Guide to Doing Business in Egypt


Laws of Business


Investment Laws

Investment Law No. 8 of 1997 and Companies Law No. 159 of 1981 and their amendments are two key laws that regulate the investment environment in Egypt:

Investment Incentives and Guarantees Law 8 of 1997:
Law 8 of 1997 repealed Investment Law 230 of 1989. It made one authority responsible for investor incentives and guarantees--the General Authority for Investment and Free Zones (GAFI). It also grouped some 20 exemptions and incentives under one law, and specified activities that would automatically accrue benefits to investors. It allows 100% foreign ownership of ventures and guarantees the right to remit income earned in Egypt and to repatriate capital.

Key provisions include: the guarantee against confiscation, sequestration and nationalization; the right to own land; the right to maintain foreign currency bank accounts; freedom from administrative attachment; the right to repatriate capital and profits; free hiring of Egyptian staff, absence of price control or restrictions, and equal treatment regardless of nationality.

Under Law 8, investments are approved automatically for projects in 16 distinct fields, effectively creating a "positive list." These fields include land reclamation; fish, poultry and animal production; industry and mining; tourism (covering hotels, motels, tourist villages and transportation); maritime transportation; refrigerated transportation for agricultural products and processed food; air transportation and related services; housing; real estate development; oil production and related services; hospitals and medical centers that offer 10% of their services free of charge; water pumping stations; venture capital; computer software production; projects financed by the Social Fund for Development; leasing; and guarantees for subscription in securities.

Projects in the government-sponsored Toshka or " New Valley" development benefit from the greatest incentives.In June 1998, the government added the new industrial zones East of Oweinat and Northwest of the Gulf of Suez to the list.

Some projects still require prior approval from relevant ministries in addition to GAFI, including investments in Sinai; all military products and related industries; and tobacco and tobacco products.Law 15 of 1963 prohibits foreign ownership of areas designated as agricultural lands, except for desert reclamation projects.

In April 2000, new activities were added to the package of incentives to include development of new urban zones, software design and production of electronics, establishment and management of technology zones, credit classification, deductions, river transportation activities, management of industrial projects and utilities, and waste collection and treatment projects.

Law 8/1997 also establishes that a one-stop shop for investors will be located at the General Authority for Investment and Free Zones (GAFI) to facilitate and simplify approval, registration, licensing and certification for new projects instead of having to go to 25 separate ministries.

Companies Law 159 of 1981 and its Amendments:
Law 3 of 1998, amending law 159 of 1981, covers investors in any sector not covered by Law 8 of 1997; including shareholders, joint stock, and limited liability companies and representative and branch offices. It allows for automatic registration of a company upon presentation of the application to the Companies Department and for acquisition of legal status 15 days after annotation in the Commercial Register. The Administrative Authority can challenge the establishment of the company within 10 days of its notification in case of non-compliance with procedures; the company’s objective contradict with laws or public order; or lack of qualifications requisite to operating a business (Article 17 & 18).

Founders of joint stock companies must submit a bank certificate showing a 10% deposit of the issued capital to the Companies Department, and to be increased to 25% within three months (Article 32); as for the limited liability companies, the issued capital should be fully paid.

Law 3 of 1998 amending law 159 provides for the right of petition for denial of incorporation, removes the restriction that 49% of shareholders must be Egyptian, allows 100% foreign representation on the board of directors, and redefines accounting standards.

Environment Law4 of 1994

Environmental issues in Egypt are governed by Law No. 4 of 1994. This law provides for the creation of an agency for the protection and promotion of the environment, the Egyptian Environment Affairs Agency (EEAA). The EEAA formulates general policy and prepares the necessary plans for the protection and promotion of the environment. It also follows up on the implementation of such plans.

The law provides for a mandatory environmental review, to be undertaken by the competent administrative authority according to EEAA's instructions, as part of the approval process for all proposed projects.

The law forbids the handling of hazardous substances and wastes or the construction of any establishment for treating such substances without a license from the competent administrative authority. It is also forbidden to import hazardous waste or to allow its entrance into or passage through Egyptian territories. It is mandatory for all those who produce or handle dangerous materials to take precautions to ensure that no environmental damage shall occur.

All establishments (industrial and others) are required to ensure that while practicing their activities, no leaked or emitted air pollutants (caused by the burning of fuel, etc.) shall exceed the maximum permissible levels. It is also prohibited to incinerate, to dispose of or to treat garbage and solid wastes, as well as to spray pesticides or any other chemical compound, unless it is done according to the conditions and safety measures specified in the Executive Regulations of the law.

Ships of any nationality, offshore platforms and any other companies or agencies authorized to explore or exploit natural marine resources are forbidden to discharge into the territorial sea of Egypt any polluting substances resulting in harm to the water environment.

The law further provides for a system of incentives to be offered to those who implement environmental protection activities or projects and sets penalties for those who are in violation of its provisions.

The Egyptian government has developed a five-year environmental action plan (1997/98-2001/02) for dealing with the country's solid waste, air and water pollution problems. The plan's priorities include: preparing feasibility studies for planned development projects, urging companies to work toward ISO 14000 environmental standards certification and urging the use of scientific management techniques and waste recycling to preserve natural resources.

Egypt is a signatory to various conventions concerning environment protection, among which are: the Environmental Modification Convention; the African Convention on the Conservation of Nature and Natural Resources; the Vienna Convention for the Protection of the Ozone Layer; the Convention for the Prevention of Pollution from Ships; the Barcelona Convention for the Protection of the Mediterranean Sea against Pollution; the Brussels Convention on Civil Liability for Oil Pollution Damage and the Moscow Treaty for Nuclear Weapon Tests in the Atmosphere.

Tenders Regulations

There is also a separate judicial system for administrative disputes involving government ministries and agencies. These administrative courts fall within the jurisdiction of the Council of State (Conseil d' Etat), which is empowered to hear actions brought by persons challenging the validity of presidential decrees and ministerial decisions as well as disputes involving contracts with the government. The Council of State also has a Legislative Department that reviews draft legislation and government contracts and renders legal opinions for the government.

Under Article 175 of the Egyptian constitution, the Supreme Constitutional Court is "vested solely with judicial control over the constitutionality of laws and regulations". The Constitutional Court also reviews administrative decisions and conflicts of law between the civil and administrative courts.

Arbitration

Most international contracts provide for some form of international arbitration for the settlement of contractual disputes. The Court of Cassation has confirmed on a number of occasions the validity of such arbitration clauses. An Egyptian court will respect an arbitration clause and stay proceedings brought before it. Arbitration may be conducted under any set of rules. One of the most popular set of rules is the International Chamber of Commerce (ICC) rules. An arbitration under the rules of the ICC may be upheld in Egypt or abroad.

A local body of arbitration is the Cairo Regional Center for International Commercial Arbitration, which applies the rules of the United Nations Commissions on International Trade Law (UNCITRAL). However, there are no requirements in Egyptian law that an arbitration be conducted under the auspices of the Cairo Regional Center.

Law No. 27 of 1994 and its amendments (9/1997 & 8/2000) concerning arbitration in civil and commercial matters brings Egypt further into line with the UNCITRAL model on international commercial arbitration (which it appears to have been largely modeled after).

Law No. 27 of 1994 is a comprehensive statement of the law and therefore facilitates the conduct and enforcement of international arbitral proceedings in Egypt. The new law now requires only that the following conditions be met for the enforcement of an arbitral award in Egypt:

  • It does not contravene any judgment issued by Egyptian courts on the subject matter of the dispute
  • It does not contravene public order or policy in Egypt
  • The defendant receives due notice of the award.

