Liquidation is a legal measure that terminates a company’s existence and results in the distribution of its assets after its settlement, Whether the company is wholly foreign-owned or in partnership with Egyptians, liquidation in Egypt is subject to strict and precise controls governing investment laws, particularly Companies Law No. 159 (Final) of 1981 and its executive regulations, Investment Law No. 72 of 2017, and the Commercial Code.
Many companies can be established in Egypt
- 1- Limited Liability Company (LLC)
- Minimum number of founders
- Not permitted to issue shares.
- Liquidation is subject to the supervision of the General Investment Authority.
- 2- Joint Stock Company
- Can be fully owned by foreigners.
- A board of directors is required.
- Required to publish its annual budget.
- Liquidation is subject to the approval of the General Investment Authority and after paying taxes.
- 3- A branch of a foreign company
- Operating under the umbrella of the parent company.
- It must be registered with the General Authority for Investment.
- Liquidation means terminating the business in Egypt only.
- 4- Representative Office or Scientific Office
- It does not engage in commercial activities, but rather provides information or educational services.
- It can only be liquidated by notifying the Authority and closing the bank accounts.
Reasons for liquidation
- By a decision of the partners or the general assembly.
- By the expiration of the company’s term specified in the articles of association.
- By a court order (in the event of bankruptcy or insolvency).
- For failure to engage in business for a prolonged period (usually three years).
- For violating the provisions of the Investment Law or Egyptian laws.
Company liquidation procedures for foreigners in Egypt
- Liquidation decision
Issued by
Partners (in limited liability companies).
Extraordinary general assembly (in joint stock companies).
It must be notarized and notified to the General Authority for Investment and Taxes.
- Appointing a legal liquidator
The liquidator must be a certified public accountant or financial expert.
He/she will prepare an opening liquidation report.
- Announcing the liquidation.
Publishing the decision in two daily newspapers.
Notifying the Commercial Registry and Tax Authority.
- Closing bank accounts
Submit a bank certificate stating that there are no outstanding liabilities.
Transfer any remaining balances to the liquidation account.
- Settling Obligations
Paying accumulated taxes.
Paying employee benefits and social insurance.
Paying any other obligations (loans, suppliers, rents, etc.).
- Distribution of Assets
After settling liabilities, the remaining assets of the company are distributed to partners/shareholders according to their respective shareholding ratios.
- Submitting the final liquidation report to the General Investment Authority.
It includes a statement of all procedures completed and the payment of obligations.
- Deleting the Company from the Commercial Register
After approval by the Authority and the Tax Authority, the name will be deleted from the commercial register.
The tax card and industrial registration, if any, will be cancelled.
Practical examples
Example 1: A foreign-owned limited liability company.
The partners decided to liquidate the company after five years of losses.
A chartered accountant was appointed as liquidator.
Insurance, taxes, and employee salaries were paid.
After the bank account was closed and the liquidation report was submitted, the company was written off.
Example 2: A branch of an American company in Egypt
The parent company decided to cease operations in Egypt.
Local contracts were closed and dues were paid.
The General Authority for Investment was notified, the branch’s registration was terminated, and the commercial register was cancelled.
Example 3: A joint-stock company with a 60% foreign shareholder.
The general assembly convened and decided to liquidate.
A legal liquidator was appointed, and all obligations were paid.
The foreign shareholder received his remaining share after the distribution of assets.
observed
All liquidation documents must be retained for at least five years.
Liquidation does not exempt from legal accountability if violations are subsequently discovered.
A foreign investor may transfer funds resulting from liquidation abroad with the approval of the Central Bank.