THE ENTREPRENEURSHIP ECOSYSTEM ENTREPRENEURSHIP ECOSYSTEM: ... SMEs in what is in many ways a fresh market, ... all of which of course are highly relevant for entrepreneurs seeking

www.lawtodaymag.com

Q3 2017

THE ENTREPRENEURSHIP ECOSYSTEM:IN-dEPTH PERSPECTIvES fROMdINa El-SHENOUfY aNd aYMaN ISMaIl

CaREEM aNd SWvlHow the sharing economyis booming in the region lEGal ISSUES fORENTREPRENEURSaNd STaRT UPS a WOMaN’S WORld:an interview with Mona Zulficar QUBIX: built to grow EGYPT’S ENERGY SECTORfrom a legal point of view

Table of ConTenTslaw in foCus Professional DeveloPmenT lifesTyle

07 49 57EnErgy & transportation

FinancE & capital markEts

HEaltH & Hospitality

tEcHnology & ip

rEal EstatE & construction

growtH tHrougH DivErsity:an intErviEw witH nEw lEvari partnEr moHamED sHaaban

a woman’s worlD: an intErviEw witH mona ZulFicar

living by your valuEs:wHy institution builDing mattErs

FasHion: back to scHool

tEcH rEviEw: artiFicial intElligEncE, smart citiEs & intElligEnt watEr in mEna

rEstaurant rEviEw: pEpEnEro: trEat yoursElF to somE italian HomE comForts

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a NEW SPIN ON PUBlIC TRaNSPORT IN EGYPT10

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IN-dEPTHPERSPECTIvES

ON THE ENTREPRENEURSHIP ECOSYSTEM: dINa El-SHENOUfY

SOME kEYlEGal ISSUES

GOvERNINGINvESTOR-INvESTEERElaTIONS

GROWTH THROUGHdIvERSITY

MOHaMEd SHaaBaNaN INTERvIEW WITH NEW lEvaRI PaRTNER

karim SarhanPartner, Sharkawy & Sarhan

lIvING BY YOUR valUESWHY INSTITUTION BUIldING MaTTERS

Mustafa Qamar-ud-dinaNd INTEllIGENT WaTER IN MENaSMaRT CITIES

TREaT YOURSElf TO SOMEITalIaN HOME COMfORTS

Much is made of the recent flourishing of entrepreneurship as a distinct and aspirational sector in Egypt and the region. While some see the emergence of innovative solutions to social and economic challenges and the choice made by angel investors, venture capitalists, incubators and accelerators to support entrepreneurs as being indicative of a new way of doing business, others point to historical components of Egyptian society, such as the growth of the informal economy, as examples of entrepreneurship having always existed in the country.

However it is defined, there is no question that entrepreneurship in all its forms has the potential to effect profound transformations – on the economy, on the way we work and the way we structure our work, on our ability as individuals to take risks and problem solve. Producing this issue of Law Today, which is specially focused on entrepreneurship, we have had the immense privilege to speak to and learn from leaders – both legal and non-legal – who are working to create an environment where an ever increasing number of people can be encouraged to start or contribute to an entrepreneurial endeavour or to adopt an entrepreneurial mindset.

One theme has emerged recurrently in our discussions and this is the importance of having a strong legal framework in place to protect every possible side and to support people to take the calculated risks that need to be taken in order for the economy to grow. As an entrepreneur this means working with good lawyers so as to make effective and strategic decisions about the corporate structure of your business as well as understanding your rights and responsibilities when working with investors and partners. As an investor, likewise, you will want to ensure that your rights are clearly enshrined and that the companies you invest in are being managed by people who feel empowered to give of their best in growing their entities, safeguarding your investment.

Law firms able to capitalise upon the opportunities offered by working with start-ups and SMEs in what is in many ways a fresh market, replete with possibility, will find themselves well positioned to play an important role as the wave of starting and growing businesses continues to sweep through different industries.

As Law Today seeks to bridge the legal and business communities, we could not be more convinced that the key to economic growth is effective collaboration between the two. In addition to this issue’s spotlight on entrepreneurship, we are delighted to feature opinion pieces on topics of particular interest, including a legal perspective on Egypt’s energy industry, anti-dumping and its impact on competition and the formal requirements of arbitration in the MENA region.

Our Professional Development section offers different perspectives related to leadership and institution building, all of which of course are highly relevant for entrepreneurs seeking to establish and grow their businesses. As ever, we hope that you enjoy this issue of Law Today and we encourage you to contact us if you have any feedback you may wish to share. Thank you for your interest and support.

eDiTor's noTeRamy Fahmy

Chairman

Sahar AbdelrahmanEditor-in-Chief

Lucy MarxCEO & Managing Editor

Khaled RadwanCo-founder, Features & Strategy

Mohab SaidCo-founder, Business Development

Ahmed Elsoukkary

Co-founder, Institution Building

Farah El DeebResearch and Content

Haleem El ShaaraniPhotography

HuS StudioGraphic Design

International Printing House(IPH), Printing

LAw ToDAy MAgAzInE

Street 79, Villa 1, Area 1, District 3,5th Settlement, New Cairo, Egypt

[email protected]

@law.today @lawtodaymag

Lucy MARx

2 | Q3 2017 | law ToDay

Correction: In the editorial contributed by Sharkawy & Sarhan to the Q2 2017 issue of Law Today “Public Private Partnerships in Egypt: Unearthing Opportunities for DFIs”, authors Yomna Elewa and Reham Eissa were incorrectly identified by Law Today as both being Attorneys at Law. Please kindly note that their correct job titles are as follows: Yomna Elewa, Attorney at Law, and Reham Eissa, Associate.

French law firm Gide opened an office in Tehran on Tuesday 12th September, becoming the first international law firm to obtain a license to open a branch office and practice in Iran under its own name. Gide has been practicing in the Middle East and North Africa for nearly 30 years via its offices in Paris, London, Beijing, Shanghai, Moscow, Istanbul and its four hubs in the region (Algiers, Casablanca, Istanbul and Tunis). Gide Tehran is headed up by Iranian lawyer Mehrnoosh Aryanpour, who joined Gide as partner in January 2017, alongside Paris-based partner Christophe Eck.

(Source: Gide Loyrette Nouel)

Europe's top court, the Luxembourg-based Court of Justice of the European Union (ECJ), has ordered a lower-court to re-examine the US chipmaker Intel’s appeal against a €1.06 billion EU antitrust fine for abuse of a dominant position. The EU Court of Justice set aside the judgment of the EU General Court of 12th June 2014, which affirmed the EU Commission’s decision of 13th May 2009, imposing a fine of €1.06 billion on Intel for allegedly granting rebates and payments to customers conditional on exclusivity. The General Court will re-examine the 2009 decision, particularly if regulators can sufficiently prove that the rebates have harmed competition.

(Source: Global Legal Post)

The United Nations General Assembly opened its 72nd session on the 12th September with an emphatic appeal calling for peace and a decent life for all on a planet that could sustain itself.“The UN was created for people,” Miroslav Lajčák said, in his first address as President of the General Assembly. “The people who need the UN the most are not sitting in this hall today.

They are not involved in the negotiation of resolutions. They do not take the floor at high-level events. It is one of the tasks of the General Assembly to make sure that their voices can still be heard.”

(Source: UN News Center)

INTERNaTIONal NEWS


Gide sets up in tehran eCJ rules in landmark intelCase

un General assembly opens 72nd sessionwith foCus on the world’s marGinalized peoplePan-African legal services provider

Centurion Law Group has entered into a strategic alliance with South Sudanese law firm Awatkeer Law Chambers in Juba, making it the first international law firm to enter the country.

The partnership allows the firms to pool their collective networks, skills and expertise to serve businesses, government and non-governmental organizations in South Sudan and includes the training of South Sudanese lawyers using Centurion’s legal technology platforms, as well as a joint marketing initiative.

(Source: Centurion Law Group)

Egypt's new stock exchange chief wants to launch a raft of reforms aimed at increasing trading volumes over the next six months, with the listing of big companies high up on the list. Mohamed Farid, who was appointed as chairman of the Cairo bourse in August, said that the main reform would be reducing trading halt times to 15 minutes, down from 30. Egypt's financial regulator approved that measure on Monday and it will come into effect on Tuesday. The exchange currently suspends trading on stocks that rise or fall by over 5 percent for more than 30 minutes. Other measures Farid plans to introduce include allowing short selling, which he says will improve liquidity, but not naked short selling - selling without first borrowing the security - and holding conferences on initial public offerings.

(Source: Reuters)

REGIONal NEWS south sudan welComes

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swiss-belhotel international

Swiss-Belhotel International has joined Gulf Air’s Falconflyer program, entering into a partnership whereby it awards the national carrier’s Falconflyer members 200 miles for every night’s stay in participating Swiss-Belhotel properties, spread across 23 countries worldwide. The agreement is effective from 1st September 2017.

Mr Laurent A. Voivenel, Senior Vice President, Operations and Development for the Middle East, Africa and India, Swiss-Belhotel International, said “We are pleased to partner with Gulf Air, the national carrier of the Kingdom of Bahrain’s prestigious loyalty program: Falconflyer. We are committed to rewarding our valued guests for their loyalty and this new alliance will entitle Falconflyer members to outstanding earnings at our hotels, located in some of the world’s most desirable destinations.

