Egypt has one of the largest construction and building sectors in the MENA region, making it one of the most important factors that increases the county's GDP. Prior to 1992 there was virtually no integrated organization in Egypt to sponsor and manage the profession or the industry making it accessible for companies and individuals with limited experience to participate.
The Egyptian government found it necessary to implement a system to care, manage and protect the construction sector in Egypt for it to grow exponentially. In turn, Law No. 104 of the year1992 and its Executive Regulations were promulgated concerning the establishment of the Egyptian Federation for Construction and Building Contractors.
The intention to create the Egyptian Federation for Construction and Building Contractors was to form a preparatory committee of experts and specialists (legal/technical /administrative) to draw the most important rules corresponding with the Egyptian contracting profession and industry to lay down the foundations. The committee is comprised of six qualitative divisions each consisting of a few different contracting specialties. Under each specialty, there are many classes; the highest is the first class while the lowest is the seventh class in some specialties. Those classes are different in terms of the composition of the technical and administrative body, capital and turnover permitted for the company.
Law No. 104/1992 focused on setting up an integrated system for protecting common interest of its members, representing them before the competent authorities, regulating the profession status, working on developing various methods of construction, and formulating the rules and norms related to this sector in order to guarantee its protection. It has been found that the law has regulated the conditions and procedures for registration making it mandatory to register with the committee. Article 8 of the Executive Regulation of Law No.104 of 1992 states that: "Any person engaged in construction, buildings, public works, land reclamation, installation, marine construction and any other works of the same nature, whether natural or juristic person, whatever legal system he may be subject to, shall apply for membership of the federation."
Registration conditions vary from one person to another (Natural Persons and Juristic Persons), these conditions include but are not limited to:
- Conditions for Natural Persons: Must be of full age, fully competent, registered in the commercial registry. The following documents must be presented: (a) an original stamped bank statement or certificate proving that there is a balance not less than fifty thousand Egyptian pounds in the bank account; (b) a lease contract; (c) a tax card which contains the activity of contracting.
- Conditions for Juristic Persons: Must have the original and stamped Memorandum of Association or Investment gazette of the company, an official extract of the commercial register showing the capital and the activity of the company which shall be contracting, proof of insurance for an engineer, and a criminal record.
Conditions and Procedures for Registration in the Egyptian Federation for Construction and Building Contractors:
Once the documents have been collected and notarized, if need be, the next step would be submitting the application to the Federation. These documents differ, depending if the contractor is an individual or a company. The submitted application shall specify the type of activity conducted by the applicant for it to be registered in the appropriate division, specialization and category that complies with the rules set by the Egyptian Federation for Construction and Building Contractors.
Non-Egyptian contractors are registered in a separate register than Egyptian contractors which is based on division, specialization and class under which the foreign company is registered. The foreign company will receive a letter indicating its acceptance into the Egyptian Federation for Construction and Building Contractors as well as the offered tender. If the tender is awarded to the Company, an application shall be submitted to obtain the membership card as well as the following documents:
- Construction Contract specifying the project;
- A letter from the owner stating the project's starting date and ending This document must indicate that 51% of the work is to be carried out by an Egyptian Contractor;
- Commercial register which includes the project that has been assigned to the company.
The application is submitted to the Registration Committee to agree on the membership application within a period not exceeding sixty days from the date of submitting the application. The applicants shall be notified through mail with acknowledgment of receipt at their address indicated on the application. Anyone whose application has been rejected may file for an appeal against the rejection decision within fifteen days from the date of receiving the notice. The fee for registering in the Egyptian Federation for Construction and Building is determined by two factors; firstly, the specific division which the project is allocated to and secondly the class to which the company belongs to.
To conclude, Law No. 104 of 1992 promulgating the establishment of the Egyptian Federation for Construction and Building Contractors did not discriminate between a natural person and a legal person, or between an Egyptian and a foreigner. It set out certain rules and regulations that made it mandatory for all to register and submit relevant documentation to prove their level of expertise. As mentioned above, prior to this law Egypt had no alternative method of regulating the construction and building sector as it opened the flood gates to anyone without appropriate credentials. The Federation includes all Egyptian workers in the Construction and Building Sector as Active Members. It also includes non-Egyptian workers in the same sector as Correspondent Members, whose membership is determined by the period required to conduct the activity in the Arab Republic of Egypt.
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.