What majority is needed for major decisions in an Egyptian joint stock company?

Article 70(c) of Companies Law No. 159 of 1981, as amended by Law No. 4 of 2018, requires resolutions of the extraordinary general assembly to pass by two thirds of the shares represented at the meeting. Where the resolution concerns increasing the authorised capital, reducing the capital, dissolving the company before its term, changing its purpose, merging it or dividing it, the majority rises to three quarters of the shares represented.

Can founders sell their shares immediately after incorporating in Egypt?

Article 45 of Companies Law No. 159 of 1981 prohibits trading in founders' shares and in shares given in consideration for in-kind contributions before the company's financial statements have been published for two full years, each of not less than twelve months, starting from the date of incorporation. Outside those instruments, share trading follows the Companies Law, the Capital Market Law No. 95 of 1992 and the decisions issued under it.

Does a shareholders' agreement bind an Egyptian company's general assembly?

Article 71 of Companies Law No. 159 of 1981 provides that resolutions of a validly constituted general assembly held in accordance with the law and the company's statutes bind all shareholders, present, absent or dissenting, and that the board must implement them. Article 70(c) fixes the majorities by which those resolutions are taken, so a side agreement between shareholders does not alter the corporate threshold.

Shareholder Agreement in Egypt

An Egyptian shareholders' agreement operates against a statute that already fixes the numbers a founder group would otherwise negotiate. Companies Law No. 159 of 1981 requires at least three founders for a joint stock company, sets the extraordinary general assembly majority at two thirds of the shares represented and raises it to three quarters for a capital increase or reduction, early dissolution, change of purpose, merger or division, and locks up founders' shares and shares issued for in-kind contributions until two full financial years of accounts have been published.

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Governing law

Joint stock companies, partnerships limited by shares, limited liability companies and one-person companies are governed by Companies Law No. 159 of 1981, as amended, most recently in the provisions cited here by Law No. 4 of 2018.

Companies Law No. 159 of 1981, Art. 1 of the issuing law (consolidated Arabic text published by the Financial Regulatory Authority)

What a shareholder agreement has to contain in Egypt

Except for one-person companies, a joint stock company must have at least three founding shareholders, and any company subject to the law must have at least two, failing which it is dissolved by operation of law unless the quorum is restored within six months at the latest.
Companies Law No. 159 of 1981, Art. 8
Resolutions of the extraordinary general assembly pass by a majority of two thirds of the shares represented at the meeting, and by three quarters where the resolution concerns increasing the authorised capital, reducing the capital, dissolving the company before its term, changing its purpose, merging it or dividing it.
Companies Law No. 159 of 1981, Art. 70(c) as amended by Law No. 4 of 2018
Resolutions of a validly constituted general assembly held in accordance with the law and the company's statutes bind all shareholders, whether they attended, were absent or voted against, and the board must implement them.
Companies Law No. 159 of 1981, Art. 71
Founders' shares and shares issued in consideration for in-kind contributions may not be traded before the company's financial statements have been published for two full years, each of not less than twelve months, running from the date of incorporation, and the executive regulations set the rules and conditions for this.
Companies Law No. 159 of 1981, Art. 45 as amended by Law No. 4 of 2018
Apart from those locked-up instruments, trading in the shares of a joint stock company follows the rules and procedures organised by the Companies Law, the Capital Market Law No. 95 of 1992 and the decisions issued to implement it.
Companies Law No. 159 of 1981, Art. 45
Changing the legal form of a partnership limited by shares or a limited liability company requires a resolution carrying three quarters of the capital, and shareholders or partners who objected, or who were absent with an acceptable excuse, may ask to exit the company.
Companies Law No. 159 of 1981, Art. 136

Form, notarisation and registration

All contracts, invoices, names, trade addresses, advertisements and other papers issued by the company must carry the company's name with its type stated before or after it in clear legible letters, together with its head office and issued capital as shown in the latest balance sheet. A person who contracts in the company's name without observing this is personally liable on his own funds for the resulting obligations.
Companies Law No. 159 of 1981, Art. 6

What catches drafters out

The statutory majorities in Article 70(c) are set by the Companies Law rather than by the constitution, so a veto negotiated in a shareholders' agreement operates as a contractual promise between the parties and does not change the majority by which the assembly's resolution is validly taken.
Companies Law No. 159 of 1981, Arts. 70(c) and 71
The competent administrative authority may object to a company being formed within ten days of being notified, and one of the grounds is that the preliminary contract, the incorporation contract or the company's statutes depart from the mandatory particulars in the official model or contain matters contrary to law.
Companies Law No. 159 of 1981, Art. 18
Amounts paid to the account of a company under formation must be deposited with a bank licensed for that purpose by decision of the competent minister, and the company may not withdraw them until its statutes or incorporation contract have been published in the commercial register.
Companies Law No. 159 of 1981, Art. 20