Amendments to the Law on Chambers o
Amendments to the Law on Chambers of Commerce
Background
Chambers of commerce have been established in Egypt during the first decades of the twentieth century. Their regulation has been introduced by law No. 14 of 1933 which has later on been cancelled and replaced by Law No. 30 of 1940. The latter law provided that chambers of commerce are the agencies representing within the boundaries of their jurisdiction - before government authorities - the trade and industrial interests of its members. According to the law, chambers of commerce (1) gather information and prepare statistics relevant to trade and industry, (2) classify and distribute and provide the Government with such information and statistics and (3) determines lex mercatoria, i.e. trade customs. Later on, Law No. 189 of 1951 was adopted, cancelling Law No. 30 of 1940 and recognized chambers of commerce as public organizations assuming the same role as mentioned above and with competence to take all necessary procedures to accommodate international technological development in advancing trade by among others organizing permanent exhibitions, museums, markets, trade and artisanal schools as well as other industrial and trade institutes. More generally, chambers of commerce determine the problems faced by traders and communicate them to officials. They further provide services and technical consultancy to traders and enterprises, train labor working in the trade sector, foster awareness, hold seminars, issue activities licenses for the commercial registration of companies, issue certificates of origin, authenticate invoices issued for exportation, communicate to their members the details of international and local exhibitions and conferences and inform them about importation and exportation opportunities, and observe obstacles to investment and issue recommendations for overcoming them.[1] Chambers of commerce are regulated by Law No. 189 of 1951 providing the legal framework for the chambers of commerce, their sections and the Federation of Egyptian Chambers of Commerce. A new law was issued on April 20, 2015 amending some provisions of Law No. 189 of 1951.[2]Amendments
Law No. 22 of 2015 provides for three main amendments: (1) the possibility for chambers of commerce to incorporate companies or to invest in such to carry out activities to further its interests; (2) replacing the term “the Minister responsible for Internal Trade Affairs” with “the competent Minister”; and (3) allowing traders to reschedule their overdue membership fees. We shall further elaborate on the amendments below:| The amendment allows chambers of commerce, after obtaining the approval of the competent Minister, to incorporate companies or to invest in such, alongside public or private entities, to carry out activities furthering their interests and connected to their objectives. |
- The possibility for chambers of commerce to incorporate companies
Law No. 22 of 2015 allows chambers of commerce, after obtaining the approval of the competent Minister, to incorporate companies or to invest in such, alongside public or private entities, to carry out activities furthering their interests and connected to their objectives. This is an important amendment given that it is likely to allow the chambers of commerce a more efficient role in furthering trade through the companies it incorporates. It is worth noting that it is the case in many countries that chambers of commerce are established as private companies furthering the interests of their members. Nevertheless, there still might be some complex issues that the Egyptian legislator must deal with:
- The applicability of the Public Procurement Law No. 89 of 1998 on companies incorporated pursuant to this Law given that the chambers of commerce themselves are subject to the Public Procurement Law according to the provisions of Law No. 189 of 1951.
- The effect of the presence of such companies on the freedom of competition in the market due to the shareholding structure of such companies and the ease of exchange of information, which may lead to anticompetitive behavior in the market.
- Replacing the term “the Minister responsible for Internal Trade Affairs” to “the competent Minister”
Law No. 189 of 1951 provided that “the minister responsible for internal trade affairs” shall be the competent minister in relation to chambers of commerce. The law granted the minister among others the power to appoint 50% of the members of the board of the chamber of commerce as well as the power to call for board meetings of the chamber of commerce. The present amendments now provide that the term “the Minister responsible for Internal Trade Affairs” shall be replaced by “the competent Minister” and that the Prime Minister shall issue a decree determining the competent minister in relation to chambers of commerce. Such decree was indeed issued under No. 1009 of 2015 appointing the Minister of Industry and Trade and Small and Medium Enterprise to be the competent minister for purposes of Law No. 189 of 1951.
- Allowing traders to reschedule their overdue membership fees
Article 25 of Law No. 189 of 1951 provides that every trader shall pay to the chamber of commerce in whose jurisdiction it has its head office or one or more branches an annual registration fee amounting to 0.02% of its paid up capital with a cap set at EGP 2,000. The law also provides for a late payment penalty amounting to 25% of the value of the payable annual registration fee. It is worth mentioning that the annual registration fees are the main source of revenue for chambers of commerce that is used by chambers of commerce to carry out their objectives. Law No 11 of 2015 allows paying the registration fees and late payment penalties in installments with a view to encourage traders to regularly pay in their registration fees as well as to increase the revenues of chambers of commerce, which ultimately will enable chambers of commerce to efficiently stimulate trade and commerce.
