Further Regulations Affecting Compa

On 27 November 2018, the General Authority for Investment and Free Zones (“GAFI”) published a collection of decisions and circulars issued by the Ministry of Investment and International Cooperation (“MIIC”), GAFI, and GAFI’s Chairman in its Investment Gazette (the “Gazette”), and following that, it issued a few decisions and circulars on its website. Having covered most of these decisions in previous issues of the Egypt Legal Update, we focus in this issue on decisions and circulars concerning the disposal of shares in limited liability companies, dispute resolution, the definition of CEOs, the submitting of general assembly meeting minutes to GAFI, and templates related to one-person companies.

Disposal of Shares in Limited Liability Companies

GAFI Circular No. 16 of 2018,[1] published on GAFI’s website, regulates the disposal of shares in limited liability companies that operate under either the Companies Law No. 159 of 1981 (the “Companies Law”) or the Investment Law No. 72 of 2017 (the “Investment Law”). Initially, GAFI required that the original contract for the disposal of shares have authenticated signatures from the notary public even if the company bylaws allow for such disposal in informal, customary ways. However, GAFI soon backtracked and published a correction[2] to Circular No. 16 of 2018, five days later. In accordance with the correction, GAFI now requires any of the following legal proof of the disposal of the shares for the amendment of the company bylaws upon said disposal: the original disposal contract with signatures authenticated from the notary public or through any other legal method of authenticating signatures, or proof that the disposal was registered in the company registries created for that purpose. The disposal contract itself must be registered in the notary public if the company bylaws require a formal contract for the disposal of shares. Companies must also submit to GAFI all the necessary supporting documents for the post-disposal amendment of its bylaws, particularly the extraordinary general assembly meeting minutes and the contract amending the structure of the partners. All aforementioned documents must be submitted to GAFI within three months at most from the date of the disposal of shares.

Dispute Resolution

Among the dispute resolution mechanisms available to investors are petitions committees at GAFI. Although largely similar in terms of the procedures for handling petitions and the required documentation, two different tracks simultaneously exist: petitions (and petitions committees) under the Investment Law and those under the Companies Law. As for the Investment Law framework, petitions committees were established at GAFI premises by virtue of the Investment Law, its executive regulations, and MIIC Decisions No. 11 of 2018 and 135 of 2018, to look into complaints against administrative decisions undertaken by GAFI itself or other relevant administrative authorities that grant licenses, permits, and approvals arising from the application of the Investment Law. Both MIIC Decision No. 11 of 2018 and No. 135 of 2018 were covered in the Egypt Legal Update issue of July 2018, Week 4. As for the Companies Law framework, petitions committees and a petitions office were also established at GAFI premises, by virtue of the Companies Law and its executive regulations, to look into complaints against administrative decisions undertaken by the Minister of Investment or GAFI itself in relation to the Companies Law. MIIC Decision No. 186 of 2018[3] regulates the work of these committees. In addition to what was already stipulated in the law and its executive regulations, the new MIIC decision, which was published in the Gazette, adds that the petitions committee could consult experts from different administrative authorities in its hearings, without giving them the right to vote. The committee is to hold hearings at GAFI’s headquarters, or at a GAFI branch if necessary, every two weeks, and it could convene meetings, when necessary, through an invitation from its head, without being tied to the hearings. Meetings are only valid if attended by all committee members. Finally, the committee’s decisions on petitions are issued by a majority of the votes. GAFI combined both of these tracks into a single guide[4] that it published on its website on 16 December 2018. Although the guide does not add much beyond what was already mandated in the relevant laws, executive regulations, and ministerial decisions, it facilitates the distinction between petitions committees working under the Investment Law and those working under the Companies Law, particularly in terms of the fees, kinds of decisions that could be petitioned, and the procedures to be followed. The guide also specifies the code numbers of the relevant forms for petitions under these two distinct frameworks – Form F-GC/A-01-01 for petitions under the Investment Law and Form F-GC/A-01-02 for petitions under the Companies Law – in addition to providing examples of decisions that could be petitioned under each legal framework (see table below). The guide also notes that complainants could either be investors themselves or their agents, and in relation to the Companies Law framework, it requires the petitions office to not only notify the complainant of the hearing’s time and place but also GAFI so that its representative is present at the hearing. However, as far as other matters go, the guide remains a truncated version of the previous relevant regulations or decisions. For example, it does not provide except one method of decision notification that said committees working under the Investment Law framework could use (certified mailed letter with proof of delivery) without providing for other agreed-upon methods such as fax or email that were included in other decisions related to the workings of these committees (for instance, the MIIC Decision No. 11 of 2018). Table 1: Examples of administrative decisions that could be petitioned at GAFI Finally, GAFI also issued Circular No. 6 of 2018,[5] dated 29 October 2018, regarding the addition of a paragraph on dispute resolution and mediation in the templates for companies. The paragraph does not add anything new but reiterates that shareholders or partners could resort to GAFI’s Investors Dispute Settlement Centre if the parties to a disagreement agree to such a measure at any stage of the dispute. The centre was previously established by virtue of Ministry of Investment Decision No. 170 of 2009 to settle disputes that might occur between partners, or different companies (regardless of their legal form), or between shareholders and the company, when agreed upon.

