Banking & Finance 2023

Last Updated October 12, 2023


Law and Practice


Matouk Bassiouny & Hennawy was established in 2005 and has since developed into a premier full-service business law firm in Egypt and the MENA region, with offices in Algeria, Sudan, and the UAE, as well as two country desks covering its Libya and South Korea practices. Its over 200 lawyers are trained locally and internationally in common and civil law systems and are fully conversant in English, Arabic, French and Korean. The firm’s finance and projects group – headed by regional managing partner and group head of finance and projects Mahmoud S Bassiouny – represents numerous clients in the energy sector, focusing on areas such as renewable energy, oil and gas, power (including nuclear power), gas pipelines, and transmission and distribution assets.

The banking laws and regulations in Egypt have been subject to continuous amendments and updates throughout the past decade. The Banking Law No 194 of 2020 (the “Banking Law”), which was issued on 15 September 2020, expanded upon the previous banking legislation, the Central Bank Law of 2003. The Banking Law determines many unclear and unsettled matters from the previous legal regime and embraces new financial technologies within the regulatory system. This has helped the banking sector reach out to unbanked businesses, including for services such as lending and cash management activities.

The legislature has also expanded on other corporate financing alternatives – such as through the recent issuance of the Microfinance Law, the Consumer Finance Law and the Factoring and Financial Leasing Law – in addition to the many other initiatives of the Central Bank of Egypt (CBE) in relation to companies operating in the tourism sector and the financing of mid-level residential units. This is in addition to transactions of issuing bonds and securitisations that have started to attract the interest of new business sectors.

These types of financing have created different structures for lenders and alleviated the pressure on the banking sector in certain areas. They have also created competing financiers that can offer alternative corporate finance solutions to traditional banking products. In relation to the loan market in Egypt, the real estate sector remains a huge player, with a lot of greenfield projects and restructuring deals resulting from the economic impact of the COVID-19 pandemic.

The Russia-Ukraine war has added tension to the Egyptian economy and caused inflation to soar, multiplying the effects of COVID-19 on the economy. As Egypt relies heavily on Ukraine for agricultural commodities, there was a deficit in these and this was reflected in a price hike for many products and commodities. To alleviate such economic turmoil, the CBE’s Monetary Policy Committee (MPC) convened on 21 March 2022, amid the Ukraine war, to answer the on-going threats. The MPC has set the inflation target at 7% on average by the fourth quarter of 2024 and has raised policy rates by 100 basis points. Further, the MPC released a statement on 2 February 2023 confirming that it has increased the required reserve ratio by 400 basis points in September 2022. Generally, the MPC reiterates that monetary policy tools are utilised to anchor inflation expectations and contain demand pressures and has depreciated the Egyptian pound against the US dollar.

The increased cost of finance caused the CBE to renew its initiatives for many of the troubled sectors that are crucial to the economy. For example, several initiatives were introduced and re-introduced for the real estate, agricultural, and tourism sectors to support distressed and struggling businesses in these sectors.

Egyptian banks operate under regulations from the CBE to manage any default risk and undertake ongoing measures to screen the creditworthiness and financial health of borrowers. This has limited the high-yield market to foreign non-institutional lenders and other alternative forms of trade financing offered by foreign traders. Thus, the high-yield market operates under different conditions that do not interact with mainstream institutional lending, whether through Egyptian or foreign institutions.

The recent inclination towards securitisation did not affect the loan market in a significant way, as this relates to businesses that operate in quite specific sectors, such as capital markets activities. The securitisation transactions also operate under legal and regulatory requirements that set out minimum rating requirements for the assigned rights and the issued bonds.

The loan market has recently seen an increased reliance on international financial institutions and multilateral development agencies compared to previous decades and macroeconomic projects. These institutions are taking a bigger role in the local loan market as they offer convenient solutions that have a competitive edge over Egyptian commercial banks. Foreign commercial banks have also followed suit in financing infrastructure mega-projects in several transactions according to syndicated loan structures.

Such lending transactions are, by convention, based on English law or the laws of the State of New York. Foreign commercial banks usually rely on the documentation of the Loan Market Association, while each international financial institution relies mostly on its own standard set of loan documentation. The reliance on standard documents is an advantage because it streamlines the loan documentation process; nonetheless, the application of foreign law on lending transactions in Egypt has proved to be a burden on transaction costs in several instances.