With its vast reach and popularity as a frequent flyer program, partnering with Gulf Air’s Falconflyer program is a strategic tie-up for us and will increase our brand exposure globally as well as in our top source markets in the Middle East.”

(Source: Gulf Air)

partners with Gulf Air’s Falconflyer program

The Asian Infrastructure Investment Bank (AIIB) has announced that it will provide $210m to finance a renewable energy project in Egypt, including the construction of 11 green field solar power plants, with a total capacity of 490 Mw. The project will increase Egypt’s capacity to generate energy and reduce reliance on gas and fuel to generate electricity, which would help in meeting the commitments of the Paris Climate

Agreement, according to D.J. Pandian, Vice President and Chief Investment Officer in AIIB, in a statement. He added that the bank supports this project because it contributes to Egypt’s ability to produce renewable energy, which will help in positioning Egypt as a regional center for energy production and will have economic benefits for the entire region.(Source: Trade Arabia)

$210m to finance renewable energy project in Egypt: AIIB

wants to invigorate markets in 6 monthseGypt's new stoCk exChanGe Chief

first international law firm

energy & TransPorTaTion

A LegAL PersPective on egyPt’s energy sector

sWvL: A neW sPin on PubLic trAnsPort in egyPt

cAreem: A modeL of regionAL groWth

finanCe & CaPiTal markeTs

in-dePth PersPectives on the entrePreneurshiP ecosystem: dinA eL-shenoufy

Anti-dumPing And LocAL comPetition considerAtions

governing investor-investee reLAtions: some key LegAL issues

shArehoLders' Agreements for stArt-uPs

HealTH & HosPiTaliTy

born to be WiLd

TeCHnology & iP

entrePreneurs: to Adr or not to Adr

in-dePth PersPectives on the entrePreneurshiP ecosystem: AymAn ismAiL

An A-List exPerience

for the PeoPLe

rise And shine

ArbitrAtion And its formAL reQuirements in middLe eAstern And ArAb countries

real esTaTe & ConsTruCTion

Qubix: buiLt to groW

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Established in 1953, Zaki Hashem & Partners (ZH&P) is the oldest and largest law firm in Egypt to be actively, and uninterruptedly, catering to foreign and Egyptian clients. ZH&P offers the full range of corporate, business and commercial legal services provided by over 170 employees - including 100 fee earners - all advocates of professional excellence and integrity. The Firm comprises a unique constellation of highly qualified senior associates, partners, and senior partners as well as a fresh generation of lawyers dually qualified in Egypt and other jurisdictions. The combined experience of the Firm’s members exceeds 1064 years.

ZH&P’s legal services are offered in Arabic, English, French, German, and Italian - and cater to the following main areas of practice:

Arbitration & Litigation | Banking & Finance | Capital Markets (IPOs, Bonds, Securitizations) | Competition Law | Corporate & Commercial Law | Distribution and Agency | Franchise | Hospitality & Tourism | Insurance | Intellectual Property | International Foreign Investment | International Trade | Labour Law | Merger & Acquisition | Mining | Oil & Gas | Project

Finance | Public International Law | Real Estate | Taxation | Telecommunications.

youssef Abou zeidSenior Partner

Sameh KhodeirSenior Partner

Hala HashemSenior Partner

Mohammed gomaaSenior Partner

yasser HashemManaging Partner

23 Kasr El Nil Street, CAIRO 11211, EGYPTTel: +202 2399 9999 Fax: +202 2393 3585

Email: [email protected] | www.hashemlaw.com

energy & TransPorTaTionlaw in foCus


When it comes to both natural gas and electricity, there are parallels in the government’s strategies to gradually liberate both markets and allow for more private sector participation.

The new law recently issued to regulate the natural gas market may well be an enhancement, but we will have to see how it plays out in practice. Its Executive Regulations have not yet been issued, but are due to be within six months. It will allow for transactions to happen directly between private sector entities, without direct involvement from the government as a transactional party. As with the Electricity law issued in 2015, the government still wants to protect those who are not qualified users or subscribers of the service – such as those using gas for residential purposes.

Electricity has undergone major reforms over the years. A restructuring during the late 1990s paved the way for greater private sector involvement and was followed in the early 2000s by a flourishing of electricity generation projects (IPPs), though these were later halted. However it later became critical for the government to rapidly continue its development of the electricity sector, particularly after the major blackouts of 2012 and 2013. With the electricity sector strongly linked to the oil and gas sectors (electricity generation plants having by this point moved away from their prior dependence on heavily subsidised natural gas), this status quo therefore constituted a vicious cycle for the government in terms of economic growth.

At this time there were also too many power stations relying primarily on natural gas, all of which required massive maintenance. As some did not receive the maintenance on time, their production capacity was greatly affected and, as a result, several years ago the Ministry of Electricity applied an energy mix so that Egypt would not rely solely on natural gas, but would use other sources to generate electricity.

One of several important steps taken in this area was the inclusion of renewables. The feed-in tariff (FiT) program, of which the

first round was launched in October 2014, focuses on renewable energy, solar and wind power. The program itself was, we believe, well managed and though not very successful, it attracted a large number of foreign investors and enabled the government to test what would work effectively with them. We are now in the second round of the FiT program. Currently the market does not seem to be fully cognisant of an angle that is going to be ever more important with time: this is the environmental market and climate change. Historically the Kyoto Protocol, which was entered into under the umbrella of the UNFCCC, was a milestone in climate change practice, as it differentiated between developed and developing countries, with the developed countries having commitments to reduce the levels of greenhouse gas emissions.

One important tool used to achieve this is the Clean Development Mechanism (CDM), which allows for the participation of an entity from a developed country in a project in a developing country – for example, the production of green technology. The CDM has a different registration process with the UNFCCC which allows Certified Emission Reduction certificates (CERs) to be issued and traded.

What the Kyoto Protocol achieved was to put an economic value on emission reduction, thus making it more attractive for the private sector and the government to reduce emissions. The Paris Agreement has a different air to it, with its expectation that all parties will play a more active role. This is a very important angle for the energy market to look at, as jobs and opportunities will be made available. As a new market, it will eventually need to be regulated. We have seen some positive steps; for example there is now a local Egyptian Council for Climate Change, which has put in place a strategy in order for the country to meet its climate change commitments.

Baker & McKenzie has been working on climate change practice globally and locally, participating in the drafting of the Kyoto agreement and working on CDMs in Egypt since 2008.

8 | Q3 2017 | law ToDay

Energy is a core component for economic growth and this accounts for its importance as a practice. Particularly in an emerging market, if the strategy for economic development is, for example, to incentivise more investment in the industrial or agricultural sectors or to create new communities, then it is crucial to demonstrate that the market can provide the energy component needed for this to happen.

Fortunately, as Baker & McKenzie is a strong international practice group, we benefit from both local and global expertise and the ability to compare between different jurisdictions when it comes to advising clients on crucial sectors such as energy.

Regulation and reform within Egypt’s energy market have been a topic of intense discussion for many years, meaning that any examination of recent developments in these areas must be set within a broader historical context.

Energy here comprises:1) Oil and gas, which may be seen as conventional sources of energy as opposed to, for example, renewables. 2) Electricity, which again can be generated by both conventional and renewable energy sources. 3) Nuclear, which is not really an open market practice for Egypt.

Egypt was a main exporter of oil until the late 1990s or early 2000s and of natural gas until the mid-2000s. Since that time however it has primarily been an importer, because of increased demand and the effect of subsidies.

Now we are seeing developments in the oil and gas sector from a regulatory point of view. The model which has been used by the government for the last fifty years is a production sharing model, in which all the exploration is undertaken at the investor’s risk until a commercial discovery is made, after which point the costs are recovered from the proceeds and the remainder of the oil is shared between EGPC (the Egyptian General Petroleum Corporation) and the contractor. In Egypt we refer to this as a

Concession Agreement, although in practice it is production sharing rather than pure concession.

The form of the Concession Agreement itself and the way in which concessions can be transferred or sold are key regulatory matters that significantly affect how swiftly and easily an investor feels he can enter or exit the market.

It has been common practice to sell concessions as assets through a Deed of Assignment, signed by the government of Egypt (represented by the Minister of Petroleum), EGPC, the assignor and the assignee. Usually investors in the oil and gas sector favour the transfer of concessions through selling their shares in the contractor company, which is a relatively straightforward process as most contractors and concessions are non-Egyptian entities, so shares can be sold offshore in a quick and easy way. Any direct or indirect assignment must be approved by the government and, in order to clarify and simplify this process, the government has recently issued a set of examples aiming to define what an indirect assignment is.

Technically in order for an investor to dispose of a concession, he first needs the approval of EGPC and the Egyptian government. Some investors in the oil and gas sector see this as an impediment, feeling that to go through a lengthy process, get a list of approvals required by the Egyptian government and the EGPC and sign all the documents proving the transfer of shares somewhat defeats the purpose of disposing of the Concession Agreement by selling the shares of the contractor for the relevant concession.

There is therefore scope for enhancement of the existing process so as to incentivise investments in the field. While the government and the EGPC want to guarantee effective security checks and ensure the technical and financial capabilities of the entities involved in implementing the relevant concessions, we feel nevertheless that there are ways in which they could regulate these things and allow for the transfer of concessions in a quicker manner.

Lamyaa gadelhak, Partnerziad gadalla, PartnerHelmy, Hamza & Partners (member firm of Baker & McKenzie International)

a lEGal PERSPECTIvEON EGYPT’S ENERGY SECTOR

LT: you have said that you want to bring the London transportation system to Egypt. How possible is this, and how are you going about solving the problems that will come with this?

