Law No. 141 of 2004 Issuing the Law on the Development of Small and Micro-Enterprises

Official Gazette - No. 24 Supplement (A) dated 10 June 2004 3

Law No. 141 of 2004 Issuing the Law on the Development of Small and Micro-Enterprises

In the name of the People, the President of the Republic, the People's Assembly has decided the following law, which we hereby issue:

(Article 1) The provisions of the accompanying law shall apply to small and micro-enterprises that meet the conditions for its application.

(Article 2) The Social Fund for Development shall be the competent authority responsible for working on the development of small and micro-enterprises, as well as planning, coordinating, and promoting their spread, and assisting in obtaining the financing and services they require, in cooperation with ministries, their agencies, public authorities, local administration units, and other entities. The executive regulations shall specify the Fund's operational system in carrying out these tasks.

(Article 3) The provisions of the accompanying law shall apply to existing enterprises if they meet the conditions stipulated in this law and the executive regulations are issued. The Prime Minister shall issue the executive regulations for the accompanying law within three months from the date of implementation of this law.

(Article 4) This law shall be published in the Official Gazette and shall take effect from the day following its publication. This law shall be sealed with the State seal and enforced as one of its laws. Issued at the Presidency of the Republic on 2 Rabi' al-Thani 1425 AH. (Corresponding to 8 June 2004 AD) Hosni Mubarak

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Law on the Development of Small and Micro-Enterprises (Chapter One) Definitions

Article 1 - For the purpose of applying the provisions of this law, "small enterprise" means any company or sole proprietorship engaged in a productive, service, or commercial economic activity, with a paid-up capital of not less than 50,000 Egyptian pounds and not exceeding 1,000,000 Egyptian pounds, and with no more than 50 employees.

Article 2 - For the purpose of applying the provisions of this law, "micro-enterprise" means any company or sole proprietorship engaged in a productive, service, or commercial economic activity, with a paid-up capital of less than 50,000 Egyptian pounds.

(Chapter Two)
On Establishment and Dealing with Local and Foreign Entities

Article 3 - The Social Fund for Development shall establish service units for small and micro-enterprises in its offices or in the branches of the General Authority for Investment and Free Zones in the governorates. These units shall handle, upon the request of their owners, all registration procedures, issuance of licenses, approvals, and cards mandated by legislation and necessary for practicing their activities, within a period not exceeding thirty days from the date of submitting documents to the competent administrative authorities for granting licenses.
These units shall include representatives from the Companies and Taxes Authority and the Commercial Register to complete the procedures referred to in the first paragraph of this article.
These units shall also include representatives from the authorities and entities legally competent to dispose of the lands and premises required by the enterprise, and they shall have the authority to contract with enterprise owners in all aspects of disposal.
The unit shall issue a temporary license to the enterprise owner until the activity is terminated, upon completion of the form prepared for this purpose attached with the required documents, pending the issuance of final licenses from other authorities. If these authorities do not respond within the thirty-day period stipulated in the first paragraph of this article, the temporary license shall become final. Final licenses shall be recorded in a special register at these units, and each enterprise shall be assigned a national number to be used in all its transactions. The authorities that issued the licenses shall have the right to inspect the enterprises to ensure compliance with the provisions of this law, provided that this does not interfere with their proper operation and the conduct of their activities, in accordance with the rules and procedures specified in the executive regulations of this law.

Article 4 - The Social Fund for Development shall coordinate between local, foreign, and international institutions and entities concerned with supporting these enterprises. These entities shall determine the nature of the services and facilities they provide to the enterprises and notify the Social Fund for Development thereof to take necessary measures to achieve integration among them.

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(Chapter Three)
Financing of Small and Micro-Enterprises

Article 5 - In each governorate, by decision of the Governor, in coordination with the Social Fund for Development, one or more funds shall be established to finance small and micro-enterprises, through institutions and civil society associations, in accordance with the rules and procedures specified in the decision to regulate financing, borrowing, and collection operations.
The resources of these funds shall consist of:

1. Financing allocated by the Social Fund for Development.
2. State appropriations allocated to finance these funds for the purpose of financing small and micro-enterprises.
3. Resources allocated by local People's Councils.
4. Bodies and grants provided by financing institutions to support small and micro-enterprises.

Article 6 - The unmet portion of concessional financing for small and micro-enterprises shall be included in the state's annual plan, and the sources of this financing shall be determined, including what is available to governorate funds. The state's share of appropriations resulting from the foregoing shall also be included in the general state budget, either under Chapter Four "Capital Transfers" or Chapter Two "Current Expenditures".