The law also clarifies certain aspects of Egyptian arbitration law by legislating in areas that were previously neglected. Under the new law, the Egyptian government is specifically deemed accountable for arbitration agreements it enters into and may no longer take the position that it is not subject to commercial arbitration clauses. In addition, the procedures surrounding the appointment of experts are outlined in the text of the new arbitration law. Prior to the law on arbitration, the appointment of experts had been left entirely to the discretion of the arbitrator. The law provides that annulment proceedings against all arbitration awards must be initiated within 90 days from notification of the award's issuance. However, this requirement does not preclude the enforcement of the award except under extreme circumstances (for example when there is clear evidence of fraud). Applications for the enforcement of arbitral awards must be accompanied by the original award or a signed copy; a copy of the arbitral agreement; an Arabic translation of the award, authenticated by the competent authority if the award was not issued in Arabic; and a copy of the minutes evidencing the deposit of the award with the competent court in Egypt (usually the Cairo Court of Appeal). This law provides a firm base for arbitration and enforcement of awards in Egypt.

Enforcement of Foreign Arbitral Awards An award issued pursuant to an arbitration that has taken place outside Egypt may be enforced in Egypt if it is covered by one of the international conventions to which Egypt has adhered to, or if it satisfies the conditions set out in Law No. 27 of 1994. Egypt is a signatory state to:

  • The New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral awards
  • The Washington Convention of 1965 on the Settlement of Investment Disputes between States and the Nationals of other States
  • The Convention of 1974 on the Settlement of Investment Disputes between the Arab States and the Nationals of other States.

Egypt has also signed a series of treaties with a number of countries for the encouragement and the reciprocal protection of investment. These countries include Belgium, Luxembourg, France, Germany, Greece, Iran, Italy, Japan, Lebanon, Morocco, Netherlands, Romania, Sudan, Switzerland, the United Kingdom, the United States, and Yugoslavia. Each of these treaties contains arbitration provisions in the event of a dispute. In the case of disputes between one of these countries and/or a national company of another such country concerning an investment of the latter in the territory of the former, the dispute shall be settled in accordance with the provisions of the Washington Convention.

Generally, the treaties provide that arbitration awards issued in one country may be enforced in the other if the award is supported by written evidence of the parties' agreement to arbitrate, then the dispute in question may come under arbitration in the country where the award is to be executed, and the award does not conflict with public policy. Where no international convention applies, then the provisions of Law 27 of 1994 must be satisfied for a foreign arbitral award to be enforced.

Enforcement of Foreign Court Judgments
To enforce a foreign judgment in Egypt the party enforcing the judgment must obtain an exequator. To apply for an exequator, the normal procedures for initiating a lawsuit must be followed. In order for an Egyptian court to issue an exequator, it must be satisfied that the following conditions have been met:

  • Reciprocity: the country in which the judgment was rendered enforces judgments from the Egyptian courts

  • Competence of the court rendering the judgment: the foreign court has jurisdiction over the dispute and Egyptian courts do not have exclusive jurisdiction over the dispute.

  • Due process: all parties to the dispute are duly notified and represented (i.e., not in contravention of the rules of natural justice).

  • Final judgment: the judgment is final.

  • Conflict of judgments: the judgment does not conflict with any existing judgment by any Egyptian court and the enforcement of such judgment will not contravene public policy, order or morality in Egypt.

Egypt is a signatory state to the Arab League Convention that allows enforcement of awards issued in a signatory state in another signatory state.

The Commercial Register Law

The process of registration whether for agents or companies, is governed by the Commercial Register Law No. 34 of 1976 and its amendments (98/1996 The basic rule is that anyone carrying on a commercial activity must register in the Commercial Register.

The Commercial Register Law provides that all registrations must be renewed every 5 years. Once a person, company, or partnership is registered, it must put its trade name, place of registration and registration number on the front of its premises and on all its correspondence (Article 5 of Commercial Register Law).

The penalties for violating the provisions of the Commercial Register Law are set forth in Articles 17 – 21 of the Law, and range from a fine of LE10 – 100, that might be multiplied in case of repeation; however the penalties might be three months - two years imprisonment and/or a fine between LE100-LE500, in case of any the events mentioned in 18 occurred...

The Anti-Trust Law

After a number of years, the Anti-Trust Law no. 3 of 2005 was passed on 17-1-2005 followed by its Executive regulations on August 25, 2005. The law stipulates that participating in the economic activities should not prevent, restrict, or cause damage to free competition. It also stipulates the acts that would constitute an anti-competitiveness behavior.

A public body to be established called “Anti-Trust Authority” following the competent minister, to be responsible for receiving notification, prepare database and information about the economic activities, undertakes researches and studies, and implement basics and measurements mentioned in the law.

Oil and Gas Concessions

Oil and gas concessions are granted on the basis of production sharing arrangements between the Government of Egypt and the Egyptian General Petroleum Corporation (EGPC), the state-owned organization for oil, and a foreign oil company, usually known as the contractor. The concession agreement is issued by a special law for each concession. Under this arrangement, the contractor undertakes to bear all exploration risks.

Exploration The contractor is given an initial exploration phase.The maximum period granted ranges from three to four years. This phase may be extended at the contractor's option, two renewals of shorter duration (usually two years each) being granted. The agreement will automatically terminate at the end of the agreed extensions, if applied for, provided there has been no commercial discovery of oil as defined in the concession agreement.

The agreement may, nevertheless, be extended beyond the automatic termination date at the contractor's option for a period not exceeding six months to enable it to complete the drilling or testing of a well that had been started during that phase.

Minimum Work and Financial Obligations A minimum of one exploration well has to be drilled in each phase. Wells drilled in excess of the minimum work obligation in one phase can be offset against the minimum work for the next phase. Usually the concession agreement specifies the number of wells to be drilled in each phase.

The contractor must provide all necessary financing during the exploration stage in freely convertible currency. It may buy Egyptian pounds at the official rate of exchange. The contractor will be required to spend certain amounts during each phase of the exploration period. If the contractor fails to spend that minimum amount, then it has to pay to EGPC upon the end of the concession the amount of the shortfall.

Usually, a bank guarantee in favor of EGPC is posted to ensure payment of any shortfall amounts. The guarantee is reduced by the amounts expended by the contractor. The amounts spent by the contractor are recoverable in the event of a commercial discovery from what is known as the cost recovery crude oil. If no discovery is made, then the contractor cannot claim any amounts spent from EGPC. Minimum financial obligations differ from one concession to another and from one phase to another.

Dispute Settlement

There is also a separate judicial system for administrative disputes involving government ministries and agencies. These administrative courts fall within the jurisdiction of the Council of State (Conseil d' Etat), which is empowered to hear actions brought by persons challenging the validity of presidential decrees and ministerial decisions as well as disputes involving contracts with the government. The Council of State also has a Legislative Department that reviews draft legislation and government contracts and renders legal opinions for the government.

Under Article 175 of the Egyptian constitution, the Supreme Constitutional Court is "vested solely with judicial control over the constitutionality of laws and regulations". The Constitutional Court also reviews administrative decisions and conflicts of law between the civil and administrative courts.

Arbitration

Most international contracts provide for some form of international arbitration for the settlement of contractual disputes. The Court of Cassation has confirmed on a number of occasions the validity of such arbitration clauses. An Egyptian court will respect an arbitration clause and stay proceedings brought before it. Arbitration may be conducted under any set of rules. One of the most popular set of rules is the International Chamber of Commerce (ICC) rules. An arbitration under the rules of the ICC may be upheld in Egypt or abroad.