MK: It’s insanely challenging. Working on public transportation and somehow being profitable sometimes seems like a contradiction in terms. I did aspire to establishing a system like that of London but now I am more ambitious. If we manage to build the right technology, I think we can do even better. So we are investing a lot in the technology, hiring top-notch engineers who can build a system that will tell you very precisely when buses are arriving and leaving and offer inbuilt contingency plans for buses that do not arrive on time.

One aspect of doing this is gathering data to accurately predict the flow of traffic, so that we can mitigate any congestion-related issues. Another is creating a structure allowing us to anticipate if a problem is going to happen.

In this sense, our system is completely different to on-demand transportation, where most fleets are manned by part-timer drivers who want to increase their income for just two-three hours per day.

SWVL uses commercial vehicles and so of course all our drivers are full-timers; this can pose challenges when it comes to, for example, punctuality. So we track our Captains from the moment they wake up to the moment they arrive at work and if they are going to be delayed our system gives us an alert so we can take action.

LT: what would you say to people who argue that technology alone cannot solve the complications within Egypt’s transportation system?

MK: We undoubtedly regard technology as an enabling layer but we also have an army of people working behind it to make sure we are executing our activities well

and learning every day.

A lot of what we are doing relates to social mindset and behaviour change. You will see that our branding is very much focused on the idea of making public transportation cool, so we particularly target under-35s, positioning ourselves as public transport for Millennials.

In our first week we offered one ride and now we have thousands of rides in operation, so our approach seems to be working. Timing has also been on our side: people are really facing a crunch because of the economic conditions, so we are offering a more affordable and equally convenient option. We are also trying to emphasise the fun of group travel; we have had party buses going to Sahel and we are planning an adventure bus that will take groups around Egypt.

LT: we know that careem has invested in SwVL to help with expansion and diversification of the company. What are the benefits of the Careem-SWVL connection from a strategic and a practical perspective?

MK: It has helped us a lot and given us a lot of credibility; people are more ready to trust what we are doing because of our relationship with Careem. We view the people at Careem not just as partners; they are godfathers. We were fortunate to have quite a lot of choice when it came to investors but we specifically chose Careem because we wanted people that we could learn from.

As an entrepreneur, you need nothing more than mentorship and collaboration. I have been very fortunate to be mentored by some amazing people early in my career: Wael Amin of ITWorx, Ahmed El Alfi, Mudassir Sheikha, the people at Rocket Internet.Working with these leaders absolutely gave me the push to start my own initiative.

LT: From a legal standpoint, how is

SWVL defined and regulated?

MK: What is interesting is that we are classified as a tech company, not a transportation company. We are simply enablers, connecting people, and the biggest assets we own are our laptops. Uber and Careem need to be regulated, but we employ people who work with commercial vehicles, so the legal framework was already there when we started. We are set up as an offshore LLC company and our licences are all tech related; nothing is very complicated.

LT: As a start-up that is really trying to expand a new market, what kinds of legal and regulatory challenges have you faced? MK: We are not legal experts and we had a lot of help from legal counsel when we were first established. Recently we hired our own in-house counsel because we recognise the importance of getting all our legal processes absolutely right.

I was given the very valuable advice once that the difference between us and the people in Silicon Valley is that, from the moment they start their businesses, they build for a trillion dollar company. This is not something we usually do in Egypt. We want to be a trillion dollar company so we see it as crucial to start planning for that now. We have very ambitious plans and, in order to make sure they really work, we knew that we had to have our own legal backup.

When it comes to things such as our commercial registration, tax issues, ensuring that our company description, frameworks and our contracts with partners were right, we did not pay attention to these aspects very much at the beginning; we simply saw them as something we had to get done as quickly as possible. Now we are taking the time to really understand them properly.


www.lawtodaymag.com | 1110 | Q3 2017 | law ToDay

a NEW SPIN ON PUBlIC TRaNSPORTMostafa Kandil, co-Founder and CEO of SWVL, talks to Law Today about establishing the start-up that is taking Egypt’s public transport sector by storm.

We aim to provide safe, reliable, accessible, comfortable public transportation for everyone.

LT: what would you say is the need that SwVL is meeting in the market? what was the inspiration for you to seize on this opportunity?

MK: Even when I was at school and university, I really enjoyed the idea of building and growing something. Working at Careem, my role involved helping us to launch in cities around the Middle East, so I was intimately aware of the average fares of countries in the region. Egypt’s average fare of $3-4 was, I knew, quite a lot. Reflecting upon the slowdown in tourism in the country, and the fleets of buses that were underutilised, it occurred to me to combine the two elements to create a public transport service that would be both reliable and affordable. I left Careem and started working with my co-Founders to establish SWVL.

I have a strong belief that ideas are worthless if they are not combined with good execution, which fundamentally means speed. Though it may be difficult to consistently be efficient in Egypt, it is very important. We had our iOS launch on March 26th 2017 and our Android launch two weeks later; now we’re launching our cash payment system and after just four months we have 50,000 users.

I believe our impact so far has been notable, particularly because we are offering an efficient approach and solution to a problem within a very inefficient market. We are planning by the end of the year to have launched in Alexandria; next year we will launch in Pakistan and Jordan and probably another country in Africa. In terms of our value proposition, the truth is that people in emerging markets are currently stuck between two options. On-demand transportation is reliable but expensive; public transportation is perceived in emerging markets as being for the non-privileged and is often cheap, but unsafe and unreliable. We aim to provide safe, reliable, accessible, comfortable public transportation for everyone.

LT: careem has grown rapidly since its establishment in mid-2012 and has had a particularly high growth rate in Egypt, Saudi Arabia and Pakistan. what would you term the principle factors for such rapid growth? why are these markets particularly successful or why is careem’s model particularly appealing to customers in these areas?

RK: There are two dimensions to look at: one of these is Careem as a company, the other is the markets we are dealing with. Since our inception, our Founders have always insisted that our mission is to simplify people’s lives and create an institution that inspires. By definition, the technology and the model of the sharing economy are high growth and this is coupled with us being a strong organisation that is hungry for growth.

To reach as many people as possible and simplify their lives, you can start with one person but we live in an area with millions of people, so we have to grow very quickly to achieve our objectives. We have been successful in bringing a strong culture and have abundant resources of very intelligent people, who have helped us to deliver on our promises. We have experts of over 50 nationalities in Careem - a true melting pot!

In terms of the market, working in a country that has less penetration and coverage in terms of public transportation and a larger population creates a need for the services we offer and gives us a larger market. Egypt, Saudi Arabia and Pakistan all have these characteristics.

Both Egypt (with 100 million inhabitants) and Pakistan (with 200 million inhabitants) have a low share in public transport. In Saudi Arabia the population is within the range of 40 million, however use of public transportation is even lower. So I think this is why we were very successful in those markets: there was a need

for both the employment opportunities and the transportation services. It was the perfect match.

LT: In Egypt, both careem and uber have faced a certain amount of scrutiny when it comes to their legal status, in relation to white taxis. According to our understanding, white taxi drivers have been critical of the fact that careem and uber drivers can operate without the need for the same licenses they have, and have accused both entities of being unregulated. How would you respond to this? Do you think the legal framework in Egypt could better support careem captains as they go about their work?

RK: The sharing economy in general is a new phenomenon, so the question of regulation is really a global question, not specific to Egypt.

The way Careem addresses this question is by noting that the technological evolution has become much faster than the existing regulatory and legal frameworks, and we trust that the concerned authorities will do all that is necessary to develop such a framework to enable us to simplify people’s lives and to allow us to create more job opportunities for people in the country.

In September 2016 we undertook the initiative to include taxis on our platform. Now when you open the Careem app, one of the car types you can choose is that of a taxi. We are not here to compete with the taxis and push them out; we are here to expand the market more broadly and to provide a better service, for the customer and for the economy.

Furthermore, the Minister of Investment and International Cooperation took the lead by forming a committee that includes all stakeholders to reach a legal framework that would encourage

investment in Egypt and enable us to bring value to our customers. This has been progressing very well and is in its final stages, so we could see a draft law going to Parliament very soon.

Egypt has actually been one of the quickest countries to take steps towards providing regulation, a fact about which we are happy and proud.

LT: How do you think legal processes and the framework in Egypt could be adapted to create an enabling environment for entrepreneurial endeavours such as careem to operate?

RK: The issue relates primarily to the legal culture, which is underdeveloped in a country like Egypt. People deal with the law as something alien and technical, which of course it isn’t.

There needs to be an effort made in the education system to provide basic legal knowledge to everyone - because everyone will have to deal with the legal framework at some point in their daily lives.

People are unaware of many basic issues such as: what makes a binding contract? what liability do you potentially incur by signing a particular document? what are your rights in a certain relationship - whether it constitutes employment, business or even marriage? If I look purely from an economic perspective, the general public needs to have a good basic understanding of our laws so they can understand the practical effects of certain regulations and restrictions that might be imposed.

There is a core difference between regulating and restricting. Regulation is something good, because it provides guidance as to rights and responsibilities, whereas restriction is counterproductive; it doesn’t help an industry to grow and in fact

curtails economic development and progress.

LT: Could you give your perspective on the Careem-SWVL relationship, why careem was ready and able to support SwVL from day one and how you see this connection as being beneficial on both sides?

