Doing Business In.. 2020

Last Updated July 15, 2020

Egypt

Law and Practice

Authors



Nour & Partners in association with Al Tamimi & Company is the largest law firm in the MENA region, with 17 offices across nine countries. The firm has unrivalled experience, having operated in the region for 30 years. It is a full-service firm, specialising in advising and supporting major international corporations, banks and financial institutions, government organisations and local, regional and international companies. With the added support of Al Tamimi & Company’s regional network of offices, the Egypt Office “Nour & Partners in association with Al Tamimi & Company” is well positioned to support the growth and reform in Egypt. The Egypt office offers a comprehensive range of legal services for those with business dealings in the country. It provides a comprehensive team of legal experts, with in-depth knowledge of the Egyptian legal system and an extensive understanding of the country’s culture and business practices.

Egypt is a civil law country drawing its main civil legislation from the Napoleonic Code, while also incorporating some provisions from Islamic law.

The court system is divided into several levels that operate vertically – such as Courts of First Instance, the Court of Appeal and the Court of Cassation – while also applying a horizontal structure of courts that deal with specialised matters. For example, there are specialised courts that address civil matters, criminal matters, administrative matters (public law), etc.

The Supreme Constitutional Court is tasked with determining the constitutionality of laws and resolving disputes between judicial bodies.

COVID-19

Since 15 March 2020, the Egyptian Government has taken precautionary measures in response to the outbreak of the COVID-19 pandemic, summarised as follows:

  • the suspension of government services, including public notary and licensing;
  • the suspension of court hearings, with administrative matters proceeding with precaution;
  • the imposition of a curfew during the evening and night-time, which has changed several times within the hours of 7pm to 6am;
  • the suspension of air travel until further notice;
  • the suspension of education at all educational institutions until further notice;
  • the partial suspension of several retail and food & beverage outlets;
  • the suspension of hosting at hotels; and
  • the suspension of entertainment outlets.

As of 30 May 2020, the measures mandated by the Government are as follows:

  • gradual resumption of court hearings, with an expectation of full reopening by 13 June 2020;
  • resumption of government services;
  • the imposition of a curfew between 8pm and 5am until 15 June 2020, with a possibility of continued imposition. Failure to comply may result in a fine of up to EGP4,000 fine and/or imprisonment;
  • continued suspension of air travel until further notice;
  • continued suspension of education at all educational institutions until further notice;
  • continued partial suspension of several retail and food & beverage outlets;
  • allowed occupancy at hotels increased to 50%, provided safety requirements mandated by the Government are met;
  • continued suspension of entertainment outlets; and
  • a mandatory requirement to wear a face mask in markets, outlets, government facilities, offices, banks and public transportation until further notice. Failure to comply may result in a fine of up to EGP4,000.

Generally speaking, foreign investment in Egypt is permitted and does not require any prior approval.

However, there are some activities that require a majority Egyptian shareholding, such as importation and commercial agencies. Moreover, investing in the Sinai Peninsula always requires governmental approval.

This section is not applicable in Egypt.

This section is not applicable in Egypt.

This section is not applicable in Egypt.

The most common types of corporate vehicles available and used in Egypt are set out below.

Limited Liability Company (LLC)

The founders/partners of a limited liability company may be natural persons or legal entities. A minimum of two founders/partners is required and a maximum of 50 founders/partners.

The capital of a limited liability company comprises quotas (commonly referred to as shares), which are not registerable with the stock exchange. The transfer of shares must be tendered first to existing partners, and is effected by virtue of an official/non-official agreement (in accordance with the statutes).

There is no minimum capital required for setting up a limited liability company.

The capital of the company may be wholly-owned by non-Egyptians.

Such companies are best suited for holding entities and SMEs that have no plans to become publicly listed.

Joint Stock Company (JSC)

The founders/shareholders of a joint stock company may be natural persons or legal entities. A minimum of three founders/shareholders is required.

The capital of a joint stock company comprises shares. The nominal value of such shares may not be less than EGP1 and may not exceed EGP1,000. Such shares may be registered with the stock exchange. The transfer of shares is restricted within the first two fiscal years, and thereafter must be tendered first to existing shareholders and effected through a broker.

A joint stock company has an authorised capital and an issued capital. The issued capital may not be less than EGP250,000 for closed companies and EGP500,000 for publicly offered companies.

A joint stock company may increase its capital by issuing shares to be offered to the public.

The capital of the company may be wholly-owned by non-Egyptians.