A local body of arbitration is the Cairo Regional Center for International Commercial Arbitration, which applies the rules of the United Nations Commissions on International Trade Law (UNCITRAL). However, there are no requirements in Egyptian law that an arbitration be conducted under the auspices of the Cairo Regional Center.

Law No. 27 of 1994 and its amendments (9/1997 & 8/2000) concerning arbitration in civil and commercial matters brings Egypt further into line with the UNCITRAL model on international commercial arbitration (which it appears to have been largely modeled after).

Law No. 27 of 1994 is a comprehensive statement of the law and therefore facilitates the conduct and enforcement of international arbitral proceedings in Egypt. The new law now requires only that the following conditions be met for the enforcement of an arbitral award in Egypt:

  • It does not contravene any judgment issued by Egyptian courts on the subject matter of the dispute
  • It does not contravene public order or policy in Egypt
  • The defendant receives due notice of the award.

The law also clarifies certain aspects of Egyptian arbitration law by legislating in areas that were previously neglected. Under the new law, the Egyptian government is specifically deemed accountable for arbitration agreements it enters into and may no longer take the position that it is not subject to commercial arbitration clauses. In addition, the procedures surrounding the appointment of experts are outlined in the text of the new arbitration law. Prior to the law on arbitration, the appointment of experts had been left entirely to the discretion of the arbitrator. The law provides that annulment proceedings against all arbitration awards must be initiated within 90 days from notification of the award's issuance. However, this requirement does not preclude the enforcement of the award except under extreme circumstances (for example when there is clear evidence of fraud). Applications for the enforcement of arbitral awards must be accompanied by the original award or a signed copy; a copy of the arbitral agreement; an Arabic translation of the award, authenticated by the competent authority if the award was not issued in Arabic; and a copy of the minutes evidencing the deposit of the award with the competent court in Egypt (usually the Cairo Court of Appeal). This law provides a firm base for arbitration and enforcement of awards in Egypt.

Enforcement of Foreign Arbitral Awards An award issued pursuant to an arbitration that has taken place outside Egypt may be enforced in Egypt if it is covered by one of the international conventions to which Egypt has adhered to, or if it satisfies the conditions set out in Law No. 27 of 1994. Egypt is a signatory state to:

  • The New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral awards
  • The Washington Convention of 1965 on the Settlement of Investment Disputes between States and the Nationals of other States
  • The Convention of 1974 on the Settlement of Investment Disputes between the Arab States and the Nationals of other States.

Egypt has also signed a series of treaties with a number of countries for the encouragement and the reciprocal protection of investment. These countries include Belgium, Luxembourg, France, Germany, Greece, Iran, Italy, Japan, Lebanon, Morocco, Netherlands, Romania, Sudan, Switzerland, the United Kingdom, the United States, and Yugoslavia. Each of these treaties contains arbitration provisions in the event of a dispute. In the case of disputes between one of these countries and/or a national company of another such country concerning an investment of the latter in the territory of the former, the dispute shall be settled in accordance with the provisions of the Washington Convention.

Generally, the treaties provide that arbitration awards issued in one country may be enforced in the other if the award is supported by written evidence of the parties' agreement to arbitrate, then the dispute in question may come under arbitration in the country where the award is to be executed, and the award does not conflict with public policy. Where no international convention applies, then the provisions of Law 27 of 1994 must be satisfied for a foreign arbitral award to be enforced.

Enforcement of Foreign Court Judgments
To enforce a foreign judgment in Egypt the party enforcing the judgment must obtain an exequator. To apply for an exequator, the normal procedures for initiating a lawsuit must be followed. In order for an Egyptian court to issue an exequator, it must be satisfied that the following conditions have been met:

  • Reciprocity: the country in which the judgment was rendered enforces judgments from the Egyptian courts
  • Competence of the court rendering the judgment: the foreign court has jurisdiction over the dispute and Egyptian courts do not have exclusive jurisdiction over the dispute.
  • Due process: all parties to the dispute are duly notified and represented (i.e., not in contravention of the rules of natural justice).
  • Final judgment: the judgment is final.
  • Conflict of judgments: the judgment does not conflict with any existing judgment by any Egyptian court and the enforcement of such judgment will not contravene public policy, order or morality in Egypt.

Egypt is a signatory state to the Arab League Convention that allows enforcement of awards issued in a signatory state in another signatory state.

Land Ownership Regulations

The ownership of land by foreigners is governed by three laws: Law No. 15 of 1963, Law No. 143 of 1981 and Law No. 230 of 1996.

Law No. 15 of 1963

Law No. 15 and its amendments (Law 104 of 1985) provides that no foreigners, whether natural or legal persons, may acquire agricultural land.

Law No. 143 of 1981

Law No. 143 and its amendments (55/1988, 205/1991, & 96/1995) governs the acquisition and ownership of desert land. Certain limits are placed on the number of feddans (one feddan is equal to approximately one hectare) that may be owned by individuals, families, co-operatives, partnerships and corporations. Partnerships are permitted to own 10,000 feddans, provided that the individual shall not own more then 150 feddans. Joint stock companies are permitted to own 50,000 feddans. 

Partnerships and joint stock companies may own desert land within these limits even if foreign partners or shareholders are involved, provided that at least 51 percent of the capital is owned by Egyptians. However, upon liquidation of the company, the land must revert to Egyptians. Article 1 of Law No. 143 defines desert land as the land two kilometers outside the border of the city.

Further, the lease of such land for more than a period of 50 years shall also be considered to be ownership under Law 143. Although companies formed under the Investment Law No. 8/1997 do not require Egyptian participation, companies that undertake projects over desert land must be owned in their majority by Egyptians. According to the law 55 of 1988, the President of the Republic may decide to treat Arab nationals as Egyptian nationals for purposes of this law.

Law No. 230 of 1996

On July 14, Law No. 230 of 1996 was issued superseding Law No. 56 of 1988. The new law allows non-Egyptians to own real estate whether built or vacant with the following conditions:

  • That ownership be limited to only two real estate properties throughout Egypt for accommodation purposes of the person and his family (family meaning spouses and minors), in addition to the right to own real estate needed for activities licensed by the Egyptian Government.
  • That the area of each real estate not be in excess of four thousand square meters.
  • That the real estate is not a historical site.

Exemption from first and second conditions is subject to the approval of the Prime Minister. Ownership in tourist areas and new communities is subject to conditions established by the Cabinet of Ministers. 

Furthermore, non-Egyptians owning vacant real estate in Egypt must build within a period of five years from the date their ownership is effective (the date on which the realty is recorded at the competent Notary Public Office). Non-Egyptians may only sell their real estate five years after registration of ownership, unless the consent of the Prime Minister is obtained.

International Trade Laws

The two basic laws governing international trade activity in Egypt are the Customs Tariff Law No. 66 of 1963 and the Import & Export Regulations Law No. 118 of 1975. The most important reference material for trade is found in these two laws and their amendments. The key points concerned with importing regulations in the laws are summarized as follows:   

Customs Tariff Law of 1963
  • Taxes and tariffs shall be collected according to the rules and rates set forth by the Customs Authority.
  • Items shall be classified according to the provisions, and the general explanatory rules.
  • Upon re-importation of goods exported temporarily for completion of their manufacture, customs taxes shall be collected on the end imported product plus all transport and insurance expenses.
  • Upon re-importation of goods temporarily returned to the country of origin for repair, customs taxes shall be collected at the rate of 12 percent of all repair costs plus all transport and insurance expenses.
  • Customs taxes shall be collected at the rate of 22 percent on machines, equipment, apparatus and instruments, excluding passenger cars, as imported by hotel and tourist establishments..
  • Assembly industries may request authorization for treating their products under the Customs Department's control to tax their products according to provisions mentioned in Article 6 of the Presidential Decree No. 300 of 2004.
Import and Export Regulations Law of 1975

With Regard to Imports:

  • The import of goods is allowed by both the public and private sectors. Individuals may import goods for their personal use from their own resources or through intermediary agents.
  • The Minister of Foreign Trade & Industry may confine importation activities to agreement countries, and may reserve the import of certain essential commodities to public sector organs.
  • Commodities subject to specific import controls may not be imported unless they are examined to ascertain their conformity to the conditions and specifications decreed by the law, or unless they are accompanied by a certificate of examination approved by the Egyptian authorities, conforming their fulfillment to the regulations.

