In an effort to keep up with the pace of societal developments, two new decrees have been issued to exempt certain regions in Sinai (Dahab, Sharm Al Sheikh and the Gulf of Aqaba sector) from the application of the Integrated Development Law for Sinai Peninsula No. 14 for 2012.
Presidential Decree number 128 for 2022
The new decree provides that only Egyptian natural or legal persons have the right to own lands and real estate in these specified regions in Sinai. However, lands or real estate that are owned privately by the government can only be used by way of a “Usufruct Right” of no more than 75 years. Such actions shall not be made unless approved by the ministries of Defense and Interior Affairs, and The Public Intelligence.
In addition, any investment or development project owned by non-Egyptians shall take the form of an Egyptian joint stock company in the above-mentioned regions. Pursuant to the decree, any modification in the names of shareholders, their shares, or in the articles of incorporation will not be enforceable unless approved by the above-mentioned authorities, GAFI and the FRA.
Prime Minister Decree number 1109 for 2022
A new chapter was added to the Capital Market Law’s Executive Regulations, setting out that any direct or indirect acquisition by an Egyptian person of 10% or more in the capital or voting rights in companies located in these specific regions shall be approved by the Ministries of Interior Affairs and Defense, the FRA and the Public Intelligence.
Most notably, according to the same decree, non-Egyptians wishing to acquire more than 5% of such companies’ capital or voting rights must also obtain relevant approvals from the above-mentioned authorities. Moreover, a notification must be sent to the FRA and EGX on the day following any acquisition of 3% of the capital or voting rights occurs. The said notification must include a comprehensive clarification of the acquiring persons, their shares before and after the acquisition, and the number and type of acquired securities.
According to the decree, non-Egyptians are prohibited from acquiring listed securities of companies the capital of which is fully owned by Egyptians and which own real estate in these specific regions. However, any ownership exceeding the above-mentioned percentages through inheritance, a gift or a will, must comply with this decree within six months from its issuance.
In the event of non-compliance with the rules of this decree, the FRA shall have the right to take necessary measures such as freezing the securities or prohibiting voting rights.