This type of company is best suited for public companies and joint ventures.

Incorporation of a company is a fairly simple procedure, especially with limited liability companies.

The incorporation steps are as follows:

  • submitting all the required documents to the General Authority for Investments (GAFI);
  • ratifying the articles of association with GAFI, the Lawyers’ Syndicate, the Chamber of Commerce and the Notary Public;
  • in the case of a joint stock company, providing a bank certificate evidencing the capital deposit; and
  • issuing a commercial register for the company from the Ministry of Trade.

The duration of the incorporation process ranges between two and five days.

All decisions taken by private companies – including management changes, amending the articles of incorporation, approving the financial statements and transferring shares – must be approved and ratified by GAFI. The transfer of shares in JSCs is executed OTC by the Egyptian Exchange. The transfer of quotas in LLCs is executed with fewer formalities at the level of the relevant parties and the company.

A limited liability company is managed by one or more managers, appointed by the general meeting. The general meeting may remove a manager at any time.

A joint stock company is managed by a board of directors, which must comprise no fewer than three directors. All board members are appointed by the general meeting for a term of three years. The general meeting may remove board members at any time. The board must appoint the chairman of the board from among its members, and may appoint one or more vice-chairmen and managing directors. The board may also appoint a general manager, who may attend the board meetings without having the right to vote.

A limited liability company is deemed an independent legal entity and is solely liable vis-à-vis third parties in connection with its contractual arrangements. Partners enjoy a limitation of liability (exposure is limited to the value of their quotas). The managers of the company are released from liability by the General Assembly but remain civilly and criminally liable in the event of violations.

A joint stock company is deemed an independent legal entity and is solely liable vis-à-vis third parties in connection with its contractual arrangements. Shareholders enjoy a limitation of liability (exposure is limited to the value of their shares). The board of directors of the company is released from liability by the General Assembly but remains civilly and criminally liable in the event of violations.

Employment matters in the private sector in Egypt are governed by Labour Law No 12 for 2003 (the Labour Law). Several ministerial decrees also govern employment relationships and are considered complementary to the Labour Law, which applies to all employees working in the private sector in Egypt regardless of their nationality.

An employment relationship is governed by the employment agreements/collective agreements concluded between the employer and the employee or the employees’ union, as the case may be.

Employment agreements are required to be written in the Arabic language. A bilingual agreement in both Arabic and English may be concluded for particular reasons, but the Arabic language prevails in the event of any conflict or dispute.

Generally, employment agreements must be drawn in three copies: a copy for each party and the third copy must be deposited with the competent social insurance office or the competent labour office in the case of foreign employees obtaining the necessary work permits.

The employment agreement may include an article regulating the probation period, which cannot exceed three months and cannot be repeated more than once with the same employer.

The Labour Law distinguishes between employment agreements entered into for a definite period and those entered into for an indefinite period, and provides special rules for each type of agreement as follows:

  • Indefinite Period Agreements – when an employee is hired in a position for an undetermined period, it is presumed that as long as the employee performs his or her job requirements satisfactorily, he or she is entitled to remain in the job for as long as he or she wishes up until retirement.
  • Definite Period Agreements – when an employee is hired in a position for a determined period, the employment agreement explicitly determines a period after which the employment relationship shall be deemed terminated.

It must be noted that according to Article 105 of the Labour Law with regard to definite period agreements, if the employer and the employee remain silent at the end of the agreement period (ie, none of the parties requested termination or renewal), the agreement shall be valid and shall turn into an indefinite period employment agreement. The latter, however, does not apply to foreigners’ agreements.

Pursuant to the Egyptian Labour Law, an employee shall work for a maximum of eight hours a day or 48 hours per week. However, the Labour Law has specified cases whereby the employer may not abide by such maximum limit for working hours.

Accordingly, an employee may be required, in certain cases, to work overtime upon the approval of the labour office. Overtime is the time worked by employees over the limit set out by the Labour Law.

The general rule is that an employee may not work for more than five hours straight, and then must be entitled to rest and a lunch hour. However, Ministerial Decree No 122 of 2003 states that employers that have a continuous 24-hour operation (based on three shifts) can have employees work eight hours straight and two hours overtime. Also, employers that have a two-shift operation may have eight continuous daily hours and two overtime hours, provided they obtain the written approval of the employees.

In all events, the employer shall always be under an obligation to allow the employees to have drinks and snacks while working, or rest periods to be regulated by each relevant employer.

