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Law No.95 For The Year 1995

L.E.15

Serial No.31

[ Office Journal No. 22-Bis dated 2 June 1995 ]

Law No. 95 of the year 1995

CONCERNING FINANCIAL LEASE

IN THE NAME OF THE PEOPLE .

THE PRESIDENT OF THE REPUBLIC .

The People's Assembly Decreed the Following Law and it is promulgated by us :

The following terms shall denote the meaning indicated next to each of them :

In applying the conditions of this LAW, the following

shall be considered a FINANCIAL LEASE:

1. All deed by virtue of which the LESSOR is committed to lease to a lessee movable properties owned thereby or received by the lessor form the SUPPLIER on the basis of a certain contract , in which case the LEASE shall be in return for a rental value to be agreed upon between the LESSOR and the LESSEE..
2. All deed whereby the LESSOR is commited to rent to the LESSEE realities or installations to be elected by and at the expence of the LESSOR for the purpose of renting them to the LESSEE, according to the terms , conditions specifications, and a rental value as determined in the contract.
3. All deed by virtue of which the LESSOR is committed to rent to the LESSEE a property based on FINANCIAL LEASE ARRANGEMENT if the ownership of this property has devolved to the LESSOR from the lessee by virtue of a CONTRACT the enforcement of which is based on concluding the FINANCIAL LEASE CONTRACT.

• A-R-T-I-C-L-E-3:

The Concerned Administrative Authority shall provide a Register for recording the LESSORS ,and another register for recording the FINANCIAL LEASE contracts which are concluded or enforced in Egypt, or if one of the parties to these deeds is resident in Egypt , and also for recording therein the sale contracts which are concluded based thereon , as well as any modifications to these contracts . The recorded entries shall determine and define the leased property, and indiacte the parties to the contract as well as their quality in respect of this property , in addition to the contract period and the data indicated in the sale contracts.

The Executive Statutes of this law shall determine the provisions and procedures of recording in the foregoing two registers, as well as the documents, papers and other complementing data as required for recording therein , and also the procedures of amending or nullifying the recorded entry.

The Executive Statutes of this law shall determine the fees for recording in the LESSORS REGISTER, which shall be within and not exceeding three thousand pounds , as well as the fees for modifying the recorded entry, which shall be

within and not exceeding ONE THOUSAND POUNDS. The Executive Statutes shall also deteermine the fees for recording in the register of contracts, which shall not exceed FIFTY POUNDS, and the fees for requesting a copy of the entry in the foregoing two registers as well as the modifications introduced thereto, which shall not exceed TWENTY POUNDS.

Every person shall have the right to request a copy of the data recorded in the foregoing two Registers, after paying the fees prescribed therefor.

• A-R-T-I-C-L-E-4:

The Lessor shall have the right of recording in the REGISTER OF IMPORTERS, concerning the properties imported thereby for the purpose of renting them under the system of FINANCIAL LEASE , along with excepting the lessor in this case from the conditions of the Egyptian nationality concerning the ownership of the Capital and the Board membership as prescribed in the LAWs re-organising the REGISTER OF IMPORTERS and Companies.A LESSOR who is recorded in the Register of LESSORS shall have the right of recording in the Register of Commerce

• A-R-T-I-C-L-E-5:

The LESSEE shall have the right of choosing to buy the property leased thereto, wholly or part of it, at the time and price determined in the Contract, providing that in determining the price,the rental amounts paid thereby shall be taken into consideration, subject to the provisions of the two laws Organising the ownership of built realities and vacant lands by non-Egyptians, and the prohibition of possesing agricultural lands by foreigners. In case he chooses not to buy the leased property, he shall have the right of returning it to the LESSOR , or renewing the LEASE, according to the conditions to be agreed upon between the two parties.

In all cases, the LEASE shall not be renewed implicitly nor shall it be extended whether the LESSEE is notified of the expiry of the contract period , or has not been notified thereof.

• A-R-T-I-C-L-E-6:

Subject to the rights the State may be entitled to the LESSEE, or THIRD PARTIES-effective the date of recording in the registers - may not plead vis avis the LESSOR any right that contradicts with the data of the FINANCIAL LEASE deed which were recorded according to the provisions of article (3) of the law.