With Regard to Exports:

  • The Minister of Foreign Trade shall issue a decision organizing export operations whether from local production or from previous imports, and shall issue certificates of origin and lay down the procedures to be followed in this connection.
  • The Minister of Foreign Trade & Industry may restrict the export to agreement countries and also the export of certain essential commodities to the public sector.
  • Exports can only be practiced by persons whose names are recorded in the register ad hoc in the Ministry of Foreign Trade. Persons whose names are to be recorded in this register should belong to one of the following categories:
    1. Shareholder companies of the nationality of the Arab Republic of Egypt and having their head offices in it.
    2. Public organizations, cooperatives and their unions.
    3. Persons and companies fulfilling the conditions to be defined by a decision of the Minister of Foreign Trade.
  • Persons exporting commodities for personal use are to be exempted from registration in the exporters register.
  • The following matters are to be defined by a decision from the Minister of Foreign Trade:
  • The conditions, forms, proceedings and documents relating to registration and its renewal in the register, modifications of the data striking out and cancellation.
  • Duties of registration, renewal and modification of data, and extracted copies, provided that they do not surpass the following limits:
    1. LE50 duty of registration in the exporters register.
    2. LE15 duty for renewal of registration every three years.
    3. LE5 duty for modification or insertion of date.
    4. LE3 duty for copy extracted from the register.
  • The interdiction or restriction of the export of certain commodities from the Republic of Egypt abroad may be established by a decision of the Minister of Foreign Trade & Industry. The export of such commodities shall be in compliance with the conditions and forms decided by the Minister.
  • A duty may be imposed on certain exports, not exceeding 100% of their value, on consideration of allowing the realization of a reasonable profit to the exporter. The duty and its increase are not applicable on export permits issued before their imposition. Commodities on which the duty is applicable, its amount, mode of collection, cases of its refund or total or partial exemptions from it are to be defined by a decision of the Minister of Foreign Trade.
  • The exporter may, in virtue of a decision of the Minister of Foreign Trade & Industry or whoever is empowered by him, be required to present a guarantee for effecting export operations. Such a decision shall specify the kind of guarantee, the period of its return, and in which cases it may be confiscated.
  • The commodities to be specified by the Minister of Foreign Trade & Industry shall be subjected to the specific control on exports and imports.
  • Commodities subjected to control cannot be exported before the obtainment of an investigation certificate attesting their conformity with the conditions and specifications to be laid down by a decision of the Minister of Foreign Trade, after agreement with the competent authorities. The export of such commodities must take place within the period in the said certificate. In case this period lapses without the export being mad a new certificate should be obtained.

Import/Export Licensing

Trade regulations provide that goods may be freely imported and exported provided they are not on the prohibited list and the relevant duty is paid. Egypt no longer requires import licenses, except for items on a banned list, which the Government has stated its intention to abolish entirely. Egypt continues to ban poultry parts, though there are some indications that turkey parts may soon be permitted.

Some exceptions to the banned list have been introduced, including items required for enterprises engaged in tourism, military production, civil aviation, the petroleum sector, or essential production inputs approved by the Minister of the appropriate sector. Except for countries on United Nations sanctions lists, there are no restrictions against imports from other countries.

All Egyptian products can be exported directly through customs without obtaining any form of export permit, except hides, scrap metal (excluding stainless steel) and alpaca fibers. Some commodities are subject to an annual quota, including raw wool and wool waste, cotton and cotton yarn waste, tanned hides and skins, and used newsprint. An export duty is imposed on the following locally-produced commodities - waste of raw hides, molasses, raw hides and skins, iron and steel scrap, nickel scrap, aluminum scrap, zinc scrap and antiques over 100 years. Quality control of exports is voluntary.

Quotas are imposed by the EU on Egypt's exports of certain agricultural crops and by the EU, the U.S. and Turkey on Egypt's exports of cotton textiles and apparel.

The General Authority for Control of Exports and Imports must approve exports involving production lines/machines being replaced by new equipment, and goods released by customs under an import permit in the case of re-exportation of commodities/goods that were received damaged or found not to conform to specifications.

Commercial Samples and Temporary Imports

The Egyptian Customs regulations permit the temporary importation of equipment for display purposes at officially recognized exhibitions or for sales promotion activities involving Egyptian public sector organizations, without payment of customs duty.

Machinery and equipment, which were imported into the country under the temporary imports system and used in infrastructure projects, may be subject to final release rules under certain conditions.

Companies or individuals wishing to take advantage of this concession are required to submit to the customs authorities a letter of guarantee valid for at least 6 months to cover payment of customs duties and taxes should the goods not be re-exported. The guarantee should be confirmed by one of the accredited banks in Egypt.

In certain cases, goods imported on temporary basis may be disposed of or sold in Egypt upon payment of the appropriate customs duty plus 10 percent extra. This does not normally apply to goods that are prohibited from importation.

On re-exportation of goods imported under temporary import regulations companies should ensure that correct documentation and return of the letter of guarantee is obtained from the Egyptian Customs in order to avoid claims against the company at a later stage.

Samples are admitted without an import permit or payment of duty, provided that they are not in a condition to be sold, or their value does not exceed LE500 and are destined to an Egyptian importer. In addition, they should not be included in the list of items for which importation is prohibited.

If the Customs Administration finds that the samples either dispatched or accompanied by visitors are of saleable condition and of a value exceeding LE500, the importer or possessor will have to pay a deposit and sign a declaration on Customs Form 93 that the samples are to be re-exported. The refund will be made immediately upon showing evidence of exportation.

Medical samples must comply with the rules for the importation of pharmaceuticals, and samples of foodstuffs must comply with the relevant health regulations.

Printed advertising materials, such as catalogs, posters, or films, may also be imported duty free in small quantities.

Drawback System

This is different from temporary release. Full custom duties are paid on imports. There is a one-year time limit for re-exporting these imports as part of a final product in order to have the right to claim the full amount of the duties and taxes paid. This is controlled by the Industrial Surveillance Authority and the Customs Authority.

The Export Promotion Law

The new law was approved by the People's Assembly on June 16th, 2002. The Export Promotion Law No. 155 of 2002 restates the authority of the Ministry of Foreign Trade's General Organization for Import and Export Control (GOIEC) over import inspection procedures. It seeks to improve the customs rebate system for exporters by establishing a central unit, under the joint supervision of the Ministries of Finance and Foreign Trade, to oversee the system.

It also establishes an "export promotion fund" financed at least in part by fees levied on imports, but neither the nature of the fee (new or existing) nor the activities of the fund are yet clear. The executive regulations that presumably will clarify the new law's provisions are under discussion and the law will come into effect as of October 2002

New Labor Law: See our section on “Labor Regulations

For an on-line bi-monthly legislative update, check AmCham’s “Egypt Watch

Currency Regulations

The new Law on Central Bank, the Banking Machinery and Exchange no. 88 of 2003 and its Executive Regulations regulate foreign exchange operations in Egypt. The Executive Regulations list entities authorized to deal in foreign currency. These include almost all banks licensed to operate in Egypt where banks are permitted to buy foreign currency for their own account. Banks are the only entities allowed to transfer currency abroad. Branches of foreign banks are permitted to deal in local currency as well as foreign currency.

