Are you planning to start your business in Egypt? With its strategic location amidst East and West and its thriving economy, Egypt is obviously a great choice for aspiring entrepreneurs. However, if you are new to the country, starting your business or acquiring an existing business could be challenging if you don’t have adequate knowledge and the right guidance.
Business Structure in Egypt
Before starting your business, you should have a clear idea about the common business structures in Egypt and choose the best one that suits your needs. The following are the most common types of business structures allowed in the country:
- Joint stock company
A joint stock company is suitable for large businesses with capital divided into equal shares between the shareholders. A shareholder’s liability is limited to their capital contributions, and they won’t be liable for the company’s debts except within the limit of those shares.
Features
- Ownership: The company will have multiple shareholders.
- Capital: JSCs require a specific amount of capital depending on the nature of the business activity.
- Registration: Registering a JSC involves drafting Articles of Association, obtaining notarization, and registering with the General Authority for Investment and Free Zones (GAFI). GAFI is the main authority that regulates the establishment of businesses in Egypt.
- Limited Liability Company
A Limited Liability Company (LLC) is a suitable business structure for small to medium-sized companies as it provides limited liability protection and operational flexibility. These types of companies cannot be listed on the stock exchange.
Features
- Ownership: The company will be owned by multiple shareholders who are not liable for the company’s debts beyond their shares.
- Registration: Registering an LLC requires drafting Articles of Association, obtaining notarization, and registering with the General Authority for Investment and Free Zones (GAFI).
- Sole proprietorship
As the name denotes, sole proprietorship refers to a small-scale company owned by a single individual. It is also one of the most common business structures in Egypt. The owner has full liability for the debts of the company.
Features
- Ownership: The business is owned by a single individual.
- Registration: Registering a sole proprietorship involves obtaining a commercial registration certificate and a tax card.
- Partnership
Partnership businesses are formed by two or more individuals. There are mainly two types of partnerships in Egypt: Limited partnerships and General partnerships. In a general partnership, all partners share equal responsibilities and liabilities. On the contrary, in a limited partnership, one of the partners will have unlimited liability while the others’ liability will be confined to their capital contributions.
- Representative office
This is the ideal choice for foreign companies that wish to explore business opportunities in Egypt. The parent company will be responsible for all operations and assume responsibility for the debts.
Features
Registration: The parent company must obtain approval from GAFI and register the branch office with the Egyptian Commercial Registry.
Understanding the process
Once you are aware of the different business structures in the country, it’s crucial to understand the process of registering your business. Let’s understand how you can establish a business setup in Egypt:
- Business registration: In order to start legally operating your business, you need to register it with the appropriate authorities. The steps involved in this process include choosing a business name, registering with GAFI, paying registration fees, submitting the required documents to GAFI, and obtaining a Commercial Registration Certificate.
- Licenses and permits: Businesses may require some licenses and permits depending on their business activity, like commercial registration and tax registration certificates.
- Capital requirements: Before you start your business, determine the amount of money you want to invest in it. The amount varies based on the business structures and some of them don’t require a fixed capital investment.
- Tax obligations: Your business needs to comply with the tax regulations of the country. Register for taxation with the Egyptian Tax Authority and obtain a tax identification number.
- Employee registration: Every company in Egypt must register its employees with the National Authority of Social Insurance. It provides compensation for employees in cases of unemployment, retirement, or work-related injuries.
Documentation
These are some of the important documents that you will need while registering your company in Egypt:
- A trade name clearance certificate from GAFI.
- A bank certificate by the capital depositing.
- Power of attorneys and original for establishment.
- Copies of the IDs for partners and Egyptian managers and passports for foreign managers.
- An original copy of the auditor’s account
While starting a business in a new country, you should understand the different business structures, regulations, and government policies. So, it is better to approach a trustable business consultancy that can give you expert guidance throughout the process and thereby avoid any complications in your entrepreneurial journey.
