Legal Framework
Flexible
A resilient legal framework that allows developing a streamlined system for investors.
Autonomous
SCZONE has a robust legal framework that grants the Board of Directors a wide array of powers to sustain SCZONE’s peculiarity and competitiveness.
Decision in a Single Place
All Decisions are made at SCZONE’s premises to support and facilitate starting business.
Rules
The Suez Canal Economic Zone (SCZONE) represents a new chapter in the economic development of Egypt. Created under Law No. 83 of 2002 and its amendments by the virtue of law no. 27/2015.
Regulations
One of the main features of the special economic zones is that they are granted unique taxation and customs systems, characterized by being more flexible and autonomous.
Special Customs System
SCZONE has by the virtue of law a special customs system to be set by the Board of Directors after the approval of the Minister of Finance. This system shall include the following:
- Effective and swift checking procedures.
- Clear and transparent valuation rules according to the international trade agreements.
- Streamlined customs clearance procedures.
- Comprehensive and accurate laboratory checking at one location.
- Accurate and effective procedures for issuing and checking certificate of origins.
- Clear rules for determining the imported component percentage for products entering the local market.
A special customs administration shall be established inside the SCZONE by virtue of a decision from the Minister of Finance. This administration shall be supervised by a supreme customs committee to be established by the chairman of the SCZONE. This committee shall be competent to implement the policies and decisions of the SCZ Authority in this regard.
Special Taxation System
The SCZONE shall have a special taxation system to be issued by the board of
director after the approval of the Minister of Finance. This system shall
include the following:
- The special rules related to the tax filing and the related documentary and financial analysis.
- The conditions and criteria that must be met by auditors who can register at the auditors list at the SCZONE.
- Tax examination rules.
- Deduction and withdrawals systems.
- Rules and procedures for deciding and disputing the taxes.
A supreme taxes committee will be established by a decision of the chairman of the SCZONE after the approval of the Minister of Finance. This committee shall be responsible for implanting the tax system at the SCZONE.
The board of the SCZONE shall be the competent authority to issue all licenses required for establishing and running all kind of business and activities inside the SCZONE. It will be specifically competent to issue the following licenses:
- Licenses for agricultural, industrial and service projects.
- Land allocation, as well as building and demolishing decisions.
- Licenses for the construction and management of infrastructure and public utilities inside the zone.
- Environmental and health and safety licenses.
- Internal regulations and decisions related to the financial, administrative and technical affairs of the SCZ Authority.
- Establishing the companies and its registration at the commercial register.
- Licenses for establishment of schools and educational institutes as well as hospitals, scientific, research, medical and cultural centers.
Projects may not be established in the SCZONE unless a prior written approval from the board of the SCZ Authority is obtained. The application for incorporation must include, inter alia, the following information:
- Founders and their nationalities,
- Purpose of the project and its investment cost,
- Legal structure of the project and its capital,
- Financing sources,
- Project legal-requirements,
- Numbers of employees, and their nationalities,
- Project’s impact on environment, and any other information required by the board of directors.
The project company shall be incorporated in compliance with the Egyptian Companies Law no. 159/ 1981 as follows:
A project company may also take the form of a “Sole Proprietorship” or a “Branch” of a foreign company. The board of directors shall design and issue a template of the articles of associations for the companies, and determine the documents required for completing the incorporation process.
Incorporation of Companies and EstablishmentsDefinitions & Legal Rules of the different Legal Entities within SCZone
- A sole proprietorship is businesses owned by a sole person whether Egyptian or foreigner. This person is the businessman who incorporates and runs the establishment, and is hence personally held liable for the obligations thereof.
- It is necessary that the owner of the establishment has the legal personality (which is reaching the age of 18 or 21) subject to laws of the country.
- A joint-liability is a company established/owned by two persons or more and shall be held responsible for the obligations and the performance of the company.
- The company’s name may include the name(s) of one or more of its partners, plus adding the suffix “and co.” or “and partners”.
- The joint-partner shall have the capacity as a businessman and shall therefore have the legal capacity to enter into trade by reaching the age of (18-21) subject to the authorization of the Court.
- Full foreign ownership is allowed (100% of the shareholdings) except for the activities limited to the Egyptians.
- Each partner in the joint-liability company is responsible for the company debts, accordingly each partner is fully responsible for all the debts.
- The management of the company shall be for the joint partners or one of them or, a third party may be appointed as manager.
- A company that is held between one or more partners who have joint liability in addition to other partners who contribute to the share capital of the company, shares the profits and losses of the business, yet does not get involved in the management of the company
- Full foreign ownership is allowed (100% of the shareholdings) except for the activities limited to the Egyptians.
- The company’s name may include the name(s) of one or more of its partners
- The company management is reserved for the acting partners or one of them and the dormant partner shall not interfere under any circumstances.
- The minimum number for the incorporators is 2 (two) persons and shall not exceed 50 (fifty). The legal capacity of the natural persons must be fulfilled. The Liability is limited to the value of the partner’s shares.
- The minimum amount of the company capital is determined by the partners in the memorandum of association.
- Full foreign ownership is allowed (100% of the shareholdings) except for the activities limited to the Egyptians.
- At least one of the managers shall be Egyptian.
- The company’s name may include the name(s) of one or more of its partners Additionally, the words “Limited Liability Company” must be included in the name.
- If the purpose of the company is to employ workers whether abroad only, locally only or both, the paid-up capital in all cases shall not be less than (One Hundred Thousand Egyptian Pounds) – If the company purpose is limited to the employment abroad only, the participation of Egyptians in the company capital shall not be less than 51%. But if the purpose of the company is limited to the employment of domestic workers only or a combination of applying labor at home and abroad , the participation of Egyptians in the company capital in both cases shall not be less than 100%.
- The minimum number for the incorporators is (3) three persons.
- The minimum issued capital is (250,000) two hundred and fifty thousand Egyptian Pounds.
- The participation of foreigners in the company capital may be (100%) – with the exception for those engaged in activities limited to the Egyptians or required to have a minimum level of the Egyptian participation.
- The minimum number for the members of the board of directors is “three”.
- The company articles of association may stipulate multiple representatives for the shareholders.
- The minimum value of the share is (5) five EGP and the maximum value is (1000) One Thousand pounds or the equivalent in foreign currencies.
- The company’s articles of association may include the issuance of shares to the shareholders on condition that they do not exceed 25 % of the company total number of shares, on the condition that they are all paid in full.
- The minimum number for the incorporators is (3) three persons.
- The minimum issued capital is (250,000) two hundred and fifty thousand Egyptian Pounds.
- The participation of foreigners in the company capital may be (100%) – with the exception for those engaged in activities limited to the Egyptians or required to have a minimum level of the Egyptian participation.
- The minimum number for the members of the board of directors is “three”.
- The company articles of association may stipulate multiple representatives for the shareholders.
- The minimum value of the share is (5) five EGP and the maximum value is (1000) One Thousand pounds or the equivalent in foreign currencies.
- The company’s articles of association may include the issuance of shares to the shareholders on condition that they do not exceed 25 % of the company total number of shares, on the condition that they are all paid in full.