• A-R-T-I-C-L-E-7:

The owner of any project -before signing a financial lease contract -may negotiate direct with the SUPPLIER or the CONTRACTOR concerning the specification of the property necessary for his project , or the method of making or establising it, on the basis of a prior written approval by the Leasing party. This approval shall comprise the matters in respect of which the negotiations will take place between the owner of the project and the supplier or the contractor .

The Executive Statutes of this LAW shall indicate the provisions related to the approval and the matters subject of negotiations.

• A-R-T-I-C-L-E-8:

If a financial lease contract is signed and the LESSOR authorizes the LESSEE to receivethe property subject of the contract, direct from the SUPPLIER or the CONTRACTOR, such receipt of the property shall be according to the terms, conditions and specifications agreed upon, and by

virtue of a report recording the conditions of leased property, and the defect in it if any.

The LESSEE may refuse to receive the leased property if the supplier or the contractor refrains from drawing up a delivery report according to the provision of the previous clause.

The LESSEE shall be accountable vis a vis the LESSOR for any data mentioned about the PROPERTY in the Delivery report.

• A-R-T-I-C-L-E-9:

The LESSEE shall commit himself to using , repairing and servicing the leased property , in keeping with the purpose the property has been provid

ed for , and in accordance with the instructions handed to him by the LESSOR concerning the technical norms that should be observed , whether they are prescribed by him, or by the supplier or contractor .

The LESSEE shall also notify the LESSOR of all emergent impediment to the leased properties preventing total or partial benefit thereof, in accordance with the procedures prescribed in the contract concerning such properties. In all cases, the provisions of article no.(341) of the Penal Code shall apply to this contract.

• A-R-T-I-C-L-E-10:

The LESSEE shall bear the civil liability ensuing from the harms and damages caused by the leased property , according to the provisions of the Civil Code.

The LESSOR shall bear the consequences of the destruction of the leased property, once it is caused by factors the LESSEE has nothing to do with. The LESSOR may stipulate covering the leased property with insurance to guarantee he will obtain the rental value for the remaining period of the Contract or the price determined therein .

The LESSEE shall be commited to pay the rental amount agreed upon, within the dates and according to the conditions set forth in the contract.

Agreement may also be reached on the LESSOR's entitlement to the whole rental value, even if the LESSEE has not profited from the leased property, as long as the reason is not attributable to the LESSOR

• A-R-T-I-C-L-E-12:

The Leased movable property shall remain and continue to maintain its nature, even if the LESSEE might have or affixed it to same reality. If the LESSEE buys the leased property , its ownership shall not be alienated thereto except after settling the full price as determined in the contract.

• A-R-T-I-C-L-E-13:

The LESSEE may have remedy direct over the Supplier or Contractor,in all court actions which are held for the LESSOR in respect of the contract signed between him and the Supplier or the Contractor, with the exception of rights of the LESSOR in having remedy over the supplier or the contractor in this respect.

• A-R-T-I-C-L-E-14:

The LESSOR shall be responible for his acts or disposals which lead to error in selecting the leased property, or to making it possible for the supplier, the contractor ,or third parties to molest in any form the use of the leased properties by the LESSEE.

• A-R-T-I-C-L-E-15:

The LESSOR may relinquish the contract to another LESSOR. Assigning the contract to other lessorsshall not derogate the LESSEE's rights and guarantees vis a vis the original LESSOR.

The LESSEE may -with the approval of the LESSOR -assign the contract to another LESSEE, and in this case the original LESSEE shall guarantee the assigneein implementing his obligations resulting from the Contract, unless the LESSOR otherwise approves.

The ASSIGNEE shall pay direct to the LESSOR the rental value which is payable according to the contract, from the date the LESSOR notifies him of approving this assignment . The ASSIGNEE shall invoke-vis a vis the LESSOR - the rental amounts he might have already paid before that date.

• A-R-T-I-C-L-E-17:

The LEESSOR - in the cases prescribed in the two previous articles- shall take procedures of annotating the assignment in the register provided for recording the FINANCIAL LEASE, contracts with the concerned Administrative Authority, in the Executive Statutues of this Law.

The assignment may not be envoked vis a vis a third party except from the date the assignment is annotated in the register according to the provisions of the previous clause.

