Investment Guarantees in Egypt

Egypt seeks to attract more domestic, regional, and international investments to achieve high growth rates. To reinforce this objective, specific laws governing investments have been enacted to attract foreign investors, including Investment Law No. 72 of 2017 and it is executive regulations. The General Authority for Investment and Free Zones is the official regulator responsible for all documentation related to company establishment, licensing, and authorization.

The Investment Law encompasses numerous incentives and guarantees aimed at protecting investors against expropriation, compulsory pricing, ensuring full profit entitlement, profit distribution, and the right to resort to dispute resolution panels managed by the General Authority for Investment.

Law No. 72 of 2017 ensures fair treatment for both local and foreign investors and protects the invested capital and projects from any arbitrary actions. It prohibits the nationalization of investment projects and imposing custody, seizure, or freezing of funds except by judicial order. Additionally, the law guarantees freedom for foreign investors to transfer profits in foreign currencies without restrictions. In cases of liquidation, companies undergoing liquidation must settle all outstanding financial frameworks within a maximum period of 120 days, ensuring a safe and timely exit for the investors.

The most significant guarantees according to the law are as follows:

- All investments within Egypt receive fair and equitable treatment.

- The state ensures foreign investors receive treatment equivalent to that granted to national investors. However, exceptions may allow preferential treatment for foreign investors based on the principle of equal treatment.

- Invested funds are protected against arbitrary measures or discriminatory decisions.

- Non-Egyptian investors are granted residency throughout the project's duration.

- The state commits to respecting and enforcing contracts entered into by investors, provided the investment project was not established through fraud, misrepresentation, or corruption. Proof of this must be presented through a judicial ruling or arbitration.

- Decisions concerning investment project affairs are reasoned and communicated to relevant parties.

- Nationalization of investment projects is prohibited.

- The expropriation of project funds is permissible only for public benefit, with fair compensation paid promptly, equivalent to the fair economic value of the expropriated assets, transferable without restrictions.

- The imposition of administrative sequestration on these projects is strictly prohibited. Sequestration measures can solely be enforced based on a conclusive judicial ruling. Seizing such projects is also impermissible except under a judicial order or ruling, strictly limited to the circumstances delineated within the law.

- Administrative imposition of custody on such projects is not permissible unless by final judicial order. Likewise, seizure or freezing of assets is only allowed by judicial order or final judgment, except for tax debts and state social insurance contributions, which may be collected through various forms of seizure without breaching contracts made by the state or legal entities with the investor.

- Administrative bodies are prohibited from issuing general regulatory decisions imposing financial or procedural burdens on projects subject to this law or imposing fees or charges on them without the advisory opinion of the Authority's Board, and the approval of both the Cabinet and the Supreme Council for Investment.

- The revocation, suspension, or withdrawal of licenses issued for the investment project is only permissible after notifying the investor of alleged violations, hearing their point of view, and providing an appropriate period to rectify the violation.

- The investor has the right to establish, expand, finance, and operate the investment project from abroad without restrictions and in foreign currency. They have the right to own, manage, use, dispose of, earn profits, and transfer them abroad, as well as liquidate the project and transfer all or part of the proceeds abroad without infringing upon the rights of others.

- The state allows all cash transfers associated with foreign investment freely and promptly within and outside its territories in a convertible currency. Similarly, the state allows the conversion of local currency into a usable currency without delay.

- Projects subject to this law have the right to independently import needed raw materials, production requisites, machinery, spare parts, and suitable transportation means without being listed in the importer registry.

- These projects have the right to export their products directly or indirectly without a license and without the need to be listed in the export registry.

- Investment projects are permitted to employ foreign workers, up to a maximum of 10% of the total workforce, which may be increased to a maximum of 20% under specific conditions in strategic projects outlined by the Supreme Council for Investment, ensuring national workforce training in certain strategic projects. Foreign workers in investment projects have the right to transfer all or part of their financial dues abroad.

Prepared by/

RPLF Team

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