Egypt Introduces Regulation Requiring Beneficial Ownership Disclosure from Companies

Increasing Transparency and Accountability

The government of Egypt has recently introduced a new regulation aimed at enhancing transparency and accountability in the business sector. Ministerial Decree No. 41/2020 amends the Executive Regulations of the Commercial Register Law No. 34/1976, requiring all companies to disclose their ultimate beneficial owners.

Key Requirements

• Companies must maintain a special book detailing the names and data of their ultimate beneficial owners.
• The information in this book must be made available for inspection by competent authorities upon request.
• Companies must notify the relevant Commercial Register Office of any changes in ownership or control arrangements immediately.
• New company registrations and amendments to existing ones will require inclusion of a section for ultimate beneficial owners’ details.

Consequences of Non-Compliance

While the regulation does not specify penalties for non-compliance, failure to disclose accurate information may lead to prosecution under Article 19 of the Commercial Register Law. This carries a maximum two-year imprisonment sentence and/or a fine of up to EGP 500.

Challenges in Implementation

The decree lacks clear definitions for “control” and minimum ownership requirements, as well as guidance on how far up the ownership chain disclosure should extend. Authorities will closely monitor the implementation of this regulation, with ongoing observations expected to provide insight into the practical application of the beneficial ownership disclosure requirement.

Enhancing Transparency and Accountability in Egypt’s Business Sector

The introduction of this new regulation represents a significant step towards enhancing transparency and accountability in Egypt’s business sector. As the implementation of this regulation unfolds, it is likely to have a positive impact on the country’s efforts to combat money laundering and terrorist financing, as well as promote good governance and corporate responsibility.