Additionally, recent trends have seen companies increasingly resorting to alternative financing methods such as factoring, financial lease and other non-banking financial solutions. These activities provide alternative forms of credit, subject to obtaining the required licences by the Financial Regulatory Authority (FRA), and operate under different pieces of legislation, such as the Financial Leasing and Factoring Law No 176 of 2018. Most recently, Egypt issued Law No 5 of 2022 regulating and developing the use of financial technology in non-banking financial activities for the regulation of fintech financial activities. Many of the companies operating in these activities

There are certain techniques that firms and commercial banks are currently relying on to mitigate the risk of their portfolios. Against the backdrop of highly leveraged corporations and sovereign debt borrowers, a hedging arrangement or a sovereign guarantee often provides a safe harbour against potential risk, which is typically governed by International Swaps and Derivatives Association (ISDA) Master Agreements. There are also several mega-project transactions that involved the participation of an insurance agency to mitigate any default risk.

In addition, borrowers are concerned about the interest rate risks and the volatility of interest rates. This has led to an increased reliance on selection notices to have the option to choose between variable and fixed interest rates at certain points throughout the lifetime of the loan.

The FRA has issued regulations requiring companies to prepare disclosure reports on ESG standards after approving the first issuance of green bonds in the Egyptian capital market – worth USD100 million – to a company listed on the Egyptian Exchange (EGX). Companies listed on the EGX and companies with non-banking financial activities have to provide ESG disclosure reports related to sustainability.

In addition, other reports related to the financial consequences of climate change shall also be provided by such companies. As of January 2022, a quarterly statement on the procedures taken, or that will be taken, by companies with respect to such disclosures shall be also provided to the FRA.

Commercial lending activities in Egypt are subject primarily to the Banking Law, which defines a banking activity that would require a licence from the CBE as any service provided customarily by banks in Egypt on a recurring basis. For a bank to operate in Egypt, it must have a licence from the CBE and comply with all the regulations of the CBE.

Other non-banking financial services are regulated under the Capital Market Law No 95 of 1992, as amended, and are regulated by the FRA. This includes types of financing such as factoring, invoice discounting, securitisation, margin trading and investment banking. Moreover, according to the Microfinance Law No 141 of 2014 as amended, companies that are licensed by the FRA can provide microfinancing to businesses with a ceiling of up to EGP200,000 for each loan.

The Banking Law defines banking activities as those that involve, on a primary and recurring basis, receiving deposits or obtaining funds, investing those monies to grant financing or credit facilities, participating in the capital of companies, and undertaking what is considered as banking activity by reference to the prevailing customs. These are the main activities of commercial banks in Egypt and would require the entity that practises these activities to have a licence from the CBE. Additionally, pursuant to Article 1 of the Banking Law, entities and branches of foreign banks may undertake banking activities provided that the relevant CBE licence is obtained. The Banking Law includes an explicit restriction on any entity not licensed to practise such activities.

This restriction, although broad and explicit, is faced with the reality that many foreign commercial banks provide loans to companies in Egypt, including governmental and public entities, on a non-recurring basis. It is also common practice to have intra-group and shareholders’ loans without considering such transactions caught by the Banking Law restriction.

These practices have led to a development in the construction of the rule regarding the Banking Law restriction, so that the acceptable interpretation is deemed to catch lending activities by an entity which are recurring, continuous, and offered on a non-solicited basis to potential borrowers in Egypt. The settled position, then, is that competent authorities close their eyes to foreign lenders providing loans to Egyptian entities as long as such lending is not advertised or offered to the public and is not considered a significant part of the lending activities of the foreign lender.

The regulatory framework around granting securities to foreign lenders may vary according to the type of collateral involved. For example, Article 106 of the Banking Law gave foreign banks and foreign financial institutions the right to take real estate mortgages and commercial mortgages. This can be practically achieved through a prior authorisation from the CBE.

Limitations Relevant to the Movable Collaterals Law

In relation to the Movable Collaterals Law No 15 of 2015 (the “Movable Collaterals Law”), which regulates the granting of securities such as pledges over bank accounts, future assets, and movable assets, including intangible assets, the law requires the entity benefiting from the security to be licensed as an Egyptian bank, a financial leasing company, or another type Egyptian company licensed to provide credit solutions. This means that the Egyptian Collaterals Registry is limited to Egyptian entities, which have exclusively online access to the Registry.

Limitations Relevant to Security on Immovable Security

In relation to real estate mortgages, Egyptian law does not include any general restriction on a foreign lender being a mortgagee under a mortgage contract. However, there is a disparity between the legal rule and its application. The offices of the Notary Public in Egypt, being the competent authority responsible for real estate mortgage registration, do not, as a matter of practice, accept any mortgage registration with a foreign entity as a beneficiary. It is yet to be clarified whether such practice is based on internal regulations or merely common practice developed over the years.

Limitations Relevant to a Shares Pledge

A pledge on shares in a joint stock company is executed in the form of an agreement that has to be registered with Misr for Central Clearing, Depository and Registry (MCDR), the authority responsible for the central depository of all shares in joint stock companies, in order to block any trading on the shares in the registers of the MCDR. One of the requirements for the MCDR to register such a pledge, is that the pledgee must be coded on the EGX to be able to sell the shares in an enforcement scenario. This coding system on the EGX is available for foreign as well as Egyptian entities and individuals.

At present, there are no specific restrictions, controls, or other concerns regarding foreign currency exchange, which is permitted through banks registered with the CBE and licensed foreign exchange bureaus. The Banking Law also includes several provisions that provide for the licensing of foreign currency exchange firms, and payment facilitators and payment aggregators, although these provisions leave the details of the licensing processes to be decided by the board of directors of the CBE.

According to the Banking Law, the borrower must use the loan proceeds for the purposes contained in the credit approval of the bank and the bank must supervise such use. The use of the facility proceeds is subject to the general principles of Egyptian law regarding corruption, terrorism and money laundering. The use by the borrower of the loan proceeds for any of the aforementioned purposes would be penalised under the relevant criminal provisions. Furthermore, the use of the loan proceeds for a purpose other than the purpose included in the credit approval is subject to imprisonment and/or a fine not exceeding EGP1 million and not less than EGP100,000.

In Islamic finance transactions, the general rules of Sharia apply and, as such, the proceeds cannot be use in activities such as gambling, or those relating to alcohol or arms trading.

The concept of a trust is not specifically recognised under Egyptian law, although its general features can be found in the agency rules, with certain disparities. It is common in syndicated loans to have security and facility agents play an administrative role representing the interests of the syndicate lenders.

The facility agent can be appointed in the same debt instrument to act on behalf of the lenders in relation to the management of documentation and transfer of funds to and from the borrower. The security agent holds the security documents on behalf of the lenders, and in cases of default, it is entitled to initiate enforcement procedures on behalf of the lenders.

Typically, a loan agreement includes an obligation on the borrower to pay annual fees to the agents, in consideration for the services performed by them. The agency roles as clarified can be based on the agency provisions included in the Civil and Commercial Codes.

The transfer of a loan between lenders can be made by way of an assignment that is subject to the Egyptian Civil Code (ECC). The assignment agreement is executed between the existing lender and the new lender without the necessity of having the borrower as a party. The notification to the borrower, however, is required to make the assignment effective towards the borrower as per Article 305 of the ECC. Also, in practice, the existing lender and the new lender sign an assignment certificate whereby the assignor bank is exempted from its obligations under the loan agreement.

Security interests can also be transferred by way of an ECC assignment from a theoretical perspective. However, it is recommended in many cases to cancel the security interest and create a new security interest in favour of the new lender. This is especially relevant in cases where the existing security interest does not include all favourable terms for the new lender or where there are practical considerations that impede the transfer of security process.

There are no specific restrictions on debt buy-back by the borrower or sponsor.

There are no rules regarding “certain funds” with respect to public acquisition finance transactions. The usual set of documentation is typically used in these transactions. All information on loans and other financings taken by the bidder must be disclosed in its subscription bulletin.

The recent economic turbulence caused by COVID-19 followed by the Russia-Ukraine war have caused parties in the loan market to stress the importance of having well drafted market disruption clauses. Also, many US dollar-denominated loan agreements have recently been subject to addendums for adopting the transition from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR) as a reference for interest rates.       

Under the ECC, to the extent that interest payable by an Egyptian entity would exceed 7% per annum, including compounding or capitalisation of interest, or interest exceeding the principal, such excess is unenforceable.

It may be argued that the calculation and determination of interest is subject to Article 50 of the Commercial Code, which allows such rate between merchants to a contractual maximum of the rate declared by the CBE from time to time. This restriction does not apply to banks licensed and registered in Egypt to undertake banking activities, which banks are entrusted to freely set interest rates subject to the nature of the banking activities in accordance with the Banking Law.

The are no specific requirements to disclose financial contracts other than the generally applicable regulatory reporting and disclosure requirements for the activities of financial institutions in general. Egyptian banks and financial institutions are also subject to contractual obligations with the US authorities to disclose information relevant to US individuals and entities under Foreign Account Tax Compliance Act (FATCA) rules. Many of these institutions request specific clauses in the documentation to allow them to disclose such information.

Interest payments paid overseas to entities that are non-resident in Egypt by entities which are resident or have a permanent establishment in Egypt are subject to withholding tax at a rate of 20%, whether paid directly or indirectly, without any deductions, and subject to any double taxation treaty which may provide for a lower withholding tax rate or an exemption from tax. Withholding tax must be remitted to the Tax Authority on the first business day following the day on which the withholding has been deducted.