RK: As part of building an institution that inspires, we believe that developing the start-up ecosystem is part of our duty, whether through offering advice or direct investment in promising start-ups that align with our strategy. SWVL gave us the chance to do exactly this, as providing different modes of transportation is part of our key strategy.

In Egypt, where the cost of a car ride on a daily basis for a long commute might not be economically viable, there is a need for a mass transportation model. Mostafa Kandil, SWVL Co-Founder and CEO, worked well on developing the idea of SWVL after leaving Careem and he brought it to life fairly quickly. We saw that it could be in both our interests to help him develop this; it was a win-win for everyone involved.

Society will benefit from having this new and promising start-up as part of the economy, and having the example of a wonderful project led by young and talented people. We as Careem are delighted by this support of our strategic objective to provide mass transportation to the market. We are very happy to see people come to Careem, learn how things are done, and then go out and do wonders. We have a lot of faith in Mostafa and will give him all possible support, whether by investing or by offering strategic advice or support when needed.



The sharing economy in general is a new phenomenon, so the question of regulation is really a global question, not specific to Egypt. The way Careem addresses this question is by noting that the technological evolution has become much faster than the existing regulatory and legal frameworks.

Ramy Kato, careem’s Head of Egypt operations, talks to Law Today about the process of growing a booming commercial entity and why strong legal frameworks are imperative for this to take place.

12 | Q3 2017 | law ToDay

a moDel ofregional growTH

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IN-dEPTH PERSPECTIvESON THE ENTREPRENEURSHIP ECOSYSTEM: dINa El-SHENOUfY

DInA EL-SHEnoufy, Chief Investment Officer of Flat6Labs, shares her insights with Law Today as to how regional support benefits early-mid stage entrepreneurs, the legal hurdles facing start-ups in different jurisdictions and why legal counsel is key to providing a strong investment framework.

Many entrepreneurs start here with a view to then expanding into other countries. Tech-based companies in particular don’t necessarily want to establish a physical presence elsewhere but what they want help with (and what we can help them with) is accessing the market.

Often we can help entrepreneurs to access overseas markets by connecting them to investors, as part of broad business development initiatives. Sometimes their need relates more to on the ground experience, talent management or simply insight into different cultures. An app that is native to and works well in Egypt would have to be completely tweaked in order to be launched in Saudi, as the cultures are really different. Being able to connect with other service providers is also useful, so if one of our entrepreneurs needs a service or an app to be “arabised” or localised, we can help with that.

LT: At its best, the legal framework is really the supporting structure protecting both investors and entrepreneurs. How can it be more supportive for all sides? DS: When it comes to working with start-ups in Egypt, there are currently certain hurdles in the regulatory framework. The ease of setting up is one, but actually liquidation is more problematic for us as Flat6Labs, particularly because we invest in many companies knowing that a number of them will eventually shut down.

Liquidation just requires so many different steps. An auditor has to issue a particular statement saying the company has no liability, which costs a lot of money, then you have to appoint a particular person whose role it is to oversee the liquidation. You pay this person to go through your company’s documents to ensure you have no legal recourse, dues, or liabilities. Having cleared everything with many different entities, you have to go back to GAFI and show that you have finalised everything. So it can genuinely take six months to liquidate a company that is worth 200,000 LE (less than $US 10,000). The money that entrepreneurs will need to spend on a company that they have essentially written off, just to liquidate it, is significant. Often they do not want to do this so we may end up as shareholders in dormant companies, in which case we need to let go of any formal responsibilities, resigning from the Board of the company for example.

The enforceability of certain contractual clauses can also be problematic. Egyptian commercial law does not have any provisions for convertible notes, tag-alongs and drag-alongs, so this makes it

difficult for investees to create and manage companies and for us as investors to feel we have safeguarded our investments. The simplest of corporate transactions can be very daunting for the entrepreneurs: doing a capital increase or transferring shares from one shareholder to another is a very lengthy process that involves GAFI and the stock exchange. Sometimes this also becomes an impediment to foreign investment, which often results in these companies feeling that they need to set up offshore.

Other jurisdictions that we work in face comparable, related, issues. Tunisia has huge foreign ownership restrictions and essentially faces the opposite issue to Saudi. Whereas non-nationals cannot own companies in Saudi, Tunisian nationals are not allowed to own assets outside Tunisia. Clearly it is difficult to strictly enforce such tight control, but it really presents huge problems and makes the process of offshoring immensely difficult.

Tunisia has significant tax exemptions for people who invest in technology and entrepreneurship but only for Tunisian start-ups. A lot of angel investors, wanting the tax exemption, are therefore keen to invest in such start-ups, but if the start-ups are also trying to attract foreign investment, foreign investors don’t necessarily want to invest in Tunisia. So they face the tedious process of trying to find a structure that will suit both Tunisian and foreign investors.

Maybe the only jurisdiction of the places we currently operate in that is slightly more international is Abu Dhabi, particularly because we are in the Free Zone. Even then, the start-ups tend to want to register as Delaware or BVI companies, especially if they start getting bigger.

Beirut has laws that are enforceable but foreign investors often feel more comfortable investing in a BVI or Delaware-incorporated entity.

In Saudi you need to immediately offshore your company if you want to have any foreign investors.

So the regulatory framework is definitely not as straightforward as it would be in, for instance, the US – where you can set up a company online without the need for a lawyer in a matter of days. Here you can do it on your own, but you face so many potential obstacles, which is why we have our lawyers who take care of everything for us.

There is no question that, if undertaking corporate governance transactions were easier, it would make the lives of

entrepreneurs and investors much easier. Where lawyers could plug in:

1) Being more accessible. If more law firms offered special rates for start-ups, it would encourage entrepreneurs to bring business their way. Because lawyers are so expensive, you often find start-ups with miserable structures that decided to undertake processes on their own and cut corners. 2) Making answers to FAQs available or holding regular open days. 3) Attending more events in the ecosystem. Then they could understand more clearly the challenges facing entrepreneurs and investors.4) Offering sound advice and connections.

Patenting, for example, is worthless in Egypt because it is not enforceable or recognised anywhere else. So if any of my companies feel that they have something really good and credible that they want to patent, they have to do so in the US because that’s where it makes sense to get it done. But then they don’t know how to do this on their own; they need help finding a good patent lawyer in the US, with affordable rates. A lot of lawyers here would be well placed to advise them and offer connections that could be helpful. Generally speaking, if law firms were looking strategically at building relationships with start-ups, it would pay off on both sides. What we offer is six months of legal support at a very formative stage in their development, and this builds loyalty. Generally, companies will continue working with the entities they are comfortable with and therefore this will ensure that they keep bringing their business to these law firms as they grow.



LT: Flat6Labs has been instrumental in people taking entrepreneurship seriously as a viable career path and something to invest in. what, for you, are the core drivers behind this success and is it something you anticipated when you started in 2011?

DS: One of the reasons we have managed to succeed is that we had a particular model and framework which we stuck with, even when we were under pressure to do things differently. Despite facing hurdles we insisted that every company we invested in was one we set up, even if our investment was tiny. Every venture that we support has been set up as a joint stock company – not even an LLC, so we went down the tougher route.

It is very important for our entrepreneurs to understand that this is not merely a competition that lasts for three months, but a proper investment and we are their partners from the get-go. We have a vested interest and the real heavy lifting starts with the end of the program cycle.

So we have always been focused on issues such as how to properly structure a company. We have a legal partner, Levari, that has been with us from the very beginning and one of the core components we add to any company we invest in is this access to legal support.

Because Flat6Labs is a company that supports youth and creates employment opportunities, it would have been easy to get sucked into being perceived as a purely grant-based CSR initiative. However, we are an investment vehicle; we have established a fund in which we invest on behalf of our investors and we insist on instilling in all the companies we support this sense of strong corporate governance.

LT: Based on the regional expansion undertaken by Flat6Labs, do you see particular lessons the Egyptian ecosystem could learn from Tunis, Beirut, Abu Dhabi or Jeddah that could be applied here for growth?

DS: Every one of our locations is independent. We fundraise for each separately and each has its own local team on the ground, which understands the intricacies of the local market, but then we have a central team to connect everything together. Both Ramez (El-Serafy, CEO of Flat6Labs) and I have as a core aspect of our roles the creation of that central environment. In essence we become a call centre that creates a regional platform to build upon synergies, cross-border interactions and easy mobility from one country to another, offering the entities we support the ability to expand. This is one of the things that we can offer now we have the regional presence.

Though we are close geographically, the environments in different countries in the region can vary greatly and setting up in Saudi or the UAE can be more daunting for an Egyptian than setting up in the US. In Saudi there are laws prohibiting foreign ownership of companies, so if you want to set up as an Egyptian organisation in Saudi, you have to go through a very long legal process where you find a local partner who will be the majority shareholder. This obviously does not offer you much security so you need to set up a back-end agreement that offers you some semblance of control over your own company. Even this does not offer total security, particularly in the event of key decisions or disputes.

In the UAE, security processes are very strict so Egyptians may often face issues getting security clearance to set up and be the CEOs of their own companies operating there.

However my position, as someone with a strong affiliation to the regulatory authority in Abu Dhabi, for instance, allows me to have some influence when it comes to supporting Egyptian or Saudi companies wanting to operate in the UAE, giving the companies I work with an edge that others may not have. This is one of the reasons why we wanted to have a regional presence.

