Companies Law 159/1981 or Investment Law 72/2017 in Egypt?

Investors in Egypt often face a critical legal question at the outset: should their company be incorporated under Companies Law No. 159 of 1981 or registered as an Investment Project under قانون الاستثمار رقم 72 لسنة 2017? Both laws remain in force, and both are administered through the General Authority for Investment and Free Zones (GAFI). Yet they serve different purposes.

The Companies Law is Egypt’s general corporate statute, it governs the establishment and governance of companies across the board. By contrast, the Investment Law provides an optional overlay: it applies when investors register their project to obtain investment incentives, guarantees, and special treatment. In practice, most investors will find themselves engaging with both regimes: the Companies Law to create the corporate vehicle, and the Investment Law if their project qualifies for incentives.

Companies Law No. 159/1981

The Companies Law is the default legislative framework for most corporate entities in Egypt. Its scope extends to:

1. Joint stock companies (JSC), limited liability companies (LLC), partnerships limited by shares (PLS), and since later amendments, the single-person company.
2. Any company incorporated in Egypt that does not fall under a special regime (e.g., certain public enterprises or banks governed by sector-specific statutes) is subject to Law 159.

The substantive coverage of the Companies Law is broad. It regulates the formalities of incorporation, including the preparation and filing of the articles of association, and sets minimum capital requirements, particularly for joint stock companies, together with detailed rules on shareholding structures. It also establishes the framework for corporate governance, defining the powers and obligations of boards of directors, general assemblies, and auditors.

In addition, the law governs the legal mechanisms for transformation of companies, as well as mergers, demergers, and liquidation. Oversight of these matters is entrusted to the General Authority for Investment and Free Zones (GAFI), which serves as the administrative authority for incorporation, filings, and ongoing corporate housekeeping. The Executive Regulations of Law 159, issued under Ministerial Decree No. 96 of 1982 and subsequently amended, provide the procedural detail that complements the statutory provisions.

In short, Law 159 operates as the baseline corporate law in Egypt, one that no investor can disregard, since even when a project is registered under the Investment Law, its internal corporate mechanics remain governed by Law 159.

Investment Law No. 72/2017

The Investment Law was enacted as part of Egypt’s broader strategy to attract foreign direct investment and stimulate key sectors. Its scope differs markedly from Law 159:

It applies only when an investor elects to register a project under one of its recognized categories:

1. Inland projects (within Egypt’s territory but outside special zones).
2. Investment Zones established under Cabinet decree.
3. Technological Zones designated for ICT and innovation projects.
4. Free Zones, where companies operate outside the customs territory with special tax treatment.

By registering as an “Investment Project” under Law 72, a company acquires a distinct legal status that grants it access to a suite of guarantees and incentives not automatically available under the Companies Law. This special status reflects the purpose of the Investment Law as a vehicle to attract capital by offering advantages beyond the ordinary corporate framework.

The administration of these projects is entrusted to the General Authority for Investment and Free Zones (GAFI), expressly designated in the statute as the “Authority.” GAFI is responsible for supervising, approving, and licensing projects, while also coordinating with other governmental bodies to ensure that procedures are streamlined and that investors are able to operate under a unified regulatory umbrella.

It is important to note, however, that even when a project is registered under Law 72, the company itself must still adopt one of the corporate forms defined by Law 159. The Investment Law does not create new types of companies; rather, it overlays additional privileges and protections onto the existing corporate structures established under the Companies Law.

Thus, while Law 159 is general, Law 72 is selective and incentive-driven.

General Incentives under Law 72

The Investment Law grants projects a set of automatic general incentives that take effect upon registration. These include relief from stamp duties and notarial fees associated with the incorporation documents, as well as exemptions for contracts relating to financing, mortgages, and pledges during the first five years of a company’s life. The law also provides that land registration contracts executed for the benefit of an investment project are exempt from the same duties. Perhaps most significantly, machinery and equipment imported for the establishment or expansion of a project are subject to a unified customs duty of only two percent, a substantial reduction compared to standard customs tariffs. These provisions apply across the board to projects established under Law 72, with the exception of those operating in free zones, which enjoy a distinct regime of their own.

Special and Additional Incentives

Beyond the general incentives, the law offers special incentives that are directly tied to the economic objectives of the state. Investment projects established in underdeveloped or priority areas, referred to as Sector A, are entitled to deduct fifty percent of their investment costs from their taxable net profits. Projects in other designated sectors, referred to as Sector B, are entitled to a thirty percent deduction. Both forms of deduction are subject to a ceiling of eighty percent of paid-up capital and are limited to a maximum of seven years from the commencement of operations. These incentives are structured to direct capital towards areas and industries that the government has identified as crucial for economic development.

The law also allows for the granting of additional incentives on a discretionary basis by decision of the Cabinet. These may include participation by the state in infrastructure costs, allocation of land free of charge or on a favorable usufruct basis, and other benefits tailored to the needs of strategic projects. Such additional incentives are not automatic but are evaluated on a case-by-case basis, reflecting the government’s intention to reserve them for projects of exceptional national importance.

Absence of Incentives under Law 159

The Companies Law, in contrast, does not confer any fiscal or customs advantages. Companies established solely under Law 159 are subject to the general provisions of the Income Tax Law, the Value Added Tax Law, and the Customs Law, without any preferential treatment. Their incorporation documents are subject to stamp duty and notarial fees, and machinery imported for their operations is taxed at the ordinary rates. In short, Law 159 is neutral: it creates the corporate form but leaves fiscal and investment matters to the general body of economic legislation.

Comparative Overview

The relationship between the Companies Law and the Investment Law is best understood as one of complementarity. 

Law 159 of 1981 establishes the corporate architecture: it prescribes the forms of companies that may be created, regulates their internal governance, and sets the framework for incorporation, transformation, and liquidation. It is universal, applying to almost all corporate entities incorporated in Egypt, whether foreign-owned or domestically controlled.

Law 72 of 2017, by contrast, is sector-specific and policy-driven. It overlays incentives and guarantees upon the corporate structures that Law 159 creates. Its objective is not simply to regulate companies, but to attract investment in designated areas and activities. It provides investors with fiscal relief, customs advantages, and explicit statutory protections, while also subjecting them to closer supervision and linking them to the state’s investment priorities.

The choice is therefore not always binary. In many cases, a company will be incorporated under Law 159 and simultaneously registered as an investment project under Law 72. The real decision lies in whether the investor seeks to benefit from the advantages offered by the Investment Law, or whether it is more appropriate to rely solely on the corporate framework of the Companies Law.

Comparison of Companies Law 159/1981 and Investment Law 72/2017:

الختام

Companies Law No. 159 of 1981 provides the essential framework for all corporate entities in Egypt, defining how companies are incorporated, governed, and dissolved. Investment Law No. 72 of 2017, on the other hand, adds a targeted layer of incentives and protections for projects aligned with national priorities.

The two laws are not alternatives but complementary regimes: every company must comply with Law 159, while Law 72 is optional and strategic. For investors seeking neutrality and flexibility, the Companies Law alone may suffice. For those pursuing large-scale, capital-intensive, or export-oriented ventures, the guarantees and fiscal incentives of the Investment Law can be decisive.

The choice, therefore, lies in assessing whether the additional benefits under Law 72 outweigh the enhanced oversight it entails. With proper structuring, investors can use both frameworks together to secure legal certainty and maximize commercial advantage.

Frequently Asked Questions

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