Law No. 203 of 1991

Concerning the Law on Public Sector Business Sector Companies (*)

In the Name of the People
President of the Republic

The People's Assembly has decided the following law, which is hereby issued:

(Article 1)

The provisions of the accompanying law shall apply to the Public Sector Business Sector. By this sector, it is meant the holding companies and their subsidiaries subject to the provisions of this Law. These companies, in both types, shall take the form of joint stock companies. The provisions of Law No. 159 of 1981 on Joint Stock Companies, Companies Limited by Shares, and Limited Liability Companies shall apply to them in matters not addressed by a penalty provision in this Law and in a manner not inconsistent with its provisions.

The provisions of Law No. 97 of 1983 on Public Sector Bodies and Source Companies shall not apply to the aforementioned companies.

(Article 2)

Holding companies shall replace the public sector bodies subject to the provisions of the aforementioned Law No. 97 of 1983, and subsidiaries shall replace the companies supervised by these bodies, effective from the date of implementation of this Law, without the need for any further procedure.

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(*) Official Gazette on June 19, 1991 - No. 24 (duplicate).

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All rights, including usufruct and lease rights, of the abolished public sector bodies and their companies shall be transferred to the holding companies and their subsidiaries, as applicable. All their obligations shall be assumed by them, and they shall bear full responsibility therefor.

The articles of association of each holding and subsidiary company shall be published at their expense in the Official Gazette and registered in the Commercial Register.

(Article 3)

Boards of directors of holding and subsidiary companies shall be formed in accordance with the accompanying law within six months from the date of its implementation.

The current chairmen and members of the boards of directors of the public sector bodies and their companies shall, as applicable, continue to manage the aforementioned companies until the new boards are formed.

(Article 4)

Employees working in the public sector bodies and their companies who are in service on the date of implementation of this Law shall be transferred to the holding or subsidiary companies with the same job status, salaries, allowances, leave, pension and in-kind benefits, and compensation.

These employees shall continue to be subject to all systems and rules governing their employment until regulations for the employees of the transferred companies are issued in accordance with the accompanying law within one year from the aforementioned date.

The transferred employee shall personally retain whatever salaries, allowances, leave, appreciation and in-kind benefits, and compensation they receive, even if they exceed what they are entitled to under these regulations, without affecting their future entitlement to any raises or benefits.

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(Article 5)

Without prejudice to any special provision in this Law or the accompanying law, the system of employees in the public sector issued by Law No. 48 of 1978 shall not apply to employees of companies subject to the accompanying law, effective from the date of implementation of the aforementioned regulations.

(Article 6)

The Council of State courts shall continue to hear the following lawsuits and appeals until a final judgment is rendered in accordance with currently applicable rules, without the need for any further procedure:

First: Disciplinary lawsuits and appeals against disciplinary penalties, and other lawsuits concerning employees of companies subject to this Law that were filed before the implementation of the regulations stipulated in the preceding article.

Second: Other lawsuits and appeals in which those companies are parties, provided they were filed before the implementation of this Law.

(Article 7)

Companies subject to this Law shall not be deprived of any benefits or subjected to any taxes that violate equality among them and joint stock companies subject to Law No. 159 of 1981 operating in the same activity. Item (1) of Article 6 of Law No. 66 of 1971 establishing a general authority named "Social Insurance Bank" is hereby repealed, as is the phrase "within the limits of the available resources" in the first paragraph of Article (1) of Law No. 118 of 1975 concerning Import and Export.

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(Article 8)

The President of the Republic shall issue a decree specifying the competent Minister for implementing the provisions of this Law. The Minister shall submit periodic reports to the Council of Ministers in accordance with the executive regulations regarding the results of the work of companies subject to this Law.

(Article 9)

By decree of the President of the Republic and after approval of the Council of Ministers, one of the economic bodies, public institutions, or public sector companies subject to special systems may be converted into a holding or subsidiary company subject to the provisions of this Law.

(Article 10)

The provisions of Article 8 of this Law shall not affect the administrative and executive competencies and authorities granted to Ministers by laws, regulations, and presidential decrees.

(Article 11)

The Council of State, exclusively, shall review the draft articles of association and the model articles of association of companies subject to this Law.

The aforementioned companies may request the Council of State, through the competent Minister, to issue an opinion on matters concerning their legislation, board members, or any other matters related to their affairs.

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(Article 12)

The Prime Minister shall issue the executive regulations for the accompanying law within three months from the date of implementation of this Law.

The draft articles of association and the model articles of association for companies subject to this Law shall also be issued within three months from the date of implementation of the executive regulations.

The articles of association of companies may be extended according to the nature of their activities.

(Article 13)

This Law shall be published in the Official Gazette and shall take effect thirty days after its publication.

This Law is deemed part of the State system and shall be enforced as one of its laws.

