Status of Contracts and Actions Conducted by the Branch Manager:
The contracts and actions concluded by the local manager of the branch of the foreign company or their equivalent are binding on that company, as long as that contract or action is within the ordinary limits of managing the affairs of the branch (Article 168/1 of Law 159 of 1981).
This provision does not benefit anyone who actually knew, or could have known due to their position in the company or relationship with it, that the local manager lacks the competence to execute such an action or contract (Article 168/3 of the Law).
Provisions Concerning Branch Employees:
Branches of foreign companies and their equivalents are bound by the provisions concerning employees detailed in Articles 174 to 176 of the Companies Law. Accordingly, the number of Egyptians working in Egypt among the employees must not be less than 90% of the total employees in the branch, and their wages must not be less than 80% of the total wages paid by the company to employees. Additionally, the number of Egyptian technical and administrative staff must not be less than 75% of the total branch staff, and their total wages and salaries must not be less than 70% of the total wages and salaries paid by the branch to these categories of employees.
This is subject to the right of the competent Minister to grant an exception allowing the employment of foreign workers or consultants in the event it is impossible to find Egyptians, for a period specified by the Minister, and these individuals are not included in calculating the prescribed percentages.
Employees in the branches of the foreign company are entitled to a share in the profits realized from the branch's activity in Egypt, in the manner outlined in Article (41) of the Companies Law and Article (196) of the Regulations. This requires that the employees' share in the profits to be distributed in cash must not be less than 10%, provided it does not exceed the total annual wages of the branch's employees. If the branch's bylaws allocate to the employees a share in the profits exceeding 10% and not exceeding the total annual wages of the employees, the employees' share in excess of the 10% shall be set aside in a special account invested for the benefit of the employees. Amounts from it may be distributed to employees in years when no profits are realized due to reasons beyond the branch's control, or used to establish projects that benefit them.
These provisions do not prejudice a profit scheme applied in branches existing in April 1982 if it is more favorable to them.
The Board of Directors' remuneration cannot be estimated at a specific percentage of the profits exceeding 10% of the profits to be distributed, after distributing a profit of not less than 5% of the capital to shareholders and employees, unless the company's bylaws specify a higher percentage.
Provisions Concerning the Foreign Company's Name and Inspection of Branches
1- Displaying the Foreign Company's Name;
Branches of foreign companies operating in Egypt must state in their correspondence the name of the original foreign company, its nationality, legal form, principal address, purpose, and capital. The branch is also required to state its registration number in the Commercial Register and its address (Article 171 of the Law and Article 314 of the Regulations).
2- Inspection of Foreign Company Branches:
The legislator, in Companies Law 159 of 1981, granted the Authority the right to inspect branches of foreign companies in Egypt. It also granted it the right to review their books (EU equivalent: Accounting Records) to ensure compliance with the provisions of the law and the Executive Regulations. This administrative authority has the right to request any clarifications or documents necessary for this inspection (Article 315 of the Regulations).