Conclusion
We believe the above amendments may stimulate trade, especially internal trade, given that chambers of commerce will be given a chance to play a more efficient role to develop trade and create competitiveness through more flexible and effective structures to achieve the objectives of the chambers of commerce because of the economic efficiency of private companies. The amendments are also likely to increase the chambers of commerce’s revenues allowing them to play their role as set out in the law. However, maintain the Minister’s power to appoint half the board members of the Chamber raises questions regarding their independence. [1] See the website of the Federation of Egyptian Chambers of Commerce available through this link. [2] Presidential Decree-Law No. 22/2015 amending Law No. 189/1951 on Chambers of Commerce, Official Gazette, Issue No. 16 (b), 20 April 2015.Background
Chambers of commerce have been established in Egypt during the first decades of the twentieth century. Their regulation has been introduced by law No. 14 of 1933 which has later on been cancelled and replaced by Law No. 30 of 1940. The latter law provided that chambers of commerce are the agencies representing within the boundaries of their jurisdiction - before government authorities - the trade and industrial interests of its members. According to the law, chambers of commerce (1) gather information and prepare statistics relevant to trade and industry, (2) classify and distribute and provide the Government with such information and statistics and (3) determines lex mercatoria, i.e. trade customs. Later on, Law No. 189 of 1951 was adopted, cancelling Law No. 30 of 1940 and recognized chambers of commerce as public organizations assuming the same role as mentioned above and with competence to take all necessary procedures to accommodate international technological development in advancing trade by among others organizing permanent exhibitions, museums, markets, trade and artisanal schools as well as other industrial and trade institutes. More generally, chambers of commerce determine the problems faced by traders and communicate them to officials. They further provide services and technical consultancy to traders and enterprises, train labor working in the trade sector, foster awareness, hold seminars, issue activities licenses for the commercial registration of companies, issue certificates of origin, authenticate invoices issued for exportation, communicate to their members the details of international and local exhibitions and conferences and inform them about importation and exportation opportunities, and observe obstacles to investment and issue recommendations for overcoming them.[1] Chambers of commerce are regulated by Law No. 189 of 1951 providing the legal framework for the chambers of commerce, their sections and the Federation of Egyptian Chambers of Commerce. A new law was issued on April 20, 2015 amending some provisions of Law No. 189 of 1951.[2]Amendments
Law No. 22 of 2015 provides for three main amendments: (1) the possibility for chambers of commerce to incorporate companies or to invest in such to carry out activities to further its interests; (2) replacing the term “the Minister responsible for Internal Trade Affairs” with “the competent Minister”; and (3) allowing traders to reschedule their overdue membership fees. We shall further elaborate on the amendments below:| The amendment allows chambers of commerce, after obtaining the approval of the competent Minister, to incorporate companies or to invest in such, alongside public or private entities, to carry out activities furthering their interests and connected to their objectives. |
- The possibility for chambers of commerce to incorporate companies
Law No. 22 of 2015 allows chambers of commerce, after obtaining the approval of the competent Minister, to incorporate companies or to invest in such, alongside public or private entities, to carry out activities furthering their interests and connected to their objectives. This is an important amendment given that it is likely to allow the chambers of commerce a more efficient role in furthering trade through the companies it incorporates. It is worth noting that it is the case in many countries that chambers of commerce are established as private companies furthering the interests of their members. Nevertheless, there still might be some complex issues that the Egyptian legislator must deal with:
- The applicability of the Public Procurement Law No. 89 of 1998 on companies incorporated pursuant to this Law given that the chambers of commerce themselves are subject to the Public Procurement Law according to the provisions of Law No. 189 of 1951.
- The effect of the presence of such companies on the freedom of competition in the market due to the shareholding structure of such companies and the ease of exchange of information, which may lead to anticompetitive behavior in the market.
- Replacing the term “the Minister responsible for Internal Trade Affairs” to “the competent Minister”
Law No. 189 of 1951 provided that “the minister responsible for internal trade affairs” shall be the competent minister in relation to chambers of commerce. The law granted the minister among others the power to appoint 50% of the members of the board of the chamber of commerce as well as the power to call for board meetings of the chamber of commerce. The present amendments now provide that the term “the Minister responsible for Internal Trade Affairs” shall be replaced by “the competent Minister” and that the Prime Minister shall issue a decree determining the competent minister in relation to chambers of commerce. Such decree was indeed issued under No. 1009 of 2015 appointing the Minister of Industry and Trade and Small and Medium Enterprise to be the competent minister for purposes of Law No. 189 of 1951.
- Allowing traders to reschedule their overdue membership fees
Article 25 of Law No. 189 of 1951 provides that every trader shall pay to the chamber of commerce in whose jurisdiction it has its head office or one or more branches an annual registration fee amounting to 0.02% of its paid up capital with a cap set at EGP 2,000. The law also provides for a late payment penalty amounting to 25% of the value of the payable annual registration fee. It is worth mentioning that the annual registration fees are the main source of revenue for chambers of commerce that is used by chambers of commerce to carry out their objectives. Law No 11 of 2015 allows paying the registration fees and late payment penalties in installments with a view to encourage traders to regularly pay in their registration fees as well as to increase the revenues of chambers of commerce, which ultimately will enable chambers of commerce to efficiently stimulate trade and commerce.