Issued at the Presidency on 7 Dhu al-Hijjah 1411 AH (19 June 1991 AD)

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Law on Public Sector Business Sector Companies

Chapter 1: Holding Companies

Section 1: Establishment

(Article 1)

The establishment of a holding company shall be issued by a decree of the Prime Minister upon the proposal of the competent Minister. Its capital shall be wholly owned by the State or public legal entities, and it shall acquire legal personality from the date of its registration in the Commercial Register.

The holding company shall take the form of a joint stock company and shall be considered a private law person. The decree establishing it shall specify its name, main location, duration, purpose, and capital.

The decree establishing the company, along with its articles of association, shall be published at its expense in the Official Gazette, and the company shall be registered in the Commercial Register.

(Article 2)

The holding company shall invest its funds through its subsidiaries, and may, when necessary, invest directly itself.

The company shall work to develop the national economy within the framework of the State's general policy.

Furthermore, to achieve its objectives, the company may undertake the following:

• 1. Establish joint stock companies alone or in partnership with public or private legal entities or individuals.
• 2. Purchase shares of joint stock companies or subscribe to their capital.
• 3. Form and manage the company's securities portfolio, including shares, bonds, debentures, and any other financial instruments or assets.
• 4. Undertake all transactions that help achieve all or part of its objectives.

Section 2: Board of Directors

(Article 3)

The holding company shall be managed by a board of directors formed by a resolution of the General Assembly upon the proposal of its chairman, for a term of three years renewable. It shall consist of an odd number of members, not less than five and not more than eleven, formed as follows:

• 1. A non-executive Chairman.
• 2. At least five members chosen from those with expertise in economic, financial, technical, administrative, and business management fields.
• 3. A representative of the General Federation of Trade Unions, appointed by the Federation's board.
• 4. The chairman and members of the board shall not be considered employees of the company.

The resolution forming the board shall specify the executive members, and shall determine the fixed remuneration for the chairman and executive members.

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(Article 4)

The General Assembly's resolution shall determine the attendance fee and per diem for each chairman and board member, and the company's articles of association shall specify the annual allowance they are entitled to, in accordance with Article (34) of this Law.

(Article 5)

The chairman and members of the board may be dismissed if convicted of a felony, or a crime punishable by deprivation of liberty for an offense involving honor or honesty, or by any of the penalties stipulated in Articles 49, 50, and 51 of this Law.

(Article 6)

The chairman and members of the board may be dismissed, in whole or in part, during their term by a resolution of the General Assembly for the offenses stipulated in Article 39 of this Law, if their continued service would harm the company's interests.

The appointment of the chairman and members of the board may not be renewed during their term.

(Article 7)

The board of directors shall exercise all powers necessary to manage the company's affairs and undertake all acts necessary to achieve its purpose, except those reserved for the General Assembly. Specifically, the board shall:

• 1. Formulate general policies and determine necessary means to achieve them.
• 2. Manage the company's securities portfolio, including the purchase of shares it contains.
• 3. Propose the establishment of joint stock companies alone or in partnership with public/private legal entities or individuals.
• 4. Purchase shares of joint stock companies or subscribe to their capital.
• 5. Undertake all necessary actions to correct the financial structures of struggling subsidiaries, organize their profitability, and rationalize costs.
• 6. Approve the draft budget and final accounts for submission to the General Assembly.
• 7. Establish performance standards, review and examine reports on the company's operations.
• 8. Approve the organizational structure and internal regulations regarding financial, administrative, technical, and other matters.
• 9. Consider any matter the General Assembly chairman or board chairman deems appropriate to submit to the board.

(Article 8)

The board may form one or more committees from among its members to exercise some of its competencies. It may also delegate some of its competencies to the board chairman or a manager. The board may authorize one of its members or a manager to perform a specific task, provided a report on the performed acts is submitted to the board.

(Article 9)

The board chairman represents the company before the judiciary and in dealings with third parties, and is responsible for:

• 1. Implementing board resolutions.
• 2. Managing the company and conducting its affairs.

The board chairman shall exercise the competencies and duties stipulated by laws and regulations for a delegated board member, and may delegate some of his competencies to one or more board members.

Section 3: General Assembly

(Article 9)

The General Assembly of the company shall consist of:

• 1. The competent Minister as Chairman.
• 2. Members with expertise in the fields of activities of the subsidiary companies, comprising no less than ten and no more than fourteen members, including at least one representative of the General Federation of Egyptian Workers, elected by a decree of the Prime Minister. The decree shall specify their attendance allowances according to rules set by the executive regulations.

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(Article 10)

The chairman and members of the board of directors and the account auditors of the Central Audit Organization shall attend General Assembly meetings and shall have a deliberative vote.