Pursuant to the Egyptian Stamp Duty Law No 111 of 1980, a stamp duty tax is levied in respect of credit facilities and loans extended by banks. The rate of the stamp duty tax is ten basis points every quarter calculated on the highest debt balance throughout the quarter under the facility, loan or borrowing extended by the bank. The stamp duty tax must be borne and split equally between the lender and the borrower and should be transferred by the lender to the competent tax authority within a maximum period of seven days from the end of each quarter.

Loans extended by foreign lenders or non-money centre banks remain subject to a withholding tax on interest rates in accordance with the Income Tax Law. This is usually mitigated through including tax gross-up clauses in the loan agreement to shift the burden of tax to the borrower.

Egyptian law recognises various forms of security over assets including real estate mortgages, tangible and intangible movables mortgages, pledges of bank accounts, pledges of shares, security on claims and receivables such as accounts receivable and rights under contracts. The security takes the form of an agreement between the pledgor and the pledgee.

Perfection of the security will vary subject to the nature of the same. In order to perfect a real estate mortgage, it shall be notarised with the Notary Public, while perfection of a possessory mortgage entails transferring the possession of the movables, subject of the mortgage, to the pledgee in order for the pledge to take effect. The Egyptian Collaterals Registry has been established to register security interest over movable assets, including cash deposited in bank accounts and non-possessory pledges. In the case of a share pledge, the relevant security interest must be registered with the MCDR. Unregistered security interests would carry the risk of unenforceability towards third parties. 

The fees for registering securities will vary according to the type of the security and, in certain instances, subject to the amount of the loan.

Floating charges are not explicitly regulated under Egyptian law. However, under the Movable Collaterals Law, a pledge may be granted over future assets and registered with the Egyptian Collaterals Registry. Security interest may also be granted to secure a future debt, an overdraft, or a revolving line of credit.

Corporate guarantees, including downstream and cross-stream, are generally permissible subject to the existence of corporate commercial interest. Upstream guarantees are permitted under the Companies Law to the extent that the borrowing shareholder is not represented on the board of directors of the guarantor. The Companies Law further prohibits any company from guaranteeing the obligations of its board members to prevent the abuse of board member’s rights for personal interests. Thus, if any subsidiary is guaranteeing the obligations of its parent company, the parties must ensure that the parent is not represented on the board of the subsidiary during the lifetime of the financing.

There is no explicit legal provision restricting the target from granting security in the context of the acquisition of its own shares. In practice, the acquirer grants the shares of the target as security for the financing of its transaction. In this regard, it should be noted that the target may not provide a guarantee in relation to the liabilities of any of its board members, and hence the acquirer may not be represented on the board of directors of the target.

Generally, no further consents are required. Please refer to 5.1 Assets and Forms of Security. From a practical perspective, registration of in rem security interests may trigger significant survey fees subject to the nature and size of the land, and as determined on a case-by-case basis. This applies to foreign lending institutions only, as Egyptian banks benefit from a cap on notarial fees under the Banking Law.

Please note, however, that certain restrictions may arise in relation to the registration of the security. By way of example, the property itself must be registered with the Notary Public as a prerequisite for registering the real estate mortgage. This might not be practical as the majority of real estate properties in Egypt are not registered due to the lengthy and costly procedures involved.

Security release mechanics vary depending on the type of security, but security interests are typically released upon the instructions of the pledgee following the complete repayment of the debt obligations by the pledgor.

Regarding the pledge of shares, the termination instructions by the pledgee must be notified to the MCDR to release the block placed on the shares. For other forms of registrable securities, the release will also have to be perfected in accordance with instructions from the pledgee to the authority responsible for the registration of the pledge.

Regarding the priority of competing security interests, certain creditors enjoy a general or specific lien created by virtue of the law over all or part of the assets of the debtor. For example, the law determines a priority ranking of a lien for judicial expenses and tax obligations over any other debts. Other than lien rankings provided by the law, different lenders have the right to secure their debt and subordinate contractually their rights between themselves and/or other creditors, such as in the case of subordinating a shareholder loan to a creditor. If there is no subordination contractually, the rank of each security interest is determined pursuant to its date of registration and perfection, whereby earlier registration takes precedence over later.

Any contractual subordination executed prior to bankruptcy procedures will survive. However, the borrower shall not undertake any action contradicting the restructuring plan (eg, granting securities) prepared in light of its potential bankruptcy that will affect the lenders’ interests. Accordingly, the contractual subordination concluded after the restructuring plan may not survive, subject to the discretionary power of the competent court. If the competent court declared the bankruptcy of the borrower, it shall not administer or dispose of its assets and hence the contractual subordination will not survive.