The Law permits the establishment of authorized foreign exchange dealers, who are authorized to buy and sell foreign currency for their own account (Article 37 of the Executive Regulaitons). However, foreign exchange dealers are not authorized to transfer foreign currency abroad. Individuals or entities may deal in foreign currency but only through licensed banks or foreign exchange dealers.

Maintaining Foreign Currency: Both individuals and legal entities are free to retain any amount of foreign currency, which may be held with any approved bank in Egypt and may be maintained abroad at the owner’s discretion. Funds kept in foreign currency amounts may be used in Egypt or remitted overseas.

Buying Foreign Currency:  The purchase of unlimited amounts of foreign currency from any of the authorized banks or dealers is permitted. Banks and dealers are allowed to sell foreign currency either in cash or by means of wire transfers to individuals, private or public sector companies. Furthermore, banks and dealers are authorized to sell foreign currency to allow for repatriation of dividends earned on Egyptian stocks and interest from Egyptian bonds.

The Executive Regulations of the Law introduced the concept of forward exchange transactions whereby the purchase or sale of foreign currency at an exchange rate established at the time of agreement can be carried on, with payment and delivery at a specified future date.

Free Foreign Exchange Market: the exchange rate of the Egyptian Pounds against foreign currency are subject to the interaction of supply and demand mechanism in the foreign exchange market in accordance with the rules and regulations issued by the Prime Minster through the Central Bank (Article 112)


Financial Sector Regulations


Financial Sector Liberalization

Since the early nineties, the Egyptian financial system with its three main sectors: the capital market, banking and insurance, has been undergoing ambitious legislative reforms to enhance performance and encourage competition especially from the private sector. Since 1993, the government has stopped intervening directly in the financial sector, and instead has been using indirect measures to control monetary aggregates such as bond issues. The government is currently focusing on reactivating the bond market, creating new financial institutions and building strategic links with international financial institutions.

Serious efforts are also being done to divest state ownership of joint venture and public banks and insurance companies, and increase private sector involvement in the financial sector.

Full private sector ownership, including foreign ownership, has been allowed in the banking and insurance sectors. Thereby, several financial intermediaries representing large international financial institutions in the areas of commercial and investment banking, mutual funds, insurance and securities trading are now operating in Egypt. The recent enactment of the mortgage law is also expected to bring liquidity to the market and enhance the retail-banking sector.

Insurance Legislation

In 1995 and 1996, amendments to the Law No. 10 of 1981 were issued to regulate the insurance sector, and since 1996 tariffs on insurance have been almost eliminated, thereby reducing insurance premiums significantly.

Law No. 156 of 1998 and Decree No.45 of 1999 were promulgated to set a comprehensive legal framework for the supervision and control of the insurance sector in Egypt. The main provisions included:

  • The private sector is permitted to own up to 100% of the shares of an Egyptian insurance company that is fully owned by the government. This provision applies to both local and foreign private investors.

  • The Prime Minister's approval is required to own 10% or more of an insurance company's shares. This provision applies to individuals, except in case of inheritance, and entities.

  • Risk insurance must no longer be transacted in Egypt or executed by fully owned Egyptian insurance companies. Insurance operations, which are to be transacted outside Egypt, must apply for EISA's approval to be conducted by other companies abroad.

  • Managing directors of state-owned companies do not have to be Egyptians as was previously required by law 10 of 1981. The company's Board of Directors should include two expert members with experience in the insurance field, provided that one of them should be the executive manager.

  • Any company wishing to enter the market and get a new license must have a minimum issued capital of LE30 million, 50% of which should be paid upon establishment, however, if the company is to deal in life insurance, the cap is set at LE60 million. Another factor that determines granting of a license is the new company's contribution to increasing total retention in the market by introducing new covers or developing already existing covers.

  • All insurance companies are required to publish annual financial positions approved by accredited financial auditors.

USAID has established several programs with the Ministry of Foreign Trade to provide technical assistance regarding insurance regulations and supervision. The programs were mainly designed to encourage the government in liberalizing the sector. The programs also focused on developing social insurance services such as health care and pensions.*

Banking Legislation

The CBE, Banking sector, and currency are governed by Law No. 88/2003, regulating the banking system in Egypt.

Capital Adequacy Requirements
Pursuant to the above Law, the issued and paid in full capital of banks should not be less than LE 500,000,000 (Five Hundred Million Egyptian Pounds).

The CBE retains significant powers to undertake remedial measures and impose penalties when the provisions of the above Law are violated. For example, the CBE retains the right to cancel the registration of a bank by virtue of a resolution issued by the CBE's Board of Directors in case of violating the provisions of the said Law, its executive regulations, any of its executive decrees, and not remedy such violaton within the period and according to the conditions fixed by the CBE.

The Board of Directors of the CBE, may grant banks or branchs of foreign banks, which deal only in foreign currency, the approval to deal in local currency.

Foreign Ownership of Banks
Egyptians and non-Egyptians have the right to acquire shares in banks; however, such should be without prejudice to the provisions of the above Law. However, individual or entity's ownership of over 10% of the bank's issued capital or any other percentage resulting in the actual control of the bank is not permitted without the approval of the CBE.

Bank Secrecy Law
The above Law governs the obligation of banks not to disclose information relating to their customers' accounts, deposits, safe deposit boxes and transactions, in the absence of either the written permission of the customer, his legal representative, a delegated agent, or a decision rendered by a competent judicial or arbitration tribunal.

Astrongny party legally authorized to strongview information relating to a customer's account, deposits or safe deposit box is also prohibited from disclosing such information unless either of the above mentioned criteria have been met.

The Central Bank of Egypt (CBE) Law
The aforementioned Law (No. 88/2003) regulates the activities of the Central Bank of Egypt. The law addresses the independence of the Central Bank of Egypt (CBE) and its supervisory authorities regarding inter-banks activities. According to the law, the CBE's paid in capital is LE 1 billion and the bank is a public legal entity reporting to the President of Egypt. The law identifies the CBE's responsibilities in several areas including supervision of payment systems, management of international reserves and management of external debt.

 

Capital Market Legislation

  • The Capital Markets Law No. 95/1992 regulates the operations of the capital market in Egypt. Under the Capital Market Law, any company intending to issue securities must notify the Capital Market Authority (CMA), which then has 3 weeks in which to review the proposed securities issuance.

  • For a public issuance of securities, a company must prepare a prospectus approved by the CMA and must provide the CMA with periodic reports and information relating to such a public issuance.

  • A company offering part of its shares in a public offering, or trading a minimum of 30% of its shares on the stock exchange, must inform all shareholders owning at least 1% of the company's capital of any other shareholder wishing to increase its shareholding above 10%. Any Board member or employee of the Company wishing to increase his/her shareholding above 5% must also comply with the foregoing requirement.

  • The Capital Market Law also allows the issuing company to set a return on securities that exceeds the limit established in other laws (i.e. 7% ceiling in the Civil Code).

  • The Capital Market Law provides that trading of securities may only be undertaken by companies licensed by the CMA. Board members of such companies must have a minimum of 5 years experience in the field of securities or must have 4 years experience and have participated in a training course set up by the CMA.

