New Law Regulating the Federation o

On 28 May 2019, a new law was published regulating the Federation of Egyptian Industries and the Industrial Chambers that it comprises. Law No. 70 of 2019 (the “Law”)[1] constitutes a considerably detailed regulation of the federation’s operations and structure in comparison to its previous regulatory framework which consisted mainly of a stipulation under the 1958 law on the organization and promotion of industry, and a presidential decree that was issued in the same year. The Law similarly abolishes other presidential decrees that previously regulated the establishment of industrial chambers. The current formation of the board of directors of the federation of Egyptian industries, and that of the existing chambers shall remain until the election and appointment of new members according to the provisions of the Law at the end of the current term.

Background

A federation representing industries has existed in Egypt in some form or the other since early in the 20^th century. The current Federation of Egyptian Industries (“FEI”) was established under this name in 1947, following which it was stipulated for under Law No. 21 of 1958 on the organization and promotion of industry, and then further regulated by other decrees. The 1958 law remains in effect to this day albeit with several amendments, the most significant of which were those introduced through Law No. 15 of 2017 on the facilitation of industrial licensing. On its website, FEI boasts representing 60,000 industrial facilities mostly from the private sector. FEI members are categorized under 19 chambers of industry representing variable fields.[2] FEI plays an active role in representing the interests of its members and is frequently consulted on draft laws in areas that affect its fields of industry and investment. FEI is thus an important actor on the scene of public private dialogue. In addition, FEI is the competent entity for issuing certificates of origin and relevant permits/approvals for the goods produced by its members. Published this May 2019, the new FEI Law has been in deliberation in the House of Representatives during the last quarter of 2018. FEI was involved in the dialogue that took place at the time of discussing the provisions of the new Law in the House’s industrial committee and there seemed to be agreement between members of parliament, the government represented in the Ministry of Trade and Industry, and FEI.

The New FEI Law

• Transitional Provisions

The Law stipulates that the current FEI shall remain, as well as all established industrial chambers until their establishing decrees are re-issued within three months. It also abolishes presidential decrees No. 33, 452, and 453 of 1958 regarding the establishment of regional councils for industry, the organization of the federation of industries, and the establishment of industrial chambers respectively, as well as any provisions that contradict the new Law. The formation of the current FEI board of directors shall also remain, and so will the boards of the existing chambers of industry, up to the end of their current electoral term (2016 – 2019), while elections for the upcoming term will be conducted according to the provisions of the new Law.

• FEI Provisions

FEI is formed of its subordinate chambers. Its funds are public funds, and it enjoys financial, technical, and administrative independence according to the stipulation of the Law. FEI is to cooperate with the relevant state authorities in laying out strategies for promoting industrial development in Egypt, and act as a liaison between the government and industrial chambers. Small and medium industries are given mention under the general obligation for FEI to coordinate with the ministry of industry and others for these stated purposes. Different from its structure under the abolished framework, FEI board of directors now consists of a representative of each of the industrial chambers (elected by the chamber boards for that purpose), in addition to seven members that the minister of industry appoints. The board’s term is four years form the date of appointment that is renewable for one similar term, and the board convenes at least once every two months. The members of the board and its chairman are prohibited from receiving compensation for their roles. FEI’s general assembly comprises the board members of the industrial chambers. This is in contrast to abolished presidential decree No. 452 of 1958, under which FEI’s general assembly was formed of representatives elected by the general assemblies of the chambers and four ministry of industry representatives holding different positions within the ministry. The ordinary general assembly convenes once a year, and it passes its decisions by a simple majority.  In contrast, FEI’s extraordinary general assembly convenes upon the request of the chairman of the board, five board members, 10% of the general assembly members, or the relevant minister. The extraordinary general assembly looks into the dissolving of the FEI board or relieving one of its members, as well as other urging matters. It passes its decisions with a majority of two thirds of the present members. For its resources, FEI receives 30% of the membership fees paid to its subordinate chambers, in addition to grants and donations from members and state bodies, while donations from other sources must be approved by the minister. Other financial resources include returns from real estate or movable assets which FEI owns, and service fees for issuing certificates.

• Industrial Chambers

Previously regulated under presidential decree No. 453 of 1958, chambers of industry were established by virtue of a decision from the Minister of Trade and Industry. The decree mandated that any industrial facility with a capital of EGP 5,000 or more, or employing 25 persons or more, had to join its industry specific chamber(s). Under the new Law, industrial chambers are established by virtue of a prime ministerial decree following a proposal from FEI Chairman, and upon consulting with the chambers of intersecting sectors (if any). In addition, all industrial facilities in a given sector must join the chamber representing their respective activity and show proof of membership for purposes of obtaining or renewing an industrial registration and related permits. The Law lists the tasks of industrial chambers such as collaborating with the government on laying out industrial development policies, working towards accomplishing the common interests of members, and gathering information relating to its activities. Each chamber must maintain a registry listing its member facilities according to three categories depending on whether the entity is a large industrial facility, a medium facility, or a small/micro industrial facility. A chamber must have a general assembly that includes one representative from each of its members. In addition to providing the general rules on the convening of the chamber’s ordinary and extraordinary general assembly meetings, the Law contains a stipulation mandating that chambers notify both FEI and the ministry of industry of the date of general assembly and board meetings, as well as invite both entities to attend. In addition, copies of the minutes of these meetings must be submitted to the ministry and FEI within seven days from the convening of the meeting. The resolutions taken in the meetings are valid if unchallenged by FEI or the ministry within 20 days. A chamber has 15 board members, 12 of which are elected by the chamber’s general assembly through a confidential vote, while the remaining three members are appointed by the minister. Chamber boards sit for a term of four years that can be renewed for one similar term, and the term starts running from the date of appointment of the three members that the minister chooses. The board is headed by a chairman, and it must also appoint an executive manager. Any interested party may submit a request before court to dissolve the board of an industrial chamber, under three listed grounds: the board’s violation of the Law, failure to enforce general assembly decisions within three months, and the general assembly’s rejection of the chamber’s budget, financial statements, or closing account. Formerly, the minister of industry could dissolve the federation in the event of a violation of the law. The chamber’s budget consists of is annual membership fees, and fees of registration in its registry. Minimum and maximum annual fees are provided depending on whether the entity is large or small, with the minimum threshold for micro facilities being at EGP 500, and the maximum threshold for large facilities lying at EGP 30,000 a year.

Conclusion

In comparison to the former regulatory framework governing the operation and structure of the federation of industries and the industrial chambers, this Law is much more detailed. It also provides a single body of text organizing matters that were previously scattered under three different decrees and a 1958 law. Nevertheless, the establishment and operation of chambers under the old framework seemed to offer more flexibility and autonomy in comparison with the new regulation which transfers the authority to establish chambers from to the minister of industry to the prime minister and gives the ministry of industry the right to attend chamber meetings, as well as receive and object to the resolutions issued therein.   [1] Law No. 70/2019 regulating the Federation of Egyptian Industries and the Industrial Chambers, Official Gazette, Issue No. 21 (bis) (a), 28 May 2019. [2] Federation of Egyptian Industries, available through this link.