Egypt’s new Beneficial Owners Register requirements

 

By:

Mohamed Hashish
Partner
E. m.hashish@shandpartners.com
M. +2 010 0047 0077
T. +202 2516 2131 (Ext. 101)

 

March 12, 2020

Background:

On March 1, 2020, the Egyptian Minister of Supply and Internal Trading (“MoSIT”) issued a Ministerial Decree No. 41 of 2020 (the “Decree”) amending the Executive Regulation of the Commercial Registry Law No. 34 of 1976 (the “Commercial Registry Law”).

The Decree was issued in light of certain laws including, inter alia, the Anti-money Laundering Law No. 80 of 2002 (the “AM Law”).

Article 1 of the Decree stipulates that new three (3) articles shall be added to the ‘Law’. In this regard, we believe that the reference to the ‘Law’ is a typo and it should be the Executive Regulation of the Commercial Registry Law as the MoSIT does not have the power to amend the Commercial Registry Law but only to do so for the said Executive Regulation.

The Decree was published in the Egyptian Official Gazette on March 8, 2020 and entered into force in Egypt as of March 9, 2020.

Beneficial Owners Register:

According to the Decree, any person, whether natural or juristic person, that is registered with the Commercial Registry in Egypt is required to create a special register for the “Beneficial Owners” (the “Beneficial Owner Register”) and annotate in this Beneficial Owner Register specific data including, inter alia, Beneficial Owner’s data who actually owns or controls the said person, whether such Beneficial Owner is juristic person(s) or legal interest(s) (the “New Requirements”). These data are required to be:

  • updated once any change is made to the said ownership or control; and
  • notified to the competent Commercial Registry immediately upon the occurrence thereof.

The Beneficial Owner Register is required by the Decree to be available to any judicial officer upon request.

The Decree does not specify or provide any definition for the legal terms of Beneficial Owner, Ownership, Control and/or Legal Interest. This being said that it is not clear under the Decree to what extent the New Requirements will apply (e.g. whether or not the New Requirements shall apply to all levels of Ultimate Beneficial Owners (“UBO”)).

However, given that the Decree was issued in light of the AM Law, then the definitions stipulated under the AM Law and its Executive Regulation may apply, whereby the term “Beneficial Owner” means “(i) any natural person having an actual ownership or control over any person, whether natural, juristic person or the legal interest, or (ii) any natural person on which behalf a transaction is made”.

According to the Decree, any person subject of the Decree is required to maintain the Beneficial Owner Register throughout its registration with the Commercial Registry and for a period of five (5) years as of the date on which ceasing the business activities the said person or deregistering the said person’s commercial register from the Commercial Registry.

The Beneficial Owner Register shall be subject to the same formality requirements that are applied to all commercial ledgers, especially in terms of the necessity of not having, inter alia, unnecessary spaces or corrections.

Commercial Register:

According to the Decree, the standard form of Commercial Registers in Egypt shall be amended to include a new item in which the data of all “Beneficial Owners” shall be annotated including their nationalities and the number of their National Identification for Egyptians or Passport for non-Egyptians in light of the data recorded in the Beneficial Owners Register.

It is worth noting the following:

  • according to the Commercial Registry Law, no person is allowed to carry out any business activities in Egypt unless this person is registered with the competent Commercial Registry.
  • Commercial Registers are deemed public record information and, therefore, all data annotated therein including the data of all “Beneficial Owners” will be within the public domain.
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