A long waited law is issued on the 7th of March 2017 to amend the Importers Register Law no. 121 of 1982. The amendment aims at reorganizing the importation business in Egypt, establishing a competitive and transparent market and kerbing the entry of 'low quality' commodities.
The amending law is issued under number 7 for 2017 (“Amending Law”), and below are snapshots of the main changes the Amending Law came with:
Mitigating the Foreign Nationality Prohibition
The ancient requirement that an importation company must be 100% by Egyptian nationals is mitigated by decreasing such percentage to 51%. This will apply to both Limited Liability as well as Joint Stock companies.
A draft of the Amending Law was circulated for sociological discussion in August 2016 suggesting the complete removal of the foreign ownership restriction to encourage prudent investors to inject money in the importation sector without restrictions related to their nationality. This suggestion was strongly opposed by local importers who seems to succeed in convincing the legislator to make such partial liberalization by allowing only 49% foreign ownership.
The Amending Law removed the provision prohibiting registered importers from entering into arrangements with non-Egyptians to import on their behalf and removed the related criminal liability. This may be interpreted as an indication that a registered importer can now act as a vehicle for importation on behalf of non-Egyptians.
The requirement for the importation company to have an Egyptian manager is reconfirmed with the addition that the manager has to successfully pass the training courses to be determined under the executive regulation.
Increasing the Minimum Capital Requirement
The minimum capital threshold required for an importation company is increased to as follows:
A limited liability company must have a minimum paid up capital of EGP 2 Million.
- A joint stock company must have a minimum issued capital of EGP 5 Million. This is in addition to another requirement that a company must have a minimum previous experience in the Egyptian market (for at least one year) with a business turnover of at least EGP 5 Million during the previous year. Companies which already hold importation license – at the time of the issuance of the executive regulation of the Amending Law- are exempted from this turnover requirement.
Increasing the Amount of the Insurance Deposit
An importation company is required to deposit a cash insurance amount to be refunded upon expiry or termination of the importation license. Such insurance amount is increased to EGP 200,000.
Applying Severer Sanctions
The Law imposes harsh penalties on violating importers. A penalty of imprisonment for a period not exceeding one year and/or a fine of not less than EGP 50,000 and not to exceed EGP 1,000,000 shall be imposed on importers who commit any of the following:
- Import goods for trading purposes without having an importation license.
- Provide, in bad faith, misleading information to the authorities whether for obtaining, renewing or amending the information relating to the importation license.
- Use inaccurate information about the importation transactions in any correspondences, documents or communication.
- Refuse to provide the competent authorities the required information about the imported shipment, its warehouses and distribution, as well as the sale or distribution invoices; this is without prejudice to the commercial data protection rules.
For importation companies, a senior executive may be punished by the same penalties if it is proven that such senior executive was aware of the violation and breached one of its duties in a way contributing to the occurrence of the violation.