Client Alert: Egyptian Paper Tax Card To Be Replaced With The Magnetic Card

regulations and U.S. or European anti-boycott laws.

Challenge:

A Fortune 100 manufacturer encountered boycott-related disclosure requirements in a number of North

African and Gulf Cooperation Council (GCC) countries. Like many other manufacturers who export

internationally, it simultaneously had to comply with U.S. anti-boycott laws.

Solution:

Relying on our extensive regional experience, we advised the client about the appropriate level of

disclosure for each national authority. We coordinated the efforts of our network of local counsels in the

region as well as our celebrated Washington-based International Trade team to make sure that our

client complied with regulations on both sides of the Atlantic.

Result:

Now, the manufacturer flourishes in the region as it has returned to producing and exporting at full

capacity after addressing boycott concerns.

However, the Special Track application process applies only to companies having one of the following specifications: multinational global companies having branches or subsidiaries worldwide, companies with registered Patents and Trademarks, and companies working with the Saudi government.

The government announced that the arrest of the former minister after the corruption allegation, which makes him the first high-profile official to be arrested in such a case under President Al-Sisi. With regards to the Egyptian Mint, the Minister of Interior announced the arrest of the criminals and also its efforts to recover the stolen gold. The arrest of the former Minister of Agriculture and the alleged pilferers sends a clear message that the government is trying to restore law and order in Egypt.

CLIENT ALERT: UAE Introduces New Commercial Companies Law

In an attempt to harmonize its legal framework with international norms, the UAE government issued Federal Law no. 2 of 2015 concerning Commercial Companies. This law was announced on April 1, 2015, and became effective on July 1, 2015. The law provides for a one-year grace period, which means that existing companies have until July 1, 2016 to comply with the new law or be deemed dissolved.

Limitations:

The law does not apply to:

• Companies that are excluded by UAE Federal Cabinet resolution;
• Companies that are wholly owned by federal or local governments and,
• Companies that are operating in certain fields, such as gas and power, in which the federal or local government directly or indirectly holds 25% and there is explicit provision in the company’s memorandum stating this status.

The rule mandating a minimum of 51% share ownership by a UAE national over both Limited Liability Companies (LLCs) and Joint Stock Companies (JSCs) is still in effect. In order to establish a branch, foreign companies still need to use a local agent (either a UAE national or company wholly owned by UAE nationals).

Changes:

The new law allows for a ‘Sole Shareholder’ for LLCs and JSCs. In addition, the new law recognizes the establishment of LLCs and JSCs as holding companies who are able to conduct activities solely through subsidiaries. The new law recognizes investment funds and states that they shall have legal personality, which was not permissible under previous laws.

For LLCs, partners in an LLC can now pledge their shares. For there to be a general assembly meeting, there needs to be a quorum of 75% of share capital. The old limit of 50 shareholders has been increased to 75, but there is still a requirement that all shareholders must attend meetings in person. This is unlike in many jurisdictions where a shareholder can attend a meeting via telephone or videoconference. Additionally, the old law’s cap on the number of directors at five has been eliminated.

The requisite notice for meetings has been shortened from 21 days to 15 days, and companies now have the option to send notice via a method of their choice in the Memorandum of Association. Shareholders can now delegate attendance at a shareholder meeting to third parties if they are unable to attend.

The new law requires companies to present a draft of a merger contract to the General Assembly of Merging Companies. A party holding 20% of shares can object to the merger and subsequently appeal before UAE courts. Partners and shareholders who object to a merger resolution can now withdraw and recover the value of their shares. However, a holding company may merge with one or more of its wholly-owned subsidiaries without a merger contract.

Next Steps:

Many foreign investors were anticipating a change in the law that would allow fully foreign-owned companies. While the new law has not delivered this degree of change, it did note that a new Foreign Direct Investment Law may be enacted in the future that will allow 100% foreign-owned LLCs in certain sectors. No additional information was provided regarding which sectors will be covered, or when the law will come into effect.

One of the prominent Islamic banks in the region was the lead arranger for an Egyptian oil services

company. The oil services company needed to refinance its medium term growth capital, and the bank

sought a way to use new, post-2011 Egyptian law to incorporate Islamic finance. The bank brought in

Hegazy & Partners as the prime legal advisor on the transaction.

We faced strict time constraints as we had to complete a best efforts syndication with complex offshore

and onshore security structures, and this needed impeccable documentation within a 60 day deal

window. This was made even more difficult, as we operated within an incomplete legal framework.

Additionally, we had to balance the perspectives of all involved parties, including the other conventional

and Islamic banks in the syndicate, sharia scholars, and the company’s counsel.

Solution:

We embarked on pioneering efforts at all stages of the transaction to complete it in time. Specifically,

we forged new partnerships and new ways of working the deal, fulfilling the needs and interests of both

conventional banks and Islamic banks under one syndication structure.

Result:

This concluded with Egypt’s first home-grown, 9-figure Islamic finance deal under the post-2011 Islamic

finance law. This award-winning $150M syndicated Ijara facility allowed the oil services company to

favorably refinance its capital in a Shariah-compliant way.

A leading hospitality provider and its affiliates have operated for decades in Egypt. This combination of one of the world’s leading hospitality providers and one of the world’s premier travel destinations means that this provider needs constant legal assistance to support its ongoing business activities.

Solution:

Inspired by how our client serves its guests, we provide a full set of legal services for the provider in Egypt. Our work for the provider includes, but is not limited to, tax, corporate, contracts, employment, and regulatory compliance with a variety of authorities.

A company, which is part of a large industrial conglomerate, specializing in the design, engineering,

assembly and sales of power generation systems required legal advice and assistance under Algerian law

in bidding for a major government contract. At the same time, the client needed to be prepared to

engage in a joint venture with a local partner to maximize its competitiveness in connection with the

public bid. As is often the case for government contracts, the matter was time-sensitive.

Solution:

Working in cooperation with our local colleagues, we advised our client in devising and executing its

bidding strategy for the government contract as we simultaneously crafted a joint venture agreement

with a local partner. All of this was accomplished in time to incorporate the joint venture entity in time

to participate in the bid.

Result:

The client incorporated its joint venture entity with the required speed to win the government contract.