Companies with 25% Public Contribut

The general rule according to the Companies Law[1] is that joint stock companies appoint one or more auditors that satisfy the conditions of the Egyptian Auditing and Accounting Law, to be appointed by the company’s general assembly of shareholders. Meanwhile, the Central Auditing Organization (“CAO”) Law states that the CAO is responsible for monitoring companies that – although not public sector companies – have a public contribution of 25% or more of capital. This includes auditing all final accounts, financial statuses, budgets, and directing the execution of operations to be in line with acknowledged accounting fundamentals and standards. In addition, the CAO Law states that its Chairman can appoint auditors from CAO in said companies, who directly report to CAO and submit reports containing their remarks to be presented to the regulatory authority along with the company’s auditor report. In this respect, the General Authority for Investment and Free Zones (“GAFI”) recently issued a circular No. 22 of 2019[2] reminding companies with a public contribution of 25% or above with the requirement to appoint an auditor according to the Companies Law and not merely rely on the fact that CAO appoints an auditor for review. The Circular also grants non-complying companies one year in order to comply with this rule.   [1] Law No. 159/1981 on Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies, Official Gazette, Issue No. 40, 1 October 1981. [2] GAFI Circular No. 22/2019 obligating joint stock companies to appoint an auditor other than that appointed by the Central Auditing Organization.