16 | Q3 2017 | law ToDay



In his celebrated capacity as the Robert M. Beren Professor of Economics at Harvard University and Chair of the President's Council of Economic Advisors, Nicholas Gregory Mankiw exhibited a profound understanding of the practical use of anti-dumping in restricting competition. With characteristic incisiveness, he writes:

The ostensible purpose of anti-dumping law is to help ensure competition by punishing foreign firms that sell their products at "unfair" prices in the U.S. market. In practice, however, anti-dumping has strayed far from this purpose, becoming little more than an excuse for special interests to shield themselves from competition at the expense of both American consumers and other American companies.

It is the argument of N. Gregory that anti-dumping laws have extended their reach to the degree that they have started harming import economies through actually creating protection from competition.

Dumping is the practice of exporting products at prices that are lower than they would be sold for in the domestic market. Anti-dumping regulation, a manifestation of selected international trade policies, purports to regulate particular governmental interventions to protect the sustainability of domestic industries. The rationale behind having such a tool is very much aligned with the concept of safeguarding public interest – or at least what is perceived to be public interest.

Any company has options when it comes to deciding how to price its products, but these options are limited by the cost of production. No company can sustain selling below cost for very long. Companies also face greater limitations when there is poor competition in their markets. When there is a monopoly over certain products in any particular market, smaller producers will be forced to submit to the same pricing as the company which maintains market dominance or a larger market share. In a market characterized by poor competition, a company may charge higher prices domestically and use the extra profit to subsidize exporting at a lower price to other countries.

Therefore, the conditions under which dumping takes place are in situations where prices are inflated in favor of the producer of the monopoly.

If poor competition in the exporting country is likely to affect or facilitate dumping, what then are the core considerations further compounding the complexities this relationship brings to trade at the local and international levels? If we extrapolate that indeed poor competition is a key factor in this scenario, we will find that there is a relationship between anti-dumping laws and anti-trust laws.

There are those who will argue that such a relationship is direct: the more lax anti-trust laws are in the exporting market, the more dumping takes place. Anti-trust is a tool that involves organized governmental interventions which focus on eliminating limits on free entry and exit from the domestic market. This is built on the idea that the only way producers can support the often expensive practice of dumping is through subsidization, paid for by inflated prices in the exporting market.

Dumping, then, becomes required seeing as the producers are constantly seeking to maximize their sales. If the exporting or local market is not receptive to a product due to its high price, then the producer is forced to sell abroad at a lower price point

in order to gain more consumers and get access to new markets.

The counter-argument to this idea of direct relation claims that there is no necessary relationship between anti-trust and anti-dumping except in cases where the importing market is actually harmed. Thus, there is no need to regulate the exporting markets, or the source, but rather there is a need to regulate the destination by imposing tariffs, duties or other measures.

However, if this counter-argument relies on demonstrable injury to the importing market having been found, and this being attributed to anti-dumping, one might reasonably ask what happens in the event of anti-dumping duties having been applied in excess of any actual harm suffered by the importing market.

One way to combat dumping is by exacting sufficiently large trade restrictions on the exporting markets in question to keep it from being profitable to the exporters to dump their products. Another way to combat dumping is by making it a requirement that countries with poor domestic competitive values must use higher export restrictions, to avoid causing injury to the markets of other countries through dumping by either raising the price of the exports or limiting their volume. Theoretically speaking, it would be sensible to have tariffs on exports in order to protect domestic industry, but from a practical perspective this measure may not necessarily lead to the desired result. It is not always the case that there is a complementary relation between anti-dumping and anti-trust. In practice, the anti-dumping tool might adversely, by its very nature, distort market competitiveness albeit as a result of a rather legitimate and valid necessity. For instance, anti-dumping authorities in some countries would apply the “dumping margin” rather than the “injury margin” in assessing anti-dumping trade remedies.

The dumping margin is defined as being the entire difference between the normal value of a product and its export price (including any sufficient adjustments) while the injury margin is defined as being the actual amount of duties that would be sufficient to overcome the injury experienced by the domestic industry. In practice, it is highly unlikely that a dumping margin would be lower than an injury margin.

Accordingly, while in theory the application of a dumping margin rather than an injury margin would be a perfectly acceptable remedy to anti-dumping, in reality the use of a dumping margin rather than an injury margin can actually harm domestic competition due to the application of an excessive level of protection to the domestic industry. This would normally be used by countries undergoing privatization programs, as a means of appealing to foreign investors by imposing particular regulations on production mechanisms, including border tariff protection measures, that would guarantee a synthetic monopoly.

It is important to understand that anti-dumping is a necessary strategy in order to combat unfair competition, however when such a strategy manages to stifle competition in the importing market, anti-dumping regulation and practice needs to be re-assessed. It might be a valid proposition to impose export tariffs on countries that dump, giving them an incentive to review their poor competition values and thereby producing a market where the producer does not feel the need to sell abroad at lower prices in order to escape his own domestic market. By focusing on anti-trust from both importing and exporting ends, and by ensuring that competition in a broad sense is protected, there is every reason to believe that countries may in the future no longer find grounds to dump and that the practice will not survive.

18 | Q3 2017 | law ToDay

Hossam gramonPartner, Head of Banking and financenour & Selim in association with Al Tamimi & company

aNd lOCal COMPETITION CONSIdERaTIONSaNTI-dUMPING



So if the company has a share capital of 10,000 LE and a lawsuit is filed in which damages of $10,000,000 are sought from the shareholders, only up to 10,000 LE can be recovered. In any kind of partnership structure, the party suing in the event of a dispute can go after the shareholders’ own money, which is why such entities are referred to as personal companies.

Many entrepreneurs will automatically choose to set up their companies as LLCs, because this structure doesn’t have a minimum capital requirement. You could set up an LLC with 1000 LE. A JSC meanwhile does have a minimum; you need to set up the company for 250,000 LE but crucially you don’t have to pay the full amount immediately. You can pay 10% at the point of incorporation, you have three months in which to increase that amount to 25% and then three years to pay the remaining 75%.

The problem with setting up as an LLC is that this structure doesn’t allow for expansion beyond a certain point. If you look at a company such as Fawry, which started almost eight years ago with only a few people and in 2015 was sold at a total valuation of US$ 100,000,000, you can see that quite monumental expansion is possible. Indeed, it is surely the dream of every start-up. In this kind of situation, you would need at some point to transform your entity from being an LLC to being a JSC, which is an essentially straightforward process but takes three or four months with some procedural issues involved – a long time in business terms.

If a start-up is being transformed from an LLC to a JSC, it is usually at the behest of a new investor. Generally speaking, the new investor will want the transformation to take place before entering, so essentially the transaction will be delayed and thus jeopardised.

My advice to entrepreneurs therefore would be, if you have money, to set your company up as a JSC. It will mean you are very well placed for expanding and continuing to attract new investors.

Why do investors prefer joint-stock companies?

From the perspective of investors, a JSC is a far more appealing investment prospect as it affords greater control. A JSC is run by a Board of Directors who can if necessary be changed by a 50%+1 vote, while an LLC is run by managers who are usually responsible for all operational issues and who could only be changed by an absolute majority vote of 75%.

Likewise, you cannot transfer shares in an LLC without a 75% approval. In a JSC there are generally very few share transfer restrictions; you can easily transfer shares except in very particular circumstances so the shares are not in lock up. The transfer of shares in a JSC is done through the Egyptian Exchange, which requires the appointment of a licensed broker, but their costs are normally reasonable.

The Board of a JSC can run the company, or can appoint others to take care of its day-to-day operations, with different committees issuing recommendations that the Board can act on. Decisions are taken by majority vote, with a minimum of three Board members in attendance.

An LLC is quite different. Any manager hired will normally have signatory powers that pertain to his or her area of focus so, for example, a CFO appointed will have signatory powers on financial issues and the ability to take decisions in this area without consultation or voting. He or she could only be changed with a 75% approval. An LLC requires at least one manager of Egyptian nationality.

The reality is that most investors who invest in a start-up would want majority ownership - which is anything over 50% and preferably over 75% to control the Extraordinary General Assembly – because fundamentally they want to maintain control. A typical arrangement would afford the investors a majority vote (normal or absolute) with the founders continuing to manage the company and a proper management agreement in place governing the structure and working relationships. An LLC is really made for small investments. It cannot go to an IPO (Initial Public Offering or stock market launch), for instance, but would have to be transformed to a JSC.

Examining recently issued laws in Egypt, it is clear that the government is also trying to encourage the proliferation of JSCs rather than LLCs.

One very clear example of this is in the amendments made to the Importation law. It used to be that if you wanted to do any kind of importation (other than for industrial purposes), it had to be done through a company entirely owned by Egyptians. Non-Egyptians were not allowed to invest in importation companies. The new amendment, which is very long awaited, allows for 49% ownership by non-Egyptians. This is a great thing in terms of attracting investment to the country, because as a foreign investor you could have 49% ownership and then get full control through a Shareholders’ Agreement, assuming all parties agree to it.

When issuing an amendment to an existing law, the government must give a grace period allowing existing companies to reorganise their structure to be in compliance with the law. It is clear that one anticipated by-product of this amendment is that companies working in this field will be financially incentivised to incorporate as, or transform into, JSCs. For example, one item in this amendment states that if an LLC wants to do importation activities, its share capital needs to be at least 2,000,000 LE, fully paid. The rationale behind this is that the government doesn’t want an entity set up with 10,000 LE to start importing for $1,000,000; speaking more broadly, they want to limit importation as much as possible.

