Given the current economic and pricing fluctuations, it is crucial to be aware of the recent legislative changes that have significantly impacted strategic goods trading in Egypt. Cabinet decree no. 5000 of 2023 (the “Strategic Products Decree”) and Ministry of Supply and Internal Trade (the “Ministry”) decree no. 200 of 2023 (the “Trading in Strategic Products Decree”) have introduced stringent measures to regulate the production, importation, manufacturing, packaging, and distribution of specific strategic products.

The Strategic Products Decree identifies 7 (seven) products as strategic: blended oil, fava beans, rice, milk, sugar, pasta, and white cheese. The Strategic Products Decree imposes restrictions on the sale of said strategic products, prohibiting their withholding, concealing, or refusing to sell the same in any manner. Additionally, entities in possession of such products are required to promptly notify relevant Directorates of Supply and Internal Trade regarding the type and quantities stored.

Violating the requirements stipulated under the Strategic Products Decree may result in severe penalties, including imprisonment, fines ranging from EGP 100,000 (one hundred thousand Egyptian pounds) to EGP 2,000,000 (two million Egyptian pounds), or the equivalent value of the products involved. Furthermore, violations may be subject to military court proceedings under Law No. 3 of 2024 regarding the Security and Protection of Public Facilities and Vital State Facilities.

The Trading in Strategic Products Decree was subsequently issued to set additional requirements on entities importing, producing, and packaging strategic products. Below are the key takeaways of said decree:

  1. Tax Invoices and Price Inscription:

Entities trading in strategic products shall issue tax sales invoices detailing product specifics. Starting 1 March 2024, entities must include a clear, permanent, and non-erasable inscription of the product’s maximum final consumer selling price in Arabic.

  1. Monthly Reporting and Immediate Notifications: 

Entities subject to the Trading in Strategic Products Decree must submit detailed monthly reports to the Ministrycovering various aspects of their products, including, inter alia, product description, production date, maximum final consumer selling price, and production quantity. In case of changes to the maximum final consumer selling price, immediate notification to the Ministry is also required.

Failure to comply may result in penalties akin to those outlined in the Strategic Products Decree and the Consumer Protection Law No. 181 of 2018, which encompass imprisonment, fines, and the confiscation of products subject to violation.

Further, a recent Ministerial Instruction has been issued requiring specific timeframes for storing strategic products. These include sugar, milk, cheese, and pasta for no longer than 3 (three) months; oils for no longer than 6 (six) months; beans, lentils, and rice for no longer than 2 (two) months. 

The practical implementation of said decrees and the Ministerial Instruction remains to be seen.

If you require any further clarification or assistance on strategic products decrees, please do not hesitate to our retail, e-commerce and logistics team, Mennatullah Sultan, Senior Associate, Associates, Nourhan Hatem and Karim Manadelo, and Heba Aboslima, Junior Associate.

On 10 January 2024, the Ministry of Transport issued Decree No. 654 of 2023, regulating the land transport of goods and freight-forwarding using information technology, domestically and internationally.

Mirroring the impact of the Ride-Hailing Law No. 87 of 2018, which streamlined the operations of industry giants like Uber and Careem, the Land Transport Regulatory Authority Regulations (“LTRA Regulations”) are intended to regulatethe logistics landscape. Key highlights under the LTRA Regulations include, for example:

Introducing the LTRA Regulations aims to raise operational standards and promote compliance. Businesses, especially those operating in e-commerce and logistics, are advised to consider the implications of these regulations. This involves assessing what the “use of information technology” means, how it may apply to your business model and how you may need to align your operations with the new requirements.

If you require any further clarification or assistance on the LTRA Regulations, please do not hesitate to our retail, e-commerce and logistics team, Mennatullah Sultan, Senior Associate, and Associates, Nourhan Hatem and  Karim Manadelo.