Definition of CEOs (“Executive Presidents”)

An amendment to the Companies Law issued earlier this year by Law No. 4 of 2018 had introduced for the first time in Egyptian Law the concept of the company’s “Executive President.” In order to clarify this concept and distinguish it from closer ones, GAFI issued Circular No. 7 of 2018[6] which explains that the Executive President is an executive member of the company’s Board of Directors who is responsible for its executive management. He/she may represent the company in front of the judiciary and third parties if the company’s statutes so prescribe, but may not convene meetings for its board of directors or general assemblies.

Submitting General Assembly Meeting Minutes to GAFI

The Companies Law required that a copy of general assembly meeting minutes be sent to a relevant authority within a month at most from the date of the meeting. The executive regulations to the law specified the relevant authorities as the Financial Regulatory Authority and the legal representative of the bonds-owners association. GAFI Circular No. 17 of 2018[7] adds GAFI to the list by requiring that a copy of the meeting minutes be submitted to GAFI within a month from the meeting. Companies have until 15 January 2019 to comply in order to avoid possible sanctions.

One-Person Company Templates

In the same issue of the Gazette, GAFI also published Circular No. 15 of 2018[8] with an attached 12 templates related to one-person companies. These include, among others, templates for amending company bylaws, changing the legal form (from/to one-person company form), notifying GAFI with the disposal of capital, liquidation, and merger.   [1] GAFI Circular No. 16/2018 regulating the disposal of shares in limited liability companies that operate under either the Companies Law or the Investment Law, dated 12 December 2018. [2] Correction to GAFI Circular No. 16/2018 regulating the disposal of shares in limited liability companies that operate under either the Companies Law or the Investment Law, dated 17 December 2018. [3] Minister of Investment and International Cooperation Decision No. 186/2018 regulating the operations of the committee for petitions against GAFI decisions in relation to the implementation of the Companies Law No. 159/1981 and its executive regulations, Investment Gazette, Issue No. 51080/2018, 27 November 2018, available through this link (in Arabic). [4] Guide for the petitions committees working under the frameworks of (1) Law No. 159/1981 and its executive regulations and amendments, and (2) Law No. 72/2017 and its executive regulations, published on 16 December 2018, available through this link (in Arabic). [5] GAFI Circular No. 6/2018 adding a paragraph on dispute resolution and mediation in the templates for companies, Investment Gazette, Issue No. 51080/2018, 27 November 2018, available through this link (in Arabic). [6] GAFI Circular No. 7/2018 on the definition of the Executive President and his responsibilities, Investment Gazette, Issue No. 51080/2018, 27 November 2018, available through this link (in Arabic). [7] GAFI Circular No. 17/2018 requiring the submission of a copy of the general assembly meeting minutes to GAFI within a month from the meeting, dated 16 December 2018. [8] GAFI Circular No. 15/2018 with templates related to one-person companies, Investment Gazette, Issue No. 51080/2018, 27 November 2018, available through this link (in Arabic).