Liens ranked as such and mandatorily preferred by virtue of law shall take priority ahead of contractual loan debts. These preferred liens are generally debts related to judicial expenses and tax dues. After satisfaction of rights mandatorily preferred by law, secured creditors shall recover outstanding debts from the assets taken as security according to their degree of priority. Finally, unsecured creditors will share any remaining enforcement proceedings on a pro rata basis in relation to the total indebtedness of the debtor. If a secured creditor did not collect all its debt from the asset provided as a security, then the creditor must participate with the remaining uncollected sum in a pro rata distribution with other unsecured creditors. Claw-back rights are not explicitly regulated under Egyptian law.

According to Articles 1138, 1139, and 1140 of the ECC, senior debts that have priority over a secured debt created by a contractual relationship, are as follows according to their order of priority:

  • The most senior debts are the judicial expenses incurred for the benefit of all creditors for the preservation and sale of the debtor’s money. These are the expenses paid for the benefit of all creditors, such as attachment expenses, custodial services expenses, and procedures of enforcement expenses. These expenses can be paid by and accordingly be due for one of the creditors undertaking these procedures on behalf of the other creditors, or the court. The seniority means that these expenses will be collected from any enforcement proceeds resulting from the sale of the mortgaged assets (whether real estate or commercial) prior to any other rights or debts.
  • Second are the amounts due to the public treasury, such as taxes, duties, and other rights that are enumerated specifically by virtue of different laws. These dues to the public treasury can be found in tax laws, such as the Income Tax Law or the Real Estate Tax Law. The seniority means that these dues will be collected from the assets which are subject of the tax dues, each in accordance with the law that determines the tax. For example, real estate tax dues may be collected as senior debt from the enforcement proceeds resulting from the sale of the mortgaged real estate assets.
  • Third are amounts incurred for the maintenance and restoration of a movable property, such as maintenance expenses for a car or other movables. These amounts are considered senior debts and can be collected from the value of the relevant movable property.

There are other senior debts that can be specific to a real estate property. These are senior debts by virtue of Articles 1147, 1148, and 1149 of the ECC and will have a priority that is subsequent to other senior debts mentioned in Articles 1138, 1139, and 1140. These debts will not have seniority over secured debts created under a contractual obligation unless they are registered prior to the real estate mortgage. 

The enforcement of security under Egyptian law varies depending on the type of security in question. It is generally completed through selling the asset by public auction through courts. Certain laws expressly set forth simpler enforcement procedures, such as the Banking Law in relation to the enforcement of a share pledge registered in favour of Egyptian banks and the Movable Collaterals Law in relation to a pledge over bank accounts. A general overview on enforcing security in Egypt is as follows.

Immovables (ie, Lands and Buildings)

An “execution order” is issued by the competent court upon the request of the creditor and annotated in the competent Notary Public office. The creditor shall notify the debtor of the execution order and grant a period of 30 days to the debtor to make the due payment. If the debt is not paid, the property will be sold in public auction under the supervision of the enforcement judge.


Regarding the movable properties pledged under a fonds de commerce mortgage, should the debtor not make the payment within the eight days following the notification to the debtor, the creditor may request that a summary judgment is rendered permitting the sale of some or all of the debtor’s assets under the fonds de commerce mortgage agreement by way of public auction. However, if the movables are pledged separately (as opposed to by way of a fonds de commerce mortgage), the creditor has the right to request from the competent court the sale of the pledged property in whole or in part following the lapse of five days from the notification to the debtor with the due payment.

Share Pledge

Following serving a notification to the debtor with the due payment, the creditor may enforce its rights over the shares in accordance with the EGX sale and purchase rules, noting that the MCDR requires that the pledgee must be coded on the EGX to be able to sell the shares under an enforcement scenario. However, upon the occurrence of the incident that requires the creditor to enforce its right over the pledged shares and following the lapse of five days from the written notification to the debtor with the due payment, the creditor may proceed with selling or acquiring the pledged shares and deduct its value from the due payment.

It is not permissible to directly acquire any securities or financial instruments unless the pledge agreement stipulates the same; likewise, the method of evaluating the securities or financial instruments for the purpose of enforcement must be stipulated in the agreement. In all cases, it is not permissible to agree to postpone the enforcement of the pledged securities or financial instruments until an administrative decision or a court judgment is issued, an auction is held, or until a certain period of time has elapsed. Also, the bankruptcy or restructuring of the debtor or the creditor shall not result in delaying the enforcement.

Bank Accounts and Cash Deposits

If the creditor is the bank holding the pledged accounts/deposits, a set-off is usually executed between the pledged accounts/deposits and the amounts owed by the debtor; and if the pledged accounts/deposits are owned by another bank, such accounts/deposits may be claimed by the creditor.