With regard to the salary paid against working overtime (the Overtime Consideration), Article 85 of the Labour Law provides that the Overtime Consideration shall be more than the salary paid for working normal hours. The Labour Law sets out the minimum rates for the Overtime Consideration, and differentiates between daytime and night-time overtime.

According to Article 85 of the Labour Law, daytime overtime shall be compensated with an additional 35% of the normal working hours salary, while night-time overtime shall be compensated with an additional 70% of the normal working hours salary.

The employer shall always abide by the minimum limits set out by the Law above. If the employer provides a higher threshold via its general internal regulations then this threshold shall be respected, as it will be considered an acquired right of the employees and may not be decreased.

In all cases, the Labour Law prohibits the employee staying in the establishment for more than ten hours a day. Thus, overtime hours cannot exceed two hours in a full working day. Furthermore, if the employee has his or her lunch break in the workplace then it is part of the ten-hour daily limit.

The Law has set out the weekly rest entitlement of employees (ie, the weekend) as a continuous period of 24 hours’ rest weekly (or after six consecutive days of work).

In light of the above, the weekly rest of an employee shall not be less than 24 hours every six working days. The employer shall not oblige its employees to work on their weekly rests. However, according to Article 85 of the Law, employees may – in certain circumstances and after the employer informs the labour office – work during their weekend against an extra consideration (the Weekend Overtime Consideration), which is double the salary of the relevant employee in normal working hours. The employer may not agree with the employee on a lower Weekend Overtime Consideration than that provided under the Law.

If the employee works for seven straight days, they shall get double payment for the seventh day and be compensated with an additional day off in the following week.

According to Article 104 of the Labour Law, a definite term employment agreement shall be terminated by any of the parties at its expiry. Therefore, an employee may terminate the definite term employment agreement at the date of its expiry without the need for any prior notice.

Furthermore, if the employment agreement’s term exceeds five years, the employee has the right to terminate the employment agreement at any time, prior to its expiration date, by virtue of providing three months’ prior written notice to the employer.

As for terminating an indefinite employment agreement, an employee is obliged to notify the employer at least two months prior to the desired date of termination. Nevertheless, if the employment relationship exceeds ten years, the employee is under the obligation to notify the employer of its wish to terminate the agreement at least three months in advance.

Termination of the Employment Agreement

It is rather difficult for an employer to terminate an employment agreement, but the Labour Law has given employers the right to terminate an employment agreement in certain cases.

With respect to definite period agreements, the agreement is terminated without need for notice or any legal or judicial procedure upon the expiry of the period stated in the agreement, or the termination of the task, project or season, as the case may be. However, it must be noted that, at the date of expiry, the employer must inform the employee of the end of the employment agreement. Otherwise, the employment agreement shall be transformed into an indefinite employment agreement.

As for terminating an indefinite term employment agreement, the employer must notify the employee of its wish to terminate at least two months prior to the actual termination. Nevertheless, if the employment relationship exceeds ten years, the employer must notify the employee of its wish to terminate the agreement at least three months in advance.

In all cases, the employer may not terminate the employment agreement (whether definite or indefinite) unless the employee commits any of the acts or omissions mentioned in Article 69, as follows:

  • the employee assumed a false identity or submitted false documents;
  • the employee acted negligently, causing the employer considerable loss, provided the employer notifies the competent authorities of the incident within 24 hours of becoming aware of it;
  • the employee failed to observe written instructions, displayed in a prominent place, compliance with which is necessary to ensure the safety of the workers and of the establishment, despite his or her receipt of a previous written warning;
  • the employee has been absent without a valid reason for more than 20 days a year, or for more than ten consecutive days, provided that he or she is first warned in writing by registered mail with acknowledgment of receipt by the employer after ten days’ absence in the former case and after five days in the latter;
  • the employee divulged confidential information about the enterprise employing him or her, which caused serious damages to the enterprise;
  • the employee has been competing with the employer in the same field of activity;
  • the employee has been found in a state of obvious intoxication or under the influence of drugs within working hours;
  • the employee has assaulted the employer or the employer’s representative, or has committed a serious act of violence against any of his or her superiors during or in connection with his work; and/or
  • the employee has not respected the provisions regulating the right to strike.

Additionally, the employer can terminate the employment agreement for incompetence in accordance with the approved work regulations.

Compensation for Unlawful Termination

In an unlawful termination of a definite term employment agreement, the employee shall be entitled to all his entitlement in addition to the gross salary of the remaining period of the employment agreement. Furthermore, the employee shall be entitled in this case to any bonus amounts, leave balances and any additional amounts regularly paid by the employer.

