The council of ministers agrees to reduce the minimum capital of single member companies to EGP 1000 instead of fifty thousand Egyptian pounds (EGP 50,000), and to approve the conditions for considering the investment project as strategic or national one.
During its session held today, headed by Dr. Mostafa Madbouly, at the government headquarters in the new city of El Alamein, the council of ministers approved a number of decisions related to facilitating the business environment and providing new facilities to investors. Such decisions included the approval of amending the executive regulations of the Law on Joint Stock Companies, Partnerships Limited by Shares, Limited Liability Companies and Single Member Companies issued by Law No. 159 of 1981, which specifies the minimum capital needed to incorporate a single member company.
The Prime Minister stressed that the aim of such decisions is to support young investors, start-up companies, and entrepreneurship, which contributes to encouraging investment opportunities.
Counselor Mohamed Abdel Wahab, CEO of the General Authority for Investment and Free Zones (GAFI), explained that the amendment approved by the Council of Ministers included reducing the minimum value of the capital of a single member company to only one thousand Egyptian pounds (EGP 1000) instead of fifty thousand Egyptian pounds (EGP 50,000). The aforementioned comes in line with the state’s approach to simplify and facilitate procedures for investors, encourage investment opportunities in the establishment of these companies, and stimulate start-up companies in the fields of information technology and other fields when establishing such type of company in Egypt, which allows only one person to incorporate a single member company.
Moreover, the council of ministers also approved a draft decree on defining the conditions for considering the investment project as a strategic or national project, in accordance with the provision of Article (20) of the Investment Law promulgated by Law No. 72 of 2017.
The draft decree stated that in accordance with the provision of Article (20) of the Investment Law, in order for the investment project to be considered a strategic or national project it has be established in one of such sectors; the electricity and renewable energy sector, the petroleum and mineral resources sector, the transport sector, the industry sector, the communications and information technology sector, the housing and utilities sector, the tourism sector, the youth and sports sector, or the military production sector.
In addition, such project must meet at least two of the below criteria, which are to contribute in increasing exports by exporting at least a portion (50%) of its products abroad annually, within a maximum period of three years from the date of starting of activity, and to be funded by foreign currencies transferred from abroad through an Egyptian bank in accordance with the provisions set forth in Article (6) of the Investment Law and Article (9) of its Executive Regulations, and in accordance with the controls determined by the Board of Directors of the Central Bank.
The criteria also included that the project aims to reduce imports, domestication of industry and deepen the local component in its products, provided that the percentage of the local component of raw materials and production requirements is not less than (50%), provided that this percentage is calculated by deducting the value of the imported components from the cost of the product, and that the project be established in one of the most in need-of-development areas identified by Council of Ministers Decree no. 7 of 2020.
The criteria also included that the project contribute to the transfer and domestication of modern and advanced technologies to Egypt, and support innovation, development and scientific research, as estimated by the Appropriate Minister concerned with Communications and Information Technology affairs, the Appropriate Minister concerned with industry affairs, or the Appropriate Minister concerned with scientific research affairs, as the case may be, and the project shall be one of the projects that aims to secure strategic goods for the country and limit its import, and to be one of the labor-intensive projects, in accordance with what mentioned in Article (11) of Executive Regulations of the Investment Law, in addition to the project contribution to reducing environmental impact, reducing heat and gas emissions and improving the climate, as estimated by the Appropriate Minister concerned with Environmental Affairs.
The resolution also said that the stipulated conditions and criteria should be amended and updated annually, or whenever necessary, in light of the state's economic development plan.
GAFI CEO indicated that this resolution comes as a continuation of a series of measures issued recently with the aim of improving the investment and business climate, to keep pace with the aspirations of investors and contribute to attracting more local and foreign investments in areas that are in line with the state's economic development plan.
