Egypt: The Sole Proprietorship Company In Egypt

Last Updated: 23 October 2018
Article by Youssry Saleh & Partners

On January 16th,2018, a new amendment has been issued under Law no. 4 of the year 2018. Law no. 4 of the year 2018 is considered as an amendment of some articles of the Egyptian Law no. 159 of the year 1981 (the "Companies Law")1.

The amendment of this law includes the new entity form which is called the "Sole Person Company", in which one person is liable for the incorporation of the companies, financial contributions "in-kind / in-rem" and disputes settlement. According to the Law, it takes the same form and structure of a Limited Liability Company.

This is for the first time to introduce such kind of companies in the Egyptian Law, as the core of incorporating a company in Egypt is based on the fact of partnership between 2 or more persons.

Taking into consideration that according to GAFI rules, in case of a new partner entering the partnership of the company, then the regulations of a Limited Liability Company will be applied and this partner may be a natural or legal person.

If he is a natural person then he shall submit his ID and if he is a legal person then he shall submit his Commercial Register.

In case the partner is foreigner, if he is natural person he shall submit a copy of the passport and in case he is a legal person, then he shall submit the passport, the Commercial Register (translated and legalized) and obtain positive security check results.

According to Article 129 Bis:

"In exception of the provisions of Article 505 of the Civil Code, each natural or legal person, within the limits of the objectives it is established for, may establish on its own a sole proprietorship in accordance with the provisions of this Part. This company shall be of a limited liability.

Where no special provision is set out, the provisions of the limited liability companies is set out and this Law shall apply to the sole proprietorships."

Sole Person Company has been stated in the Law No.4 of 2018 in the below Article as follows:

Article 4 Bis:

"The Sole Proprietorship is a company the capital of which is fully owned by one person whether natural or legal in such a way that does not contradict the objective thereof. The founder of the company shall not be held accountable for its liabilities except within the limits of the capital allocated therefor".

Referring to the abovementioned company, now a juristic or natural person may incorporate his own company solely.

Furthermore, this type of companies is a Limited Liability Companies which are subject to the regulations and laws of such type. The partner solely will be liable for the company's obligations and liabilities. He will be able to take the initiative solely for any resolution or decision that shall be taken like company liquidation in case of insolvency or failure to make a separation between the financials of the company and the founder's financial, election of the Board of Directors members, meetings of ordinary or extraordinary general assembly meetings and the disclosure of the financial statements.

Moreover, not all companies may certify the financial statement from the Notary Public only however, certifying the financial statement is done for specific purposes with determined fees. Thus, the Financial Statement is issued either from GAFI, the Notary Public or from the company.

Article 1 of the Executive Regulation No. 16 of the year 2018 states:

"The (Financial Statement) word is replaced by (Budget) and (Account of Losses and Profits) wherever it is mentioned in the executive regulation"

Furthermore, the financial statement shall be published within 2 months after the end of the fiscal year and before the Meeting of the General Assembly. And this is according to Article No. 218 bis of the Executive Regulation:

Article 218:

Documents which shall be submitted before the Meeting of the General Assembly

"The Board of Directors, the Partner or the Managing Partners, as the case may be, shall publish the Budget, Account of Profits and Losses, the report, and the whole provisions for the Auditor's report in 2 Daily Newspapers within 2 months nor more from the end of the Fiscal year".

In case of discussing a new financial statement then an Ordinary General Assembly shall be held and then after the financial statement is being accredited by the General Assembly it shall be submitted to the General Authority of Investment and Free Zones and this is according to Article 156 of Law No. 4 of the year 2018:

Article 156 bis of Law No. 4 of the year 2018:

"Companies subject to the provisions of this Law shall provide the Authority with a copy of the financial statements thereof, on an annual basis after they being approved by the general assembly and a data form"

Article 189bis of the aforesaid law in the previous paragraph states that:

"The obligation of submitting the financial statement to GAFI

The companies are liable for submitting a copy of its financial statements to GAFI after being accredited by the General Assembly, Form of Annual Data that is issued through a resolution by the Chairman of the General Authority for Investment and Free Zones that specifically includes the number of employment, investments, renewing the data of the companies, the organizational structure and the branches of the company and its location, the form shall be submitted whether in the headquarters of the Authority or through the website of the company through the official representative of the company or his agent or whom he may delegate, and this form is accredited by the Board of Directors of the Authority"

In case of the insolvency according to the last financial statement of the company, that is submitted annually, then an Extraordinary General Assembly shall be held to discuss what resolutions shall be taken and the plans which shall be set and followed for the benefit of The Company, The Partners, The Founders, Board of Directors, and The Employees as it is states in the below Article of the concerned law:

Article 69 provides:

"If the company's loss reaches half the equity in accordance with the last annual financial statements of the company, the Board of Directors shall call for an Extraordinary General Assembly to convent to look into the dissolution or continuation of the company".

Breaching the obligatory of the Companies Law penalized it as invalid, however, now the courts may provide duration up to 6 months to amend the invalidity, if conceivable. Moreover, the time frame for filling a claim or invalidity case is expanded from one to three years from the date that the concerned parties are aware of breaching the law, rules and regulations.


1 Taking into consideration that the Ministry of Investment and International Cooperation has amended the Executive Regulation of Companies Law by Decree No. 16 of the year 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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