The joint stock company (JSC) is a company the capital of which is divided into shares of equal value; the liability of the shareholder is confined to the value of the shares to which he subscribes, and he is not liable for the debts of the company except within the limit of those shares. It may be a closed company or a listed company.
- A joint stock company must be registered in the Commercial Registry and is subject to the supervision and control of GAFI.
- The Egyptian Financial Supervisory Authority (EFSA) should be informed of the issuance of any stocks or bonds, which should only be issued if EFSA has not objected within three weeks of its notification.
- Public issues are supervised by EFSA. Furthermore, the registration of companies working in certain fields such as securities or factoring requires a license from EFSA.
- All joint stock companies have to register their shares with Misr for Central Clearing, Depository and Registry by the end of April 2019. Companies failing to do so will be unable to transfer shares or distribute dividends and GAFI will refuse to sign off on decisions reached by the companies' boards and general assemblies.
- Scope of
- A joint stock company can carry out all commercial activities subject to the limitations imposed by applicable laws and regulations except the agency and importing activities.
- Management and
- There must be at least three partners.
- The management of the company is effected through a board of directors comprising at least three members elected by the partners for a three-year term.
- Capital Shares
- The minimum issued capital required for a company not offering its shares to the public is LE 250,000, of which 10% is to be paid at the time of incorporation, to be increased to 25% within three months, and the remaining amount of the nominal value of the shares is to be paid up within five years.
- The minimum capital of a joint stock company offering its shares for public subscription is LE 20,000,000, fully paid up. However, in case of holding companies established for the purposes of stock dealings and investment, the minimum capital is LE 5 million, of which at least 25% must be paid on incorporation.
- Joint stock companies are subject to tax on company profits.
- Profit-Sharing At least 10% of the net profits are to be distributed to employees, provided that the amount to be distributed shall not exceed the total value of the wages and salaries annually paid to the company's employees.
- The entitlement of foreign employees to such a distribution is subject to legal debate. However, the Labor Office has taken the position that foreign employees are not entitled to such a distribution.
- Required Documentation for
the Company Formation
- A certificate of non-confusion of company name approved by the Commercial Register;
- A bank certificate to the effect that at least 10% of the issued capital has been deposited;
- Copies of relevant powers of attorney from all founders (minimum three founders) .It shall be noted that Original Powers of Attorney must be submitted for matching against the copies;
- Copies of valid personal ID of founders
- An official original certificate obtained from the register of Accountants and Auditors to the effect that the company's auditor is entitled to review and approve the budgets of the company. In case the original was previously furnished to GAFI, a copy must be submitted;
- A copy of the Bar Association Card of the lawyer who signs the articles of association;
- A security check on foreign founders;
- The name and address of the company's legal consultant (who must be a lawyer at least admitted before the Court of Appeal);
- In the event of sharing in-kind shares upon incorporation, the original report of GAFI's committee, which valuated such in-kind shares, must be submitted; and
- In the event of incorporating a company to operate under the Free Zones System in accordance with Law No.72 of 2017, the aforementioned required documents must be submitted together with the following:
- In respect of public free zone, GAFI's approval prior to incorporation must be obtained.
- In respect of private free zone, the approval of the Cabinet must be obtained prior to incorporation.
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.