February 2018 has seen the issuance of a several pieces of legislation that are crucial for the business and investment community in Egypt. On 11 February, the Ministry of Investment issued amendments to the Executive Regulations of Law No. 159 of 1981 on Joint Stock Companies, Partnerships, Limited Liability Companies, and One-Person Companies. The amendment mirrors the recent amendment of a significant number of provisions of the law itself issued on 16 January. Together, the amendment of the law and its executive regulations introduce the one-person company as a new legal form of company offering limited liability to the founder. In addition, significant corporate governance provisions were modified and/or added. These result in significant changes to the rules and procedures governing ordinary and extra ordinary general assembly meetings, the election of board members, financial statement disclosure and publication requirements, access to company records and information, minority shareholder rights, the acknowledgement of shareholder agreements, company establishment and the buyback of treasury shares. Companies that are subject to the Companies Law have been given a grace period of one year to apply the new rules.
In an equally important development, a new Bankruptcy Law No. 11 of 2018 was issued on 19 February 2018, which repeals old bankruptcy rules in Code of Commerce No. 17 of 1999, in addition to any other contradicting rules that deal with bankruptcy under other laws. The regulation of bankruptcy is one of the most significant issues that affect businesses and investment, as they aim to put in place a system that deals with bankrupt debtors while giving the distressed company or individual an opportunity to regain a healthy commercial position while protecting creditor
rights. The new law adds novel concepts and introduces a new approach to dealing with persons and entities who are facing financial or administrative turbulence. For instance, it introduces for the first time in Egyptian bankruptcy legislation the concepts of mediation and restructuring, giving both debtors and creditors a higher degree of flexibility in dealing with debts. It also revokes some harsh consequences of bankruptcy that were part of previous legislation, cancelling the authority of the bankruptcy judge to place the debtor in custody. The law states that its executive regulations and other related implementing decrees are to be issued within three months from the date of
its coming to effect determined as thirty days following publication.
A number of separate decrees were also issued in relation to Companies and Investment. Of these is a decision by the Ministry of Industry extending the grace period granted to importers in order to comply with the amendments of the Importers Registry Law by another six months. Meanwhile, two decisions were issued by the Ministry of Investment, one concerning the establishment of petition committees at GAFI, and the other establishing a committee to follow up and incentivize the activities of the new Centre for Investor Services.
Moving on to Financial Markets, the Central Bank of Egypt issued a circular to banks operating in Egypt regarding the steps that banks must undertake in preparation for applying International Financial Reporting Standard (IFRS) 9 on expected credit risk provisioning.
In addition, the Financial Regulatory Authority issued a decision regulating the availability of data on shareholders and owners of restricted securities with the aim of regulating the Central Depository and Registration Company's ability to issue certificates specifying the internal structure of ownership and shareholding of companies listed on the Egyptian Stock Exchange or those registered under the central depository system.
In Extractive Industries, the Executive Regulations of the Natural Gas Market Law was issued on 14 February, following the law s issuance in August 2017. The new law had allocated more space for private sector participation in the gas market and established a new regulatory body, the Gas Market Regulatory Agency making it responsible for managing the gradual liberalization of Egypt's natural gas market. The executive regulations provide more details regarding the issuance of licenses, which any entity is required to obtain prior to participating in any activity in the gas market. It also mandates the Agency with a number of regulatory and organizational responsibilities and empowers it to gradually create a competitive market. Furthermore, the issuance of the executive regulations signals the beginning of the countdown period in which actors must reconcile with the new legal requirements.
Moving on to the Health sector, we have covered the establishment of a medical centre the focus of which is the development of stem cell research and medical regeneration with the aim of contributing to the prospering of Egypt s scientific research capabilities in the medical field. The Centre is directly headed by the Chief of Staff of the Armed Forces, and decisions taken by its board are not valid until they have been approved by the Minister of Defence.
In Tourism, the Ministry issued a decision extending a previous decision to prohibit the establishment of new tourism companies for the duration of one year starting from the end of the preceding decision this February. The decision is controversial due to the decline in Egypt's tourism sector since 2011 as the ban on the establishment of new tourism companies and its extension for many years is a disincentive for potential investors in the industry, and a setback to the principles of fair competition amongst companies.
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