General Assembly resolutions shall be adopted by a majority of the votes of those present, except in cases requiring a special majority as stipulated by the executive regulations or the company's articles of association.

The executive regulations shall specify the conditions for the validity of the General Assembly's convening and the voting system on matters submitted to it, depending on whether it is convened in an ordinary or extraordinary session.

(Article 11)

The company's articles of association may not be amended by the Extraordinary General Assembly except in accordance with the executive regulations.

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Section 4: Financial System and Audit of Accounts

(Article 12)

The articles of association shall determine the beginning and end of the company's financial year.

The company's funds shall be considered State-owned private funds, and the company shall deposit its resources in local and foreign currencies in a bank account at the Central Bank or one of the commercial banks.

(Article 13)

The holding company shall prepare annual financial statements disclosing assets, liabilities, shareholders' equity, revenues, expenses, and the use of funds of the company and its subsidiaries, according to the format, conditions, and data specified by the executive regulations.

(Article 14)

The company's net profits shall be determined and distributed by a resolution of the General Assembly in accordance with this Law and the executive regulations.

The State's share of these profits shall be transferred to the General Treasury.

(Article 15)

The Central Audit Organization shall supervise the company's accounts and evaluate its performance in accordance with the law.

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Chapter 2: Subsidiary Companies of Holding Companies

Section 1: Establishment

(Article 16)

For the purposes of this Law, a subsidiary company is one in which a holding company owns at least a portion of its capital.

If more than one holding company, public legal entity, or public sector bank jointly own this portion, a decree of the Prime Minister shall specify the holding company to which this subsidiary belongs.

The subsidiary shall take the form of a joint stock company and shall acquire legal personality from the date of its registration in the Commercial Register.

(Article 17)

The establishment of a subsidiary company shall be issued by a decree of the competent Minister upon the proposal of the holding company's board of directors. This decree, along with the articles of association, shall be published at the company's expense in the Official Gazette, and the company shall be registered in the Commercial Register.

Section 2: Company Capital and Shares

(Article 18)

The company's capital shall be divided into equal-value shares.

The articles of association shall determine the nominal value of shares, which shall not be less than five pounds and not more than one hundred pounds. This provision shall not apply to subsidiaries that replaced companies previously supervised by public sector bodies under this Law.

Shares shall be indivisible and may not be issued at a value lower than their nominal value.

They may not be issued at a higher value except under the conditions and circumstances specified by the executive regulations, with such increase added to the reserves.

Under no circumstances shall the issuance exceed the limits set by a resolution of the Capital Market Authority.

The executive regulations shall govern the data contained in share certificates, the replacement of lost or damaged certificates, and the treatment of such certificates when the company's articles are amended.

(Article 19)

If in-kind contributions (tangible or intangible) are included in the company's capital at establishment or during a capital increase, the founders or board of directors, as applicable, must request verification from the competent Minister that these contributions were correctly valued.

The verification shall be conducted by a committee formed by a decree of the competent Minister, chaired by a counselor from a judicial body chosen by its president, and comprising up to four members with expertise in economic, financial, legal, and technical fields, a representative of the founders or shareholders chosen by the holding or subsidiary company's board, and representatives from the Ministry of Finance and the Central Audit Organization.

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(Article 20)

The committee shall submit its report to the competent Minister within a maximum of sixty days from the date the documents are referred to it. The valuation shall not become final until approved by the Minister.

(Article 21)

Shares of the subsidiary company shall be tradable in accordance with the provisions of the regulations issued by the Capital Markets Authority under Law No. 161 of 1957 and Law No. 159 of 1981 on Joint Stock Companies, Companies Limited by Shares, and Limited Liability Companies.

Founders' shares, shares representing in-kind contributions, and shares registered in the name of the company's founder may be traded from the date of their registration in the Commercial Register.

Section 3: Board of Directors

(Article 21)

Subject to Article (4) of this Law, the management of a company whose capital is wholly owned by a holding company alone, or jointly with other holding companies, public legal entities, or public sector banks, shall be vested in a board of directors for a term of three years renewable.

The board shall meet at least once a month upon summons by its chairman, according to a schedule proposed by the General Assembly chairman from among the board members.

The board shall consist of an odd number of members, not less than five and not more than nine, including the chairman, as follows:

• (a) A non-executive chairman with expertise, appointed by the General Assembly chairman upon nomination by the holding company's board.
• (b) Non-executive members with expertise, chosen by the holding company's board.
• (c) Non-executive members representing the shareholding of public legal entities or individual shareholders, chosen by these entities in the General Assembly.
• (d) Non-executive members elected from the company's employees in accordance with the law governing the number of board members, replacing items (b) and (c).

The Performance Committee Chairman in the company shall be elected by the General Assembly by a majority of votes of those present, except in cases requiring a special majority as stipulated by the executive regulations or articles of association.

