​Electricity Law

The Unified Electricity Law number 87 for the year 2015 was issued for the purpose of liberalizing private sector participation in the generation and distribution of electricity. The sector, which was controlled by the Egyptian Electricity Transmission Company,​ is now open for both foreign and local investors. The new Law has introduced a simple licensing regime, which has boosted energy investments and supply in the country through competitive wholesale and retail markets.

The law has also unbundled the electricity business chain to avail more opportunities to the private sector to participate in Egypt’s electricity market. As a consequence, Egypt has received billions of dollars in investment in the energy sector and expects to increase its power production capacity by almost 45% by 2018.

Main highlights of the new unified electricity law:

  • Allows for both local and foreign private sector players to participate in the generation and distribution of electricity;
  • Sets out the framework for market liberalization through demonopolising generation and distribution activities;
  • Reorganizes the roles of both the Egyptian Electric Utility & Consumer Protection Agency (“ERA”) and the Egyptian Electricity Transmission Company (“EETC”), and redefines their responsibilities and relationship with the power sector participants to ensure freedom of competition; and
  • Unifies various regulations relating to the electricity sector

Public Private Partnership Law​​​

A public private partnership (PPP) program was started in 2006 and a new PPP law was enacted in 2010. The PPP Law number 67 for the year 2010 is the single act dealing specifically with PPP to provide a solid system for private sector participation in large infrastructure projects.  The first PPP project awarded in Egypt was the New Cairo Wastewater Treatment Plant, which was awarded by the ministry of housing, utilities and urban development in June 2009, before the law was even enacted.

The Law allows for the implementation of a wide range of PPP types (BOT, BOO, BOOT), and it applies to projects procured with a minimum investment value of LE 100 million. There is no restriction over the sectors eligible for PPP, which can apply to sectors like energy, transport, water and oil and gas in addition to non-commercial activities like government services such as schools, hospitals and housing.

Egypt has reformed its tender selection process to apply a fair and transparent model that does not lead to favoritism, incompetent partners or supplies. Relevant procedures are provided in detail in the law, including how bidders are selected and the process for requesting proposals. If a bidder is disqualified, they must be informed of the reasons for rejection.

The law requires equal treatment of Egyptian and foreign investors alike, and, in accordance with good international practice, parties are able to arrange financing with reasonable flexibility.

Egypt’s PPP Law is in high compliance with internationally recognized standards. Egypt was the first southern and eastern Mediterranean country to adopt PPP specific legislation and is also the most compliant of the four Southern & Eastern Mediterranean countries when compared with international best practice.

Corporate Governance Laws

In 2003, the Egyptian institute of directors was established and was acclaimed as the first of its kind in the region. In 2005, it was followed by the drafting of the Egyptian Code of Corporate Governance (ECCG) that draws on the OECD principles of Corporate Governance. In 2006, ministry of investment issued a Code of Corporate Governance for State Owned Companies and the Egyptian Junior Business Associated issued a Corporate Governance Manual for Family Businesses. A Code of Corporate Governance for Listed Companies was issued in February 2011 incorporating the ECCG and adding to it. The Egyptian corporate governance framework reflects sound legislation, and it has been upgraded further in the last year to include additional protections to minority shareholders.

The laws governing the incorporation of companies in Egypt are the companies law, the investment law, the public business sector law and the laws governing companies listed on the stock exchange, which include the capital markets law, and the central depository law. The Laws grant shareholders rights such as the right of ownership registration, the right to convey or transfer shares, obtain relevant corporate information, participate and vote in general shareholder meetings, elect members of the board and to place items on the agenda of the general meetings. The shareholders’ meeting is responsible for the election and appointment of board members, while the appointment of the audit committee is the responsibility of the board. Shareholders’ meeting has the exclusive power to approve related party transactions, the appointment of the auditor, remuneration of both the auditor and the board members. Shareholders with10% of the company’s shares may request an extraordinary shareholders meeting.

Listed companies must disclose ownership exceeding 5% in its holding company and any of its affiliates or subsidiaries. The capital markets law mandates that any transaction, the effect of which is that a shareholder’s ownership exceeds 10% of the capital, must be disclosed by the shareholder of the company. Board members of listed companies must notify the company of any transaction that will result in an increase in their ownership over 5% as well as report to the regulator.  Listed companies are required to have an audit committee with at least three qualified non-executive independent directors, and boards are required to meet four times a year in line with minimum legal requirements.

Egyptian companies are subject to the 2006 Egyptian Accounting Standards, which are based on international financial reporting standards (IFRS) and international accounting standards (IAS) with minor differences.

Two regulatory bodies in Egypt are in charge of supervising the implementation of governance laws: EFSA and GAFI.

EFSA is the governmental body in charge of overseeing activities of non-banking financial markets. EFSA’s competencies include supervising capital markets, derivative markets, insurance, mortgage finance , financial leasing, factoring and securitization.

GAFI is concerned with regulating and facilitating investment in Egypt and it supervises the implementation of the Companies Law. GAFI has a one stop shop for investment in general, including company formation while the Egyptian Exchange (EGX) is in charge of enforcing the listing rules of listed companies in Egypt.

For more information about Egypt’s commercial laws, click here.