Expanding across global borders is an exciting step in any company’s growth journey, but it doesn’t come without hassles. You should consider how you’d like to operate in the country and establish a solid market entry strategy to decide if you want to go through the Egypt subsidiary setup process, which can take months.
That’s all before you can hire employees and actually start operations in the country. Before entering a new market, consider these best practices to ensure a seamless experience.
How to set up an Egypt subsidiary
If you decide to set up your Egypt subsidiary alone, you’ll need to decide where you’d like to incorporate in the country. Different regions in Egypt can have separate subsidiary laws that make it either easier or more difficult to incorporate.
Since Egypt offers several subsidiary structures, you should choose the one that best fits your business goals. Your options include a limited liability company (LLC), joint stock company, branch office, and representative office. Most companies choose to incorporate as an LLC because of the benefits it offers to both subsidiaries and parent companies.
Some key steps to set up an Egypt subsidiary as an LLC include:
- Establishing shareholders for your Egypt-based company. A minimum of 2 shareholders are required.
- Obtaining a physical office space/address.
- Appointing a legal representative as director of the new company. International team members can be appointed as directors. However, it is recommended to have at least 1 local director to deal with banking matters and social insurance registrations.
- Issuance of a certificate of “non-confusion” from the Commercial Registry certifying that the chosen name of the company under formation does not conflict with the name of any other registered company.
- Applying for security clearance approval for any international founder/shareholder and board member/manager.
- Obtaining notarized, attested, and legalized documents from the new company’s shareholders. These include certificates of registration, articles of association, tax registrations, and power of attorneys, among others. Some of these documents need to be locally notarized and translated prior to filing for the incorporation of the new company.
- Preparing and reviewing the new company’s draft articles of association from GAFI (Egyptian General Authority For Investments).
- Opening a bank account in the name of the new company. This step should be done before the new company is fully incorporated.
- Authenticating and notarizing the articles of association.
- Issuing the commercial register, tax card, and VAT certificate.
Egypt subsidiary laws
The type of subsidiary you choose also determines which Egypt subsidiary laws you must follow. Every LLC has to register with the Commercial Registry and stay under the supervision of GAFI. Egypt subsidiary laws do not stipulate a minimum amount of capital required, but it’s recommended to have a minimum paid-up share capital of at least the equivalent of USD 10,000.
An LLC needs constitutive documents that follow model statutes issued by a ministerial decree. In addition, LLCs are required to keep financial books and records and submit annual audited tax returns to stay compliant. The auditor is a mandatory position, which will need to be covered by the time of incorporation.
It is important to note that as Egypt is not part of the Hague convention, documents issued internationally, both for incorporation and day-to-day operations, may require notarization, attestation, and legalization, which may take a considerable time to process.
Benefits of setting up an Egypt subsidiary
Setting up a subsidiary in Egypt offers several advantages. LLCs are a popular subsidiary structure because they benefit both the parent company and the subsidiary. Subsidiaries can operate per Egypt’s laws and customs, while the parent company has limited liability from the subsidiary and doesn’t have to worry about litigation.
Other important considerations
Before setting up an Egypt subsidiary, it’s important to ensure you have the time and resources to complete the process.
But there is an alternative. G-P can take the hassle out of setting up a subsidiary. As a global EOR, we can hire employees on your behalf in compliance with local subsidiary laws so that you can start working faster.
Enter new markets with G-P — no new entities required.
Beat the competition and enter new markets in minutes, not months, with G-P. We’ve paired our industry-leading team of in-region HR and legal experts with our #1 global employment platform to help you hire compliantly in 180+ countries, eliminating the need to set up local entities or subsidiaries.
Get in touch today to learn more about how we can streamline the global growth process.