In more detail
Minority shareholders acquisition of less than 10%
The ECA confirms that the acquisition of a minority shareholding — less than 10% — is notifiable if it involves acquiring voting rights or shares, in addition to holding veto rights over a number of reserved matters.
Cross border transaction
The ECA confirms that foreign-to-foreign transactions with no legal presence in Egypt are caught under the new regime if they meet the prescribed national or worldwide thresholds. Further, the ECA highlights that the Target must meet the prescribed thresholds in Egypt.
Threshold calculations/Financial statements
The ECA adopts the Egyptian accounting standards in calculating the annual turnover and value of assets. However, other accounting standards may be accepted by the ECA, subject to further clarification by the parties.
The ECA highlights that the turnover calculation of investment funds involves a number of factors, including the portfolio companies controlled by the fund, in addition to the participation of the managing partners, and the calculation methodology depends on whether they possess direct or indirect control.
Regarding the turnover calculation of insurance companies, the turnover calculations must be based on the sum of the total written premiums that cover the turnover and installments due/premiums payable.
As long as the financial statements are issued on the same year, the ECA will not take into consideration the differences between financial years which may vary from one company to another.
Date of closing definition
The ECA highlights that "prior to closing" refers to the actual moment of gaining control or material influence over the target company.
Regarding transactions involving the swap of shares or stock, these are can be considered as two separate transactions (and filings) as long as there are differences in the concerned parties.
It shall be noted that if different parties (several acquirers) participated in one transaction, the ECA confirms that one notification file can be submitted. In addition, the notification and publication fees will be paid only once.
Online submission
The ECA confirms that there is no online submission for the notification file; it must be submitted in hardcopy at the ECA's premises.
Conclusion
The ECA's new merger control FAQs represent a welcome approach, addressing numerous uncertainties. We expect that, through practice, the ECA will develop new guidelines to bring further clarity to the regime.
For more information about the ECA's merger control regime, please refer to our previous client alert.
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