Egyptian law permits different means of obtaining control of a business in Egypt: through acquisition of shares, acquisition of assets or mergers. Acquisitions of shares is most common.

The Companies Law and Capital Markets Law regulate shares swaps between local companies. The shareholders of the target company will assign target company shares to the buyer in return for shares in one or more other companies via a share for share exchange; however, it may be required that, at least the nominal value of the shares is paid by the buyer through EGX (as set out in the "Pricing and payment" section above). The Companies Law regulates mergers of companies. One or more companies may merge into an existing company or may merge with each other to form a new company.

A merger must be approved by an extraordinary general assembly resolution of each of the companies. This approval will be subject to the voting requirements prescribed by the articles of each of the companies. The Companies Law prescribes a voting threshold of 75% for merger decisions. That said, unanimous shareholder approval is required in the event of a merger, which results in an increase of the shareholders' liability.

The most common type of target entity in Egypt is a joint stock company.

The main reason for this is that joint stock companies have a more organized management structure and more stringent corporate governance requirements. In addition, in cases where large amounts of capital are to be allocated, the choice of establishing a joint stock company becomes appealing as there are no requirements to pay the full capital upon establishment. The capital can be paid in full over five years.

There are two different types of limited liability companies, single person companies (these are uncommon), and limited liability companies (i.e., with a minimum number of two quota holders). In Egypt, limited liability company (LLC) capital must be divided into quotas of equal value. The quotaholders are entitled to determine the par value of quotas. Quotas must be of equal rights. LLCs may carry out any activity except for certain activities, such as insurance, banking, savings, deposit taking, investment funds, securities brokerage or portfolio management activities.

Shareholders of joint stock companies also enjoy limited liability under the Companies Law.

A joint stock company is made up of at least three shareholders. There is no maximum limit on the number of shareholders.

LLCs must have a minimum of two quotaholders at all times and can have up to a maximum of 50 quotaholders. A single person company, which is equivalent to a LLC, can be formed with a single shareholder only.

Shareholders or quotaholders may be natural persons or juristic persons (legal entities).

Transfer of title to shares in joint stock companies must be executed by a brokerage company licensed by the FRA, even for unlisted shares, as outlined above. The mechanics of processing the transaction vary depending on whether the shares are listed or not, but in both cases it is effected through the EGX. The time required to execute such transactions is approximately one to three business days. However, deals above a threshold of EGP 20 million require the approval of the Trading Committee and, hence, usually take approximately five business days. In practice, the time taken tends to take longer for a number of reasons, including: (i) codification of the parties involved with MCDR (as outlined above), (ii) in cases where specific regulatory approvals are required before the transfer of title, and (iii) where the buyer or the seller is a foreign party which entails preparation of supporting documents that require notarization and legalization in the country of issuance which can lead to a longer timeframe (e.g., board resolution, constitutional documents, etc.). 

The following procedures all have to be satisfied for the transfer of title to the shares:

• Signing the transaction documents including the share purchase agreement.
• Appointing a broker for the purpose of executing the share sale and purchase transaction.
• Duly signing the sale and purchase orders along with provision of documents so required by the EGX.
• The sale consideration will have to be physically deposited or transferred as below.
• Once all the documents necessary to execute the transaction are in place and the sale consideration is deposited or transferred, the broker shall proceed with obtaining the FRA and EGX approvals in respect of the transaction and subsequently transferring the title to the shares at EGX.

Payment of the sale consideration/Exceptions:

The sale consideration has to be physically made against any share transfer. Pursuant to FRA Decree No. 17 for 2017, any brokerage firm executing a transaction has to deal with its clients through a bank account opened at any of the banks approved by the Central Bank of Egypt for any transaction that exceeds EGP 100,000. The brokerage firm executing the transaction at EGX will have to submit to EGX on or before the date of transfer of title a statement confirming that the purchase price is deposited in/transferred to the seller bank account (or escrow bank account if applicable). Article 7 of the decree provides that the brokerage firm shall ensure that the buyer has deposited/transferred the consideration of the sale shares to the brokerage bank account upon executing the transaction, or to the seller’s bank account within, at most, one month before the date of submission of the sell/buy orders to EGX, provided a written confirmation is issued by the bank and addressed to the EGX and FRA. An exception to payment of sale consideration can be applied in any of the following cases:

• In the event the transfer of title to the shares is made between a buyer and its affiliates, or to an heir.
• As a result of a share swap provided that the swap is made between Egyptian Companies.
• Where the FRA so approves in other cases.

Transfer of title to quotas in limited liability companies must be executed/completed by having: (i) the register of quotas; and (ii) certain provisions of the articles of association of the relevant target company, both changed to reflect the transfer of title. The articles of association of the target company will define whether or not the quotas sale agreement must be notarized. A quotaholders resolution must be issued to amend the shareholding structure of the company.

Civil law applies to acquisitions of assets regulating the relationship between sellers and buyers. Usually, an asset transaction takes the form of an asset/business transfer agreement. Transfer of assets tends to take more time for completion/closing. It can entail a time-consuming process as assets and business components have to be transferred through separate transfer instruments and/or procedures. Depending on the type of asset to be transferred, a third-party consent may be required.