It was about five years ago, working for a fund preparing to invest in a start-up, that I started to realise the extent to which both entrepreneurs and investors are in need of clear frameworks to define and govern their working relationship, to protect both parties. As a start-up founder, you may believe that you do not have the money to hire a good lawyer, but if your company expands as planned you will regret not hiring one at the beginning.

In this situation, the founders did not hire a well-established lawyer utterly committed to ensuring that their rights were protected. They signed a Shareholders’ Agreement containing a call option, an agreement which gives the investor the right to buy shares (or bonds, stocks or other commodities) at a specified price within a specific time period or as a result of specific triggering events. In this particular case, the shares were priced at nominal value (their price when first issued rather than their actual market value at the time of being called). Two years after signing the Shareholders’ Agreement, the investment fund called

the shares. Although the founders contested, there was very little they could do. They had effectively signed away their rights.

corporate structure – what are the options?

Before communicating with prospective investors, any start-up would be well advised to seek good legal counsel. As far back as the ideation phase, the founders of a start-up should be asking themselves what the corporate structure of their entity is going to be. Whether the entity is established as a partnership, a limited liability company or a joint-stock company will have implications in terms of both financial requirements and broader issues of control.

The key difference between the partnership structure and that of either a limited liability (LLC) or joint-stock company (JSC) is that, in the case of the LLC or JSC structure, the shareholders are only liable to the extent of their investment in the company.

yasir A. ElakhdarSenior Associate, Zaki Hashem & Partners

SOME kEYlEGal ISSUES

GOvERNINGINvESTOR-INvESTEERElaTIONS

22 | Q3 2017 | law ToDay



yasir A. ElakhdarSenior Associate, Zaki Hashem & Partners

SOME kEY lEGal ISSUESGOvERNINGINvESTOR-INvESTEERElaTIONS

Within the same amendment however it is stated that JSCs that have 5,000,000 LE issued capital – not even paid capital – can undertake importation activities. So, by law, you can set up a company with 5,000,000 LE issued capital, of which you pay 25% in the first year (1,250,000 LE, which is lower than what an LLC would have to pay upfront) and then you have three years to complete the payment. Furthermore, a restriction was added that newly established LLCs, before applying for an importation licence, need to be registered with the Commercial Registrar for at least one year. No such restriction applies to JSCs. So, for multiple reasons, any importer would choose to work with a JSC rather than an LLC.

JSCs can then of course list on the Egyptian Exchange, which is desirable from multiple perspectives. The government definitely wants more companies doing IPOs.

what are other main considerations, from the investors’ side?

The angel investors or funds that we work with have a good awareness of structure; they come to us knowing what they want and often already have standard forms such as term sheets, ready for use in such transactions. Any legal expert looking at the terms and the clauses found in the Shareholders’ Agreements that come from angel investors or funds would know immediately that they are the recipients of good legal advice. Invariably they will include terms that no lay person would think of, such as how to address the issue of anti-dilution and how a capital increase could be undertaken. Often one of the key issues to address will be if the company needs to expand but the founders don’t have the money to do a capital increase.

Anti-dilution clauses are important for protecting the interests of the entrepreneurs or start-up founders. If, for example, an investor acquires the majority in the company (as is likely to happen), he or she will have wider room to exercise control, including the right to increase the share capital for expansion purposes. But if the capital is increased, everyone in the company needs to put in more cash to finance this capital increase pro-rata to their shareholding percentage of the company. In such a situation, normally founders cannot keep up with institutional investors because they don’t have the funds to do so and so eventually the capital increase will be almost fully financed by the institutional

investors. Thus, the percentage of shares held by the founders will be diluted.

This is exactly what happened with Facebook in the famous case brought to light by the film The Social Network and this is why Eduardo Saverin went into a dispute with Mark Zuckerberg. Zuckerberg and others diluted Saverin to 0.03% when he had originally had a 30% stake in the company.

An anti-dilution clause prevents this from happening, stipulating that if an investor wants to do a capital increase, he or she will finance the share of the founders, so that they don’t get diluted. Alternatively, any future share capital requirement could be governed by a business plan, detailing the manner in which company business will be run for an allotted period of time. Any approval of the business plan will be a matter to which the founder will need to agree in a properly convened Board meeting before adoption. The founder ought not to accept the business plan unless he is confident that he can finance any future share capital embedded within it.

Whether or not the issue of dilution really matters is highly dependent on circumstance. For someone who is a 5% shareholder, it doesn’t really matter if they get diluted, as it has no bearing on their relationship to the company in terms of control (they had no control over the company to begin with).

For a shareholder who originally had a 51% vote and then got diluted to 48%, the situation is very different and highly problematic, as this shareholder will have then lost his or her majority and control. Likewise, for a shareholder who originally had a 34% stake (which constitutes a blocking majority under Egyptian law) and then got diluted to 32%, the situation would also be critical. So what is important to remember is that an investment will remain as it is in terms of valuation, but in terms of control or blocking, anti-dilution is an important concept.

Fundamentally, what are investors looking for when they invest in start-ups?

Generally speaking, they will want the following:

1) Majority

If an investor is not going to get a majority, he or she will need a strong and very well prepared Shareholders’ Agreement, giving minority rights protection. In this kind of situation, they may be willing to give operational control over to the entity’s founders but retain the right to monitor them. So, for instance, any such agreement would include clear KPIs for the founders which, if they failed to achieve, would give the investors the right to remove them. Other clauses that may be in place would include the stipulation that the founders cannot take strategic decisions without the approval of the investors, the necessitating of plans and budgets in accordance with which the business will be run, restrictions on share transfers and the right of first refusal, drag-along and tag-along.

Drag-along rights say that an investor with 40% ownership might have an agreement that if someone is interested in acquiring up to 90% of the company in which they are invested, this investor has the right to urge other shareholders to sell with him or her.

To contextualise, the reason most investors like to have at least a 51% stake in a company is because it is easily saleable: you can market 51% because it affords you control in important areas. With only a 40% stake people are less likely to look at investing in the company, especially a start-up where the know-how is with the founders, because they would not have any form of absolute control. Drag-along rights offer a measure of control, in that they enable investors with a significant stake (but not a majority) to influence share sales and increase the prospect of attracting other investors, should they wish to sell.

Tag-along rights almost represent the inverse. A minority shareholder who knows that the majority shareholder is selling their shares almost certainly won’t want to remain as a minority shareholder with someone they don’t know. He or she therefore has the right, in lieu of exercising their right of first refusal, to tag their shares with those of the majority shareholder and sell them. In this situation, the majority shareholder has an obligation not to proceed with the sale, unless he or she also includes the shares of the minority shareholder.

2) Intellectual property This is somewhat dependent on the industry, but particularly when investing in a tech company most investors will want to

know that the copyrights are owned by that company. There have been incidents where people invested in companies only to later discover that the company’s trademark was registered in the name of the founder, instead of the company. So all IP rights will need to be looked at prior to investment and this should be part of the legal, financial and regulatory due diligence undertaken.

3) Shareholders’ AgreementThis is very important from the perspectives of both the investors and the investees or founders. Ideally it should also be accompanied by a business plan and an annual budget, with clear KPIs. Many investors will want to put stock options in place for founders and employees, as a means of incentivising hard work and giving a sense of security and ownership. 4) Clear understanding of company purposeThey need to understand what the company is making or doing and to have a plan if the founders do not stay with the entity; without this they will feel that there is nothing safeguarding the company (and safeguarding their investment).

So how do start-up founders ensure that their rights are protected?

It is really very simple; as the founder of a start-up, you need to work with a good lawyer. Undoubtedly many law firms are starting to recognise the importance of supporting the ecosystem and we, for instance, do a lot of pro-bono work for entrepreneurs. A number of lawyers and financial advisers also set up arrangements – so-called “sweat equity” – whereby they offer legal services in exchange for, for example, 5% equity in the company.

This is obviously not just the case for start-ups; it applies to everyone running a business. I have seen many people starting joint ventures with old friends and family, never imagining that anything will go wrong and believing that they can cut corners and save costs by hiring a lawyer who is not experienced. The disputes arise when the business starts to expand, as the stakes are higher. It simply makes sense to protect yourself and your business interests, not to mention the working relationship, by having a clear legal framework in place.

Anyone who has ever founded or operated a start-up knows that fundraising and building good, clear, strong relationships with investors is key to the framework upon which the success of their business rests. Start-ups often face difficulties with legalities when it comes to raising funds and a start-up will generally reach a certain phase in its life where it begins to approach venture capitals (VCs) and investors for its series A funding.

Once such a phase has been reached and preliminary funding has been approved, the VCs will generally begin the process of investigating the legal structure of the start-up and ensuring that it accords with what they, as investors, consider to be a sound framework to guarantee the security of their investment.

In order for both sides to protect their interests, it is worth understanding the intricacies of these agreements, so as to ensure that everyone is protected. Ideally, the framework created would guarantee a win-win situation for both sides.

The investigative process covers the following:

Financial and Legal Due Diligence:

This is a formal process during which the disclosure of key information takes place. The start-up will be required to disclose all its financial records dating from the time of incorporation, including profit and loss, expenditure, bank accounts, payroll and client contracts. This enables the VCs to gain an understanding of the financial position of the company and its liabilities.