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(Article 22)

Subject to Article (4) of this Law, the management of a company whose capital is shared with individuals or private sector legal entities shall be vested in a board of directors appointed for a term of three years renewable, consisting of an odd number of members, not less than five and not more than nine, including the chairman, as follows:

• (a) A non-executive chairman with expertise, appointed by the General Assembly chairman upon nomination by the holding company's board.
• (b) Non-executive members with expertise, chosen by the holding company's board.
• (c) Non-executive members representing the shareholding of public legal entities or individual shareholders, chosen by these entities in the General Assembly.
• (d) Non-executive members elected from the company's employees in accordance with the law governing the number of board members, replacing items (b) and (c).

The Performance Committee Chairman in the company shall be elected by the General Assembly by a majority of votes of those present, except in cases requiring a special majority as stipulated by the executive regulations or articles of association.

The General Assembly shall determine the compensation for each chairman and board member.

For items (b) and (c) of the preceding paragraph, the remuneration stipulated in Article 34 of this Law shall apply.

The General Assembly shall determine the compensation for each chairman and board member.

The holding company's board shall choose from among the members appointed under item (b) one or more delegated members to manage the company, and shall determine their salary.

The board shall designate a substitute for the delegated member in case of absence or vacancy of the position.

The board may entrust the chairman with the duties of the delegated member, provided they devote themselves to management. In this case, a fixed salary shall be determined for them in addition to what they are entitled to under the fourth paragraph of this article.

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(Article 23)

The holding company's board shall choose from among the members stipulated in item (b) a delegated member to manage the company, and the board shall determine who shall replace them in case of absence, vacancy, or dismissal.

The board may entrust the chairman with the duties of the delegated member, provided they devote themselves to management.

The provisions of the preceding article shall apply to the entitlements of a board member who devotes themselves to management as a delegated member.

(Article 24)

The delegated board member shall have all powers related to the company and shall undertake all acts necessary to achieve its purpose, except those falling within the competence of the General Assembly and board of directors according to this Law and the company's executive regulations.

(Article 25)

The delegated board member represents the company before the judiciary and in dealings with third parties.

Section 4: General Assembly

(Article 26)

The General Assembly of a company whose capital is wholly owned by the holding company or jointly with other holding companies, public legal entities, or public sector banks shall consist of:

• 1. A Chairman.
• 2. Members of the board of directors of the holding company that owns the subsidiary.
• 3. Members with expertise, not exceeding four, from the General Assembly of the company, with their attendance allowances determined.
• 4. Two members chosen by the Performance Committee.

The chairman and members of the board of directors and the account auditors from the Central Audit Organization shall attend General Assembly meetings without a deliberative vote.

Resolutions shall be adopted by a majority of the votes of those present, except in cases requiring a special majority as stipulated by the executive regulations or articles of association.

The executive regulations shall specify the conditions for the validity of the General Assembly's convening and the voting system on matters submitted to it, depending on whether it is convened in an ordinary or extraordinary session.

(Article 27)

The General Assembly of a company whose capital is shared with private sector persons shall consist of:

• 1. The chairman of the holding company's board of directors, or their substitute in case of absence, as Chairman.
• 2. Members of the board of directors of the holding company that owns the subsidiary.
• 3. Shareholders from individuals or private sector legal entities, who have the right to attend the General Assembly in person or through representatives, provided the proxy is registered as a shareholder, unless the company's articles require a minimum number of shares for attendance. However, each shareholder holding at least one share has the right to attend, even if the articles of association stipulate otherwise.

Voting rights for representatives of the holding company, private sector legal entities, company employees, or shareholders in the company's capital shall be exercised according to their capital share, as stipulated by the company's articles of association.

Resolutions shall be adopted by a majority of the votes of the capital representatives.

The chairman and members of the board of directors and the account auditors from the Central Audit Organization shall attend General Assembly meetings without a deliberative vote.

The executive regulations shall specify the conditions for the validity of the General Assembly's convening and the voting system on matters submitted to it, depending on whether it is convened in an ordinary or extraordinary session.

(Article 28)

Subject to this Law, the executive regulations, and the articles of association, the General Assembly shall have the following competencies:

• (a) Approve the board of directors' report on the company's activities and review the discharge of the board from liability for the period covered by the report.
• (b) Approve the budget and final accounts of the company.
• (c) Approve the continuation or dismissal of the chairman and board members, with voting conducted by secret ballot.
• (d) Approve the distribution of profits.
• (e) Consider any matter the General Assembly chairman or board of directors deems appropriate to submit to it.

The sale of any main production line asset shall not be permitted except with the approval of the General Assembly and in accordance with the rules specified by the executive regulations.

(Article 29)

The company's articles of association may not be amended by the Extraordinary General Assembly except in accordance with the executive regulations.