Company forms in Egypt: founders, liability and minimum capital
What separates limited from unlimited liability, and how much capital does each Egyptian company form need? Six forms compared by founders, liability and minimum capital.
Executive summary
- Companies Law No. 159 of 1981 regulates four capital-company forms: the joint stock company (SAE), the partnership limited by shares, the limited liability company (LLC), and the one-person company added by Law No. 4 of 2018. General and simple limited partnerships are governed by old provisions that the current Commerce Law kept in force, not by this law.
- Minimum issued capital (article 6 of the executive regulation): EGP 500,000 for an SAE offering its shares to public subscription and EGP 250,000 for a closed SAE or a partnership limited by shares; an LLC has no minimum, as the partners set its capital in the incorporation contract (article 67).
- The one-person company's minimum capital has been EGP 1,000 since Prime Minister's Decree No. 2928 of 2022 (it was EGP 50,000), paid in full on incorporation. In an SAE or a partnership limited by shares, each subscriber pays at least 10%, raised to 25% within three months of incorporation (article 32 of the law).
- Article 8 of the law requires at least three founders for an SAE and at least two for every other company it governs except the one-person company; falling below that quorum dissolves the company by operation of law unless it is restored within six months or the company is converted into a one-person company.
- Liability is limited in the SAE, the LLC and the one-person company, and unlimited for the general partner in a partnership limited by shares or a simple limited partnership, and for every partner in a general partnership.
- Article 3 of Investment Law No. 72 of 2017 guarantees a foreign investor treatment similar to a national investor's, whichever form is chosen, without prejudice to special laws governing certain activities and their licensing conditions.
The six forms
The joint stock company (SAE) (article 2) has its capital divided into tradeable shares of equal value. The partnership limited by shares (article 3) combines one or more general partners with one or more share-partners. The limited liability company (article 4) may not have more than fifty partners, and it may neither use public subscription nor issue tradeable shares or bonds. GAFI provides incorporation and post-incorporation services for these four forms.
The one-person company (article 4 bis, added by Law No. 4 of 2018) is wholly owned by a single person, natural or juridical, who is not liable for its obligations beyond the capital allocated to it, except in the cases set out in article 129 bis (4), which include failing to keep their own finances separate from the company's; the founder is then liable with all their property. The law allows a person to found it alone "as an exception to article 505 of the Civil Code" (article 129 bis (1)).
General and simple limited partnerships are governed by the first chapter of Book Two of the Commercial Code issued in 1883, the only part of it that article 1 of Law No. 17 of 1999 promulgating the Commerce Law excepted from repeal. Both are partnerships of persons with no minimum capital; GAFI's incorporation documents for them include no bank certificate, and the partners set the capital in the partnership contract.
Founders, liability and management
| Form | Minimum number | Liability | Management |
|---|---|---|---|
| SAE | At least 3 founders | Limited to share value | Board of at least 3 directors chosen by the general assembly for 3 years; the founders appoint the first board for up to 5 years |
| Partnership limited by shares | At least 2 (a general partner and a share-partner) | Unlimited for the general partner, limited for the share-partner | One or more general partners named in the incorporation contract, plus a supervisory board of at least 3 |
| LLC | 2 to 50 partners | Limited to quota value | One or more managers, appointed by the founders and then the general assembly; a supervisory board of at least 3 is mandatory once partners exceed 10 |
| One-person company | A single founder | Limited to the allocated capital, save in the cases in article 129 bis (4) | The founder personally, or one or more managers the founder appoints |
| General partnership | At least 2 partners | Unlimited and joint among all partners | All partners, or whoever the contract designates to manage |
| Simple limited partnership | At least a general partner and a limited partner | Unlimited for the general partner, limited for the limited partner to their contribution | The general partner; a limited partner may not take part in management |
Article 8 provides: "Except for one-person companies, the number of founding partners in joint stock companies may not be less than three, and this number may not be less than two for the remaining companies governed by this law." Should the number fall below that quorum, the company is dissolved by operation of law unless the quorum is restored within six months or the remaining partners ask to convert it into a one-person company, and they are liable with all their property for its obligations during that period.
Capital: the minimum and what is paid on incorporation
| Form | Minimum issued capital | Payment and timing |
|---|---|---|
| Closed SAE / partnership limited by shares | EGP 250,000 | 10% on subscription, raised to 25% within three months of incorporation and the balance within five years |
| SAE offering public subscription | EGP 500,000 | As above; the founders subscribe at least half the issued capital or 10% of the authorised capital, whichever is greater |
| Companies whose objects include founding capital companies, underwriting securities or dealing in them | EGP 5,000,000 | At least a quarter on incorporation (article 6 bis of the regulation) |
| LLC | No minimum; set in the incorporation contract | Capital in full, with an exemption from filing the bank certificate |
| One-person company | EGP 1,000 | In full, with a bank deposit certificate |
| General and simple limited partnerships | No minimum — person-based, not capital-based | As the partners agree |
The essential difference between the two most-used forms is timing. Article 32 of the law requires each SAE subscriber to pay "at least (10%) of the nominal value of the cash shares, increased to (25%) within a period not exceeding three months from the date of the company's incorporation", with the balance within five years, and GAFI asks for a bank certificate for at least 10% on incorporation. An LLC, by contrast, must have "all quotas subscribed and their value paid in full" to the account of the company under formation (article 68 of the executive regulation), although article 17 of the law, as replaced by Law No. 4 of 2018, exempts it from filing the bank certificate.
Treatment of investors
Choosing any of these forms does not depend on the founder's nationality. Article 3 of Investment Law No. 72 of 2017 provides that the State "guarantees the foreign investor treatment similar to that granted to the national investor", and neither the Companies Law nor its executive regulation sets a nationality condition for founders or managers, since Ministerial Decree No. 256 of 2018 removed the requirement that at least one LLC manager be Egyptian (article 281 of the regulation). The Investment Law does not, however, prejudice the special laws named in article 2 of its promulgating law, including Law No. 14 of 2012 on the integrated development of the Sinai Peninsula, nor "the substantive conditions for granting approvals, permits and licences provided for in any other laws".
What this requires
- Plan cash to the chosen form: an LLC and a one-person company pay their full capital on incorporation, an SAE in instalments starting at 10%.
- Check any minimum tied to the activity: the minimums above apply "without prejudice to" special laws and regulations (article 6 of the regulation), alongside the EGP 5 million minimum in article 6 bis.
- Monitor the number of partners after incorporation, since falling below the quorum dissolves the company by law unless it is restored within six months or the company is converted into a one-person company.
- Document the management and oversight structure — board, manager, supervisory board — precisely in the incorporation contract, since its powers derive from that contract, not from the law alone.
The firm's Corporate Legal Department advises on the legal form that fits each project, drafts the incorporation contracts, and verifies that the minimum capital and the founders' quorum are met before the incorporation application is filed.
Mahmoud Nassef — Chartered Accountant (Egyptian Register), Founder Partner
Member, Egyptian Society of Accountants & Auditors
Member, Egyptian Tax Society
Member, Egyptian Society for Public Finance and Taxation
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Disclaimer: This bulletin is prepared for general information on the legislation in force at the date of its publication. It does not constitute a professional opinion or tax or legal advice on any particular matter, and it should not be relied upon in place of advice based on an examination of the circumstances of each case. Nassef & Partners International accepts no responsibility for any action taken, or refrained from, in reliance on its contents. The positions stated remain subject to subsequent legislation and decisions.