Facilitating foreign investment in Egypt by issuing a new import regulations: A Legal Analysis of Law No. 173 of 2023:
In a significant move to bolster economic development and attract foreign investors, the Egyptian government has introduced Law No. 173 of 2023, amending certain provisions of Act No. 121 of 1982 concerning the Importers' Registry. This amendment marks a pivotal shift in the country's investment landscape, removing a major hurdle for foreign companies seeking to engage in import activities within Egypt.
Previously, Act No. 121 of 1982, in it the second paragraph of Article (2) item (e) which stipulates that: "...and the stocks or shares of shareholders/partners in joint stock companies, companies limited by shares, limited liability companies, or partnership companies should be owned by at least 51% of Egyptians." imposed a stringent requirement for joint stock companies, companies limited by shares, limited liability companies, or partnership companies to have at least 51% of their shares owned by Egyptian nationals. This condition posed a significant challenge for foreign companies, often deterring them from investing in Egypt's import sector.
Recognizing the need for a more inclusive investment framework, the Egyptian legislature enacted Law No. 173 of 2023. This amendment introduces a crucial exception, allowing companies owned by foreigners or owned by Egyptians at a percentage of less than 51% of the shares to register in the Importers' Registry. However, this exception is not without its limitations. The total period of entry in the Register shall not exceed ten years from the date of enforcement of the law. Additionally, the period may be extended for one additional ten-year period only, subject to a Cabinet Decree based on the recommendation of the Minister concerned with Foreign Trade Affairs.
Where Law No. 173 of 2023 stated that: "As an exception to the first paragraph of item (second/e) of article (2) of law no. 121 of the year 1982 on the importers' register, joint stock companies, partnerships limited by shares, limited liability companies or partnerships, where the stocks or shares of their partners are not owned by Egyptians or owned thereby at a rate less than (51%), may be recorded in the Importers' Register, provided that the total periods of entry in the register shall not be more than ten years as of the date of enforcing the provisions of the present law. Such period may be extended to one other period only of not more than ten years, by virtue of a decree to be issued by the cabinet based on the proposition of the minister concerned with foreign trade affairs."
These provisions demonstrate a delicate balance between encouraging foreign investment and preserving a degree of Egyptian control over import activities. The ten-year limitation serves as a safeguard, ensuring that foreign companies maintain a long-term commitment to Egypt's economy.
In conclusion, Law No. 173 of 2023 represents a positive step towards fostering a more open and attractive investment environment in Egypt. By relaxing the ownership restrictions for foreign companies seeking to engage in import activities, the Egyptian government has signaled its commitment to promoting economic growth and attracting international investors. This amendment is likely to have a significant impact on Egypt's import sector, stimulating competition, fostering innovation, and ultimately contributing to the country's overall economic development.
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