Company Forms

Joint-stock companies are governed by Law No. 159 of 1981 on Joint-Stock Companies, Partnerships Limited by Shares, Limited Liability Companies and One-Person Companies, together with its Executive Regulations, as amended. They are generally suited to larger projects. Their capital is divided into shares of equal nominal value, and each shareholder’s liability is generally limited to the value of the shares subscribed for. A joint-stock company must have at least three founders.

The law distinguishes between three types of capital. Authorised capital is the maximum amount up to which the company may issue shares without amending its articles of association; it may not exceed ten times the issued capital. Issued capital is the value of the shares issued and subscribed for. Paid-up capital is the portion of the issued capital that shareholders have actually paid.

Subject to any higher requirements applicable to particular activities, shareholders must pay at least 10% of the nominal value of their cash shares at incorporation. This must rise to at least 25% within three months of the company’s incorporation, with the balance paid within five years. The minimum issued capital depends on the company’s activity and whether it offers shares to the public, so the applicable threshold should be confirmed for each proposed company.

The firm advises on the most suitable capital structure, prepares the preliminary contract and articles of association, completes the incorporation procedures before the competent authorities, and sets out the relationship between the shareholders and the board of directors.

A partnership limited by shares combines features of partnerships and capital companies. It has two classes of partner: one or more general partners, who are personally liable without limit for the company’s obligations, and shareholders, whose liability is generally limited to the value of their shares. The company is governed by Law No. 159 of 1981 and its Executive Regulations, including the applicable rules on capital and shares.

The general partner or partners manage the company. Shareholders do not manage the company in their capacity as shareholders, while retaining the rights granted to them by law and the company’s constitutional documents. This form may suit a project in which the founder wishes to retain responsibility for management while raising capital from other investors.

The firm assesses whether this legal form is suitable for the client’s project and drafts the company’s constitutional documents to define the general partner’s powers and protect the shareholders’ rights.

A limited liability company (LLC) is a common form for small and medium-sized projects and family businesses. It is governed by Law No. 159 of 1981 and its Executive Regulations. An LLC must generally have at least two and no more than fifty partners. Each partner’s liability is generally limited to the value of their quota in the company.

The partners determine the company’s capital in its memorandum of association. The capital is divided into quotas of equal value, which may not be publicly offered or traded as securities, and must be paid in full at incorporation. Transfers of quotas to non-partners are subject to the statutory procedures and any applicable pre-emption rights. The company is managed by one or more managers, who may or may not be partners.

The firm drafts the company’s memorandum of association to set out the allocation of quotas and profits, the manager’s powers, and the arrangements for partners joining or leaving the company. We also complete the incorporation and commercial-registration formalities.

Law No. 4 of 2018 amended Law No. 159 of 1981 to introduce the one-person company. Its capital is wholly owned by a single natural or legal person, whose liability is generally limited to the capital allocated to the company, subject to the applicable law and compliance requirements. The company’s name must include the words “One-Person Company.”

Unlike an LLC, a one-person company does not require more than one partner. It allows a person to conduct business through a company with a separate legal personality and generally limited liability. It may not offer its capital to the public or issue tradable shares. It is managed by its owner or by a manager appointed by the owner. The minimum capital was reduced to EGP 1,000 under the 2022 amendments to the Executive Regulations.

The firm incorporates one-person companies and drafts their constitutional documents to support a clear separation between the company’s assets and the owner’s personal assets.

Partnerships, also known as personal companies, are based on the personal relationship and standing of the partners. The principal forms include the general partnership, in which the partners may be personally liable without limit for the partnership’s obligations; the limited partnership, which includes one or more general partners and one or more limited partners whose liability is generally limited to their contributions; and the partnership in participation (sharikat al-muhassa), an undisclosed arrangement between partners that does not have a separate legal personality.

General and limited partnerships are governed by the partnership provisions retained from the 1883 Commercial Code following the enactment of Law No. 17 of 1999, together with applicable Civil Code rules. The partnership-in-participation form is subject to its own applicable statutory rules. Registration and publication requirements depend on the type of partnership and the circumstances.

These forms may involve fewer formation formalities than capital companies, but the personal liability of general partners makes careful drafting essential. The firm drafts and amends partnership agreements, arranges for partners to join or leave, and assists with converting partnerships into other company forms as the business grows.