New Regulations Regarding the Rectification of Unlicensed Industrial Facilities
Since 2017, Egypt has been witnessing a legislative transformation in respect to the regulatory framework governing industrial facilities. Law No. 15 of 2017 (“Law”) was issued to facilitate the issuance of industrial licenses by ensuring that the Industrial Development Authority (“IDA”) is a one-stop shop. This Law provides a rectification period for all industrial facilities which was linked to the issuance of its executive regulations. Hence, all the industrial facilities should have been in compliance by no later than mid-2019, which did not fully implement given various reasons, including, inter alia, the pandemic.
For further facilitation and by way of encouraging investments in Egypt, on 30 March 2023, President Abdel Fattah El Sisi has issued Law No. 19 of 2023 (“Recent Law”) to grant the unlicensed yet established industrial facilities (each an “Industrial Facility”) a grace period of three years to be temporarily licensed by the IDA (“Temporary License”). To that end, any Industrial Facility may request from the IDA the issuance of the Temporary License until 31 March 2026.
The Temporary License shall be granted conditional on the provision of an undertaking that the Industrial Facility is in compliance with the environmental and civil defense requirements. The Temporary License shall be granted for a period of one year and may be renewed provided that the entire period should not exceed three years in aggregate.
In application of the Recent Law, the Minister of Trade and Industry has issued a decree which came into force on 29 May 2023 (“MTI Decree”). The MTI Decree provides the rules and procedures for granting the Temporary License.
Temporary License Requirements
At the time of requesting the issuance of the Temporary License
Each Industrial Facility wishing to rectify with the Recent Law shall submit a(n):
- Request to the IDA on the template provided thereby, in addition to attaching the following:
- possession title of the land or the entity (ownership/sale agreement, lease agreement, usufruct agreement) where the Industrial Facility is located; and
- a copy of the commercial register of the entity (if available).
- Undertaking that the Industrial Facility complies with all the environmental and civil defense requirements.
- Undertaking to rectify the status of the Industrial Facility to comply with the provisions of the Law and applicable regulations, within the period of the Temporary License.
Each Industrial Facility shall abide by the following requirements until a permanent license is issued as per the Law.
- Taking all the necessary steps to rectify the license status with the Law during the period of the Temporary License; and
- Provision of periodical report each three months which shall include the steps taken to satisfy the above steps and any obstacles that the Industrial Facility has faced to satisfy the above steps.
Timeline of Granting the Temporary License
Interestingly, the IDA shall grant the Temporary License within three business days following the satisfaction of the above conditions and requirements, unless an inspection visit is required to the Industrial Facility, in which case the three days will commence when such inspection visit is conducted.
While the MTI Decree provides a clear timeline to conduct the inspection visit, being a week from the date of the request for rectification with the Recent Law, in practice, such period may be extended, should any Industrial Facilities opt to rectify their status with the Recent Law.
Heavy industries are considered exception to the above and therefore, a Temporary License cannot be granted to an Industrial Facility which operate in the heavy industries amongst other industries (e.g., white cement) and which are regulated and listed under the Cabinet Decree No. 47 of 2020 as amended by virtue of the Cabinet Decree No. 45 of 2021.
We, at GLA, would be happy to assist you with any advice on the above and with the recent issuance of the Law, it is important for companies which own Industrial Facilities to ensure compliance with the new regulations.