With regard to legal due diligence, the start-up will be required to disclose all information and make available all company documents, including Articles of Association, the Directors’ Register, Shareholders’ Register, any registered intellectual property (trademarks, copyright) and the Board and shareholders’ minutes since incorporation.

It is important for start-ups to be fully transparent and forthcoming during this process, as later the company will sign warranties attesting to the fact that all relevant information has been disclosed.

Start-ups often worry that such information may be not be kept secret, however the VCs will send a term sheet for signature which highlights the main terms agreed upon; within those terms there will be a confidentiality clause which states that the parties undertake to keep all information related to the transaction and due diligence private and

confidential. The VCs’ lawyers and auditors, who undertake the due diligence, also have an obligation to keep such information private and confidential. It is therefore not only advised but wholeheartedly recommended that owners of start-ups be fully transparent throughout this process, in the full knowledge that their rights will be safeguarded. Shareholder’s Agreement:At the beginning of the process, the VCs or investors will have discussed with the founding team their collective preferred corporate structuring, whether this be an offshore holding company in the BVI, Mauritius or the Cayman Islands, or perhaps a local holding company. It could be that the start-up already has a good and sound legal structure in place. In any case, a Shareholders’ Agreement will be required, to formalise the structure and, again, to ensure that the rights of both parties are respected. The Shareholders’ Agreement (SA) or Shareholders’ Subscription Agreement (SSA) is one of the most important documents in any investment transaction. As such, we would always recommend that the founders of any start-up begin to familiarise themselves with the terminology and main aspects of a SSA prior to the formal inception of their entity.

There is always confusion as to which provisions belong to the SSA and which to the Articles of Association (AoA). To clarify, the AoA constitute the bye-laws of a company, governing its day-to-day management, and they include any limitations on the company's objects. Common provisions in the AoA include:

• Provisions relating to separate classes of shares and their respective rights and provisions relating to the variation of those rights;• Procedures for the issue and transfer of shares (including pre-emption rights and restrictions on transfer);• Provisions for the notice of shareholder and director meetings and their proceedings (including quorum and voting);• Provisions for the appointment of directors and (if appropriate) the company secretary, the powers of the directors and how they are to be exercised, and how directors' conflicts of interest are to be managed;• Provisions permitting the directors to share information belonging to the company with the shareholders that nominated them for appointment;• Restrictions on borrowing powers and certain other restricted matters.

The confusion frequently arises as to which provisions go into the AoA and which into the SSA. There are no hard and fast rules, but the divisions outlined below are often followed:

• Object and scope of the venture. This is normally found in the SSA.• Capitalisation and funding. This is normally found in the SSA.• Board composition and management arrangements. This is normally found in the SSA.• Distribution of profits (including dividend policy). This is normally found in the SSA.• Provisions for dealing with deadlock. This is normally found in the SSA.• Termination provisions. This is normally found in the SSA.• Restrictive covenants. This is normally found in the SSA.• Rights to appoint and remove directors. This is normally found in the AoA.• Quorum for board and shareholder meetings. This is normally found in the AoA. • Procedures for shareholders' meetings. This is normally found in the AoA. • Division of shares into classes. This is normally found in the

AoA.• Chair's casting vote. The chair's casting vote at shareholder meetings is commonly contained in the AoA.• Notice provisions. This is normally found in the AoA.• Share transfer provisions (including pre-emption rights). This can be in either the SSA or AoA.• Minority protection (veto rights, tag along rights and so on). This can be in either the SSA or AoA.• Drag-along rights. This can be in either the SSA or AoA.

In the event of a conflict between the SSA and the AoA, which document is likely to prevail?

Although in some circumstances the SSA can be registrable under certain jurisdictional laws as provided in the Company Act of 2006 in the UK, which would eliminate any conflict issues, it is generally more common that the Shareholders' Agreement would prevail and be enforceable between the parties, without the need for registration. If the SSA stipulates that, in the event of a conflict pertaining to the AoA, the shareholders will use their voting powers to amend said AoA, the requirement of registering the SSA does not arise because this SSA does not of itself amend the AoA and would not have needed to be passed as a special resolution had it not been agreed by all the shareholders.In practice, the circumstances of the conflict and the interpretation of the SSA and AoA may determine which document takes precedence.

In Dear and Griffith v Jackson [2013] EWCA Civ 89, for example, in which a Shareholders' Agreement obliged the parties to ensure that a shareholder would be periodically re-appointed as a director but the Articles of Association permitted the other directors to remove him, the Court of Appeal said that in fact there was no conflict. The Shareholders' Agreement was to be read as if it did not purport to affect the removal provisions in the articles (especially as some of the directors had no knowledge of the terms of the Shareholders' Agreement and were entitled to take the articles at face value and to assume that the removal article would work).

As such, the founders of start-ups need to also be aware of the numerous restrictions and duties to which they may be subject under Company law, insolvency and other legislation – particularly in the case of their being directors. Principally there are seven general duties of which we advise founders to be aware if they are appointed to the position of Director. These are:

1. To exercise reasonable care, skill and diligence;2. To promote the success of the company;3. To act within their powers;4. To exercise independent judgement;5. To avoid conflicts of interest;6. To declare any interest in a proposed transaction or arrangement;7. Not to accept benefits from third parties.

Finally, where an investment is to occur in an offshore holding company, we always recommend that the start-ups ensure that any transactional documents such as the AoA and SSA are checked to ensure that they have been constructed in compliance with local laws, through a local lawyer.

Understanding SSA and AoA terminologies is an essential skill for start-ups, particularly when it comes to negotiations with VCs or investors, so as to protect their interests. As such, start-ups in this situation may be well advised to seek the support of a law firm that has experience in this field.

Professional DeveloPmenT


SHaREHOldERS’aGREEMENTSfOR STaRT-UPSSHERIF HEFnIPARTnER, LEVARI LLP

HealTH & HosPiTaliTylaw in foCus


LT: you famously changed course, from a way of life where there was a strong element of comfort, security and predictability, to one where you are constantly discovering and pushing your limits. your narrative makes it sound as though that was a natural or self-evident choice to make. what would you say to people who struggle with making decisions or choices of that sort?

oS: It was natural and self-evident but by no means easy. After graduating from university, I worked in investment banking in London and Hong Kong for several years. I ended up leaving that sector, first to pursue my dream of travelling for a year, and then again to do my MBA. I then went into private equity, before leaving that to found Wild Guanabana. Every time I made the decision to leave, it wasn’t an easy one.

So now I know that the way it works for me is that I establish what I want to do, I analyse all the risks so I can try to mitigate them as best I can and then I just leap. When I take the decision, I am far less prepared than people may think but when I actually reach the starting line I am far more prepared than people may think. This is true for work and for any project I undertake. If my heart is in it, I know I will have the motivation and the drive to put the work in.

It does get easier with time, but if you are leaving your job with all its comforts it is not because you know you’re going to succeed at what you are planning to do next. You do it because you think you’ve got a good shot at succeeding, but still you have to embrace the fact that you may fail and that even if you do, you are still better off for having tried.

Especially with entrepreneurship and especially when you are building a value-based business, things often take much longer than you think.

What bothers me about entrepreneurship in the region is that I feel many people make plans to found and build their businesses only to sell them off, which I see as being counterintuitive. Ideally you should be building a business because you believe it adds value or solves a certain problem, pouring your passion and drive into it. Yes, you worry about your bottom line because you need to sustain and grow your business and attract the best people, but generally speaking you shouldn’t be starting a business primarily for the purpose of making amazing profits. That may come, but with time. Even people like Bill Gates didn’t build their businesses primarily to become multi-billionaires, but because they had a burning interest and desire to work on a particular area that interested them.

LT: you have said that artists, adventurers and entrepreneurs all share something essential in their DnA – and perhaps it is that willingness to take risks. Do you think that a society of entrepreneurs is possible or desirable?

oS: Honestly the trend towards glamorising entrepreneurship is dangerous, because there is a huge amount of risk in it and it’s not for everyone. Increasingly, people regard starting their own business as a rite of passage, but it doesn’t work that way. Different people have different skill sets and whereas some people are well equipped to be in that very uncertain, difficult period where you start the business, others are much more suited to growing a company that has already been established.

Often the investment community will not invest money in an entity unless it can demonstrate that significant returns will be generated within a particular time period. So an entrepreneur may have set up a great business that adds a lot of value, but structurally it is medium-sized. Many investors will be reluctant to invest in such a business unless its model changes to generate higher returns, thus putting the onus on the entrepreneur to be profit-focused above all else. But this

does not necessarily work, for the entrepreneur, the business or the broader community.

To give a personal example, if I sought to scale my business at faster rate than it would naturally grow at, its core value proposition would change - as would my reasons, desire and motivation for working on it. This commercialisation of business, which stems from our global society prioritising endless consumption, is neither sustainable nor feasible. Our finite resources on this planet are being depleted massively; climate change; food shortages and population explosions threaten our very survival. We have to redefine success so it is not based purely on profit but more focused on adding value and solving real problems.

A key part of this necessitates that people move away from the idea that everything is going to be quick, easy or glamorous – or indeed that we can all conform to an artificial one-size-fits-all model. What I want to do is try to make a difference. If I can do that and make money, great, but it is the work itself that motivates me.

