What is the different between representative office and branch of a foreign company in Egyptian Laws

The purpose of a representative office is limited to analyzing the markets and the possibilities of production for foreign companies in Egypt. When it comes to a branch for a foreign company, it allows the foreign company to carry out any activity it wishes to undertake in Egypt.

A branch of a foreign company can be registered to carry a certain project in Egypt by a contract concluded with any Egyptian entity, whether an Egyptian government, a public sector or a private company. Although a branch can engage in commercial, financial, industrial, and contractual activities, the activities allowed to be carried out are limited to those stipulated in the contract concluded in Egypt with one of the Egyptian entities.

The manager of a branch for a foreign company or for a representative office may be Egyptian or non-Egyptian. The branch will be under the full control of the foreign company "its parent company”, and the branch's activities are subject to the reviewal and supervision by General Authority for Investment and Free Zones to ensure compliance with laws and regulations.

A branch is not subject to a requirement of a minimum capital investment. However, initial capital investments must be made in foreign currency transferred to Egypt through a registered Egyptian bank.

Branches are bound to distribute at least 10% of their annual net profits to their employees (not exceeding the total annual wages and salaries paid to workers and employees of the branch).

Branches must have an auditor to approve the financial statements, while the representative office does not.

All tax requirements that Egyptian companies are liable for will be imposed on the branch of the foreign company. However, the representative office is not subject to any taxes other than the income tax.

Article One of the Decree states that representative offices shall submit a statement, including the name of its employees and their functions, nationalities, salaries, total wages and the percentage of salaries paid to Egyptians. The statement shall include the work that will be initiated during the year and the changes to the activities of the representative office and the decisions made by the head office about expected future operations in Egypt. Additionally, a timetable for completing remaining studies, and for providing a statement of the conclusions and proposed actions following those studies shall be submitted.

Article Two states that foreign companies that establish a representative office should establish a company or a branch in Egypt within three years of registering the representative office. This period may be extended by a decision from the CEO of GAFI if a reasonable justification is submitted.

Article Three stipulates that the registration for a representative office in Egypt shall be renewed if the aforementioned period ends without taking any of the two procedures referred to in Article 2. 

Article Four provides that representative offices are granted a registration certificate for a period not to exceed one year. However, the registration will be renewed annually, provided that the representative office complies satisfactorily with the requirements stipulated in Article One.

Article Five stipulates that representative offices shall restrict their activities to the ones stipulated in Article 319 of the Executive Regulations of the Law of Joint Stock Companies, Partnerships Limited by Shares, Limited Liability Companies, and Single Person Companies issued by Law No. 159 of 1981 and its Executive Regulations and their amendments, which stipulates that representative offices may not engage in any activity other than conducting market studies. Offices which violate this mandate shall establish a company or a branch office within 6 months from being notified with the violation. Otherwise, its registration will be canceled. Moreover, it is legalized to consider cancelling the registration of representative offices that are proven to have provided incorrect data or to be in violation of laws and regulations.

1)      A request for registration addressing the Head of the Investment Service, along with a ratified power of attorney for the applicant issued by the foreign company.

2)       A copy of the foreign company’s articles of incorporation or an official extract from the Commercial Register of the foreign company authenticated by the Egyptian consulate abroad and the Egyptian Ministry of Foreign Affairs, translated into Arabic along with a photocopy.

3)      A copy of the decision issued by the BOD of the foreign company showing its approval on the opening of an office in Egypt. The decision shall be authenticated by the Egyptian Embassy consulate abroad and the Egyptian Ministry of Foreign Affairs, along with a photocopy translated into Arabic.

4)      A copy of the appointment of an office manager thereto ratified by the Egyptian Consulate and the Egyptian Ministry of Foreign Affairs, translated into Arabic along with a photocopy.

5)      A declaration by the parent company that a branch or a representative office of the company has not previously been opened in Egypt. The document shall be translated into Arabic and ratified by the Egyptian Consulate and the Egyptian Ministry of Foreign Affairs.

6)      A bank certificate in the name of the representative office proves that there is a minimum balance of 5,000 EGP transferred from abroad in foreign currency.

7)      A copy of the lease or ownership contract of the representative office, provided that the contract is registered by date at the Notary Public and Registration Office.

8)      A photocopy of the contractual agreement or the agreement concluded for any operation in Egypt, while reviewing the original and a photocopy of the official extract of the Commercial Register of the Egyptian company contracting with it (for the branch only).

9)      A receipt from the Security Department proving that the security inquiries of the foreign company and the the office manager if foreigner are positive.