The provisions on legal extension of the lease contract or the provisions on determination of the rental value as prescribed in the laws Regulating the Landlord-Tenant Relation, shall not apply to the Lease Contracts concerning built realities and agricultural lands to be concluded according to the provisions of this law.

.

The LEASE CONTRACT shall be considered automaticaly revoked without need for addressing a notification revoking the contract, or taking judiciary procedures, in any of the following cases:

1. Failure by the LESSEE to settle the rental value agreed upon, within the dates and according to the conditions set forth and agreed upon in the contract .
2. Declaring the LESSEE bankrupt or insolvent. In this case, the leased property shall not be included in the bankruptcy property and funds, nor in the general guarantee for the the Creditors.

However, the TRUSTEE OF BANKRUPTCY may notify the LESSOR, by registered letter, within thirty days from the court sentence issued to declare the bankruptcy, of his wish to continue the contract , in which cases the contract shall continue to exist providing the rental value is paid on the due date of payment.

3. Taking Liquidation procedures vis a vis the LESSEE if the latter is a juridical person, whether the liquidation is mandatory or voluntary, unless it is taking place because of merge, and without prejudice to the LESSOR's rights prescribed in the contract.

• A-R-T-I-C-L-E-20:

In case the contract expires without renewal or without the property being bought by the LESSEE, the LESSEE, TRUSTEE, RECEIVER, or

LIQUIDATOR , according to each case, shall deliver the property leased to him, back to the LESSOR,in its condition as agreed upon in the LEASE CONTRACT. If the LESSEE refrains from delivery thereof, the LESSOR may then submit a petition to the SUMMARY COURT JUSTICE of the concerned Court, to issue a WRIT of DELIVERY in which case the procedures and provisions prescribed in article (194) of the Civil and Mercantile Procedures Law shall be followed in respect of this petition .

Whoever is concerned may file a complaint against this writ, either by objecting thereto in front of the bailiff whenever determined to execute the writ, or by the normal way of filing the CASE within three days from the date he is notified thereof. In either case, the JUSTICE ISSUING THE WRIT shall alone have the jurisdiction to consider the complaint summarily.

The Court Justice may, upon the request of the complainant, halt the WRIT against which the complaint is filled, untill he issues a final ruling in the complaint .The JUDGE shall pass his judgement in the complaint, supporting , amending, or cancelling the WRIT.

• A-R-T-I-C-L-E-21:

The Lease Contract shall be considered rescinded by force of LAW,if the leased property is due to a mistake of the LESSEE, he shall continue to pay the rental value or the price as agreed upon within the dates prescribed therefor, along with considering the deposit amounts which the LESSOR may have obtained .

If the destruction is due to a third party's fault, each of the LESSOR and LESSEE shall have the right to have remedy over the third party for compensation if so necessary.

• A-R-T-I-C-L-E-22:

The court Ruling rescinding or invalidating the LEASE signed between the SUPPLIER or CONTRACTOR and the LESSOR shall not result in any on the lease contarcts signed between the LESSOR and the LESSEE.. However, the SUPPLIER or CONTRACTOR may have remedy direct over the LESSEE, envolving the rights of the latter vis a vis the LESSOR resulting from the Court sentence rescinding or annuling the contract with him, within the limits and not exceeding the LESSEE'S obligations vis a vis the LESSOR.

If the COURT RULING is restricted to reducing the selling price, for defects or imperfection in making the property, the lease premiums and the selling price agreed upon in the lease contract shall be reduced in the same ratio of the reduction made in the price, unless otherwise agreed.

The FINANCIAL LEASE operations shall be subject to the accounting rules and criteria to be decreed by the concerned Minister in agreement with the Minister of Finance.

• A-R-T-I-C-L-E-24:

The LESSOR shall have the right to depreciate the value of the Leased property,according to the criteria normally applied in these cases, and to usage as well as the nature of the property being depreciated , without any regard to the period of the LEASE connected with this property. And in addition to the depreciation referred to hereinbefore and all the costs deductible from the results of operations, the LESSOR may deduct from his taxable profits the appropriations provided to face the losses or doubtfuldebts according to the LAW.

• A-R-T-I-C-L-E-25:

The rental value payable during the year of Tax assessment shall be considered part of the costs deductible from the profits of the LESSEE, according to the ruling fiscal legislations.

