Firm Profile > Matouk Bassiouny & Hennawy > Cairo, Egypt

Matouk Bassiouny & Hennawy > Firm Profile

The firm: Matouk Bassiouny was officially established in 2002 as a partnership between John Matouk and Omar Salah Bassiouny; and became part of DLA Piper’s global network of offices shortly afterwards.

Since establishment, the firm has been providing full legal services to clients in corporate and M&A matters; banking and project finance; capital market matters; as well as dispute resolution, whether in litigation or arbitration.

The firm is now an independent law firm, and has significantly grown as regards the number of lawyers and clientele size, with a leading position in Egypt and regionally; and has built on its name and expanded by opening offices in Dubai, UAE, and Khartoum, Sudan. The firm also has offices in Algeria and Libya.

Areas of practice: Corporate and M&A: The Corporate/M&A group can assist with all aspects of corporate transaction, from initial term sheets and due diligence to negotiations, drafting and completion. The team specializes in providing general corporate and M&A advice to a wide range of multinational corporations, private equity firms, fund managers and blue-chip investors in Egypt and the region.

Capital Markets: The Capital Markets group specializes in securities-related transactions involving the Egyptian Exchange and the Egyptian Financial Supervisory Authority (including bond issuings), funds management, IPOs, listing and dual securities listing.

Dispute Resolution: The Dispute Resolution group’s primary goal is to effectively manage risk and resolve disputes pursuant to our client’s strategic interests – be it through amicable negotiation, litigation and arbitration.

Finance and Projects: The Finance & Projects group has substantial experience in providing local legal advice on asset-based finance, infrastructure finance, project finance and real estate finance, as well as on the strengths and weaknesses of local security available to lenders in the Egyptian market.

Doing Business In

Egypt

INVESTMENT CLIMATE

Egypt is the most populated country in the Middle East and the third most populous in Africa, with over 100 million inhabitants. Egypt occupies a strategic position. It is in the heart of the MENA region and is a major country in both the Arab world and Africa. Egypt has one of the largest and most diversified economies in the Middle East, which is projected to become one of the largest in the world in the 21st century. It has the third-largest economy in Africa and the world’s 40th-largest economy by nominal GDP.

ECONOMIC REFORMS

The Egyptian economy is gaining momentum since the government has been strongly promoting economic reforms.

LEGAL REFORMS

The Egyptian legal system is based on the civil law system. Its most important legislation is the Civil Code, which mirrors principles of the Napoleonic code. It also adopts Islamic law principles in specific areas, such as family law and personal status matters.  In recent years, many of Egypt’s investment-related laws were reformed.

Companies Law Reform

In January 2018, Law no. 4/2018 amending the Companies Law was issued. Among other amendments, the aforementioned law introduced the sole person company for the first time. The sole person company is owned by one person, either a natural or a juristic person, who retains all the management powers. The minimum share capital of a sole person company is EGP 50,000 to be paid in full upon incorporation. The sole person company is essentially a limited liability company with one shareholder who is only liable within the limits of the capital of the company, except in limited cases where the corporate veil of the sole person company may be pierced.

New Investment Law

The new Investment Guarantees and Incentives Law no. 72/2017 (the “Investment Law”) was issued in May 2017 and further established and consolidated the one-stop shop system that enables investors to obtain permits and licenses directly from the General Authority for Investment and Free Zones (GAFI) instead of multiple government entities.

Tax Law Reform

Presidential Decree 96/2015 was issued in August 2015, amending the Egyptian Income Tax Law as follows:

Personal Data Privacy Law

The Egyptian Parliament approved a new data protection law on February 24, 2020. The law will be published in the official gazette upon the President’s ratification. The new law defines personal data and sensitive data.

The new law sets out obligations on data controllers and processors concerning the required consent of individuals and legitimacy of collection and processing. The new law grants individuals a number of rights pertaining to their data such as the right of providing explicit consent on data collection and processing, rescinding consent, correction and erasing their data as well as the right to be informed of any breach thereto.

The new law includes establishing the Personal Data Privacy Centre as the regulator of data privacy, the mandate of which will include issuing licenses, ensuring compliance with the new law, and investigating complaints.

Anticipated Reforms

The Parliament is discussing a draft law proposing amendments to the law no. 67/2010 of public-private partnership (PPP). The draft law adds the operation and utilization of existing projects to the scope of PPP projects, and presents new methods of awarding projects other than public tenders. In addition, the proposed amendments cut red tape such as the prequalification requirement and restrict the mandate of the petition committee.

On the other hand, the Cabinet approved a draft law amending the banking law. The law will be introduced to the State Council and the Parliament for discussion and approval. The draft law, if passed, will include for example: (i) increasing the minimum capital requirements for banks; (ii) licensing e-payment and fintech businesses; (iii) authorizing the Central Bank of Egypt (CBE) to regulate cryptocurrencies; and (iv) requiring all banks’ fiscal years to start in January.