In an unlawful termination of an indefinite term employment agreement, the employee shall be entitled to compensation that is determined by the court of law, but in all cases may not be less than two months’ gross salary for each year of service in addition to any entitlements (ie, bonus amounts, leave balances and any additional amounts regularly paid by the employer).

considered prior to termination. In all cases of redundancy, termination is deemed unjustified dismissal by law.

There is no requirement for employees to be represented, informed or consulted by management.

Income Tax is up to 25%, depending on each bracket.

Law No 26 of 2020 amending some provisions of Income Tax Law No 91 of 2005 provides the income tax to be imposed on wages and salaries.

The tax shall be withheld and remitted to the competent tax office within the first 15 days of every month, according to the rules and procedures specified in the Executive Regulation of the Income Tax law.

Tax Residency

Corporations, partnerships and other corporate entities are deemed tax residents in Egypt if they incorporated according to Egyptian Law, if the government or a public authority owns more than 50% of their capital, or if their effective place of management is in Egypt.

Egypt will be deemed the effective place of management if the entity meets any two of the following conditions:

  • daily managerial decisions take place in Egypt;
  • board or manager meetings are held in Egypt;
  • at least 50% of the board members or managers reside in Egypt; or
  • the owners of more than 50% of the shares or voting rights reside in Egypt.

Corporate Income Tax

The corporate income tax rate in Egypt is 22.5%, which is imposed on the net taxable profits of a company and is applicable to all types of business with rare exceptions, and is subject to the exemptions / incentives referred to in 5.3 Available Tax Credits/Incentives.

Value Added Tax

The standard value added tax (VAT) rate is 14%, which is applicable to almost all goods and services, with machinery and equipment used for production being a notable exception. In addition, a number of basic goods and services are exempt. Furthermore, excise tax (or the schedule tax) is imposed on certain listed products and services (eg, professional services). The excise tax is applied on specific listed items instead of VAT, but in certain cases in addition to the standard VAT.

Real Estate Tax

Real estate tax is levied annually on all constructed real estate units, with few exemptions. The real estate tax rate is 10% of the rental value, the determination of which is based on various factors and is updated periodically.

Stamp Taxes

Stamp taxes are imposed on legal documents, deeds, banking transactions, company formation, insurance premiums and other transactions. The stamp tax is proportionate to the value of the transaction or nominal. A notable type of stamp tax is that imposed on both the buyer and the seller in the transfer of shares.

Health Insurance Contributions

A contribution of 0.25% of total annual revenues is payable by all entities to fund the comprehensive health insurance system.

Capital Gains Taxes

Capital gains realised from the sale of unlisted shares are subject to a capital gains tax at the rate of 22.5%, which is reduced to 10% for listed shares. However, the tax on capital gains on listed shares was put on hold for two years on 17 May 2015 (ie, until 17 May 2017), which was later extended to 17 May 2020, and not extended further. However, the Parliament is in the process of approving the suspension of capital gains tax on listed shares until the end of December 2021 for capital gains realised by residents, and exempting non-residents from paying said capital gains tax.

The same treatment applies to capital gains realised by residents and non-residents, excluding where a non-resident benefits from a double tax treaty.

Withholding Taxes on Dividend Income

A 10% withholding tax is imposed on dividends paid by Egyptian companies to shareholders. The rate is reduced to 5% if the shareholder holds more than 25% of the share capital or the voting rights for at least two years. The same treatment applies to resident and non-resident shareholders, excluding where a non-resident shareholder benefits from a double tax treaty.

Other Withholding Taxes

Payments of interest on loans, royalties or for services made by Egyptian tax residents to non-residents are subject to 20% withholding tax, although double tax treaties may result in the reduction or cancellation of such tax rates.

The above tax rate shall not apply for payments of interest to a non-resident if the term of the loan is at least three years.

Local payments of commissions, contracting or the supply of goods or services are subject to a maximum of 5% withholding tax. The rate of such tax varies depending on the nature of the payments.

Interest on treasury bills and treasury bonds is subject to 20% withholding tax.

Investment Law No 72 of 2017 provides that all the tools, supplies and machinery required to conduct certain licensed activities by all kinds of projects established shall not be subject to taxes and customs duties, in accordance with the conditions and procedures provided in the Executive Regulations of the Investment Law.