Article 7 - The Social Fund for Development shall provide concessional financing to small or micro-enterprises from its resources in accordance with the rules and procedures established by its Board of Directors, in addition to the financing it provides to the financing funds for these enterprises in the governorates.

Article 8 - The Social Fund for Development may obtain the necessary financing from local financial markets under the terms and conditions agreed upon with the Ministry of Finance. The financing obtained by the Fund shall be used to on-lend to the development funds for small and micro-enterprises in the governorates, within the framework and controls approved by its Board of Directors.

Article 9 - The Social Fund for Development shall establish, by decision of its Board of Directors and with the participation of the financing funds for small and micro-enterprises in the governorates, a system to guarantee the credit risks faced by these enterprises. This system shall take effect upon approval by the aforementioned Board of Directors, without imposing any burden on the general state budget or governorate budgets.

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(Chapter Four)
Incentives and Facilities

Article 10 - A percentage of not less than (10%) of available vacant lands for investment in industrial, tourist, and urban communities, as well as agricultural reclamation lands, shall be allocated for establishing small and micro-enterprises. These lands shall be provided with utilities, subdivided, planned, and offered to those wishing to establish such enterprises.
The entities entitled to dispose of these lands shall appoint representatives to the Fund's units, equipped with a map of available lands, a brochure on sale and usage conditions, and draft contracts, and they shall have the authority to contract and take registration and publication procedures.

Article 11 - Without prejudice to any other benefits or facilities stipulated in another law, the selling price of the lands referred to in the preceding article shall be determined within the cost of connecting utilities. The enterprise owner may purchase the land and pay its price under the conditions specified by the selling entity, and may request the right to use it in exchange for an annual fee not exceeding (5%) of its estimated value.

Article 12 - Each ministry, its agencies, public authorities, and local administration units shall establish a register for recording small and micro-enterprises wishing to deal with them. Each shall allocate, while ensuring equal opportunity, a percentage of not less than (10%) for contracting with these enterprises to purchase their products or execute the services and constructions required by those entities.

Article 13 - The owner of a small enterprise shall pay the Fund's units a fee of (1%) of the paid-up capital, after deducting 500 Egyptian pounds for micro-enterprises, to cover fees and service charges provided by all government entities and collected on their behalf, upon receiving the license to commence operations.

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Article 14 - The Social Fund for Development shall provide the following services to small and micro-enterprises, directly or through experts it engages, including in particular:

1. Identifying available investment opportunities in each governorate and each region within it.
2. Preparing preliminary feasibility studies for projects offered to those wishing to establish them.
3. Providing advice on the best locations and optimal sources for purchasing machinery, equipment, and other supplies.
4. Providing enterprise owners with a simplified guide for quantity and accounting records, and necessary guidelines for dealing with all public entities.
5. Identifying risks that enterprises may face.
6. Identifying local and international exhibitions and assisting in participating in them.
7. Assisting in acquiring knowledge and developments in production and marketing technologies.
   The Fund shall allocate in its annual budget the necessary appropriations to provide these services.

Article 15 - Licensing small and micro-enterprises to occupy spaces in areas designated by municipalities and other public entities for goods distribution shall be subject to a fee not exceeding half of the standard fee for occupying such spaces.

Article 16 - The administrative suspension of the activity of any small or micro-enterprise shall not be permitted except in the event of committing a violation that legally warrants closure. In such a case, the enterprise owner shall be notified of the violation and the period specified for its rectification. Suspension shall be implemented if this period expires without rectification.

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Article 17 - Based on the provisions of Law No. 7 of 2000 concerning Mediation Committees in Certain Disputes, a permanent committee shall be formed by decision of the competent Governor, chaired by a judicial figure of at least the rank of Court President, appointed according to the rules and procedures stipulated in the Judicial Authority Law. It shall include a representative from the Chamber of Commerce and another from the Social Fund for Development. The concerned party or their representative shall be summoned to attend, and the organizing entity shall be represented.
This committee shall have jurisdiction to review appeals against the suspension decision referred to in the preceding article. The appeal must be filed within ten days from the date of notifying the concerned party of the suspension decision. Filing an appeal shall temporarily suspend the execution of the appealed decision, except for violations that threaten public health and citizen security. The committee shall issue a decision within seven days from the date of the appeal, either enforcing the suspension or continuing its temporary suspension until a final ruling is issued. This committee shall also have jurisdiction to adjudicate any dispute arising between the concerned party and any of the entities referred to in this law. None of the foregoing shall prejudice the right to directly resort to the judiciary.

Article 18 - All provisions conflicting with the provisions of this law are hereby repealed.