State-Owned Companies Law – Law No. 170 of 2025

On August 18, 2025, Law No. 170 of 2025 on Regulating Certain Provisions of State Ownership in Companies Fully or Partially Owned by the State (the “State-Owned Companies Law”) was published in the Official Gazette and entered into force on August 19, 2025.

The State-Owned Companies Law applies to companies wholly owned by the State, local administration units, ministries, public authorities, and other public entities, as well as to companies in which the State or its authorities hold shares, even partially.

The State-Owned Companies Law excludes companies established under international treaties, or special laws regulating their ownership, State-owned insurance companies’ contributions to the capital of any companies, and those designated as strategic or of national importance by the Cabinet.

The State-Owned Companies Law is complementary to existing legislation, including the Capital Market Law No. 95 of 1992, Non-Banking Financial Activities Law No. 10 of 2009, the Integrated Sinai Development Law No. 14 of 2012, the Sovereign Fund Law No. 177 of 2018, and the Banking Law No. 194 of 2020. It shall apply without prejudice to their provisions.

Main Features

I. Expansion of Private Sector Participation in the Egyptian Economy

The State-Owned Companies Law repeals Article 27 of the Public Sector Authorities and their Companies Law No. 97 of 1983, which had prohibited public legal entities, as well as companies and banks wholly owned by the State, from disposing of shares in public sector companies except among themselves and strictly in accordance with the conditions set out in the executive regulations of that law. The Executive Regulation of the said law specified that such shares may only be disposed of in the following order: first to the public sector authority supervising the company, then to the public legal entities or State-owned companies and banks that were among the company’s founders, and thereafter to other non-founding entities of the same kind.

Conversely, the State-Owned Companies Law introduces a new framework that enables private sector participation by allowing it to acquire, or increase, shareholdings in State-owned companies. The Law further provides mechanisms for State divestment from companies deemed unnecessary for continued ownership.

II. Regulatory Tools

1. The State Ownership Policy Document

According to the State-Owned Companies Law, the state ownership policy document is toshall include regulations set by the Cabinet to set out rules aiming to establish a comprehensive policy for the governance of State participation in economic activities according to defined timelines and withdrawal mechanisms, in order to enhance the role of the private sector in achieving economic development (the “State Ownership Policy Document”).

2. Establishment of a Central Unit for State-Owned Companies

The State-Owned Companies Law establishes a Central Unit for State-Owned Companies shall be established affiliated with the Cabinet of Ministers (the “Unit”). According to the State-Owned Companies Law, the Unit is mandated to prepare detailed restructuring programs for State-owned and state-participated companies, maintain a comprehensive database of such entities, and determine the appropriate course of action for each—whether retention, restructuring, capital expansion, partnership with the private sector, or full or partial divestment.

3. Governance and Accountability

The Unit is also responsible for governance. It sets unified standards for the selection and evaluation of State representatives in company boards, approves the appointment of investment banks and financial advisors, and reviews fair value assessments prior to any offering or sale of state-owned assets. The State-Owned Companies Law imposes strict obligations of confidentiality and conflict-of-interest disclosure on all members of the Unit.

4. The Regulatory Programs Objectives

The objective of the regulatory programs developed by the Unit include, inter alia, (i) increasing the domestic and foreign investment, and (ii) enhancing the protection for competition and neutrality in the market, without prejudice to the applicable laws regulating such matters.;

4.5.Workforce Considerations

The Unit must assess workforce matters in State-Owned Companies, including creation of ing a national database of employees, proposing mechanisms to manage surplus labour without imposing burdens on the State budget, issuing annual and quarterly reports on the State Ownership Policy, and developing a national monitoring and evaluation framework to measure its economic impact.

Based on a proposal submitted by the Chief Executive Officer of the Unit and following the approval of the CabinetFurthermore, the Prime Minister shall, based on a proposal submitted by the Chief Executive Officer of the Unit and following the approval of the Cabinet, issue a decision setting out the mechanisms for addressing the surplus workforce in State-owned companies, provided that the financial costs arising from such mechanisms are funded without imposing any burden on the State’s general budget.

5.6.Divestment and Restructuring Tools

According to the State-Owned Companies Law, the regulatory mechanisms applicable to the companies entirely owned by the State include disposal by sale, encompassing all methods of offering in the primary and secondary markets, as well as capital increases, expansion of the ownership base, division, and merger.

With respect to companies in which the state holds participation, such mechanisms are limited to the disposal by sale of shares, quotas, or voting rights owned by administrative units of the state, including ministries, public bodies, agencies, local administration units, entities with special budgets, and public service and economic authorities, along with other public legal persons.

All such measures must be implemented without prejudice to the provisions of the companies’ articles of association, their by-laws, shareholder agreements, or investment agreements under which they were established.

6.7.Valuation and Due Diligence Framework

The State-Owned Companies Law establishes a comprehensive framework for assessing the value of shares, quotas, or voting rights of a State-owned company subject to offering (the “Relevant Target”). Under this framework, a licensed financial consultancy company, approved and registered with the Financial Regulatory Authority(“FRA”), shall be appointed as the financial advisor to prepare fair value studies of the Relevant Target.

In addition, the State-Owned Companies Law provides for the appointment of a public offering advisor, which may be an investment bank licensed by the fra FRA or a foreign investment bank, to be engaged by the Unit for advisory services in connection with restructuring programs. The Unit may also appoint an investment bank, whether FRA-licensed or foreign, to promote securities, financial instruments, and other related activities.

A specialized committee—comprising representatives of several government authorities and ministries, including the FRA and the Central Bank of Egypt—shall review the bases of the financial advisor’s valuation to verify the soundness of its methodology and to ensure compliance with Egyptian financial valuation standards, or with internationally recognized standards approved by the FRA, as applicable.

The committee must complete its review within thirty days from the date on which the complete documentation is submitted and shall issue a detailed report containing its opinion to the Chief Executive Officer of the Unit.

7.8.Conditions for State Participation in New Companies

The State-Owned Companies Law imposes restrictions on the ability of State entities to establish or participate in new companies. Administrative units of the State—including ministries, public bodies, agencies, local administration units, entities with special budgets, public service and economic authorities, other public legal persons, and State-owned companies—must obtain prior written approval from the Unit before establishing or participating in companies whose primary purpose involves activities in which the State has decided to maintain its investments, as set out in the State Ownership Policy Document.

On the other hand, the said government authorities are expressly prohibited from establishing or participating in companies whose primary purpose involves activities that the State has decided to fully exit or reduce its investments in, pursuant to the State Ownership Policy Document.

The General Authority for Investment and Free Zones, the FRA, and other competent government authorities are required to monitor compliance with these restrictions and notify the Unit of any violations.