Projects enjoy the special incentives set forth in the Investment Law according to their relevant sector, including tax incentives and reductions on investment costs, as set out below:

  • exemption from stamp tax, most governmental expenses and land/property registration expenses;
  • unification of the customs duties rate to 2% on all equipment and materials required for the manufacturing and establishment of investment projects;
  • deductions ranging from 30% to 80% of the investment costs;
  • the establishment of customs ports allocated solely for certain projects, to facilitate the importation and exportation process;
  • the payment of any infrastructure costs by the Egyptian government;
  • restitution of half of the property’s value to the investor, if production commences within two years of receiving the property; and
  • free allocation of property for strategic projects as well as the government’s participation in the manpower training costs.

Additional financial benefits may be obtained depending on the location, objective, strategic importance and number of employees in the investment project.

Tax consolidation and consolidated tax returns are not applicable in Egypt, as the Egyptian tax law and regulations treat each company within a group of companies as a separate legal entity.

The Egyptian thin capitalisation rule stipulates that the debt-to-equity ratio is 4:1. Accordingly, the deductibility of debit interests of Egyptian companies on loans and advances is disallowed if such loans and advances are in excess of four times the equity average.

If related parties’ transactions result in reducing the taxable income of an entity, the Egyptian Tax Authority shall be entitled to adjust such taxable income based on the transfer pricing rules, taking into consideration that such transaction involves elements that would not be included in transactions between non-related parties and whose purpose is to shift the tax burden to tax-exempt or non-taxable entities.

The General Anti-Avoidance Rule (GAAR) was introduced in Egypt in 2014 to manage tax avoidance and combat abusive tax practices. The GAAR strengthens the ability of the Egyptian Tax Authority to combat abusive avoidance schemes.

Egyptian Competition Law No 3 of 2005 (ECL) does not encompass M&A control. The Law does not stipulate that the Egyptian Competition Authority (ECA) should have prior or subsequent approval of a merger or acquisition. In other words, the Law does not provide for a pre-merger or post-merger control regime.

However, the Law does provide for a binding post-merger notification regime. Article 11.2 of the ECL empowers the ECA to receive M&A notifications. According to Article 19.2 of the ECL, the notification procedure is obligatory if the annual turnover in Egypt of the combined relevant parties in the last approved financial statement exceeds EGP100 million. Article 19.2 of the ECL provides that: “Persons whose annual turnover of the last balance sheet exceeded one hundred million pounds shall notify the Authority upon their acquisition of assets, proprietary or usufructuary rights, shares, establishment of unions, mergers, amalgamations, appropriations, or joint management of two or more persons according to the rules and procedures set forth in the Executive Regulations of the current Law.”

The ECA introduced an M&A notification form and issued guidelines for submitting an M&A notification, which became effective at the beginning of September 2018. Both the form and the guidelines are available on the ECA website (www.eca.org.eg).

The Executive Regulations of the ECL specify the notification date and data, documents attached thereto and procedures for its submission.

Article 44 of the Executive Regulations determines that the ECA shall receive notifications from persons involved in the transaction within 30 days of the completion of the legal act concluding the transaction.

According to Article 22 bis of the ECL, failure to notify or delayed notification raises the risk of being subject to monetary fines ranging between EGP20,000 and EGP500,000.

Concerning the notification form, the ECA guidelines stipulate the required detailed information about the transaction, including:

  • the names of the merging parties, their nationalities, headquarters and related parties;
  • the transaction nature and the date of its conclusion;
  • the approximate market shares of the relevant parties and their competitors in each of the relevant markets;
  • information on the approximate period for a new competitor to enter any of the relevant markets; and
  • information about the most important clients, distributors and agents of the relevant parties that relate to their activities in Egypt.

The guidelines include an important clarification related to foreign investors in Egypt, and provide that a foreign-to-foreign transaction will now be notified to the ECA if at least one of the relevant parties has a turnover in Egypt as per its last approved financial statement that meets the reporting threshold (ie, EGP100 million). This is regardless of whether or not such party has assets or subsidiaries in Egypt.

The ECL recognises all types of anti-competitive agreements and practices. Article 6 of the ECL deals with hard-core cartels, while Article 7 deals with vertical agreements that restrain or limit competition in the market, and Article 8 deals with abuse of dominant position in the marketplace.

As to cartels, Article 6 of the ECL provides that agreements or contracts between competitors in any relevant market are prohibited. The Law provides an exhaustive list of the prohibited agreements, namely:

  • price fixing;
  • market allocation;
  • collusive tendering or bid rigging; and
  • limitation on production or distribution of products.

