Voluntary Liquidation and Strike-Off of an Egyptian Company

Executive summary

• A company in liquidation keeps its legal personality as far as winding up requires (Article 138, Companies Law 159 of 1981).
• Dissolution must be put to the general assembly once losses reach half of shareholders' equity in a joint-stock company or half of capital in a limited liability company (Articles 69 and 129).
• A claim against the liquidator for an error in the liquidation is barred after three years, or fifteen for fraud (Article 154 bis (1)).
• The administrative authorities must state what the company owes them within 120 days of the liquidator's request, or the company is deemed discharged (Article 6, Investment Law 72 of 2017).
• The final tax return is due within 60 days of completely ceasing activity (Article 31, Law 206 of 2020), and VAT registration is cancelled from the last day of the tax period in which activity stopped (Article 25, executive regulation of VAT Law 67 of 2016).

The dissolution decision, and when it must be put to the members

Liquidation is the route for a solvent company choosing to end its activity, not a distressed one, which Law 11 of 2018 handles through restructuring, preventive composition or bankruptcy. A company is in liquidation once dissolved, its term expires or it ends for any reason other than merger or division (Article 137). It keeps its legal personality during liquidation to the extent winding-up requires, "under liquidation" is added to its name, and its bodies remain for matters outside the liquidator's remit (Article 138).

Dissolution is voluntary in principle, but it must be put to the members in two cases and may be requested in a third:

The liquidator: appointment, powers and liability

The assembly or the partners appoint one or more liquidators, or the court does where it orders dissolution (Article 139). Neither the appointment nor the method of liquidation can be relied on against third parties before publication in the Commercial Register (Article 140). On appointment the liquidator inventories the company's assets and liabilities with the management and takes over its assets and books (Article 142), and banks what he collects, to the company's account, within 24 hours (Article 143). He may not start new business except to complete work in hand, on pain of liability with all his own assets, nor sell the company's assets as a whole without the consent of the assembly or the partners (Article 144). His tasks include paying the company's debts, selling its assets, representing it in court and accepting settlement and arbitration (Article 145); debts arising from the liquidation itself rank ahead of other debts (Article 148).

His fee and the liquidation period are set in his appointment document; failing that, the court fixes the fee, and any partner or shareholder may ask the court to set the period (Articles 149 and 150). He files an interim account every six months, then a closing account whose ratification ends the liquidation, and applies for strike-off (Articles 151 and 152). The books and documents are kept for ten years from strike-off at the Commercial Register office, unless the assembly or the partners choose another place (Article 153). He is liable for mismanagement and for damage his errors cause (Article 154). A claim against him for an error in the liquidation is barred three years after the error or its discovery or, for fraud or deceit, fifteen years after the liquidation ends (Article 154 bis (1)).

From opening the liquidation file to strike-off

Article 39 of the Investment Law's executive regulation (Prime Ministerial Decree 2310 of 2017) sets out the voluntary liquidation of joint-stock companies, partnerships limited by shares and limited liability companies in two stages before GAFI.

In stage one, the extraordinary general assembly, or all the partners in general and limited partnerships, resolve to liquidate and appoint the liquidator, setting his tasks, his fee, the duration and the reasons, and this is annotated on the Commercial Register (Investor Services Centre guide, 2026). Within a week of the annotation a notice is published at the company's expense in the Investment Gazette and a widely read daily newspaper, or electronically, giving the liquidator's name and task, the duration and the date from which he will receive creditors' claims, at least one month after publication. The competent authorities are notified and must state what the company owes them within at most 120 days of GAFI's notice or the liquidator's request; "the lapse of this period without a statement of those obligations shall be deemed a discharge of the company under liquidation" (Article 6, Investment Law 72 of 2017, and Article 39 of its regulation).

In stage two, the liquidator submits the minutes of the ordinary general assembly or the partners approving his report on the outcome, with the final account certified by him under Egyptian accounting standards, and GAFI gives him a letter instructing the Commercial Register to strike the company off (Article 39). For partnerships, the guide requires the notices to the insurance, customs and tax authorities to have been delivered at least 120 days before the date of those minutes.

The guide sets no stage-two fee for capital companies.

The final tax return and VAT deregistration

A taxpayer must notify the Egyptian Tax Authority of any change to its activity or establishment (Article 5(e), Unified Tax Procedures Law 206 of 2020), and of any change to its registration data within thirty days (Article 28). Article 31(d) is explicit: "a taxpayer who completely ceases activity in Egypt must file the tax return within sixty days of the date of cessation."

On VAT, when a registrant stops or liquidates a taxable activity, tax falls due on the goods it holds when they are disposed of, unless the successor is registered or registers itself (Article 8, VAT Law 67 of 2016), and its registration is cancelled from the last day of the tax period in which it stopped (Article 21 of the law and Article 25 of its regulation). A voluntary registrant may not request cancellation within 24 months of registration unless it has ceased activity for good and proves it (Article 22 of the regulation). See VAT registration in Egypt.

Closing the social-insurance file

A private-sector employer must send the National Organisation for Social Insurance the end-of-service form (Form 6) within a week of the end of each insured employee's service, or pay an additional 20% of the last month's contribution for each month of delay; that amount does not accrue from the date of the employer's bankruptcy or the establishment's liquidation, closure or dissolution (Article 20, executive regulation of the Social Insurance and Pensions Law 148 of 2019, Prime Ministerial Decree 2437 of 2021). The employer must also report any change to the data or documents it has filed within fifteen days (Article 21).

What this requires

• Set the liquidation period and the liquidator's fee in the appointment document, so neither has to go to court.
• Follow up the publication within a week of the annotation, with creditors' claims opening at least a month later.
• Send the liquidator's requests to the tax, insurance and customs authorities once the annotation is made; the 120 days run from them.
• File the final tax return within 60 days of completely ceasing activity, even before strike-off.
• Account for VAT on goods disposed of during the liquidation unless the successor is registered.
• Send each employee's end-of-service form within a week.
• Designate where the books and documents will be kept; otherwise the Commercial Register office holds them for ten years.

The firm's Corporate Legal Department drafts the liquidation minutes, handles the filing and strike-off process with GAFI, and coordinates the tax and insurance notices so none of the deadlines is missed.

Mahmoud Nassef, Founder Partner
Chartered Accountant, Ministry of Finance, Egypt

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.