Egyptian Business Structures


As stated above, many companies in Egypt operate according to Islamic, rather than secular law and this impacts on a number of key areas of business structure and performance.

One key issue is that, due to Islamic strictures on avoiding usury, the difference between companies and banks are less defined than in western economies. Companies tend to be financed through a combination of equity capital and short-term loans where the lenders do not charge interest but take a share of profits or losses (PLS loans.) Thus all risks are shared equally amongst the shareholders and lenders.

In addition, many companies have a religious Supervisory Board comprised of Islamic jurists whose role is to ensure that the company's operations comply with the strictures of Shari'a law. Thus employees must be Muslims and work stops for the regulatory prayer sessions everyday. Firms are expected to make reasonable, but not excessive, profit and managers have a social as well as corporate responsibility - they are expected to balance the interests of the company with the interests of society at large.

None of the above applies to the workings of those firms that are non-Islamic in orientation (remember that 10% of the Egyptian population are Coptic Christians) or joint-ventures with overseas organisations.

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