Establishing limited partnerships in Egypt
Establishing a limited partnership in Egypt is a suitable option for small and medium-sized businesses that require management flexibility and the ability to attract capital without involving all partners in management. Below is a detailed explanation of the steps, advantages, and disadvantages:
Alaa Eldebeki - • Information about Legal advice and incorporation work
Establishing a Limited Partnership in Egypt
CopyIs a suitable option for small and medium-sized businesses that require management flexibility while also being able to attract capital without involving all partners in management. The following is a detailed explanation of the steps, advantages, and disadvantages:
CopySteps for Establishing a Limited Partnership in Egypt
Copy1. Choosing a Company Name
o The trade name must be distinctive and unused. The name of one of the general partners is often added with the phrase "and partners."
2. Preparing the Articles of Association
o Including the partners' details (general and limited partners), capital distribution, method of distributing profits and losses, the duration of the company, management powers, and termination provisions.
o The contract must be notarized at the Real Estate Registry and certified by the Bar Association.
3. Depositing the Capital in the Bank
o Deposit the capital as stipulated in the contract and obtain a bank certificate [2].
4. Submitting the Required Documents
o Copies of national ID cards or passports.
o A lease or ownership contract for the company's headquarters with the date attached.
o A certificate of non-confusion of the trade name.
o Official power of attorney if there is a representative for the partners.
oIn-kind share valuation report (if applicable).
o Criminal record certificate for certain activities.
5. Publish a summary of the articles of association.
o Publish a summary of the articles of association in a widely circulated daily newspaper at the company's headquarters.
6. Register in the Commercial Register.
oSubmit a registration application with all required documents.
7. Open a tax file and obtain a tax card.
oApply to the Tax Authority to open a tax file and obtain a tax card in the company's name.
8. Obtain a business license.
oObtain a professional license from the Chamber of Commerce.
Advantages of a Limited Partnership:
Copy· Ease and flexibility of establishment and management compared to other types of companies.
· Ability to attract new capital through limited partners without involving them in management.
· Clarity of responsibilities: General partners manage the company and bear full liability, while limited partners are only liable to the extent of their shares.
· Increased credit: The greater the number of limited partners, the greater the capital and the greater the company's ability to obtain financing.
· Flexibility in decision-making and speed of execution thanks to the limited management of the general partners.
Disadvantages of a Simple Limited Partnership
Copy· Unlimited liability for general partners: They bear the company's debts with all their own funds.
· Difficulty in withdrawing a limited partner: They can only withdraw with the consent of all general partners.
· Trust risk: Limited partners may be exposed to risks in the event of mismanagement by general partners.
· Difficulty in transferring shares: Transferring a limited partner's share requires the consent of the remaining partners.
· Limited attraction of large investments: Due to the unlimited liability of general partners.
Comparison table between general and limited partners
CopyEstablishing a limited partnership in Egypt offers administrative flexibility and the potential to attract new funding, but it requires careful consideration of the liability of general partners and the associated risks. Choosing this legal form is suitable for family businesses or partnerships that combine management expertise with capital.