Egypt
Answer ... The transfer of unlisted shares in a joint stock company must be effected through the Egyptian Exchange (EGX). An authorised licensed broker must be designated to facilitate the transfer of shares, following the share transfer procedures outlined in both EGX and Financial Regulatory Authority (FRA) regulations.
. The consideration for the sale of shares must be deposited into a bank regulated by the Central Bank of Egypt (CBE) if:
- the value of the transaction exceeds EGP 100,000; or
- a party involved in the transaction is a foreign entity.
In addition to the basic approvals required in every M&A transaction, some regulations apply to transactions in specific industries requiring certain approvals. For example, any transaction valued at EGP 20 million or more requires:
- the prior approval of the EGX Pricing Committee; and
- notification of the FRA.
The General Authority for Investments (GAFI) must also be notified of the transaction otherwise, an EGP 50,000 fine may be imposed. The prior approval of the CBE is required if the company is governed by the banking legislation. Companies that engage in non-banking financial activities, such as fintech companies, require the FRA’s approval. In fintech M&A transactions, the acquisition of a non-banking financial institution representing 10% or requires the prior approval of FRA.
For companies operating in the Sinai Peninsula, prior approval may be required from the Sinai Development Authority.
Approval from the Egyptian Competition Authority is required in transactions that entail a change in control or material influence that meet the thresholds stated in the Competition Law (please see question 9).
Further, other authorities may also be involved depending on the industry in which the target operates.
Other regulatory approvals include shareholders’ signatures which reflect the target sale into the target’s articles of association through the convening of an extraordinary general meeting ratified by GAFI.
Egypt
Answer ... In the general sense, there are no foreign ownership restrictions. However, in some cases, foreign ownership restrictions apply to some sectors and industries, such as:
- commercial agency;
- real estate brokerage; and
- importation.
In the case of commercial agency activity, the company’s share capital must be fully owned by Egyptian nationals.
With regard to import activity, 51% of the company’s share capital must be fully owned by Egyptian nationals. However, a new draft law is approved by the Egyptian Cabinet aimed at easing the foreign ownership restrictions concerning import requirements by allowing foreign investors to be registered as importers for a term of up to 10 years, which can be extended by another 10-year term. It is still in its early days and we will need to see how it will be enacted in practice once it is finalised.
Also, it was recently made easier for foreigners to conduct business in Sinai pursuant to new amendments to Law 14/2012 allowing foreigners to own properties in certain areas of Sinai subject to specific approvals.
Egypt
Answer ... The transaction process must adhere to the Competition Law to avoid any fiscal penalties (please see question 9). Also, depending on the nature of the transaction, certain approvals may be required – for example, if the transaction is in the telecommunications industry, the prior approval of the National Communication Regulatory Authority must be obtained in relation to:
- the transfer of any licences;
- mergers; and
- changes to the shareholding structure.