Establishing a limited liability company requires some formal legal procedures so that the investor can start his own business. This type of company is a form of capital company, but its nature is mixed because it combines people’s companies and money companies, and the number of partners in it ranges from Two to 50 partners, and each of these partners has an obligation to the company within the limits of his share of shares only.
Steps to establish a limited liability company
Establishing a limited liability company
Diwan Firm It has made establishing a limited liability company in Egypt easy, as all you have to do is appoint a power of attorney to the company’s lawyers and legal experts, and they will take the following steps:
Fill out the company contract form
The contract for the limited liability company should include all its information, as the investor or agent writes this data manually, and then enters it on the computer.
The investor obtains approval to establish a limited liability company through the General Investment Authority, knowing that this approval includes several basic items, such as the trade name, the company’s address in detail, the purpose of its establishment, or its commercial activity, the specific duration of the company, and the right to manage and sign. The total capital and its distribution to the partners.
It is required that all partners’ data be clearly stated in the company’s contract, mentioning those persons responsible for management.
Fill out the security inquiries form
Security inquiries are usually requested if there are foreign partners of other nationalities in the company, and this is done through the office specialized in this matter, which is located in the Investment Authority.
Obtaining a certificate of no confusion in the trade name
It is recommended that this step be one of the first steps, because this certificate has a short validity period that does not exceed two weeks (14 days), and it is obtained from the General Investment Authority.
See also: The most important tips when establishing a company in Egypt
Open bank account
By virtue of a certificate of non-ambiguity, the investor can open an account in the company’s name at the bank after completing all its papers, and put his capital into it, and this is one of the last steps.
Review official papers and documents
It is one of the important routine steps in which the validity of the data contained in the official papers is verified, before they are entered electronically to avoid any obstacles when registering.
Payment of fees
When all the necessary papers are prepared to establish the company, the client obtains payment permits, then copies them into three photocopies, keeps one of them and uses the rest of the copies for payment.
Verifying the original power of attorney and the validity of the signature in the real estate notary
The company file is transferred to the Real Estate Registry in order for the necessary procedures to be taken to authenticate and sign it. In this case, the original power of attorney and the ID card of the agent, the founder of the company, are verified.
The agent’s ID card must be valid, and it is worth noting that after signing in front of the Real Estate Registry, the decision to establish a limited liability company is issued within a short period of time.
Follow up on the establishment decision
The legal agent is responsible for following up on the decision to establish the company, and after it is issued, he begins paying the required fees, and then submits the company’s file to the Chamber of Commerce.
A set of other official papers should be submitted in addition to the company file, such as the practice certificate, original receipts for commercial registration fees, the company contract documented in the real estate register, and the incorporation decision.
Issuance of the establishment decision
The next step in establishing a limited liability company is to submit a registration form to the commercial registry, which in turn verifies the authenticity of the papers, after which the commercial registry number is issued, and the client receives his own registry, along with the articles of incorporation, and then he can apply for the tax card. Finally, the company is published in the investment newspaper.
Determine who has the right to manage and sign in the company. He is the one who undertakes various tasks such as obtaining loans, mortgage operations, selling the company, and any banking transactions. This right may also be for two individuals together, in which case the two people must carry out any action together.
Fees for establishing a limited liability company
Steps to establish a company
Establishing a limited liability company requires paying some fees and costs that may change from time to time, the most prominent of which are the following:
- The fees required for publication in the Investment Newspaper amount to 550 pounds, to be paid in the free zones in Egypt or at the General Authority for Investment.
- Fees for ratifying the articles of incorporation are paid at the Bar Association, and this is only done if the company’s capital is greater than 20,000, knowing that the value of these fees is 1% of the capital and has a maximum of 25,000 pounds, and a minimum of 1,000 pounds.
- The fees required for registration in the Commercial Syndicate are 125 Egyptian pounds.
- The costs of obtaining a certificate of non-ambiguity are 110 Egyptian pounds.
- Company registration fees paid in the Chamber of Commerce amount to 2 per thousand of the capital, with a minimum of 100 pounds and a maximum of 2000 pounds, taking into account that there is a professional practice certificate to be obtained for a fee of 250 pounds.
- The real estate registration fee is 0.25 per thousand, with the maximum being 1,000 and the minimum being 125 Egyptian pounds, for companies subject to Law No. 159, while the minimum is 125 Egyptian pounds and the maximum is 10,000 Egyptian pounds for companies subject to Law No. 172.
- The fee for obtaining true copies of the articles of incorporation amounts to 610 Egyptian pounds.
- The costs of obtaining the company’s commercial register are 350 Egyptian pounds.
Read also: Learn everything about establishing a sole proprietorship company in Egypt
Advantages of Limited Liability Companies
Establishing a limited liability company in Egypt has many key advantages that make this type of company an attractive option for entrepreneurs and investors, the most prominent of which are the following:
Personal Liability Protection
In most cases, LLC owners are protected from claims of debts and financial obligations of the company, meaning that their personal assets are not at risk if the company runs into financial trouble.
Flexibility of management structure
An LLC can have flexibility in management and organization structure, as the owners can manage the company themselves, or they can appoint outside managers to manage it.
Tax flexibility
LLCs offer a variety of tax options and owners have the choice to have their business taxed as a sole proprietorship, partnership, or corporation as they see fit for their tax needs and goals.
Easy to set up and operate
Compared to large business corporations and joint stock companies, LLCs are usually easier to establish and operate and are less administratively and legally complex.