FOREIGN INVESTMENT IN EGYPT

Investment Vehicles

Joint Stock Companies

Generally, joint stock companies must be formed with a minimum share capital of EGP 250,000. The minimum required capital amount may be higher depending on the activity of the company and the regulations related thereto. Only 10% must be paid at the time of incorporation, to be increased to 25% within 3 months, and the remaining amount of the nominal value of the shares is to be paid up within 5 years.

At least three founding shareholders and at least three directors must be appointed in the company.  Directors are required to hold regular meetings, which provides for higher level of corporate governance. It is easier for a JSC to raise funds, as its shares can be offered to the public and traded on the Egyptian Exchange.

Founding shares and shares issued in return for in-kind (i.e. non-cash) contributions may not be transferred until the financial statements of two full fiscal years are published. The Prime Minister can waive the above restrictions in relation to joint stock companies established under the Investment Law.
Directors and shareholders need not be Egyptian nationals, unless the company carries out one of the restricted activities set out below. Forming an Egyptian joint stock company takes five business days as of the date of submitting all documents in good order to the competent authority.
Limited Liability Companies

Branches

Representative offices

FOREIGN INVESTMENT RESTRICTIONS

In principle, there are no nationality restrictions in connection with foreign investment in Egypt. However, specific activities such as commercial agency and importation with the purpose of trade include nationality requirements. Certain regulatory approvals are required for foreign and local investments in Egyptian banks and insurance companies exceeding 10% of the issued shares. Foreign ownership of land is restricted in the Sinai Peninsula.

Sector-specific controls

COMPETITION LAW

M&A transactions

ECONOMY

Currency

Interest Rates

Credit Ratings

Inflation Rates

According to CAPMAS, Egypt inflation rate reached the lowest level in nearly a decade in October 2019 to reach 2.4% compared to 17.5% a year earlier. Despite slight fluctuations in inflation rates in the following months, CAPMAS further announced that the annual inflation rate fell to 6.8% in January 2020, compared to 12.2% in January 2019.

Main Trade Sectors

Egypt is the world’s largest importer of wheat and one of the largest producers and exporter of potatoes, after the Netherlands, France and Germany.

ENERGY

Oil and Gas

Renewable Energy

GENERAL

This guide does not constitute legal advice, nor does it purport to address every legal issue or summarize the current rules, structures or regulatory frameworks.

Interviews

Mahmoud Bassiouny, Managing Partner and Regional Head of Finance & Projects

Mahmoud Bassiouny explains how he is adapting to clients’ changing needs

What do you see as the main points that differentiate Matouk Bassiouy & Hennawy from your competitors?

We are very proud at Matouk Bassiouny to have created a diverse workplace, where people from different genders, backgrounds and nationalities can exchange ideas and consolidate on existing knowledge. This is far from being an “achievement”, as we are aware that diversity, inclusion, and knowledge sharing must be a continuous work in progress that takes into account both the shifting dynamics and realities in our region, as well as the nature of the business of law, which has sometimes pushed lawyers to hoarding and self-centred approaches in regard to work and clients.

What do you do differently from your peers in the industry?

We believe in specialization. In 2013 we were the first firm in Egypt to decide on implementing core practice groups (as opposed to the then prevailing generalist model). We have also started implementing sector groups that cut horizontally across the practice groups, with the aim being to create a space for lawyers from the different practice groups to focus and foster knowledge in specific sectors. We are seeing an exponential increase in knowledge sharing and a reduction in the time lawyers need to understand a specific issue.

What advice would you give to your younger self?

Some industries will die!

Can you give me a practical example of how helped a client add value to the business?

We firmly believe that our role is to add value to the business, and not just explain the legal requirements. This value was most evident during the 2011 Egyptian Revolution, and the years succeeding that, where we had to implement creative structures to diffuse and mitigate labour unrest (our Disputes Resolution group), implement structures that reduced tax and liability exposure (our Corporate and M&A group), and help clients structure project financings in high risk times and move trapped cash out of Egypt (our Finance & Projects group).

Within your sector, what do you think will be the biggest challenge for clients over the next 12 months?

Clients operating in the region have to deal with fast paced political changes regionally, and disrupting technologies globally. We are seeing this affect our clients in many ways, but we are optimistic as we believe that challenges push us towards evolution and change.

Comparative Guides

• Egypt: Lending and Secured Finance

  Published: April 2020

  Authors: Mahmoud Bassiouny Nadia Abdallah Amgad Nagy Nourhane Hegazy

  This country-specific Q&A provides an overview to Lending and Secured Finance laws and regulations that may occur in Egypt.

• Egypt: Technology

  Published: July 2020

  Authors: Ahmed Abdel Gawad Dina Hussein Sherif

  This country-specific Q&A provides an overview to Technology laws and regulations that may occur in Egypt.