The Guide is designed to help companies and individuals involved in CSR, NGOs and other community development programs understand and comply with the new civic law and its regulations of 2021. Throughout, we attempt to provide companies—and particularly their legal and compliance professionals—with a practice-oriented overview of the key features of the law. This guide will be particularly useful for companies with existing NGOs and CSR activities seeking to maintain the legality of their operations and increase their civic engagement in Egypt.

This Guide is organized into 3 discrete modules:

• Civic society actors and compliance procedures.
• Associations: Their Purpose, obligations, regulatory aspects and new Finacial considerations.
• More on Associations, Foregien NGOs, Volunteerism provisions and Penalties.

 Part II Associations: Their Purpose, obligations, regulatory aspects and new Finacial considerations.

The new Civic Work Practicing Law regulated in details different aspects of associations as main actor of Civic Society Foundations. It is worth mentioning that associations’ stipulations are applicable to other CSF such as foundations and unions in case special rules of law are not stipulated. In the second part of our guide you can get to know more about rights and obligations of Associations, new financial and regulatory aspects that have been stipulated by the new law. In addition, we introduce both prohibited and authorized activities and finally  penalties.

We can list most significant amendments introduced by the law, as following:

1. The CWP Law mentions expressly “taking into consideration the official development plans, and society’s needs” when founding an association working in society’s development field.

2. The law maintains the same list of prohibited activities, as follows:

• Political or partial activities.
• Military activities.
• Activities in contradiction with national security, general morals and order, or those encouraging discrimination between citizens.
• Participating in political or electoral campaigns although present an electoral candidate in its name.

3. Moreover, the law now permits associations to offer scientific or professional certificates after obtaining the authorization of the competent authority.

4. CWP Law in its art. (17) grants same previous privileges and exemptions to facilitate achieving the designated objectives. Article (48) of the ER exempts associations from:

• registration and certification fees,
• taxes and stamp duties,
• real estate taxes on properties owned by the foundation, provided that the properties are solely used to fulfil the foundation’s objectives, and
• customs duties and fees for any imported equipment, machinery, devices, production resources, and cars, provided that all the aforementioned serve the objectives of the foundation.

Moreover, the foundation’s consumption and usage to facilities, such as water, electricity, and gas, shall be calculated as domestic consumption.

5. The “license” provided by previous law has been replaced by simply “a notification to administrative authority” in case of cooperation with any other local association or civic society entity. On the contrary, cooperation with foreign entities or organizations now requires obtaining a license from the central unit as well as the approval of the MOSS. The ER lists the required documents to be attached to the request.

6. Although, in order to open a branch abroad, the association shall now follow a newly introduced procedure, as following:

• File a request before the competent local unit with all the required documents listed in the ER,
• Consequently, the unit prepares a report and present it to the MOSS,
• the Minister of Social Solidarity (the “Minister”) will then issue an authorization to the association,
• afterwards, the administrative authority -central or competent local unit- shall notify the Ministry of Foreign Affairs, who in its turn will notify the Egyptian embassy in the concerned State.

7. The law stipulates -in its art.22- a new prohibition by virtue of which an association cannot allocate shelters or accommodations to categories of people in need of social aids i.e children, elderly people, patients or incapables persons- unless it obtains a license from competent authorities. The documents listed in the ER shall be attached to the request for the license.

New Financial aspects:

On one hand, the previous law allowed associations to open one or several-maximum 5 bank accounts in one of the banks under the CBE’s supervision, all funds spending or receiving shall be through those accounts.New provisions remove this maximum number -of five accounts- and give administrative authorities the ability to authorize the opening of unlimited accounts, if the foundation’s capital exceeds 5 Million EGP.

On the other hand, the law maintains the list of authorized activities related to collecting funds; associations have the right to the following:

• collect liquid fund from natural or legal, Egyptian or foreign persons, as well as foreign NGOs working inside Egypt,
• accept donations and allowances from natural or legal, Egyptian or foreign persons working inside or outside Egypt,
• accept real properties donations from natural or legal, Egyptian or foreign persons working inside or outside Egypt, and
• collect contributions and donations from inside Egyptian or foreign natural or legal persons, through banks, corporates, sms, electronic distributions, civic parties or fairs.

It is worth mentioning that the ER detailed precisely the procedures and required documents for the abovementioned cases in its art. 41 to 65, as well as the conditions of notification that must be sent to the competent unit, and the Minister’s authorization required in some cases.

Finally, an important financial activity is now authorized by the CWP Law, for the first time, associations can establish investment corporates or funds related to its activities to allow its development of capital and funds, upon the Minister’s authorization. In addition to that, Civic associations can now have many financial activities upon Financial Regulatory Authority FRA authorization, in order to develop its incomes without aiming to personal profit.

Associations’ obligations and regulatory aspects:

As for the legal obligations, the CWP Law maintains previous obligations such as transparency, publicity and disclosure. The ER provides that associations shall keep physical and electronic handbooks and keep their database up-to-date monthly.

Moreover, the law added two more significant obligations concerning good governance. On one hand, and on the other hand association shall create a special committee to administrate healthcare and schooling activities, noting that its projects financing database shall be up-to-date.

In addition to that, more regulatory aspects were added, as follows:

• Civic society foundations are now subject to severe financial regulations as newly added art. 10 stipulates that the administrative authority can - upon the Attorney General’s authorization- force banks to reveal the foundation’s accounts’ confidentiality and expose all foundation’s deposits.
• Similarly, administrative authority can also request a suspension decision from the General Prosecution, in order to suspend the Board of Directors’ abilities while a dissolution case is heard by court.
• Auditors shall now - by force of law - report all their auditing comments and observations to the administrative authority.
• Finally, an important innovation is introduced by the law - the 4^th section of chapter I - concerning the gradual list of sanctions that can applied to associations:

a. the list of sanctions begins with the suspension of activities,

b. then dissolution of BoD,

c. finally, the dissolution of the association which can be decided by court.

On the contrary, the previous law had only one sanction “the association’s dissolution”. It is a great step toward the Civic Work’s protection and encouragement, as art.45 - newly added - listed cases in which MOSS can decide the suspension of activities for a duration of only one year in addition to the headquarters’ closure. Accordingly, art. 46 & 48 listed cases of BoD and association’s dissolution by court’s decision upon the administrative authority’s request.

This blog contains general information on legal and related matters and should not be interpreted as legal advice. Fore more information please refer to our disclamer below.