The ECL adopted a per se approach in cartel cases, whereby the agreement itself is considered an anti-competitive practice in breach of the Law regardless of its effect. It should be noted, however, that in 2014 the ECL was amended to introduce a pre-exemption mechanism to cartel agreements if the agreement leads to achieving economic efficiency, provided that it reflects on consumer benefits that exceed the restriction of competition.

It is worth mentioning that anti-competitive practices, including cartels, are of a criminal nature and are subject to fines that are decided by the criminal judge. According to Article 22.1 of the ECL, cartel violations are subject to fines ranging between a minimum of 2% and a maximum of 12% of the total revenues of the product subject matter of violation, or a minimum of EGP500,000 and a maximum of EGP500 million.

As a rule, a person’s market share should not constitute a violation unless one of the violations mentioned in the ECL is committed. This says that the Law addresses restrictive practices resulting from the abuse of dominance, as opposed to market dominance itself. A market player can own 100% of the market shares and yet not be guilty of abusing his dominance; it is not the size of the firm or its share of the market that counts but rather the behaviour in the market that might lead to infringements.

Under Article 4 of the ECL, being in a dominant position in a relevant market is the ability of a market player holding a market share exceeding 25% to have an effective impact on prices or on the product volume in said relevant market, without his competitors having the ability to limit it.

The ECL regulates the behaviour of a market player in a dominant position, with Article 8 providing an exhaustive list of prohibited acts for a dominant market player, consisting of the following:

  • undertaking an act that leads to the non-manufacturing, non-production or non-distribution of a product for a certain period or certain periods of time;
  • refraining to enter into sale or purchase transactions regarding a product with any person or totally ceasing to deal with him in a manner that results in restricting that person’s freedom to access or exit the market at any time;
  • undertaking an act that limits distribution of a specific product, on the basis of geographic areas, distribution centres, clients, seasons or periods of time among persons with vertical relationships;
  • to impose as a condition, for the conclusion of a sale or purchase contract or agreement of a product, the acceptance of obligations or products unrelated by their very nature or by commercial custom to the original transaction or agreement;
  • discriminating in selling or purchasing prices, or in terms of a transaction between sellers or buyers whose contractual positions are similar;
  • refusing to produce or provide a product that is circumstantially scarce when its production or provision is economically possible;
  • dictating on persons dealing with him not to permit a competing person to have access to their utilities or services, despite this being economically viable;
  • selling products below their marginal cost or average variable cost; and
  • obliging a supplier not to deal with a competitor.

Intellectual property rights in Egypt are protected under the Egyptian Protection of Intellectual Property Rights Law No (82) of 2002 (IP Law). Additionally, Egypt is a member state to multiple Conventions and multilateral and regional Treaties related to the protection of all sorts and types of IP rights, including, but not limited to, the Madrid Protocol Concerning the International Registration of Marks, the Berne Convention for the Protection of Literary and Artistic Works, and the Paris Convention for the Protection of Industrial Property.

A patent is an exclusive right granted for an invention, which entails a new product, method or combination of elements that offers a new technical solution to an existing issue. According to the IP Law, in order for an invention to be patentable, it must fulfil three criteria: Novelty, Inventive Step, and Capability of Economic Exploitation.

The protection period of the patent is 20 years, starting from the date of filing the patent application, not from the date of its registration. Furthermore, in order to patent a certain invention in Egypt, the applicant must first file a registration request at the Egyptian Patents Office, which must include a detailed specification of the invention, a summary of the patent application, the claimed elements for protection, documents that prove the assignment of the invention from the inventors if the applicant is not the proprietor and, finally, the receipt proving payment of the associated fees for filing the application. In addition to the aforementioned requirements, the Patents Office might require other documents and/or elements, depending on the type/field of the invention. Following which, and upon examination of the patent application, the Patents Office might notify the applicant of certain amendment and/or clarifications required by the Examiner that must be provided within three months of the date of receipt of the notification, or else the patent application would be considered abandoned. It should be noted that the applicant is entitled to challenge any office action or refusal decision rendered before the Appeals Committee at the Patents Office, granted that the appeal has been filed within 30 days of the date of receipt of the challenged decision or office action. Moreover, once an acceptance decision has been rendered on the registry of the patent application, the patent application is then published in the official gazette. Any interested party is entitled to oppose the acceptance decision rendered within 60 days of the date of its publication. However, if no oppositions are filed, or if an opposition is filed and forfeited, the Patents Office then grants the patent. Finally, an annual fee is due for maintaining the validity of the application, or else the application would be considered abandoned.

