Opening a representative office in Egypt: Legal procedures and registration with the General Authority for Investment (GAFI)

A representative office is a legal form made available by Egyptian lawmakers to foreign companies wishing to establish a presence in Egypt without engaging in direct commercial activity. The representative office is not an entity independent from the parent company, but rather an extension thereof. Its purpose is to represent the parent company administratively and technically within Egypt, promote its business, and study local markets, without engaging in sales, purchases, or profit-making activities.

The Egyptian lawmakers have stipulated the provisions for opening a foreign representative office under Law 159 of 1981 and its Executive Regulations, in addition to the decisions and instructions issued by the General Authority for Investment and Free Zones (GAFI).

The opening of representative offices in Egypt is an important preliminary step for foreign investors to study the Egyptian market and familiarize themselves with the investment and legal environment before deciding to establish a branch or company to conduct commercial activities.

A foreign representative office is a form of legal presence for foreign companies in Egypt, allowing them to have an official presence without directly engaging in any commercial or profit-making activities. A representative office is a legal means of exploring and studying the Egyptian market before commencing operations.

Legal obligations of foreign representative offices:

The GAFI issued, pursuant to Resolution 222 of 2023, certain obligations imposed on foreign representative offices, which are as follows:

1. The foreign representative office in Egypt shall submit to the GAFI at the beginning of each year a statement of the names of its employees, their positions, nationalities, salaries, total wages, the percentage of Egyptian wages, the work undertaken during the year, the information sent to the parent company, and the decisions taken by the parent company regarding its work during the year.
2. The representative office shall submit a schedule of completed and pending studies and a statement of the practical studies that have been completed.
3. The activities of foreign representative offices are reviewed every three years to ensure that they are seriously committed to studying the market and that the foreign parent company is serious about establishing a company or opening a branch in Egypt.
4. The representative office shall be granted a registration certificate for a period not exceeding three years and for the entity specified by the office. This period shall not exceed the term of the office (three years). The certificate shall be renewable throughout the term of the office.
5. In the event that the office violates the provisions of Article 319 of the Executive Regulations of the Joint Stock Companies Law, the office shall rectify its position and remove the causes of the violation within six months from the date of notification of the violation.

Legal restrictions on foreign representative offices:

Foreign representative offices are subject to several legal restrictions, to ensure legal compliance with Egyptian legislation, namely:

1. Prohibition on commercial activity: The activity of a foreign representative office is limited to exploring the Egyptian market only. The representative office may not sell, purchase, or distribute products or provide services for fees, as the representative office is not profit-oriented.

2. Prohibition on concluding commercial contracts: The role of foreign representative offices is limited to representing the foreign parent company in studying the Egyptian market. Therefore, they are not entitled to conclude commercial agreements in the name of the office, but may only act as intermediaries in concluding contracts on behalf of the parent company outside Egypt.

3. Prohibition on issuing invoices or collecting payments: The representative office is not permitted to issue tax invoices or collect any financial payments from customers or clients within Egypt.

4. Limiting activities to studies and representation: The office activities are limited to market research, collecting economic information, promoting the parent company's business, and communicating with relevant government and private entities. In case of violation, the office shall be deregistered. 

5. Foreign representative offices shall be subject to the supervision of the GAFI. Upon registration, representative offices shall submit annual reports to the GAFI, explaining their activities during the year and their compliance with legal regulations.

Documents required for registering foreign representative offices:

1. Power of attorney.

A general power of attorney is executed by the director of the parent foreign company overseas, stipulating the right to establish representative offices and deal with all relevant authorities. The power of attorney shall be issued by a competent notary public abroad and certified with the seal of the foreign country's Ministry of Foreign Affairs and the Egyptian consulate, and ratified by the Egyptian Ministry of Foreign Affairs in Egypt.

2. Application for registration of a foreign representative office, to the GAFI’s Head of Investment Service.

3. The security inquiry forms of the foreign parent company and the office manager shall be submitted.

- If the manager is a foreigner, a security inquiry form shall be completed, and a copy of their passport and all relevant information shall be submitted.

- If the manager is Egyptian, a copy of a valid national ID card shall be submitted.

4. The original memorandum of association of the foreign parent company, translated into Arabic, certified with the seal of the foreign country's Ministry of Foreign Affairs and the Egyptian consulate, and ratified by the Egyptian Ministry of Foreign Affairs in Egypt.

5. The original resolution issued by the board of directors of the foreign parent company, approving the opening of an office in Egypt and appointing a manager for the office, translated into Arabic and certified with the seal of the foreign country's foreign ministry and the Egyptian consulate, and ratified by the Egyptian Ministry of Foreign Affairs in Egypt.

6. A date-registered lease agreement of the headquarters of the foreign company's representative office in Egypt.
7. A bank certificate issued by an Egyptian bank authorized to receive subscriptions, to the GAFI, equivalent to EGP 5,000 (provided that the equivalent amount in Egyptian pounds is transferred from the parent company's account abroad).
8. A statement from the foreign parent company acknowledging Resolution 222 of 2023. The statement shall be translated into Arabic and certified with the seal of the foreign country's Ministry of Foreign Affairs and the Egyptian consulate, and ratified by the Egyptian Ministry of Foreign Affairs in Egypt.
9. A copy of the payment receipt of the office’s registration fee, i.e. EGP 1,000, which will be refunded if the office is not approved for opening, as well as a copy of the payment receipt of the office’s registration certificate fee, i.e., EGP 2,000 per certificate.

In conclusion, a representative office is a legal means that allows foreign companies to duly exist within the Egyptian market, without engaging in profit-making activities, with the purpose of introducing the parent company, studying the Egyptian market, and building a network of commercial relations in preparation for future investment, all under the supervision of the GAFI.

In light of the above regulations and provisions relating to the incorporation of companies and the most common types of companies in Egypt, we, Al Saadani & Partners Law Firm, affirm our full commitment to providing the best legal services to our valued clients.

We work hard to:

• Guide our clients towards the optimal legal path for establishing a foreign representative office in Egypt.
• Provide full support since opening the representative office and obtaining the registration certificate.
• Provide professional legal services and advice, enabling our clients to make informed decisions.

We always strive to provide comprehensive legal solutions that keep pace with regulatory and legislative changes, thereby serving the interests of our clients and protecting their rights.