We are thrilled to announce that ADSERO has won the Litigation Law Firm of the Year in Egypt by Chambers and Partners  Middle East Awards 2024.

This prestigious award is a testament to our team's hard work and commitment to providing our clients with unparalleled legal services.

We sincerely thank our clients for their ongoing support and positive feedback.

Congratulations to our dedicated litigation team on this achievement and many more successes ahead!

 We are delighted to announce that our client, the Ministry of Finance | Egypt ("MOF"), has been awarded the "Sukuk Deal of the Year" for its establishment of the first Sovereign Sukuk program of USD 5 BN from the GFC Media Group Bonds, Loans & ESG Capital Markets Africa 2024 awards.

Our team was led by Partners Hossam Gramon and Malak Khalil, assisted by Karima Seyam, Senior Associate, Associates; Aya Badr, Mohamed Elshenawy, Dina Sharshar, and Sadeem Abdelsalam, and Junior Associates, Hana Raouf, and Yosr Allam, with the support of Ehab Fedaa, Partner.

We had the pleasure of working alongside our distinguished colleagues at Clifford Chance, who acted as the international legal counsel to the MOF.

Zaki Hashem, Attorneys at Law acted as the local counsel, and Linklaters acted as the international counsel to the arrangers.

Congratulations to all the talented teams on successfully executing this groundbreaking deal.

For more information, you can check GFC Media Group presents Bonds & Loans coverage here.

We are delighted to announce that ADSERO has once again been recognised by the Chambers and Partners Global Guide 2024.

These rankings affirm our commitment to providing exceptional client services and upholding the highest standards of excellence.

A heartfelt congratulations to our ranked Partners and dedicated team members whose efforts have led to this well-deserved recognition.

To view our full rankings, click here.

C&P Rankings 2024Download

We are proud to announce that our client, Ministry of Finance | Egypt ("MOF"), has been awarded the “Sovereign, Supra & Agency Bond Deal of the Year” for its establishment in the first-ever issuance of RMB-denominated bonds ("Panda Bonds") in the Chinese market at 3.5 billion Renminbi, equivalent to approximately USD 500 million from the GFC Media Group Bonds, Loans & ESG Capital Markets Africa 2024 awards.
 
Our team was led by Hossam Gramon, Partner and Head of Banking & Project Finance, Karima Seyam, Senior Associate, Aya Badr, Associate and Yosr Allam, Junior Associate.
 
We are delighted to have worked alongside our esteemed colleagues from Fangda Partners, who acted as the Local Chinese Counsel to the MOF, and Dechert LLP, who acted as the International Counsel to the MOF.
 
Congratulations to the MOF and to all parties involved in this historical transaction!
 
For more information, you can check GFC Media Group presents Bonds & Loans coverage here.

Following our recent publication on the Green Hydrogen Projects draft law, we are pleased to share its official approval. 
 
Discover the latest legal insights as Egypt paves the way for a sustainable future, offering incentives for Green Hydrogen Projects.
 
Our article outlines the law's intricacies, highlighting Egypt's commitment to eco-friendly growth, reduced carbon footprint, and economic progress. 
 
For more details, click on the attachment below.


The contributors to this article are:
Malak Khalil, Partner and Head of EENR
Radwa Elderwy, Managing Associate
Dina Sharshar, Associate
Khaled Abdelrahman, Junior Associate

Law No.2:2024 Investment Incentives Green Hydro Projects PDFDownload

We are proud to have been awarded the “Egypt Deal of the Year” from Islamic Finance News (IFN), one of the most coveted honours in the global Islamic finance and banking industry. The award recognises our work as the lead Egyptian counsel to the Ministry of Finance | Egypt (MOF) in establishing the first Sovereign Sukuk program of USD 5 BN.
 
The ADSERO team was led by Partners Hossam Gramon, Malak Khalil, and Ehab Fedaa, assisted by Associates Aya BadrDina SharsharHussien MoustafaMalak El Alfi, Mohamed Elshenawy, Sadeem Abdelsalam, and Yosr Allam, and, Hana Raouf, Junior Associate.

