The process for effecting the transfer of shares and the transfer taxes payable in Egypt depend on whether the shares are listed or unlisted, and whether the target company is a joint stock company or a limited liability company.
For joint stock companies whether listed or not, the transfer requires the appointment of a licensed broker and licensed custodian to execute the transaction before the Egyptian Exchange (EGX). The process will mainly require submitting sell order from the seller and buy order from the buyer, after completion the transfer shall be registered with the target company clearing house (commonly Misr Clearing Company for Central Depository and Registry).
The process will require that the consideration is deposited with the appointed broker in Egypt, unless an exemption from the consideration deposit is granted by the Financial Regulatory Authority (FRA). The FRA approval is also required if the transaction consideration exceeds 20 million Egyptian pounds.
In case of a listed shares, the transfer can be perfected through open market transactions or block trade or by submitting a tender offer, whether voluntary or mandatory, which depends on exceeding certain thresholds as stated by the Capital Markets Law no.95 of 1992 (CML).
As for limited liability companies, it only requires a shareholder’s resolution approving the transfer as well as waiver of the right of first refusal, which shall be further ratified before the Companies Authority (General Authority For Investment) and notarized before the public notary.
For joint stock companies, stamp tax apply on the transfer of shares, whether listed or unlisted, and are due at the time of the transaction. The applicable rate varies based on the percentage of the share capital it applies on the seller and buyer. On the other hand, capital gain taxes also apply on sale of shares transactions generating profits to the seller, the rate depends on whether or not the listed or unlisted, being 10% vs 22.5%.