In the case of patent infringement through the sale of a product or a method subject of a patent, or the sale of counterfeit products that are the subject of a patent, the owner of the patent is entitled to file patent infringement action before the competent court, as these actions are punishable under the IP Law by fining the perpetrator and/or imprisonment, which is obligatory in the case of an habitual offender. The owner of the patent would also be entitled to file for compensation based on an unfair competition action.

A trade mark is defined under Article (63) of the IP Law as a sign, word or logo that distinguishes goods and services of one enterprise from the goods and services of another. Trade marks are protected for ten years from the date of filing the application, and are renewable for consecutive terms.

Moreover, in order to register a trade mark in Egypt, an applicant submits a registration request for its trade mark on the relevant class(es) of products and/or services to the Trademarks Office, which includes the shape of the trade mark along with the Identification Card or Commercial Record of the Company based on the applicant’s type. Following this, a decision is issued based on an examination conducted on the trade mark filed and its similarity with other trade mark applications that are registered or filed at an earlier date. If a refusal decision is rendered, the applicant would be entitled to appeal said decision before the Appeals’ Committee at the Trademarks Office. On the other hand, if an acceptance or provisional acceptance decision is rendered, then the applicant must pay the associated fees for the publication of the trade mark in the Official Gazette. Any interested party is entitled to oppose the acceptance decision rendered on the registry of the trade mark within 60 days of the date of its publication in the Official Gazette. Finally, if no oppositions are filed, or if an opposition is filed and forfeited, then the Trademarks Office proceeds with the registry of the trade mark.

If any person infringes the trade mark rights of another, through the use of a similar or identical mark to the registered trade mark, such action is punishable under the IP Law by fine or imprisonment of the perpetrator and seizure of the counterfeit products. Moreover, in the case of an habitual offender, the imprisonment of the perpetrator would be obligatory. Additionally, the court may decide to close the establishment responsible for the infringement, for a period of six months. Also, the owner of the trade mark would be entitled to file for compensation based on trade mark imitation and unfair competition actions.

Industrial designs are compositions of lines or colours of any two or three-dimensional forms that give a special and non-generic appearance to a product or handicraft. The protection period for industrial designs is ten years starting from the date of filing the application, and is extendable for a consecutive five-year term if the applicant submits a request for its renewal prior to the expiration of the protection period, or within three months of the date of its expiry.

In order to register an industrial design, the applicant must submit a registration request to the Trademarks & Designs Office, which would include a clear picture of the design. Following this, the Designs Office examines the design and its similarity with other registered/previously submitted design applications. It also examines its fulfilment of the necessary conditions, which are novelty and capability of economic exploitation. Once an acceptance decision has been rendered by the examiner, the applicant then attends to the payment of the relevant publication fees to publish the acceptance decision in the Official Gazette. Any interested party is entitled to oppose the acceptance decision published within 60 days of the date of its publication in the Gazette. If no oppositions are filed, or if an opposition is filed and forfeited, the Designs Office would then proceed with the registration of the industrial design.

Upon the registration of the industrial design, the applicant would be entitled to prohibit others from the use of such design during the protection period, as it is punishable under the IP Law to use a protected design or a design that is similar to a registered one. The owner of the design would also be entitled to file for compensation based on an Industrial Design Imitation and unfair competition acts.

Copyrights are the rights that creators have over their literary and artistic works. Such works include books, music, paintings, sculpture, films, computer programs, databases, advertisements, maps, technical drawings and software codes. The protection period for copyrights varies according to the type of work protected, as follows:

  • Authorship Rights: the author’s economic rights shall remain legally protected throughout his lifetime, and for 50 years from the date of his death.
  • Derivative Works: the economic rights relating to works of joint authorship shall be protected throughout the lives of all co-authors, and for 50 years from the death of the last survivor.
  • Works of Joint Authorship: where the copyright holder is a legal entity, the economic rights relating to authors of collective works, other than authors of works of applied art, shall be protected for 50 years from the date on which the work was published or made available to the public for the first time, whichever comes first.
  • Anonymous Author: the economic rights relating to a work published anonymously or under a pseudonym shall be protected for a period of 50 years from the date on which the work was published or made available to the public for the first time, whichever comes first, unless the identity of the author is known and established or revealed by the author, in which case the term of protection shall be calculated as an ordinary Authorship Right.
  • Applied Arts: the economic rights of the author of a work of applied art shall expire after a period of 25 years from the date on which the work was published or made available to the public for the first time, whichever comes first.
  • Performers: performers shall enjoy an exclusive economic right for the exploitation of their performances for a period of 50 years, calculated from the date on which the performance or the recording took place, as may be the case.
  • Sound Producers: producers of sound recordings shall enjoy an exclusive economic right to exploit their recordings for a period of 50 years, calculated from the date on which the recording was made or made public, whichever comes first, within the limits provided for in this Law.
  • Broadcasting Organisation: broadcasting organisations shall enjoy an exclusive economic right to exploit their programmes, for a period of 20 years calculated from the date on which the programme was broadcasted for the first time.