Congratulations to the seasoned teams at Clifford Chance, who acted as the international counsel to the MOF, as well as Zaki Hashem, Attorneys at Law and Linklaters, who represented the joint lead managers.
 
We had the pleasure of working with our distinguished colleagues from ADIB - Abu Dhabi Islamic Bank, Citi, Groupe Crédit Agricole, Emirates NBD, First Abu Dhabi Bank (FAB) and HSBC, the joint lead managers.
 
Special thanks to the MOF and to all parties involved in this historical transaction! 
 
We also extend our warmest congratulations to all other winners and nominees.

For more information on this award-winning project, please click here.

Introduction

In light of the anticipated issuance of the new Egyptian labour law, complementary and related laws are also expected to undergo changes.

In this respect, last December, law no. 186 of 2023 (the “Law”) was issued with the primary objective of amending specific penalties outlined in Child Law No. 12 of 1996 (the “Child Law”) and introducing a new provision.

Overview

First and foremost, the Law has added a new provision, namely Article 72 bis, which grants female employees in the government, public sector, business public sector, and private sector the same rights as provided in Articles 71 and 72 (nursing breaks and childcare leave) if they have custody or guardianship of a child under 6 (six) months. These rights are subject to the provisions of the executive regulations of the Child Law.

Additionally, the Law has amended several penalties within the Child Law, mainly increasing the monetary fines.

It is crucial to highlight one such amendment, wherein the penalty for negligence while supervising a child, resulting in their endangerment, may now, alternatively, be imposed through enrolling the violator in a rehabilitation program lasting no longer than 6 (six) months by virtue of a court ruling instead of through imprisonment or monetary fines.

The programs will be determined by a decree issued by the competent Minister of Social Affairs in collaboration with the National Council for Women and the National Council for Childhood and Motherhood.

Furthermore, the court will monitor the violator through monthly reports the entity overseeing the rehabilitation programs submits. The court will then decide on the completion of the program, its replacement, or the enforcement of the penalty.

Our Take

It is encouraging to witness initiatives prioritising rehabilitation as a form of deterrence, in addition to or in lieu of traditional penalties. Such approaches may inspire other stakeholders to focus on and contribute to improving these programs.

Introduction

On 17 May 2023, the Cabinet of Ministers approved the anticipated package of incentives for green hydrogen and derivative projects established in Egypt. Earlier this year, the draft law regarding investment incentives for green hydrogen projects (the “Draft Law”) was finally approved by Parliament, and it is expected to be enacted into law soon.

Green hydrogen is part of Egypt’s plan to promote sustainable social and economic development and reduce carbon emissions. In 2022, several decrees, including Cabinet Decrees No. 20, 981, and 983, were issued, recognising and granting incentives for producing, storing, and exporting green hydrogen, aligning with the state’s economic development strategy and investment law. In light of those decrees, the Draft Law that Parliament approved tackled the incentives and guarantees for green hydrogen production projects and their derivatives to create an attractive investment environment for investors, enabling them to accelerate the implementation of their projects inside Egypt.

The Draft Law aligns with the Egyptian Constitution regarding economic objectives, including achieving economic development, creating job opportunities, and reducing the unemployment rate. It includes other objectives such as encouraging investment, creating a conducive atmosphere for investment, expanding production, and promoting exportation. The development of green hydrogen projects aims to enhance private sector participation in serving society and the national economy. The Draft Law’s key provisions are detailed across seven articles, which will be presented below:

 

Key Provisions

Article One covers definitions.

Article Two specifies the scope of the law’s application to projects for producing green hydrogen and its derivatives and that such projects must have agreements concluded within 5 (five) years from the law’s implementation date. These projects include factories to produce green hydrogen and its derivatives, water desalination plants, electric power production plants from renewable energy sources, projects limited to transporting, storing, or distributing green hydrogen and its derivatives, and projects directly involved in manufacturing or production equipment necessary for green hydrogen production and their derivatives.