Areas Covered
The Capital Market Law regulates both companies that offer their shares to the public and those that deal in securities. In particular, it regulates the actions of companies engaging in the following types of securities related activities:

  • Promoting and underwriting investments in securities
  • Participation in the formation of companies that issue securities or in the increase of their capital (Egyptian equivalent to the holding company)
    Venture capital
  • Securities clearing and settlement activities
  • The creation of securities portfolios and investment funds portfolio and investment fund management
  • Securities brokerage activities
  • Other securities activities specified by a decree of the competent Minister following approval of the CMA

Any other activities relating to the field of securities may be added to this list by a ministerial decree after obtaining the approval of the CMA.

Registration
Joint stock companies must register with the Stock Exchange in either Cairo or Alexandria. A joint stock company's securities can be listed in either the official or the unofficial register. The following securities may be listed in the official register:

  • Public issuance of securities that represents no less than 30% of the joint stock company's nominal shares and that is subscribed to by no fewer than 150 persons.

  • Public issuance of securities by the government or a public sector company.

Securities that do not meet the criteria for listing in the official register (including foreign securities) could be listed in the unofficial register. Investors dealing in securities listed in the official register are exempt both from stamp duties ordinarily due at the time the securities are issued and from annual stamp duties and from capital gains tax on profits realized from trading of such securities.

Issuance of Securities
The Capital of Joint stock companies and the shares of dormant partners in companies with a limited number of shares shall be divided into nominal shares of equal value. However, the company may issue bearer shares within certain limits and according to specific terms and conditions. (Article 1)

  • The company's articles of association shall determine the value of the nominal shares, but the nominal share cannot be valued less than LE5.00 and shall not exceed LE1,000.

  • A share should be indivisible. New shares may be issued, upon increasing the capital of the company with a different value from that of shares from previous issues.

  • For issuing shares against a real share, or on the occasion of merger, the value of these shares should conform to the value of the real share or the merged rights, as determined by the concerned evaluation committee. However, the party submitting the real share may pay the difference in cash or decline the deal.

  • No stocks/securities of any company, including public business sector companies, and public sector companies shall be floated for public subscription, except by virtue of a subscription prospectus, approved by the Authority to be published in two prominent daily newspapers, at least one shall be in Arabic.

Obligations of Listed Companies
In order to secure the rights of investors and the users of financial statements, listed companies must provide the following information about their financial and business results:

  • The balance sheet and other financial returns and statements of the company shall be prepared according to the accounting criteria and auditing standards to be determined or referred to in the executive regulations of the Capital Market Law.

  • All listed companies should submit to the CMA a copy of their financial statements, reports of the Board of Directors, and the auditors' report, one month prior to the date scheduled for convening the general assembly meeting.

  • All listed companies shall publish an adequate summary of the semi-annual reports and annual financial statements, in two leading daily newspapers one of which to be in Arabic.

Central Depository
A new Law on Central Registration and Depository, Law 93/2000, was adopted. This law provides for the creation of a licensed Central Depository that is to issue deeds that will be able to be used instead of material shares. For the first time, the law introduces a concept of beneficial ownership of shares. Banks and other licensed securities companies are required to enter into agreements with the Central Depository that include certain mandatory provisions. They are required to participate in a special fund that will guarantee settlement of securities transactions.

The Central Depository is owned by its members. Transactions are to be based on cash against delivery with a settlement time to be specified by the CMA.

Investment Funds
The Capital Markets Law stipulates that an investment fund must take the legal form of a joint stock company. The CMA has the authority to review and object to the members of an investment fund company's Board of Directors as well as the fund managers. An investment fund must be managed by a specialized investment management company.

The Capital Market Law provides that an investment fund must maintain a certain ratio between its paid-in capital and its financial resources. Only banks that have been authorized by the Minister of Foreign Trade may deal in the subscription of investment fund shares.

Banks and insurance companies may establish investment funds without having to create a separate joint stock company, if they have received authorization to do so from the CMA and, either the CBE (in the case of banks) or the General Organization for Insurance Supervision (in the case of insurance companies).


Employee Shareholders' Association (ESA)
The Capital Markets Law also introduced the concept of Employee Shareholders Associations, whereby employees of a joint stock company may form an association that owns shares in the joint stock company's capital on behalf of the employees.


Brokers' Obligations and Restrictions
The obligations of and restrictions on brokerage companies are set out by the Executive Regulations of the Capital Market Law, Decree 39/1998.

Brokerage companies are bound by fiduciary duties of honesty and integrity. Therefore, brokerage companies are required to disclose any conflict of interest that may exist. Also included in their fiduciary duty is the obligation not to disclose any information regarding their clients. Insider trading rules, Article 244 of Decree 39/1998, have been established which stipulate that brokerage companies, their directors and employees are expressly prohibited from engaging in insider trading by using non-public information in accordance with, among other things, these rules:

  • Brokerage companies may not execute transactions on behalf of their clients, without sufficient evidence justifying their advice and the resulting transactions.

  • Brokerage companies are prohibited from "churning" (i.e. entering into transactions for clients participating in excessive trading, with the aim of increasing commissions, expenses or other fees).

  • Brokerage companies may only deal on behalf of their clients in transactions for which they have been granted specific instructions. These instructions should be recorded by the brokers.

  • The client must be informed of the completion of a transaction within 24 hours.

  • Transactions on behalf of the brokerage companies' directors, employees or relatives are permitted only with the explicit written consent of the Board of Directors of the brokerage company.

 

Money Laundering Law

The People's Assembly approved the Money Laundering Law with all its 20 articles on May 22nd , 2002. The Law was proposed due to the government's rising concern of the danger of this phenomenon and its detrimental effect on Egypt's economy; as well as, concerns expressed by the OECD Financial Action Task Force (FATF) on Money Laundering regarding the lack of a comprehensive legal regime in Egypt to counter this globally recognized illegal activity. The law provides for setting up a unit by the Central Bank of Egypt (CBE) to monitor reports from the financial institutions on the suspected money laundering deals.

The law stipulates that financial institutions should hold books, which record their domestic and international money dealings coupled with full information that shed lights on these dealings. According to the law, the institution should keep the books for five years at least as of the date when the dealings were concluded. The institution is held responsible for putting such books and records at the disposal of judicial authorities concerned with the enactment of the law whenever they are requested.

The law also provides that any citizen has the right to take out and bring in whatever amount of hard currency, provided that the sum should be written down on the entry visa, in case it exceeds $20,000 or its equivalent.

The law also determines a maximum 7-year imprisonment anyone convicted of money laundering, or attempted to launder money, in addition to fining the culprit twice the amount of money he/she laundered. However, it absolves from any criminal charges any body that reports, in good faith, on any suspected money deal that turns out to be illegal.

(Last Updated November 10, 2005)

Mortgage Law

A new mortgage law No. 148 of 2001 was passed in 2001 to regulate real estate bank financing. The law, which is geared towards encouraging housing of low and middle-income groups, allows banks to offer subsidized loans for the purchase of houses as well as administrative and commercial units and renovating existing ones. However, it is believed that middle-income families who can afford to pay a monthly installment not less than LE400 will benefit most from the new law. Borrowers will be able to make a 20% down payment and pay off the remainder in installments over 20-30 years. Under the new law, banks will be able to foreclose on loan defaulters in case they default on payments for between six and nine months. However, for protection of borrowers the idea of a mortgage guarantee fund is applied by the law. (Article 35)

As to its effect on the real estate sector, the law is expected to eliminate the gap between demand and supply that was created after the rush of many investors to construct new residential units, shopping malls and tourist villages on the outskirts of Cairo and the Mediterranean without being matched with an equal rise in demand due to a lack of real estate financing for the low and middle class groups. However, the law is expected to improve liquidity to the market, which will reflect on the country's overall economic welfare.


