Egypt is one of the three largest economies in Africa and is strategically positioned at a crossroads between the East and West, making the country a significant player in international trade in the Middle East and Africa. Egypt is home to the Suez Canal that connects the Mediterranean Sea with the Red Sea and is a key artery in global trade.
According to the fDi Report 2020 issued by fDi Intelligence, “Egypt replaced South Africa as the second ranked destination by projects in the region, experiencing a 60% increase from 85 to 136 projects.” This ranking covers both the Middle East and Africa.
Furthermore, Egypt also managed to be ahead of all ranked countries in the Middle East and Africa by capital investment in 2020 by acquiring 12% of all capital investment, with a total value of USD13.7 billion, according to the report.
These rankings reflect how the Egyptian Government has been working hard to improve the current economic conditions to attract more Foreign Direct Investment (“FDI”) to the country.
There are a large number of mega projects in Egypt including, for example, (i) the new administrative capital, the first phase of which has a total area of approximately 44.1 sq km and a total construction value of EGP20 billion (approximately USD1.2 billion); (ii) a new EGP4.4 billion line for the third phase of the Cairo metro, plus the fourth phase of the metro which has a total value of USD1.2 billion and the first sky train with a total value of USD1.5 billion; (iii) the Zohr gas field, which is the largest-ever natural gas find in the Mediterranean Sea; (iv) Benban Solar Park, which is a photovoltaic power station under construction with a planned total capacity of 1650 MW; and (v) El Dabaa Nuclear Power Plant, which is the first nuclear power plant planned for Egypt.
As part of the ongoing improvement of the legal system in the country, the Egyptian House of Representatives passed over two hundred laws in 2020, including the new Data Protection Law, Banking Law, Customs Law and United Tax Procedures Law. Those laws are in addition to a number of key decrees issued by the Egyptian authorities including the General Authority for Investment and Free Zones (“GAFI”).
In July 2020, Egypt issued its first-ever Data Protection Law (151/2020) which prohibits, inter alia, any act of transfer, storage and/or sharing personal data, which was collected or prepared for processing, to any foreign state unless the following two main conditions are being satisfied:
(i) application of a protection level that is not less than the one adopted by the Data Protection Law; and
(ii) a licence or an authorisation by the Egypt Data Protection Centre is obtained.
The restriction above definitely affects the way all multinational companies deal with personal data.
The Executive Regulations to be issued for the new Data Protection Law shall specify the policies, criteria, requirements and rules that shall be met for the transfer, storage, sharing, processing and protecting of personal data across borders. According to the new Data Protection Law, the Executive Regulation shall be issued within six months as of October 15, 2020. However, in practice, it is very unlikely to have an Executive Regulation issued within the timeline given by law. For example, the Executive Regulation of the Cybercrime Law was required to be issued within three months as of August 15, 2018. However, in practice the said Executive Regulation was issued on August 27, 2020 (i.e. after two years).
In March 2020, the Executive Regulation of the Commercial Registry Law (34/1976) was amended to the extent requiring all companies registered in Egypt to create a special register for the 'beneficial owners' and annotate in the register specific data such as who owns or controls the subject company and type of legal interest(s) therein. This data is required to be:
- updated once any change is made to the said ownership or control; and
- notified to the competent Commercial Registry immediately upon the occurrence thereof.
This special register is required to be available to any judicial officer upon request.
The amendment above has not yet been applied in practice. As of March 18, 2020, for the first time in Egypt, GAFI issued its Decree (160/2020) allowing all companies registered in Egypt under the provisions of the Companies Law and the Investment Law to hold Board and General Shareholders Meetings online. This Decree was a relief for all multinational companies that were suffering from holding physical Board and/or General Shareholders Meetings, especially in the COVID-19 era.
This new Decree is an addition to the latest amendments made to the Companies Law allowing shareholders of all companies registered under the Central Securities Depository to electronically vote during the General Shareholders Meetings.
GAFI started also to facilitate the process of incorporating limited liability companies in Egypt. For example, limited liability companies are no longer required to submit any evidence for paying the issued capital before the incorporation.
A mandatory pre-security clearance is still required to be obtained for a few nationalities including, inter alia, China and Russia, before incorporation of any company in Egypt and/or implementing certain processes such as any change to capital, business activities and place of business. This pre-security clearance is not usually required for other nationalities. However, to the best of our knowledge, this mandatory pre-security clearance will be revoked soon.