The choice of foreign law as governing law of the contract is valid to the extent it does not contravene Egyptian public policy or public morality. The application of Egyptian law is only mandatorily applicable in contracts relating to a transfer of technology in accordance with the Commercial Law. The submission to a foreign jurisdiction is generally a valid and enforceable choice, subject always to private international law rules. However, it must be noted that foreign law, for evidential purposes, is treated as a matter of fact and must be proven by the concerned party. In certain matters Egyptian law provides for the exclusive jurisdiction of local courts.

Immunity from suit may be waived contractually. However, waiver of immunity from enforcement is subject to a restriction whereby real property and movables owned by the state or public juridical persons, which are allocated for public interest in fact, or pursuant to a law, regulation, or decree of the competent minister, are considered public monies that are not subject to attachment according to the ECC.

In relation to foreign court judgments, a request for enforcement of a judgment by a foreign court must be filed in Egyptian courts, in order to review that the foreign judgment satisfies the following conditions (without reviewing the merits of the dispute):

  • the courts of Egypt are not competent to hear the dispute, and the foreign courts are competent for the matter in accordance with the rules of international private law for the choice of jurisdiction in that country;
  • that the parties to the dispute were duly notified and properly represented in the proceedings;
  • that the judgment is final and enforceable in accordance with the law of the foreign country;
  • that the judgment does not conflict with any prior judgment issued by an Egyptian court in the same case and is not contrary to public policy in Egypt; and
  • the country where the court judgment is issued adopts a reciprocal treatment for the judgments of Egyptian courts.

In relation to foreign arbitral awards, Egypt is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Arbitration Convention of 1958. A foreign arbitral award obtained in a state that is a party to the New York Convention should be recognised and enforced by the competent Egyptian court under an exequatur after verifying that:

  • the arbitral award does not conflict with prior judgments issued by Egyptian courts on the same subject matter of the dispute;
  • the arbitral award is not contrary to public policy in Egypt; and
  • the party against whom the arbitral award is rendered has been duly notified.

There are no specific restrictions on a foreign lender’s ability to enforce its rights under a loan or security agreement to the extent that the structure of the agreements and perfection requirements comply with the law. Exceptionally, certain rules may apply for the enforcement of a real estate mortgage considering the rules on foreign ownership of land or real estate. This might also depend on the place where the property is located.

Pursuant to Article 87 (a) of the Bankruptcy Law No 11 of 2018 (the “Bankruptcy Law”), the bankruptcy trustee shall annotate the declaration of bankruptcy in the Egyptian Collateral Registry (ECR) and the competent Notary Public office. Upon the issuance of a judgment declaring the bankruptcy of the debtor, the debtor shall not repay any debt to a creditor unless through the court proceedings. Following the judgment, the interest on unsecured loans shall be suspended, and the interest on secured loans may not be requested unless to the extent of the amounts collected from selling any collateral assets. Payment of the principal shall take priority, followed by the interest due before the issuance of the judgment, then the interest due after the issuance of the judgment.

The order of priority for creditors during a company’s bankruptcy proceedings is detailed under 5.8 Priming Liens.

It is not possible to estimate the length of typical insolvency processes and generation of recoveries as such time limit varies depending on the case.

Egyptian Law differentiates between insolvency procedures applied to non-merchant individuals and bankruptcy procedures applied to merchants, including companies. The Bankruptcy Law provides two procedures that mitigate the financial distress of a company and provides a first line of defence ahead of bankruptcy. These proceedings are as set out below.


The purpose of restructuring is to figure out a plan to organise and overcome the financial and administrative turbulence of the bankrupt company. Any company may request restructuring provided that its capital is not less than EGP1 million and has conducted business in a continuous manner for the previous two years without committing any fraud. The company may not request restructuring if a judgment has been issued declaring its bankruptcy or opening rescue/reconciliation procedures. The competent judge will approve the plan prepared by the restructuring committee. The company will remain in control of its business, nonetheless the competent judge may appoint an assistant. Pursuant to Article 18 of the Bankruptcy Law, the methods by which restructuring may be achieved include, inter alia, the revaluation of assets, restructuring debts, and capital increase.


Subject to the condition of two years of conducting business, any company that may be declared bankrupt, and that did not commit fraud or gross negligence, has the right to request “a reconciliation from bankruptcy” if there is a disorder in its financial conditions that may lead to cessation of its due payments, or if it has ceased payment (even if a bankruptcy declaration has been requested), has the right to request the reconciliation from bankruptcy and submit it to the competent court. Any debtor company may request a “reconciliation from bankruptcy” upon the approval of the majority of partners or general assembly subject to the type of the company; however, a company subject to liquidation procedures may not request the same. The company under reconciliation will continue managing its own monies under the supervision of a trustee appointed by the competent court. The company can also conclude all kinds of ordinary transactions necessary for its business.

