In accordance with Article 316 of Egyptian Company Law and the relevant regulations, Representative Offices of foreign companies in Egypt may be established for the primary task of studying the Egyptian market and investigating the possibility and viability of the parent company conducting future commercial activity. This includes the conducting of market research, market surveys, and production of relevant studies. Where a Representative Office of a ‘technical’ parent company is established, the scope of authorised activity also includes reviewing of technical products within the market.
The Egyptian authorities have increasingly become aware of the fact that many Representative Offices are conducting activity which goes beyond the prescribed authority. As a result, GAFI, the General Authority for Investment, has implemented a new investigative procedure whereby the conduct of representative offices can be reviewed. They are now looking to request copies of the data and market research that is being gathered by the office, in order to ensure that the entity is not acting beyond the scope of authorities. As a result, it is essential that Representative Offices keep organised records of all their research so that it may be presented to the authorities should it be requested. It is recommended that such market reports are generated at least once a year.
Given the limited scope of permitted activities by a representative office, it may be more appropriate to establish a different entity, so that you are permitted to conduct all activity in accordance with your company’s needs. For example, a Foreign Branch Office, Joint Stock Company or Limited Liability Company can conduct significantly more activity and upon request we can assist you with choosing the right entity for your business needs.