In joint stock companies, capital restructuring follows a structured approval process involving both the board of directors and the shareholders. Article (86) of the executive regulations provides that the increase of the authorized capital is effected by a resolution of the extraordinary general assembly upon a proposal submitted by the board of directors. Similarly, Article (105) of the executive regulations provides that the reduction of the issued capital requires approval of the extraordinary general assembly based on a proposal from the board of directors, supported by a report from the auditor confirming the existence of serious grounds for the reduction.
The regulations also allow a degree of flexibility in capital increases. Article (88) of the executive regulations permits the board of directors to increase the issued capital within the limits of the authorized capital, subject to the condition that the issued capital more info is fully paid prior to the increase. For companies listed on an Egyptian stock exchange, such increases must be approved by the ordinary general assembly rather than being affected solely by the board.
Capital Increase and Decrease in Limited Liability Companies
In contrast, the mechanism in limited liability companies is more direct. Article (276) of the executive regulations provides that any increase or decrease in capital must be approved by the assembly of partners by a majority representing three-quarters of the capital. The proposal originates from the managers and must be supported by a report from the auditor explaining the reasons for the proposed restructuring.