There is the inherent risk associated with the fact that the monies of the debtor may not be sufficient to pay the debt of all creditors. In that case, the proceeds will be shared on a pro rata basis between creditors unless there are secured creditors.

The main market trends are currently underlined by national financing projects, including infrastructure and real estate, in addition to small and medium-sized projects. The Egyptian Economic Development Conference (EEDC), held in March 2015, presented investment opportunities to domestic and international investors, and highlighted how well the banking sector weathered the economic turbulence that followed the 2011 revolution.

Additionally, the project finance market in Egypt witnessed:

  • the issuance of a new Banking Law (replacing the previous legislation of 2003), which embraces new financial technologies within the regulatory system and expressly permits the creation of security in favour of foreign banks and international financial institutions;
  • the inauguration of the ECR created pursuant to the Movables Collateral Law (MCL), which enables security to be created over bank accounts and future assets; and
  • the signing of a significant number of sustainable projects in the renewable energy sector, including, green hydrogen projects, the construction of an electric high speed railway, and many solar and wind farms.

Public-private Partnership Overview

Egyptian law recognises public-private partnership (PPP) contracts pursuant to which a project company is entrusted with the financing, construction, equipping and operation of infrastructure projects and public utilities, and making their services available, or financing and rehabilitating such utilities with an obligation to maintain works that have been constructed or rehabilitated and to provide services and facilities necessary to enable the project to produce or provide services regularly and progressively throughout the duration of the contract.

PPPs are primarily regulated under Law No 67 of 2010 regulating partnership with the private sector in infrastructure projects, services, and public utilities (the “PPP Law”) and the executive regulations enacted thereunder. PPP contracts must be concluded for a term of no less than five years and up to 30 years from the date of completion of the construction and equipping works or completion of the rehabilitation works and with a minimum aggregate value of EGP100 million. The Cabinet of Ministers, upon the recommendation of the Supreme Committee for Public Private Partnership Affairs (the “Supreme Committee for PPPA”), may, if required due to a material public interest, agree to conclude a PPP contract for a term longer than 30 years.

Pursuant to the PPP Law, PPP projects may not be tendered except following the approval of the Supreme Committee for PPPA, following a request by the competent authority in light of studies prepared under the supervision of the PPP Central Unit at the Ministry of Finance. The PPP Law provides for contracting by way of direct award if:

  • the state’s need for the establishment of a project cannot be accommodated through contracting methods such as tender and public or limited auction, and there is an economic interest or a social necessity that requires its speedy implementation; or
  • any of the project companies contracted with have finalised the implementation of a project in an efficient manner, and the Supreme Committee for PPPA estimated that re-awarding any of the works stipulated in Article 2 of the PPP Law to any of these companies to perform in the implemented project would have an economic or social interest that would not be achieved if re-awarded to a different entity. Contracting for these works shall be by virtue of a new contract.

Limitations Under the PPP Law

Additionally, pursuant to Article 11 of the PPP Law, the assets pertaining to the implementation of the partnership contract may not be seized or enforced upon. Article 11 provides that “it is not permissible to seize or undertake any enforcement measures on the facilities, tools, machines or equipment designated for implementing the partnership contract and operating or exploiting the project. The project company may not sell the funds and assets of the project, which it may own in accordance with the partnership contract for the project and the facilities being established or developed, except for the purpose of implementing the replacement and renewal programme stipulated in the contract and after obtaining the approval of the competent authority or assign any right to them”.

Certain national projects and programmes introduced by the government involve templates of previously set project documents that are governed by the Egyptian law. These agreements are typically entered into between the government or public sector entities and the project companies. Project contracts entered into between two or more private sector parties are also typically governed by local laws. It is worth noting that that the choice of foreign law to govern project agreements is acceptable provided that it does not contradict public order and public morality. Finance agreements that are between foreign lenders and the project companies are typically governed by a foreign law (for example, English law).

Further, as stated under 6.3 Foreign Court Judgments, Egypt is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. As such, foreign arbitral awards are recognised and enforceable in Egypt if such awards are obtained in a state that is a party to the New York Convention. However, pursuant to Article 1 of the Arbitration Law No 27 of 1994 “[w]ith regard to disputes relating to administrative contracts, an agreement on arbitration shall be subject to the approval of the competent minister or any person assuming their jurisdiction with respect to public legal persons and it is not permissible to delegate such powers”.

Foreign ownership of property and usufruct rights are subject to certain conditions under Law No 230 of 1996. Foreign individuals or entities may own lands in Egypt subject to a limit of two properties, and within specific area limits.