Ability to attract investors
An LLC can attract investors by issuing membership shares, allowing greater flexibility in profit distribution and transfer of ownership.
Unrestricted dividend distribution
LLC has the flexibility to distribute profits among owners without being bound by the percentage of capital contribution, as profits can be distributed based on an agreement between members instead of being bound by fixed percentages.
Company continuity
Unlike sole proprietorships, which end with the death or withdrawal of the owner, LLCs can continue to operate based on prior agreements between the owners.
Less scrutiny and regulation
LLCs are not typically subject to the same level of scrutiny and regulation as corporations, making it easier to conduct business and avoid regulatory complexities.
Easy transfer of ownership
LLC owners can relatively easily sell or transfer their shares in the company, which can be attractive to potential investors.
In short, LLCs offer the perfect combination of flexibility, protection, and operational efficiency, making them an ideal choice for many entrepreneurs and investors alike. If you are thinking of starting a business, establishing an LLC may be the perfect step to support the growth and protection of your business.
See also: Learn about the most important steps in establishing an online company
Disadvantages of Limited Liability Companies
Establishing a limited liability company
Establishing a limited liability company, despite its many advantages, has some disadvantages that must be taken into consideration, which we will explain to help you make an informed decision about whether a limited liability company is the right choice for your business, including the following:
Complexity of registration and establishment procedures
Although many countries facilitate the procedures for establishing limited liability companies, the process can be complex and expensive for small businesses, as incorporation requires multiple legal and administrative procedures, such as submitting the company's articles of association and paying government fees.
High costs
The costs associated with establishing an LLC can be high, including registration fees, legal and accounting consulting costs, and some countries charge annual fees to maintain the company's legal status, which adds to the financial burden.
Legal and tax restrictions
Although LLCs provide legal and financial protection for their owners, there are some legal and tax restrictions to consider.
For example, some countries may impose strict financial standards and periodic reporting requirements, which means that a company needs additional resources to ensure compliance with these standards.
Difficulty in transferring ownership
Transferring ownership of an LLC can be more complicated than transferring ownership of a corporation, because it may require an agreement between all existing members, and there may be legal restrictions affecting the sale or transfer.
Limited financing options
Limited liability companies may face difficulties in obtaining external financing compared to joint stock companies, because banks and investors usually prefer investments in companies that offer clearer guarantees, making attracting capital a greater challenge.
Mandatory compatibility between members
In a limited liability company, each member has a specific role and responsibilities, because if there is no consensus among the members or if there are significant differences in visions and goals, these differences can lead to major problems in the management and stability of the company.
Limited expansion
Limited liability companies may face challenges in converting to a joint stock company if they want to expand significantly or attract large investments, because the conversion requires restructuring and renegotiating contracts and agreements.
See also: Tasks and factors for choosing a lawyer to establish companies in Egypt
Legal Tips for Establishing Limited Liability Companies
Establishing a limited liability company
Here are several legal tips regarding establishing a limited liability company in Egypt in order to ensure the success of this process and avoid legal problems that you may face, by following some basic steps and tips, the most prominent of which are the following:
Choosing a suitable name for the company
Before you can register your company, you must choose a company name, which must be unique and not used by any other company in the same field. It is worth noting that there are some laws that require the presence of certain words in the company name, such as “limited liability” or “LLC.”
Preparing the articles of association
The articles of association are one of the basic legal documents that define the structure of the company and its owners. This contract must include several important data such as the name of the company, the address of the headquarters, the names of the members (owners), the purpose of establishing the company, and the duration of the company (if it is limited to a specific period of time).
Drafting the internal regulations
Although many countries do not require internal regulations, their existence is necessary to regulate the relationship between members and avoid potential conflicts.
The bylaws must include the rights and duties of each member, decision-making procedures, how profits and losses are distributed, and the procedures to be followed in the event that a member wishes to withdraw from the company.
Legal registration and submission of documents
After preparing the basic papers, they must be submitted to the competent authorities in the country in which you wish to establish the company, in which case you will need to pay the registration fees and obtain the certificate of incorporation.
Tax compliance
Ensure that your company is registered with local and national tax authorities, in which case you must obtain a tax identification number and comply with all applicable tax laws.
Appointing an accountant or legal advisor
Dealing with financial and tax laws can be complex, so it is best to hire an experienced accountant or legal advisor who will help you provide the necessary advice and manage tax payments.
Insurance
Your company must be insured against various risks that it may face, such as liability insurance and property insurance.
Frequently Asked Questions
Here are some of the most frequently asked questions about establishing a limited liability company, including the following:
How much does it cost to set up an LLC?
The cost of setting up an LLC may vary from country to country and depends on several factors such as local legislation, required capital, legal fees, etc.
Typically, the cost of setting up an LLC includes costs such as (company registration fees, required capital which depends on the type of business and country, business start-up and licensing costs, legal fees for legal consultants, witnesses or financial experts, commercial register establishment fees).
It is advisable to contact the relevant authorities such as the Commercial Registry or legal consulting offices to obtain accurate details about the costs required to establish a limited liability company.
What is the minimum capital for a limited liability company?
The minimum required to establish an LLC is not specified and is agreed upon according to some local regulations and corporate laws that vary from place to place.
We explained all the steps for establishing a limited liability company through Diwan Firm Which is offered to you The best company establishment lawyer in Egypt With a statement of the fees and costs required to complete the establishment work, it is worth noting that this type of company has some disadvantages, such as that bonds cannot be offered for public subscription. In addition, the company has a limited lifespan and is renewed after the expiration of the period.
Sources:
