Requirements to Register a Business at The Social Insurance Authority in Egypt

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Immediately after a company is incorporated at the General Authority for Investment (GAFI), it should comply with the applicable laws in Egypt to open a file and register at the Social Insurance Authority without any delay to avoid being subject to the penalties decided by the respective laws.

For the Social Insurance registration process, the company must submit a set of documents and follow the necessary steps to successfully have an active file at the Social Insurance Authority in compliance with the laws and to consequently be able to register its employees on that file.

Required Documents – Social Insurance File Opening:

1) Company’s official documents such as: Commercial Register copy, investment prospectus, tax card, …etc.,

2) Signed lease agreement/ownership agreement of the company’s headquarters in Egypt, with date authenticated thereon at the Notary Public Office. So, it is not just a signed lease agreement but it has to be endorsed with an official stamp on it.

3) Valid passport copies/IDs of the partners.

4) Print outs of the social insurance number of the partners (applicable to foreign partners same as nationals). This means that an expat or any foreign investor has to apply for a Social Insurance filing for himself as an individual.

5) Certificate with main data from the corporate tax department.

6) Power of attorney from the company’s manager/legal representative in his/her capacity as per the company’s official documents. It can also be made at the investor’s place of residency.

Do We Need to Code the Shareholders of a Joint Stock Company Before Its Incorporation in Egypt?

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If you are willing to open an investment in Egypt and you are finally settled on the joint stock company form for your new business in Egypt, you will need to code all the founders whose names will be added in the joint stock company;

• The coding process is done through a brokerage company or a bank that is licensed by Misr for Central Clearing, Depository and Registry (M.C.D.R) to provide central custodian services of the securities.

• This phase doesn’t require the physical presence of the founders, as it can be handled by having POAs from the founders to Al-Bedeawi & Partners Law Office to undertake this process on behalf of them.

What are the requirements to the coding process?

• A power of attorney “POA” from each founder to undertake the process on their behalf.

• Valid passport copy for each of the shareholders.

The coding process takes on average between 7 to 15 days based on the company or bank to be chosen.
Below we shall illustrate what this coding request looks like by giving you a standard form of such request as per the following:

The form of the official request to code the founders in a joint stock company in Egypt “JSC”:

Attention: The Egyptian Exchange

With regards to your recent disclosure requirements, we would like to issue new code for the below client in the Egyptian market:

Client Name:- Entity Type:
– Domicile:
– Nationality:
– The name of the company delegates:
– Company’s capital:
– Company’s number of shares:
– Shares Type:Below is a list of the Company’s board of directors:- Names

Below is a list of all ultimate beneficial end investors (shareholders) in the COMPANY with 10% or more ownership:

Ultimate Beneficial End Investors (Shareholder) % Nationality
Name 0 –

We hereby undertake to immediately report in case of any change in the above information to EGX even before the end of the three years required to update the unified code.

There are no company stamp
Name
Director
/signature/

General Requirements for Company Formation in Egypt and What Is The Preferred Type of Company?!

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The statutory and registration process requirements differ based on the legal form of the company that the client wishes to set up in Egypt. We usually recommend our clients to go for the limited liability company type as the process of its registration is simpler than other types of company. The number of partners required for the legal structure of an LLC starts from one person (juristic/natural) and up to 50 persons.

The requirements also differ whether the partners in the company would be natural or juristic persons or both. But initially, the common basic requirements to set up an LLC in Egypt are:

1. A power of attorney from the concerned person. This POA template will be provided by Al-Bedeawi & Partners Law Office for the Client to sign and legalize in his/her place of residence up to the Egyptian consulate’s stamp, then the original of this signed and legalized POA shall be couriered to our office. If the concerned party is a foreign company, then in this case the POA shall be signed by the company’s manager. The signature will be given in his capacity as per the company’s official documents.

2. Valid passport copies of the partners/managers of the under-construction entity in Egypt.

3. Detailed description of the purposes/objects of the company the Client intends to establish, in order to check and identify if there are any pre-approvals required or not.

4. Suggested names for the company to be established.

5. Signed lease agreement for the headquarter of the company no matter is the size of such place.

6. Sometimes, you will be required to deposit the capital of the LLC specially if you seek to apply for an investor residency.

The company formation take on average 4-7 working days and it can be established in only one day with an additional fee to the government which is EGP10,000 as a VIP processing fees.

We, at Al-Bedeawi & Partners shall lead you through this process and usually we will give you more ideas on the incorporation and what suits you best when we discuss with you and know everything from you about the activity of the business.

Also, we conduct orientation sessions for our engaged clients to clarify everything relevant to their business in Egypt.  We even go farther by explaining the tax system after the incorporation to make sure that our client is in the loop of all the compulsory laws and deadlines. Accordingly, he will not be subject to any kind of legal violation, or penalties that may be resulted thereof.

What are the business tax submissions in Egypt and its deadlines?

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Any company in Egypt nowadays is under huge pressure of new and numerous tax regulations regardless the size of a company, especially that these new regulations have imposed a lot of heavy penalties on any disobeyed company.
Therefore, all companies must be aware of all deadlines of tax submissions to avoid being subject to any kind of penalties due to either delayed submissions or lack of information.

The first step would be registration (sign up) of the company at the electronic portal of the Egyptian Tax Authority, and there is a subscription fee for this portal of EGP 500 that shall be renewed and paid for annually.

As for the tax submissions of a company, they shall include the following:

  • Income tax return: which shall be submitted annually on April 30.
  • Payroll/earnings tax return: submitted every 3 months. Required documents include filled social insurance form No. 2 of the company, and the ID/passport copies of the partners and employees of the company.
  • Withholding tax return: submitted every 3 months.
  • Value-Added-Tax (VAT): The company will be required to register in the VAT only if:
  1. It starts with the importation activity under its name directly; or
  2. The total sales exceed the amount of EGP 500,000. The first EGP 500,000 will be tax exempted, and the tax assessment will start based on any amount exceeding this first EGP 500,000.
  • In all cases, once the company is registered in VAT, it shall collect 14% VAT on sales, and deduct 14% on inputs, then the difference between those amounts shall be paid.
  • The VAT tax returns are submitted monthly.

The company shall on a monthly basis provide two separate excel sheets; a) one for purchases detailing every item related to the company’s purchases during the previous month; and b) the other is for the sales to detail every item related to the company’s sales during the same month. Along with these excel sheets, the documents supporting these transactions will be required.

It is to be noted that all the tax returns are submitted through the Tax Authority’s electronic portal.

The records that the company shall currently authenticate are as follows (we shall purchase the records and authenticate them at the General Authority for Investment):

  • General daybook.
  • Inventory book.

About the author:

Mr. Al-Bedeawi is the founder of Al-Bedeawi and Partners LLP, and is a member of both the Egyptian Bar Association, as well as the International Bar Association in London. He has 13 years of experience in corporate law, international contracts, franchise, trademark registration, intellectual property rights, hotels management agreements and debt collection.

Before founding the law firm, Mr. Al-Bedeawi worked as a legal consultant for a number of high-ranking tourism and real estate investment companies in Egypt, including Misr-Italy Real Estate, and Sharm Dreams Group in which he was drafting, revising and negotiating its agreements including the management agreements for its five star Hilton and Marriott hotels. Additionally, Mr. Al-Bedeawi has made a 320 million EGP acquisition for a large ceramic factory in Ain Sokhna and he was representing the selling party and chosen to be as a mediator during the performance of the sale agreement made by Mr. Al-Bedeawi himself.

What Is the Registration Process of a Business at the Social Insurance Authority in Egypt

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Following our previous article regarding the required documents to open a Social Insurance file in Egypt for a company after its incorporation is completed, we must proceed with these following steps to finally have the file opened and ready to be used and start adding employees thereon;

a) First step of registration would be preparing the required documents as per our previous article, and as may be amended/required by the Social Insurance Authority pursuant to any new laws, regulations, or resolutions at the time of initiating the Social Insurance registration process. Also, the signature forms of the representative from the company who shall sign any Social Insurance form on behalf of the company shall be signed by this step.
This representative can be;

i) the signatory of the company as per the company’s commercial register,

ii) an authorized person by virtue of a delegation signed by the company’s manager, or

iii)an attorney by virtue of a POA signed by the manager.

b) Fill in the application of registration of the company at the Social Insurance Authority attaching thereto the Company’s documents as aforementioned, this is in addition to filling out the Social Insurance registration form(s) with the data (including the Social Insurance number) of the manager, or partner(s) of the company to submit with the application.

c) Afterwards, the application and the submitted documents are reviewed by the Social Insurance inspector who is assigned to the company’s file to make sure that all the documents and data are fulfilled before deciding a date for the inspection that will take place at the company’s headquarters.

 

d) Should the Social Insurance inspector not require any further documents or data to be provided by the company, the inspector shall consequently visit the company’s headquarters to undertake the inspection (to be noted that this inspection visit of the company’s headquarters normally takes place with no prior arrangements between the company and the Social Insurance inspector, and the company is not notified of the date thereof).

e) Following the inspection visit, the company’s file and documents are reviewed by the computerization department inside of the competent Social Insurance Office, so the reviewed and completed file is sent to the Main Office to which the competent SI Office is affiliated, for approval.

f) After the approval of the Main Office of the company’s Social Insurance file, it sends the file back to the competent Social Insurance Office to be reviewed for the last time by the computerization department in preparation for issuing the social insurance number of the company.

g) Keep following up until the registration on the system of the Social Insurance Authority is finalized, the Social Insurance Office shall then inform the company to pay any outstanding contribution/registration fees (if any), after which the company shall obtain its social insurance registration number marking the last step in the successful registration process of the company at the Social Insurance Authority and by which the company shall then be ready to register its employees in a whole new process and requirements.

Finally, you will need an experienced attorney to lead you and follow these steps to adequately register your company without any delay or overestimating your stuff number by the inspector. In order to avoid these practical problems you may need to communicate with out team to help you out on this issue.

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