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Company’s Ledgers

دفاتر الشركات - Company Ledgers

The Egyptian legislator has regulated in several laws the obligations imposed on legal entities to maintain legal and financial ledgers (Ledger/Ledgers), which are considered a primary source for the financial and legal data for the operations and transactions carried out by the company.

These Ledgers are considered as comprehensive records of every debit and credit transaction throughout the company’s existence. The ledgers must be held physically by the company to enter all the data and information manually in handwriting.

Additionally, companies use ledgers to get a comprehensive understanding of their financial activities and their legal changes throughout the term of the Company, as the data and information entered the Ledgers are useful in creating income statements, financial statements, and other basic financial statements and reports.

Company ledgers’ categories

1- Legal ledgers:

The Egyptian Companies’ Law No. 159 of 1981 (Companies’ Law) and its executive regulations differentiate between three types of legal ledgers which are required to be held by the juridical persons (i.e., companies), which are:

a) Partners’ register:

In accordance with Article (117) of the Companies’ Law and Article (275) of its executive regulations, the companies must hold a Ledger that includes the partners’ data and the number of quotas owned by each partner, in addition to clarifying the details of any transfer or change of ownership concluded on the company’s quotas, the date of the signature of the assignor and transferee in the event of a disposition between the living, and the signature of the manager and the person to whom the share devolves in the event of the death of one of the partners. Noting that any transfer or change in quotas’ ownership is valid among the company and third-parties once recorded/proved in this Ledger. The Legislator granted the partners and any interested party the right to review this Ledger during the company’s working hours.

Additionally, the Legislator obligates companies to prepare a list containing the data contained in this Ledger, including any changes that occurred during the past year to be annually sent to the competent administrative authority in the first month of each year, and this data shall be published in the bulletin issued for this purpose. The Legislator imposes a legal responsibility on the company’s managers for any damage resulting from maintaining the Ledger incorrectly, preparing lists in a defective manner, or due to incorrect data recorded in the Ledger or lists.

b) General Assemblys’ Ledger:

Since the general assemblies are competent, under the Companies’ Law, to approve and amend any all ordinary and extraordinary matters that may occur to the company – such as the financial statements and modification in the company’s articles of association – it becomes necessary to maintain a comprehensive Ledger in which the resolutions of all the Company’s assemblies are recorded in such Ledger.

Relevantly, Article (75) of the Companies’ Law stipulates the necessity of carefully recording the minutes of the general assembly meeting after each meeting, and being approved by the competent authorities. The responsibility for the accuracy of the data contained in the book falls on the signatories of the meeting minutes, and a copy of the minutes of the General Assembly meeting shall be sent to the competent administrative authority within a maximum of one month from the date of its convening.

C) Board of Directors Meetings’ Ledger:

This Ledger only appears in the Joint-Stock Companies, in order to maintain transparency, accountability, and legal compliance on the part of the company’s board members.

This Ledger shall record all deliberations, decisions, and actions taken during board of directors’ meetings. They also provide clarity on the main discussions. Additionally, it is considered as a reference point for future meetings, audits, and legal inquiries.

Legislator also required some formal standards that must be met in regard to this Ledger, such as requiring the signature of the chairman of the board of directors and the secretary.

2- Financial Ledgers:

According to the Egyptian Trade Law No. 17 of 1999 (Trade Law), there are two main financial ledgers that shall be held by the trader, whether the trader is a natural person or a juridical person, as follows:

a) Inventory Ledger:

According to the Trade Law, the trader shall record all the details of the available goods at the end of each fiscal year.

All details of the goods owned by the trader must be recorded, in addition to a copy of the balance sheet, profit and loss account that proves all the transactions and operations concluded on the goods; in order to prove the trader’s financial position before the competent authorities and/or third parties.

Such book shall be submitted to the Egyptian Tax Authority to count the taxes that shall be imposed on the trader.

b) General Ledger:

Pursuant to Articles (21) and (22) of the Trade Law, this Ledger is used to record all financial transactions and operations concluded by the trader on a daily basis, each transaction shall be recorded twice, once on the debit side and once on the credit side.

Conditions for holding Ledgers

The Legislator set some conditions and standards that must be met in holding the required Ledgers, such as that they shall be free from any gaps, modifications, footnotes, erasures, or clutter, as well as that they shall be free from any space, whiteness, scratching, or cramming. In addition to, the pages of the Ledgers must be numbered sequentially, and before using it, each page shall be stamped with the stamp of the notary office and signed by the competent employee.

Competent authorities to notarize the ledgers in Egypt

Regarding the Legal Ledgers, the Ledgers must be notarized from the competent notary public office; while the Financial Ledgers must be notarized from the competent commercial registry office.

Importance of ledgers

As Ledgers are the backbone of financial accountability and effective management. Ledgers are vital records for businesses and institutions, as they ensure accuracy, transparency, and compliance with legal requirements. By meticulously recording financial and legal transactions, Ledgers help prevent errors, detect fraud, and provide a solid foundation for informed decision-making.