The LESSEE shall include in a vivid form, in the Profit and Loss Account the rental value payable in implementation of the LEASE contract, along with indicating whether the leased property is movable property or a realty. He shall also include in the explanations complementing the Balance Sheet Statement, the LEASE CONTRACTS be signed and the rental amounts paid thereby for each LEASE , and the remaining balance of these amounts.

• A-R-T-I-C-L-E-26:

The Provisions concerning deduction, collection and addition, and other systems of attachment at source for account of the TAXATION AUTHORITIES shall not appply to the rental amounts payable to the LESSOR.Nor shall they apply to the price determined in the LEASE contract.

• A-R-T-I-C-L-E-27:

Customs, taxes and duties -according to the systems in force- shall be payable on equipment and other related imports which are imported for Lease purpose according to the provisions of this LAW.

In terms of Customs taxes and duties prescribed on this equipment , the LESSOR shall be treated on equal footing with the treatment legally prescribed for the LESSEE, throughout the LEASE period.

In case of revoking or rescinding the LEASE CONTRACT, or terminating its period, without the LESSEE using his right to purchase , these taxes and duties shall be payable.

• A-R-T-I-C-L-E-28:

Customs ,taxes and duties which were paid on property imported for lease purposes according to the provisions of this LAW shall be refunded if this property is re-exported, after deducting 20% for each year lapsing from the date of releasing such property. Fractions of the year shall be considered a whole year.

• A-R-T-I-C-L-E-29:

If the subject of the LEASE comprises the rental of vehicles which require a registration at the concerned Traffic Department,for their circulation,the LESSEE may submit a request for such Licence, providing a copy of the LEASE contract shall be attached to the papers.

The Licence shall be issued in the name of the LESSOR,and in it shall be mentioned that the vehicle is in the possession of the LESSEE by virtue of the LEASE contract , and that the latter is using these vehicles by himself or his subordinates.

The LESSEE shall bear all taxes and duties legally prescribed for obtaining the licence and for its renewal. He shall also pay the premiums of obligatory insurance, and other obligations resulting from the ownership of the vehicle .

• A-R-T-I-C-L-E-30:

Subject to any fiscal exemptions that are legally prescribed, the LESSOR shall be exempted from the taxes imposed on income, with regard to his profits realized from the financial lease operations, for a period of five years starting from the date of exercising the activity.

No physical or juridical person who is not recorded in the Register of importers, shall use the term (FINANCIAL LEASE) or alternatives thereof in his address , nor shall be exrecise FINANCIAL LEASE OPERATIONS.

All person violating this prohibition shall be liable to a fine penalty of not less than FIVE THOUSAND pounds and not exceeding TEN THOUSAND POUNDS. A court ruling may also be passed closing down the place and such closure shall become mandatory in case of recurrence..

• A-R-T-I-C-L-E-32:

Whoever violates the provisions of this LAW shall be liable to a fine penalty of not less than FIVE THOUSAND pounds and not exceeding twenty thousand pounds.

Subject to any more stringent penalty, whoever changes the features of the leased property, or its descriptions as recorded in the register provided for the purpose, or obliterates the statement recording the quality of the LESSOR in relation to this FUND, shall be liable to imprisonment for a period of not less than THREE months, and a fine of not less than FIVE THOUSAND pounds, and not exceeding TWENTY THOUSAND pounds, or either penalty.

• A-R-T-I-C-L-E-34:

Civil Servants in the concerned administrative authority who fill the positions to be determined by a decree of the Minister of Justice, in agreement with the concerned Minister shall have the power of LAW OFFICERS in respect of crimes taking place in violation of the provisions of this LAW.

Towards fulfilling such duty, they shall have the right of access to all registers, books documents and data, at the premises of the LESSOR's or LESSEE's head office. They shall submit to these law officers all data and extracts, as well as copies of the documents to be required thereby for this purpose.

The Concerned Minister shall issue the executive statutes of this LAW within SIXTY days from the date this law comes into force.

The present LAW shall be published in the official Journal and shall come into force effective the First of the month next to the expiry of SIXTY DAYS from the date of publising the LAW.

• The LAW shall receive the SEAL OF THE STATE and come into force as a Law of the State.
• Issued at the Presidency of the Republic on 3 AL MOHARRAM Hejra Year 1416 ( Corresponding to 1, June, 1995)

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