Labor Regulations


Egyptian Labor

Around 96% of the 73 million Egyptians live in the Nile Valley and Delta, with 16 million residing in Cairo and 6 million in Alexandria. Approximately one-third of the workforce is employed in agriculture. An estimated 47% of Egypt's economic and social establishments are in the Cairo and Alexandria governorates, which host 25% of the labor force.

The number of non-Egyptian employees in any establishment must not exceed 10 percent of the total work force for unskilled or semiskilled workers. For skilled workers the limit of Egyptian labor is 25 percent. Also total compensation of foreign employees must not exceed 35 percent of the total payroll of the establishment.

The Egyptian labor market is regulated by the new unified Labor Law No. 12 for 2003. The new Law comprises 257 articles that address all the legal aspects regulating the Egyptian labor market. The new law aims at increasing the private sector involvement and at the same time achieving a balance between employees' and employers' rights. Amongst the most important issues that the new law addresses is the right of an employer to fire an employee and the conditions pertaining to this as well as granting employees the right to carry out a peaceful strike according to controls and procedures prescribed in the new law.

Leaves

Annual Leaves

An employee is entitled to a minimum annual paid leave of 21 days every one full year of service and proportionally if his period of service is less than one year. This annual leave is increased to one month after the employee has worked for 10 consecutive years or is over 50 years old. In addition, every employee is entitled to full pay for official holidays designated by the Ministry of Manpower and Immigration, not to exceed 13 days a year.

If employees are required to work during official holidays, the employees are entitled to overtime (paid at twice their normal rate). The weekly days off and the official holidays shall not be counted as part of the annual leaves.

Accidental Leave
Accidental leave is the leave taken by an employee, as a result of unexpected circumstances, in which he has no choice except desisting from work, after that he should inform the employer with the reasons of desisting.

Article No. 51 of the Labor Law states that desisting from work with accidental reason should not exceed six days per year with a maximum of two days each time, and this leave will be counted from the annual leave of the employee.

Sick Leave
The Labor Law provides that an employee whose sickness is established and determined by the concerned medical responsible is entitled to sick leave, and shall be compensated according to the Social Insurance Law (up to six months of paid sick leave annually at between 75% and 100% of the employee's normal wage).

A worker shall be entitled to benefit from his accumulated annual leaves in addition to leaves of sickness and he shall also have the right to request his leaves of sickness to be transferred to the annual leave balance.

An employer shall not terminate the employee's service due to sickness unless the employee has utilized the above-mentioned period.

Official Leaves (Public Holidays)
According to ministerial decree No. 112/2003 regarding identification of the official leaves, which are fully paid, are as follows:

  • The 1st day of Moharam (Islamic new year)
  • The 12th day of Rabie the first (Prophet Mohamed's birthday)
  • The 1st and 2nd days of Shawal (1st Bairum)
  • The 9th, 10th, and 11th days of Zoelhega (2nd Bairum)
  • The seventh day of January (Eastern Christmas)
  • Spring day (Sham El Nessim)
  • The 25th of April (Sinai Liberation Day)
  • The 1st of May (Labor Day)
  • The 23rd of July (Revolution Day)
  • The 6th of October (Armed Forces Day)

Performing Pilgrimage or Visiting Jerusalem
Regarding religious respects, Article No. 53 of the new Labor Law stated that an employee who has spent five consecutive years in the service have the right to full paid leave for a period not exceeding one month for performing pilgrimage or to visit Jerusalem and such a leave shall be enjoyed only once during the period of service.

Maternity and Child Care Leave
A female having spent 10 months in the service of an employer shall be entitled to a maternity leave of 90 days with full wage payment including the period preceding giving birth. The female employee is not entitled to this maternity leave for more than twice during her working period.

During the 24 months following the date of childbirth, she has the right to two period of rest daily (30 minute each) for breast-feeding her child, with the option to combine both periods in one.

Employment Contracts

Employment contracts are required to be in writing, in triplicate and in Arabic language. The employer, employee and social insurance office each keep one copy of the employment contract, which must include certain information as specified in the Labor Law.

A typical labor contract would include:

  • Name of the employer and the address of the work place.
  • Name, qualifications, occupation and address of the employee and the documents required to prove his identity, and his social insurance number.
  • Nature and kind of work subject to the contract.
  • The wage agreed upon and method and time of payment.

If an employee is hired on probation, the employment contract should indicate the probationary period, which cannot exceed three months.

An employment contract may be drawn up for a fixed-term or indefinite period of time. In case the employee and the employer continue in implementing a fixed-term contract after its term, such shall be considered as a renew of the contract for an indefinite term.

It is necessary that both the employer and employee agree on essential matters in the law concerning wages, job description, and contract period.

It is also important to state the kind of work, which the employee is obliged to do, and the entity to which he/she is questionable if work is not performed.

Contract Period
The legislator regulates a maximum of five years for a fixed contract. If the employer and employee agree on a longer employment duration, then the latter has the right to terminate the contract after the initial five years, without receiving compensation; however, the employer must be notified within an agreed upon time period, which is a three-month prior notice.

The probation period shall be specified in the labor contract and no employee shall be appointed under probation for a period exceeding three months, neither shall an employee be appointed under probation more than once with the same employer.

Working Hours
Employees should not work more than eight hours a day or 48 hours over a six days working week.

Most private sector employees work 5 days a week, usually Sunday to Thursday. The number of working hours may be increased to 9 hours a day in certain circumstances.

Employees are entitled to one whole working day off each week. Certain exceptions apply when work is intended to prevent a serious accident or to cope with a heavy workload. In such situations, the employee must be paid overtime.

Employees' Benefits

The Social Security System and Public Health Insurance
Social security is a public program designed to protect individuals and their families from income losses due to unemployment, old age, sickness, or death and to improve their welfare through public services (e.g. Medical Care).

For Egyptian employees, who must constitute a significant part of a company's workforce, there is a social security system under which the employer pays contributions equivalent to approximately one-fourth of the salary earned, up to a certain limit of salary.

Contributions in the private sector under social security regulations are levied only on Egyptian nationals who are in full-time employment. Contributions are required at the following rates:

On the monthly basic salary up to LE 700, at 26% and 14% for employer and employee, respectively; and on any amount in excess of the basic salary (LE 700), or other allowances or overtime, up to LE500 monthly, at 24% and 11% for employer and employee, respectively.

For seasonal and temporary workers employed by construction contractors, a different system applies, Social Security contributions by the contractor amount to 18% of the percentage that labor costs bear to total contract costs. This levy may significantly increase labor costs on projects.

Benefits provided under the social security scheme are pensions, disability payments, sickness payments, maternity and death allowances, and unemployment insurance. These benefits are not given to non-Egyptians.

All private sector companies in Egypt are required to provide free health care for their Egyptian employees either through the Medical Insurance Plan of the Ministry of Social Insurance or privately. They are also required to contribute to the Pension Insurance Fund of the Ministry of Social Affairs and Insurance.

Other Benefits

1. Annual Increment
Employees are entitled to a periodical annual increment of not be less than (7%) of the basic salary on which the social insurance subscriptions are calculated. Thus until the National Council for Wages issues the decisions regulating the payment of that increment.

2. Overtime Pay
The minimum overtime premiums are 35 per/cent of normal pay for overtime worked during daylight, 70 per/cent for that worked at night, and 100 per/cent on rest days and 200 percent on official holidays. Production incentive bonuses are tax-free.

3. Minimum Wage
Not yet determined by the National Council for Wages.

4. Profit Sharing
Employees of a Joint Stock Company, Limited Liability Company, or Foreign Branch are entitled to a share in the distributable profits. The share is fixed at an amount not less than 10% of distributable profits and not more than the total annual salaries of the employees. However, Limited Liability Companies with capital less than LE 250,000 are not subject to this distribution of profit share.

