New Requirement to Disclose Ultimate Beneficial Owners
A new regulation was issued yesterday to require all companies in Egypt to disclose the ultimate beneficial owners who have actual ownership or control over the company. The regulation is issued by Ministerial Decree No. 41/2020 (“Decree”) amending the Executive Regulations of the Commercial Register Law No. 34/1976.
Companies are required by virtue of this Decree to create a special book for recording the names and data of the ultimate beneficiaries and to notify the competent Commercial Register Office of any legal arrangement that lead to such ownership/control immediately upon its occurrence. Competent authorities will also have the right to inspect such book upon request.
The template form of the commercial register (issued by Commercial Register Offices for each company) will be amended to include a placeholder to reflect the details of the ultimate beneficiaries. Such information will be required in order to register any new entity in the commercial register or to reflect any amendment in the commercial register of existing companies.
The Decree does not provide for specific sanctions for non-compliance. Non-compliance however may fall under the general violation stipulated under Article 19 of the Commercial Register Law for recording incorrect information in the commercial register. Sanction for such violation is imprisonment of not less than three months and not more than two years and/or a fine of not more than EGP 500.
The Decree does not define the word ‘control’ nor does it put a minimum ownership requirement for disclosure. It does not also state how far up in the ownership chain the disclosure should be.
We will keep an eye on the practice and how the competent authorities will implement the Decree.