On March 7, 2017, amendments to the Importers’ Registry Law were introduced (the “Amendments”).
The old law (Law no. 121 of 1982) permitted natural and juridical persons to import goods for the purpose of trade or resale only after being registered with the Importers Register, but provided for strict nationality requirements.
While the Amendments may seemingly be seen as relaxing the restrictions on foreign ownership and management, the Amendments now dictate that any entity wishing to import products for the purpose of trade or resale in Egypt, i.e. other than for carrying out the company’s operations (“Trading Companies”), be majority owned by Egyptians (instead of wholly owned). With respect to management, the Amendments are ambiguous, and we expect the position of the legislator to be clarified in the amendments to the Executive Regulations, expected to be issued shortly. The text of the Amendments implies that only the managers and employees responsible for the importation activity within the Trading Companies be of Egyptian nationality; the Amendments, however, do not clearly address whether or not this nationality requirement extends to board of directors members and general managers.
The Amendments also introduced changes to the minimum capital requirements of Trading Companies, inter alia, as follows:
- EGP 2,000,000 (instead of the earlier EGP 15,000) for limited liability companies, and
- EGP 5,000,000 (instead of the earlier EGP 250,000) for joint stock companies. With respect to this type of companies, the Amendments are silent as to the amount of this minimum capital which should be paid-up, and we expect the general provisions of the Companies Law to govern in this respect.
Based on the foregoing, for existing Trading Companies, the primary concern is to comply with the capital requirement introduced by the Amendments, within the grace period prescribed by the Amendments.
For Trading Companies that have not yet been registered with the Importers’ Register, the Amendments now require the Trading Companies to have been operating for a minimum of one year, with a minimum annual turnover of EGP 5,000,000. Shahid Law is of the opinion that this is the most restrictive provision introduced by the Amendments, as it makes registration of new Trading Companies in the Importers Register extremely cumbersome, while creating an edge and leverage for already registered ones.
For more information on the Amendments, or the importation legal framework in general, please do not hesitate to contact the partner in charge of your file at Shahid Law Firm, or the Managing Partner, Girgis Abd El-Shahid.