5. Bonuses
There is no obligation to pay annual bonuses.

Employer's File

Article 77 of the Law No. 12/2003 states that the employer should establish a file for each of his/her employees where he/she shall detail the employee's name, occupation, level of skills, educational degree, his address, military status, social status, date of appointment, wage and changes in wage, penalties imposed, leaves obtained, and finally the date of service termination and the reasons for it.

The employer should also deposit any investigation reports, any reports by the employee's supervisor concerning performance, and any other document related to the employee's service.

Moreover, the employee should keep the above-mentioned file for at least one year after the termination of the labor relationship. Reasons behind this commitment is to prevent any dispute that may take place on wages, leaves, firing or dismissal reasons and to facilitate the employer's administration regarding accomplishing the Labor Law requirements.

The previously referred to data in Article No. 77 represent the least amount of data that should be provided in the employee's file. There are no restrictions to adding any more data such as: the employee's age, sex (male, female), qualifications acquired and certificates of experience.

Special Requirements for Foreign Resident

Visas
Tourists and visitors are generally permitted to enter the country with a minimum of immigration formalities. Except for nationals from certain countries who must obtain visa from the Egyptian Consulate in the country where they live, most visitors require temporary visas to enter Egypt. These are issued at ports.

1. Tourist Visas
Tourist visas are issued to foreign nationals visiting Egypt for recreational purposes or to foreign nationals whose stay in Egypt will not exceed three months. It is possible to renew this visa for similar durations.

2. Temporary Visas
Temporary visas are issued to foreign nationals who are entering Egypt for reasons other than recreational purposes and whose stay will exceed three months but will not exceed one year.

Work Permits
All Egyptian workers, except part-time or temporary staff, must obtain work certificates.
Foreigners interested in employment in Egypt have to obtain work permits and follow the corresponding regulations issued by the Ministry of Manpower and Migration in this regard. After a work permit is obtained, the foreign national's visa (whether tourist or temporary) is converted into a work visa, with the same duration as the work permit.

Work permits are easier to obtain for technical staff than for unskilled or semi-skilled workers. Work permits are usually granted to foreigners for a period of one or less than one year. It may also be issued for a period exceeding one year after settling the relative fee for the requested period.

Documents Necessary for Obtaining Work And Residence Permits for Foreigners in Egypt:

  • Letter from the Work License of Foreigners Department to issue the visa approving his work in Egypt to be addressed to the Passport Authority, and to the competent Manpower Department, the Companies Department, or the General Authority for Investment & Free Zone (GAFI).
  • Filling the applications forms for work permits of foreigners willing to work in Egypt. These application forms may be obtained from the work permit department at the Manpower and Training Directorate-Tahrir Complex.
  • Passport for perusal. It is important to apply while residence is valid.
  • Copies of passport size photographs of the foreigner.
  • Copies of the company incorporation contract.
  • Copies of the Tax ID Card.
  • A copy of the commercial register.
  • Copies of the certificates of academic degrees and experience of the foreigner.
  • The license for exercising the profession in the cases where such license is required.
  • A memorandum justifying the recruitment of the foreigner for that job, stating the reasons for not recruiting an Egyptian as well as the tasks assigned to the foreigner together with the name of the Egyptian assistant whose qualifications and experience are consistent with the foreigner.
  • Approval of the related Authority (e.g. Investment Authority, Egyptian General Petroleum Corporation … etc.).
  • A delegation from the company to the person who is going to apply for the work permit on behalf of the foreigner.
  • A certificate from a public hospital or a recognized laboratory such as the vaccination laboratory of the Ministry of Health, confirming that the foreigner is free of HIV.
  • The approval of the concerned security authorities. This can be arranged through the department of work permits at the Manpower and Training Directorate at Tahrir complex.
  • Evidence of settlement of the work permit fees.

Fees for issuing the permit are set as follows:

  • Issuing the permit for the first time or on its renewal for both Aliens and nationals of Arab countries is approximately L.E. 1,000.
  • The fee should be due in full for the whole year or its fractions.

Records Stated in Labor Law

The Labor Law obliges the employer to present the following records to the Ministry of Manpower and Migration:

Disabled Record
Regarding the employment of disabled individuals according to Law No. 39 of 1975, which entails qualifications and employment of the disabled, this law obliges private sector employers, whose number of workers equals to or exceeds fifty employees, to employ 5% of the total number of workers from the disabled as recommended by the Manpower Offices.

The employer also has the right to appoint disabled individuals he chooses provided they are holding the registry certificate which proves their disability.

Any employer who hires a disabled worker should send a registered mail letter with receipt confirmation to the manpower office in charge during the first fifteen days of the employment of the disabled worker/employee.

Foreigners' Record
In an attempt to enforce control on employing foreigners, the ministry obliges organizations employing foreigners to make a record including the following:

  • The foreigners name, surname, nationality and religion
  • Birth date
  • Job title and exact job description
  • Qualifications
  • Date and number of his employment permit.
  • The wage (Article 13 of MD 136 of 2003)

Financial Penalties Record
An employer shall make entry of the financial penalties imposed on employees in a special register, detailing the reasons why such penalties were imposed, the name of the employee and his/her salary. According to Article 2 of the Ministerial Decree 123 of 2003, all financial penalties imposed on the employees should be spent over the social, cultural, and sports activities for the employees.

The Unemployment Insurance Law

The unemployment insurance law, officially known as the Emergency Subsidy Fund Law No. 156 of 2002, establishes a fund to compensate workers/employees whose wages are suspended due to firm closure or downsizing. The Fund’s resources will come from a 1 percent deduction from the base salaries of the government sector, public enterprises and private sector employees in firms with over 30 workers, a government contribution, and other donations.

Termination of Employment

Duration of Probation
The probation labor contract should not exceed three months neither shall an employee be appointed under probation more than once for the same employer.

A probation contract is a conditional labor contract, in case the employee proves unsuitable for the job during the allotted period; thus, allowing the employer to cancel the contract.

Dismissal & Termination
Article 69 of the Labor Law, lists the grounds under which an employee may be dismissed. An employee may not be dismissed until the matter is brought before a committee with judicial powers at the Ministry of Manpower and Migration. The committee shall decide the request for dismissal brought to it within (15) days from the date of the first session and its decision shall be final. However, the employer may thereafter dismiss an employee and the employee retains the right to challenge the dismissal in court.

Egyptian Labor Courts retain discretion in reviewing an employment dismissal. Compensation awards may be granted to employees for wrongful dismissal on the basis of a review of the facts and circumstances of each case.

An employee is entitled to 60 days notice for dismissal if his period of service does not exceed 10 years and 90 days if that period exceeds 10 years. (Should the employer desire to dismiss the employee without giving him the relative notice period, the employee shall receive two or three months salary payment instead of such notice).
Article 122 Labor Law states that the compensation shall not be less than the wage of two months' salary for each year of employment for wrongful dismissal. Throughout the notification period the labor contract shall remain ruling.

Grounds for legal termination without notice include the expiry of a fixed-term employment contract, retirement, resignation, death or a court ruling.

Social Insurance Contributions

Employers must pay social insurance contributions to the Ministry of Social Insurance and Social Affairs with respect to their Egyptian employees. Egyptian employees also are liable for contributions. Employees' contributions are withheld by the employer from the employees' salaries and wages each month and paid to the ministry; together with the employer's own contributions, within the first two weeks of the following month.

Social Insurance Contribution Rates

  Employer (%) Employee (%)
On basic monthly salary up to L.E. 700/month 26 14
On variable pay (such as production incentive bonuses)-up to L.E. 500/month 24 11

(Last Updated November 10, 2005)