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24 May 2023

Council of Ministers Meeting No. 241 Headed by Dr. Mostafa Madbouly, Prime Minister

The Council of Ministers approved, during its meeting today that was headed by Dr. Mostafa Madbouly, to amend some provisions of the Executive Regulations of the Investment Law issued by Prime Minister Decree No. 2310 of 2017.

The amendment stipulated that the Article (76) of the Executive Regulations of Investment Law be replaced with the following text: "An approval to establish Private Free Zones project shall be in accordance with some conditions and controls […etc.].".

According to the conditions and controls, Private Free Zone projects shall observe the conditions of industrial safety, fire and Civil Defense– in accordance with the Egyptian Code governing this respect, or in accordance with the decisions issued by the minister concerned with industrial affairs on industrial establishments – and shall secure establishments and boundaries thereof by guard towers, surveillance cameras and security individuals from among GAFI and ports security individuals, at the expense of the project; and GAFI shall follow up on activities of Private Free Zones projects in a way that would guarantee proper functioning and assure compliance with the applicable procedures in respect of carrying on activity, provided that the appropriate Free Zone management submits periodical reports to such Free Zone BoD which shall verify whether or not it is feasible for projects to continue operation under the provisions of the Free Zones Framework.

The conditions included that all Free Zones projects shall put all records and invoices at the disposal of GAFI during inspection and follow up processes, and GAFI may, at its discretion, use the services of any relevant bodies in this regard. A final approval on a project shall lapse, should the Investor fail to demonstrate seriousness in carrying out implementing procedures including, inter alia, (i) commencement of incorporation procedures, (ii) submission of engineering  drawings, (iii) obtainment from the bodies concerned such approvals that are required to set up  the project, and (iv) the schedule set for commencement of engagement in activity, within six (6) months from the day on which the Investor has been notified of the approval on the project. This six-month period may be extended for another in the light of the justifications provided by the persons concerned, and deemed acceptable by the Free Zone BoD at its discretion.

The Council of Ministers may, for considerations on its discretion in each case, and upon a proposal of the appropriate minister, and after the approval of GAFI BoD, exclude one of the projects from one or more of such conditions.

The amendment includes the addition of a new Article No.(76) bis, which states that "As an exception to the conditions and controls stipulated in Article (76) of the Executive Regulations, except for what is stated in item (8) of the same Article, the Council of Ministers may – upon the proposal of Appropriate Minister – approve the establishment of a Service Private Free Zone consisting of a main service project that establishes, develops, manages, and provides space for some service sub-projects that engage in similar activities, which fall under any of the sectors mentioned in Article (1) of the Executive Regulations under the Private Free Zones Framework. This shall be in accordance with a number of conditions and controls stipulating that: (i) the main project in the Service Private Free Zone shall be either a joint stock company or a limited liability company; (ii) the main project in the Service Private Free Zone shall observe the conditions of fire and Civil Defense in accordance with the Egyptian Code governing this respect; and (iii) GAFI BoD shall issue a resolution on the procedures and requirements for establishing service sub-projects within the Private Free Zone, to be approved by the Council of Ministers upon a proposal of Appropriate Minister.  

The conditions and controls also include the competence of the Board of Directors of the Public Free Zone, which the Service Private Free Zone lies within its geographical scope. Such BoD is competent to approve the establishment of projects within the Service Private Free Zone, and to cancel them. The chairman of the Board of Directors of referred Public Free Zone is responsible for licensing such projects to carry out their activities and considering the renewal and amendment of such license. The license must include a statement of the project's objectives, validity period and limits, and the value of the financial guarantee that is presented in exchange for the obligations that may be due on the project.