By: Lamiaa Youssef and Ahmed Jamal

Keywords: Infrastructure & Power, Banking & Finance

The president promulgated Presidential Decree issuing Law 95/2015 that introduces amendments to the Decree of the Supreme Council of Armed Forces (SCAF) 14/2012 on the Integrated Development of the Sinai Peninsula (the Sinai Law). The Decree loosens the restrictions on investors who wish to acquire land rights within Sinai Peninsula, as follows.

1. The Decree widens the scope of persons exempted from the Sinai Law.  The law had exempted existing projects at the time (19 January 2012) from its application.  The new Decree extends the exemption to projects that were still in the process of establishment, if they had preliminary agreements with the government or land allocation decisions.   Such projects are subject to the applicable law at the time the action was taken.
2.  The Decree allows Non-Egyptians who receive title to a land in the Sinai Peninsula (not just development areas) by the mean of inheritance, testament or gift to retain some rights over this land.  Under the new Decree, they can keep the right of usufruct over the land as well as title to immovable properties established on that land.  However, they have to dispose the title of the land itself to an Egyptian within six months from the date the foreigner acquires the land’s ownership.  Originally, such persons were obligated to dispose of their ownership within six months; otherwise, the land is mandatorily transferred to the state against a fair price.
3. The law also gives the same treatment to Egyptians who acquire a second nationality; or who give up the Egyptian nationality as part of the process of acquiring a foreign nationality; or who have one Non-Egyptian parent and receive the land through any other means than inheritance.
4. The maximum period for usufruct rights is extended from 30 to 50 years and can be renewed to another 25 years.
5. The Decree allows new contracting parties who receive the rights to land to stipulate in the original contract a clause guaranteeing them the right to pass on their land rights to their legal heirs.
6. The Decree allows the President (after the approval of the security agencies) to exempt some companies working in integrated development areas from the statutory percentage of foreign ownership (under the law, foreigners may only own up to 45% of any corporation working in Sinai).  These exempted companies must undertake not to change the structure of their shareholders until the end of the project.  However, if it becomes necessary to do so, then these companies must obtain the approval of the security agencies before the change.  In addition, the president may also exempt a certain city or a part thereof, coastal areas, or the areas designated for the development of the Suez Canal Axis or for the special economic zones within Sinai from following Sinai Law.
7. In case of a violation to the usufruct agreement, the law gives the authorities the discretion to grant violators a grace period to fix the violation or terminate the project.

A copy of the decision (Arabic) can be accessed here.