Law no.: 21 of 2022 amending some provisions of Law no.120 of 1982 regulating Commercial Agency and some of Commercial Intermediary business.
Issuance date: 11 April 2022
Publication date: 11 April 2022
Entry into force: 12 April 2022
Executive decisions issuance: by the competent minister within six months
Compliance period: six months as of the date of executive decisions issuance.
Recently, a significant amendment was adopted regarding the law regulating Commercial Agency and Commercial Intermediary (the “Law”). The amendment has two primary purposes: firstly, it regulates expressively, and for the first time, the real estate brokerage activities by creating an electronic register and providing several vital obligations to be fulfilled by agents in this field. Secondly, the amendment aims to increase penalties, initially stipulated by the original law adopted in 1982, regarding commercial agency, commercial intermediary, and real estate brokerage registration requirements.
The Law provisions apply to:
- Commercial agents;
- Commercial intermediaries; and
- Real estate brokers/agents.
It is worth noting that the Law applies whether natural or legal persons are engaged in these activities.
The Law introduces the following new concepts:
- A special e-Register, namely “The Real Estate Brokerage Register,” was created to register real estate agents/brokers, including their data, code, category, and required information and statistics to regulate real estate activities.
- The Law creates “negative lists,” including terrorist entities and entities enlisted in the Anti-Money Laundry Special Unit database, who cannot register as real estate brokers.
- The essential requirements needed to register as a real estate broker were stipulated as follows:
- For natural persons: a list of requirements needs to be fulfilled besides passing a specialized training course in the Real Estate Agency field following executive decisions to be issued soon.
- For legal persons:
- The applying company headquarter must be in Egypt. In addition, the competent minister can authorize the enrollment of companies based in Egypt;
- The real estate brokerage must be included in the company’s status as one of its activities;
- The company’s paid-in capital must be no less than EGP 20,000 at the time of enrolling in such e-register; and
- Partners, directors, board of directors members or persons engaging in the company’s management must fulfil several conditions and requirements in this regard.
- The Law also creates new obligations to be followed by registered real estate brokers as follows:
- The broker/agent shall hold a register including all brokerage transactions, received commissions, price/date/down payment of each transaction, personal data of parties, and any other required information to be determined by future executive decisions.
- Moreover, the broker/agent shall fulfil verifications and data privacy obligations regarding each transaction.
- Regarding the real estate agency contract, it must include a list of required data such as:
- Contract date;
- Broker and clients names and ID numbers;
- Real estate agent data and tax registration number;
- Unit description, and any other required data by future executive ministerial decisions; and
- Payment references, including its method, type, date, and amount.
- The commission in the real estate agency contract and any other received amount shall be paid by cashless payment methods regulated by law no.18 of 2019. Otherwise, the agent would be subject to a fine of 2% - 10% of the total cash received with a maximum of EGP 1 million.
Penalties and Conciliation
On the one hand, the Law significantly increased the penalties once stipulated in the original text adopted in 1982 to be adequate to the actual context, as follows:
- The Law stipulates a maximum of two years imprisonment and/or a fine of EGP 50,000 – EGP 2 million, besides facility closure and banning from engaging in such activity for a period of two years, in case of:
- Practising commercial agency, engaging with a commercial intermediary or real estate brokerage activities without registration on the special register;
- Establishing or managing a facility created for the activities mentioned above without registration;
- Registering on the commercial agency and intermediary register or real estate brokerage register upon incorrect data mentioned intentionally, or upon blocking and hiding required data, information, registers, or documents.
- A fine of EGP 30,000 - EGP 50,000 and registering cancellation if the real estate agent did not mention any introduced edits or amendments on the required data for registration to the competent authority within 30 days of such edit.
- Moreover, a fine of EGP 50,000 and/or six months of imprisonment if intentionally practising such activities after dismissing one of the required conditions for the registration.
- Finally, the effective manager of the legal person shall endure the same penalties following conditions stipulated by the Law.
On the other hand, reconciliation is also an option for the competent minister in case of criminal proceedings engaged for the mentioned violations, following conditions and fine payments provided in detail by the Law.