The registration process for copyrighting works varies as well, based on the type of works – for example, copyrighting a software code is conducted through filing an application to the Information Technology Industry Development Agency (ITIDA), enclosing the first and final 15 pages of the software code, images for the interface of the software, and a brief summary of the software itself, while copyrighting drawings of characters is conducted through filing an application before the Fine Arts Department at the Ministry of Culture.

During the protection period of the copyrights, others are prohibited from using the works without obtaining the author's prior consent on such use; such acts would be punishable under the IP Law. In addition, the author is entitled to claim compensation for the unauthorised use of their works based on a copyright infringement action.

The IP Law also recognises other IP rights, as follows.

Plant Variety Rights

These are also called Plant Breeders’ Rights (PBR), and are granted to the breeder of a new variety of plant, giving the breeder exclusive control over the propagating material (including seed, cuttings, divisions, tissue culture) and harvested material.

The term of protection for plant varieties shall be 25 years for trees and vines, and 20 years for other crops. The protection period is calculated from the date of grant, not from the filing date of the application.

Neighbouring Rights

These are the rights of a creative work not connected with the work's actual author, and are organised under the Copyrights Section of the IP Law.

Geographical Indicator

Whereas geographical origin has become descriptive of the quality, reputation or other characteristics of a certain product so as to be largely instrumental in its marketing, such geographical indications shall be used to indicate the place of origin of such goods in a district or part in a country member in the World Trade Organization (WTO) or a country affording Egypt reciprocity.

There is no specific law that addresses overall data privacy issues (technical and organisational). A new draft law has been approved by the government and sent to the Parliament for review.

However, Law No 175/2018 for Fighting Data Technology Crimes has recently been issued, placing further protection on personal data shared through the internet, as well as websites and personal emails.

In the absence of a modern data protection law, the general rules for data privacy would apply. However, in practice, certain security agencies in Egypt are hyper-sensitive to the issue of transferring data of substantial value.

For completeness, a breach of the provisions of Law No 175 of 2018, specifically Article 25 thereof penalising sharing the data of a user without their consent, is punishable by imprisonment for not less than six months and/or a fine of not less than EGP50,000 and not exceeding EGP100,000. Furthermore, Article 35 of said law provides for the criminal responsibility of the person responsible for the actual management of the juridical person if the website, account, email or information system of the entity has been violated and this violation has not been reported to the competent authority at the time of his knowledge of the violation. The penalty for said crime is imprisonment for not less than three months and/or a fine of not less than EGP30,000 and not exceeding EGP100,000.

There is no agency in charge of enforcing data protection rules. However, according to Article 1 of Law No 175/2018 for Fighting Data Technology Crimes, the National Telecommunications Regulatory Authority (NTRA) is tasked with governing telecommunications facilities, and disseminating its services, and addressing the law that interacts with the providers, developers and users under said law.

As said law has only been issued recently and is still awaiting the issuance of its executive regulations, the role and authority cannot yet be determined accurately.

Nour & Partners in association with Al Tamimi & Company

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S.AlMaleh@tamimi.com www.tamimi.com
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Law and Practice

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Nour & Partners in association with Al Tamimi & Company is the largest law firm in the MENA region, with 17 offices across nine countries. The firm has unrivalled experience, having operated in the region for 30 years. It is a full-service firm, specialising in advising and supporting major international corporations, banks and financial institutions, government organisations and local, regional and international companies. With the added support of Al Tamimi & Company’s regional network of offices, the Egypt Office “Nour & Partners in association with Al Tamimi & Company” is well positioned to support the growth and reform in Egypt. The Egypt office offers a comprehensive range of legal services for those with business dealings in the country. It provides a comprehensive team of legal experts, with in-depth knowledge of the Egyptian legal system and an extensive understanding of the country’s culture and business practices.

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