Article Three clarifies some of the requirements for establishing the project company (i.e., Special Purpose Vehicle (“SPV”)), the governing laws, and the maximum duration of the project agreements. The article also included a condition, which is to conclude project expansion agreements within 7 (seven) years from the date of the start of commercial operation of the project.

Article Four provides numerous tax incentives to green hydrogen production projects and their derivatives. Key incentives include a cash investment incentive known as the ‘Green Hydrogen Incentive,’ valued at no less than 33% (thirty-three per cent) and no more than 55% (fifty-five per cent) of the tax paid upon declaring the income generated from initiating activities in the project or its expansions. These incentives also involve VAT exemption on equipment, tools, machines, devices, raw materials, supplies, and transportation (excluding passenger cars). Furthermore, the VAT rate for exports of green hydrogen projects and their derivatives is set at 0% (zero per cent). The article outlines exemptions from real estate tax for properties actively utilised in these projects, as well as a waiver of stamp tax, documentation and registration fees related to the company’s article of association, credit facility and mortgage contracts, land registration contracts necessary for establishing green hydrogen projects and their derivatives, and customs tax exemption on all imports essential for these projects, excluding passenger cars.

Article Five grants non-tax incentives to such projects, the most important of which are: the SPV obtaining a single approval (Golden License) detailed under the provisions of Investment Law No. 72 of 2017 allowing the SPV to import, on its own or through others raw materials, production requirements, machines, spare parts, and means of transportation for its establishment, expansion, or operation without the need for a license and without the need to be registered in the importers’ register. Incentives also included allowing the SPV, during the first 10 (ten) years from the date of signing the project agreements, to hire foreign workers up to 30% (thirty per cent) of the total project workforce. It permits the establishment of special customs zones for the project’s exports or imports in accordance with the Minister of Finance. Additionally, the Draft Law grants a 30% (thirty per cent) reduction in fees related to the use of maritime ports and maritime transport services in Egyptian ports, a 25% (twenty-five per cent) reduction in fees for the right to use the industrial land allocated for the establishment of green hydrogen production factories and its derivatives and a 20% (twenty per cent) reduction in fees for storing facilities in ports. The licenses required for implementing green hydrogen production projects and their derivatives should have the same duration as the usufruct right to the land.

Article Six highlights several conditions to grant incentives to green hydrogen projects, their derivatives, and expansion projects under the law, including (1) initiating commercial operation of the project within five years from the date of concluding the project agreements, (2) financing the project depends on foreign currency from international project financiers, constituting at least 70% (seventy per cent) of the investment cost, and (3) using national components whenever available in the local market constituting at least 20% (twenty per cent) of the project components. The article also emphasises the project’s contribution to transferring and localising technology and a commitment to developing and implementing training programs for Egyptian workers.

Article Seven states that the competent minister or their authorized representative will issue the required certificate to benefit from the incentives in this Draft Law. This certificate is considered final and effective on its own without the need for the approval of other authorities, and all authorities must act in accordance with it and abide by the data contained therein.

We advised Akh Gold Limited on its two exploration licenses awarded by the Egyptian Ministry of Petroleum and Mineral Resources and the Egyptian Mineral Resources Authority following the international bid round 1/2020 second round for Gold and Associated Minerals.

Our team was led by Partners Ragy Soliman, Malak Khalil, and Sadeem Abdelsalam, Associate.

Congratulations to Akh Gold on this new milestone.

For more information, click here

Introduction

As Egypt strives to bolster its foreign currency reserves, legislative changes are anticipated to align with and support this economic initiative, and given that Egypt currently hosts more than 9 million foreigners from more than 133 nationalities, Egypt’s Cabinet has identified an opportunity to regulate residency application fees, contributing further to its financial goals.

