this Article.

*The first, second, and last paragraphs amended by Law No. 4 of 2018. The text of the Article before amendment: If the capital of a joint stock company or a partnership limited by shares includes, or when increasing the capital, in-kind shares (tangible or intangible), the founders or the board of directors, as appropriate, must request the Competent Administrative Authority to verify whether these shares have been correctly valued. A committee formed within the Competent Administrative Authority, chaired by a counselor from one of the judicial bodies, and comprising at most four experts in economic, accounting, legal, and technical specialties chosen by that authority, shall be competent for this valuation. If the in-kind share is owned by the State, a public entity, or public sector companies, representatives from the Ministry of Finance and the National Investment Bank must be added to the committee. The committee shall submit its report within a maximum period of sixty days from the date of referral of the documents to it. The founders or the board of directors shall distribute the committee's report to the partners, as well as the Central Bureau of Accounts if the in-kind share is owned by one of the entities mentioned in the previous paragraph, at least two weeks before the meeting convened to discuss it. The valuation of such shares shall not become final until approved by the group of subscribers or partners by a numerical majority holding two-thirds of the cash shares or shares, after excluding those owned by the providers of the aforementioned in-kind shares, and the providers of these shares shall not have the right to vote on the approval even if they are owners of cash shares or shares. If it becomes apparent that the valuation of the in-kind share is less by...