Whether you are still in the initial phase of deciding your best legal structure for your business, or you have a well-established small/medium business operating in Egypt, throughout the following days we will post some legal tips regarding incorporation, and current opportunities available for SMEs in Egypt.

At S&S, sharing our knowledge is one of our core essences. As part of our CSR activities led our Pro Bono department, we have long since launched the “Law for All” initiative aims to create a comprehensive Arabic legal guide, answering the majority of legal questions an entrepreneur might have in the early stages of business life. It addresses issues related to the incorporation and management of LLCs, the liabilities incurred by the founders and managers, and even employment-related issues. For further information, please check out our website http://www.lawforall.info/index.pl/setting_up__small__project .

Step One: How to choose your best legal structure to operate in Egypt?

FROM IDEATION TO OPERATION

• Choosing the best legal structure to meet your business needs is the first step towards ultimately having stable operations.
• In order to choose the right legal structure for your business, you must first be aware of your options. Accordingly, it is good to ask yourself the following key questions: how many founders are there and what are their rights? How much money are you allocating for the company’s capital to be paid upfront? What are the company’s activities/overall goals and purpose?
• If you are only one person willing to start and maintain your business without including other shareholders or investors, the Sole Person Company is your best option. This type of company was recently recognized as a legal structure as part of the latest amendments to the Companies Law issued on 16 January 2018. A Sole Person Company is a limited liability company that is owned by one person, which can be a natural person or a juristic person (e.g. another company). The liability of the owner is limited to his share in the company.
• The minimum capital for incorporating a Sole Person Company is 50,000 EGP, which must be paid in full at the time of incorporation. Allocating this amount at such an early stage might be a challenge for many businesses. If your main concern lies in allocating the funds constituting the capital for your business, then your best option would be to establish a Limited Liability Company (LLC). Requiring no minimum capital, incorporation as an LLC has always been the first choice for startups and SMEs. However, to establish an LLC, the minimum number of founders/shareholders is two.
• Another factor limiting your options when choosing your company’s legal structure is the company’s activities and operations. Some sectoral laws governing specific areas of operations impose additional requirements for practicing certain activities, such as electricity production, microfinance, and capital market activities. These requirements may mean that a specific type of company must be established (e.g. a Joint-stock Company or JSC), with a fixed minimum capital which is usually considerably higher than the amount generally required under the Companies Law (159/1981).

To know more about benefits and characteristics of an LLC please follow the following link: http://www.lawforall.info/index.pl/intro4