 

Overview

In August 2023, Prime Minister Mostafa Madbouly issued Decree No. 3326 of 2023 (the “Decree”). It stipulates that foreigners applying for a residency permit, whether for touristic purposes or other purposes, before the Ministry of Interior’s General Administration of Passports, Immigration, and Nationality, must provide evidence of converting the relevant fees from USD (or its equivalent in free currency) to EGP. This conversion must be done through any licensed bank or exchange company.

Concerning legitimising their residency, the Decree grants foreigners unlawfully residing in Egypt a three-month grace period from the Decree’s entry into force to “legitimise their residency”. This is conditional upon having an Egyptian host and requires the payment of administrative fees of USD 1,000 (one thousand United States Dollars). It should be noted that such grace period has been extended to March 2024 by virtue of the Prime Minister Decree No. 4313 of 2023, which was issued on 7 December 2023.

It is worth noting that the failure to reconciliate within the above-mentioned grace period will result in imposing a fine of no less than EGP 1,000 (one thousand Egyptian pounds) within the first 3 (three) months, to be increased by 50% (fifty per cent) for every other 3 (three) months that follow, in addition to the possibility of deporting the foreigner subject of the breach.

 

Concerned Entity

Ministry of Interior.

 

Our Take

It is crucial to ascertain that the issuance of the Decree is regulatory rather than restrictive, especially as the number of foreigners is expected to increase due to the current unfortunate political situation.

Accordingly, Egypt’s legislative framework will continue adapting to geopolitical factors, ensuring the State’s readiness to provide services, maintain security, and prevent any violations that may obstruct Egypt’s hospitability.

We are pleased to announce that we have been shortlisted as the Litigation Law Firm of the Year in Egypt by the Chambers and Partners Middle East Awards 2024.

Heartfelt thanks to all our clients for their positive feedback; your trust drives our commitment to excellence.

A special thank you to our team at ADSERO for their hard work and dedication.

Best of luck to all shortlisted candidates.

Looking forward to the awards ceremony on March 7, 2024!

A. Increase of the Minimum Wage for Private Sector Employees

Effective 1 January 2024, the Ministry of Planning and Economic Development, through Decree No. 90 of 2023, has raised the minimum wage of private sector employees. The National Wage Council implemented this change on 1 December 2023, increasing the minimum wage from EGP 3,000 (three thousand Egyptian pounds) to EGP 3,500 (three thousand five hundred Egyptian pounds).

In this regard, as we approach the new year, we would like to highlight the employer’s additional obligations to ensure full compliance to mitigate the risk of potential employment claims or legal liabilities brought against them.

 

B. Employers’ Obligations

  1. Social Insurance Wage
    As most employers are aware, social insurance salaries increase on an annual basis. For 2024, the minimum social insurance wage is EGP 2,000 (two thousand Egyptian pounds), while the maximum is EGP 12,600 (twelve thousand six hundred Egyptian pounds).
  2. Social Insurance Wage
    The basic wage is also subject to an annual increase. For 2024, the minimum is EGP 380 (three hundred and eighty Egyptian pounds), while the maximum is EGP 2,370 (two thousand three hundred and seventy Egyptian pounds).

We are delighted to share our contribution to the Egyptian chapter of Global Legal Group Insights (GLI) - FinTech Laws and Regulations 2023.

GLI - Fintech 2023 covers approaches and developments, the Fintech offering in each jurisdiction, regulatory and insurance technology, regulatory bodies, key regulations and regulatory approaches, restrictions, and cross-border business – in 24 jurisdictions.

The authors of the Egyptian chapter are Mohamed Abdelgawad, Partner, Head of Corporate, Commercial & Regulatory, Darah Zakaria, Senior Associate, Aya Yassin, Managing Associate, and Associates Ali Shohayeb and Neamat Amin.

To read our contribution, click here.

To access other jurisdictions, click here.

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