Egyptian law does not provide for specific restrictions in relation to the form of the project company in the context of a project financing as this shall be subject to the type of each project and the relevant agreement executed between its parties (eg, project companies established in relation to energy projects under the feed-in tariff programme must be joint stock companies). One point to note when structuring the security package is that an upstream corporate guarantee by an Egyptian entity is only permissible to the extent that the guaranteed entity is not represented on the board of directors of the Egyptian company.

Restrictions on Foreign Investment

Generally, Investment Law No 72 of 2017 grants all investments (whether Egyptian or foreign investments) an equal and fair treatment and guarantees to foreign investors a treatment similar to that granted to national investors. Although there are no restrictions on foreign ownership as the company may be wholly owned by foreigners, there are legal restrictions on foreigner participation in certain activities, such as the following:

  • Commercial agencies are required to be wholly owned by Egyptians or persons who have held Egyptian nationality for at least ten years.
  • With respect to importation activities for trading purposes, whereby 51% of the shareholders must be Egyptians.
  • Acquiring lands and/or real estate in the Sinai Peninsula (excluding the cities of Sharm El-Sheikh and Dahab, as per Presidential Decree No 128 of 2022), whereby the company is required to be wholly owned by Egyptians. Additionally, a company operating in the Sinai Peninsula (implementing investment and integrated development projects) must be established in the form of a joint stock company and 55% of its shareholders must be Egyptian. Certain approvals are required and restrictions are imposed on the foreign ownership. By way of exception to the aforementioned threshold, the requirement to have 55% Egyptian shareholders in companies that conduct the implementation of integrated development projects in the Sinai Peninsula may be exempted by virtue of a presidential decree issued in this regard. These companies must also obtain the necessary approvals from the Cabinet and other competent authorities to allow them to conduct their activities.

Projects are typically financed by a combination of both debt and equity and subject to a gearing ratio agreed between the lender and the borrower. Shareholders’ loans are typically extended and may be subject to capitalisation throughout the tenor of the debt financing in order to maintain the agreed gearing ratio. Financing backed by export credit agencies is also a typical source of financing for projects.

Natural resources are generally governed by the Egyptian Constitution, Law No 61 of 1958 as amended, in relation to the granting of concessions relating to investment in natural resources and public utilities, as well as the relevant law of the concession setting out regulatory and contractual terms.

The Egyptian Constitution prohibits disposing of natural resources as being a state public property. Granting the right to exploit natural resources or a concession to a public utility shall take place by law for a period not exceeding 30 years, while granting the right to exploit quarries, small mines and salterns (or granting a concession in this regard) shall be for a period not exceeding 15 years by law.

Noting that, the relevant law of the concession usually sets the licences and permits required to be obtained for the exploitation of the natural resources and the requirements that must be met by companies that are granted the right of exploitation or concession.

Mineral and salt materials may not be exported except upon the approval of the Egyptian Mineral Resources Authority. The exportation of critical primary materials enjoying strategic industrial value is prohibited unless the exportation is meant to add value to the material, or is part of an industrial project.

Law No 4 of 1994 and its executive regulations issued by virtue of Prime Minister’s Decree No 338 of 1995 (the “Environmental Law”) is the general framework governing environmental, health and safety matters in relation to existing projects/upcoming projects in Egypt. Pursuant to the Environmental Law, the Egyptian Environmental Affairs Agency is the competent authority to issue environmental permits/approvals. Labour Law No 12 of 2003 has also provided for the provisions and regulations required to preserve occupational health, safety and security on work sites.

Additionally, there are other regulatory frameworks governing specific environmental, health and safety measures. For example, Law No 55 of 1977 and its executive regulations governing the establishment/operation of thermal equipment and steam boilers, along with obtaining the required management and operating permits, and Law No 119 of 2008 governing the specifications, obligations, and requirement for establishing a new building or modifying an existing building.

Matouk Bassiouny & Hennawy

12 Mohamed Ali Genah
Garden City

+202 2796 2042

+202 2795 4221
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Matouk Bassiouny & Hennawy was established in 2005 and has since developed into a premier full-service business law firm in Egypt and the MENA region, with offices in Algeria, Sudan, and the UAE, as well as two country desks covering its Libya and South Korea practices. Its over 200 lawyers are trained locally and internationally in common and civil law systems and are fully conversant in English, Arabic, French and Korean. The firm’s finance and projects group – headed by regional managing partner and group head of finance and projects Mahmoud S Bassiouny – represents numerous clients in the energy sector, focusing on areas such as renewable energy, oil and gas, power (including nuclear power), gas pipelines, and transmission and distribution assets.

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