LT: From a practical point of view, what do entrepreneurs need more of?

oS: I am very pro-environment and I believe business owners, and any systems designed to support them, have a responsibility to think about environmental sustainability in their work. There should be incentives in place for entrepreneurs who choose to start environmentally conscious businesses or social initiatives. Tax breaks, greater access to funding, programs with particular support and mentoring and networking would all be helpful.

As a nation, we don’t really know what our needs are. There should be careers counselling and guidance for young people as part of an integrated system that understands the country’s real needs. If we identify that we need more doctors, engineers or technicians, the entire education system should then be geared towards meeting those identified needs, producing skilled people ready to go into those fields.

In Egypt, there are some examples of entrepreneurs who have done amazing things and who are now celebrated at the international level. Some of these people are trying to run socially conscious, sustainable businesses but, in my view, not enough.

LT: what are you most excited about, in terms of your future plans?

oS: I have a number of projects, both personal and professional, that are ongoing and about which I care deeply. But Wild Guanabana is still my main focus and our primary reason for existence is to help people reconnect with nature. As human beings, we live lives that are really far removed from nature and as such we end up losing something of ourselves. Reconnecting helps you to do your best work, better understand how to proceed in your life and be more fulfilled. Every person we can help to experience this on any level is another incremental reason for us to keep going.

Wild Guanabana has a recently established brand called Muricata, which focuses on working with children aged six to sixteen. Now, Muricata is moving from being an entity that, for example, arranges school trips, to becoming almost an alternative education business. Children are learning how to build character and values, to recognise that they do not exist in a silo but are part of an interconnected world and society, and to acquire the skills as well as the knowledge to be part of that.

The beauty of starting a value-based business is that it can really evolve and change – and very quickly if you allow it. So I am very excited about seeing where and how that develops.

28 | Q3 2017 | law ToDay

Entrepreneur and Founder of adventure travel company Wild Guanabana, Omar Samra epitomises for many people the risk-taking mindset so prized within the entrepreneurship sector. He gives his views on the importance of balancing risk with the careful creation of a sustainable and value-based business.

BORN TO BEWild

TeCHnology & iPlaw in foCus


It takes a certain type of individual to be an entrepreneur. You have to be a risk taker and you have to be, in one way or another, comfortable with pressure.

It comes with the job.

While entrepreneurs are eternal optimists who are great at planning for the future when everything is going well, it is the same high-risk high-reward attitude which makes the entrepreneur less likely to plan for the worst.

Lawyers tend to be the opposite. Lawyers are conservative by nature and plan for the worst. Both occupations, lawyers and entrepreneurs, produce individuals who need to be comfortable with pressure.

As a disputes lawyer I see the ‘worst’ every day. Clients who thought everything was going to work out smoothly, but became disillusioned when things went wrong and are now bogged down in lengthy and demoralizing legal battles. The one thing you hear over and over again from clients is ‘we didn’t think it would get to this’.

This should not come as a surprise when the market is awash with dispute resolution mechanisms (and contracts in general) that are at best not optimized and at worse disadvantageous.

The point of this article is to highlight, in my experience, what the best dispute resolution mechanism is for the average entrepreneur in Egypt.

Dispute resolution is called DR in legalese and, as the title of this article suggests, there is something called ADR or alternative dispute resolution. ADR is an alternative to the default dispute resolution mechanism. Generally, the default situation is that whenever things go wrong, you go to court. But the courts, in Egypt and abroad, can be costly, time-consuming and, most importantly, non-specialized.

If an app producer goes to court in Egypt, he or she needs to explain to the panel of non-specialized judges (who usually deal with run-of-the-mill civil claims) what their product is in technical terms. After that, they need to convince the court why they are owed damages or, conversely, are not liable.

In practical terms, this is very difficult in Egypt. The courts are swamped with civil claims. The average judge may have to get

through sixty cases a day. As a result, the average civil claim hearing only allows for five minutes worth of oral pleadings per session. On a good day you may get half an hour.

That’s at best half an hour and at worst five minutes to explain to a panel of usually senior judges what the product is and what your case is.

It is difficult.

Compound this with the fact that judges are usually selected straight from law school with very little business knowledge and may not really understand, or want to understand, technological or innovative issues. To make matters worse, judges, like lawyers, tend to be conservative and resistant to innovation.

Don’t forget, while you plead for five to thirty minutes, your opponent will be doing their level best to destroy whatever it is you’re arguing.

The average civil claim in Egypt takes five years to reach an enforceable judgment. True, the administrative costs are usually low, but a good lawyer costs money, and five years of retaining a good lawyer, or firm, adds up, even if it’s before the courts. So normal DR is not pretty.

That’s why the legal system came up with ADR, which encompasses a whole range of dispute resolution mechanisms like mediation, conciliation and arbitration and a variety of other ways to fix legal problems without having to go to the courts.

Now ADR is usually more expensive than going to court (especially arbitration) but it saves time. The average arbitration should take a year or two to complete, and then there is usually another year for enforcement. However, once you have an award the losing party is usually willing to settle to dampen the loss in return for speedy and consensual enforcement.

In mediation or conciliation, where the parties sit down in the presence of a trained mediator/conciliator, you can achieve concrete results in just a few days.

The most important advantage of ADR is that it gives you time to argue and explain your case. Arbitration, the go-to ADR process, is still antagonistic. Two sets of lawyers battle it out, but not in court. They do so in front of a panel of arbitrators,

whom the parties select. The arbitrators can be engineers, app developers etc… but they are usually qualified lawyers who have experience in the sector subject to the dispute. This combines the legal expertise required with the technical expertise desired.

Most importantly, the parties can take as much time as they want to plead their case. A full day of sitting in front of the panel to explain the case (versus the thirty minutes at best allocated in court) is the norm. I have personally participated in hearings which have lasted two weeks. There are probably cases with longer hearing sessions. This all takes place at an ADR center, or hotel meeting room, where the parties are comfortable and able to organize and store their documents. You can even use PowerPoint to hammer your message home. Courtrooms are high stress, and not a fun place for witnesses. There are also no technology facilities.

As you can imagine, arbitration, as explained above, is expensive. It is not for everyone. The arbitrators, and the lawyers, are paid hefty fees. But in general, ADR gets you more bang for your buck.

Whereas in court, strategy is usually procedural and you can win or lose a case using procedural tactics (filing objections, contestations and the like), in ADR people get down to the meat of the matter and discuss with specialized individuals the substance of the case.

Some caveats. ADR is usually only allowed in civil claims, and should be selected when drafting contracts with commercial counterparties. The parties entering into the contract can select, and mix and match options to achieve the desired result. The entrepreneur must decide, early on, when he/she is entering into their contracts, whether they would like low-cost, high time, low-impact or high-cost, high impact, medium time.

Knowledge is a weapon, and the entrepreneur, when adequately armed, may navigate the market more assuredly. Which is why I recommend people entering into ventures to request legal advice on these issues early on. A small consultation cost in advance may save time, cost and bother later on. In fact, instead of thinking of legal expenses as a cost, you would be better served thinking of them as an investment or even insurance. As they say, an ounce of prevention is worth a pound of cure.

30 | Q3 2017 | law ToDay

Adam El ShalakanySenior Associate, Shalakany Law office



very conscious of this and that the Ministry of Trade and Industry has just changed the licensing law with a view to facilitating the process of obtaining appropriate licences. This has really been the biggest bottleneck, because licensing is all about municipalities and that is where you have a lot of issues and challenges.

For tech start-ups the situation is quite different. For those seeking venture funding, usually they need to include specific terms in their term sheet that are required for minority shareholders’ protection. Egyptian law has not been designed to support these term sheets, for example offering stock options or liquidation preferences. I know that the Ministry of Investment and International Cooperation is working to resolve this situation, but this is why currently many tech start-ups incorporate offshore when they get an investor.

This is a huge loss because then ultimately our start-ups are being sent to other countries, we are not benefitting from their taxes, and as they grow bigger they will be based elsewhere. Rather than listing in the Egyptian stock exchange, they will go to the BVI and Cayman Islands, Delaware, Dubai or Europe – and these are high-value start-ups.

So for the general entrepreneurship environment the main issues are really related to licensing, taxation and dealing with government bureaucracy, but mostly after incorporation. For tech start-ups, their issues are more related to receiving investment, minority shareholder protection, implementing term sheets, and being able to put all of this in the legal context in Egypt.

LT: can the legal ecosystem – primarily private practice lawyers and law firms – help with these developments?

AI: Yes, and in fact this has actually been framed as a request from the government: you need to tell us about the specific points that you need the law to address or offer to companies, so that we can work out how to incorporate these into the law or policy framework.

We really need to undertake a legal study of how you can add specific terms into the legal or regulatory framework to incorporate a high-growth innovative tech start-up that is funded by a VC. This is a study that probably the World Bank will need to support at some point, with the involvement of a law firm, and then present to the government. If lawyers were to, for example, look at term sheets that currently cannot be implemented and work out specifically what types of legal changes need to take place, it would be extremely useful and it would position them very well. In my experience, government representatives such as Dr. Sahar Nasr, Minister of Investment and International Cooperation, are very supportive of the entrepreneurship space. If the government

was presented with such a study, it may well discuss the findings in the next legislative round. At the very least it could spark a national discourse within the technical – governmental – legal community, which would be another positive step.

LT: Are there other countries we could learn from in terms of applying legal reforms to create a thriving community of entrepreneurs?

Of course there are countries with different legal regimes, but we need to be clear about what we are actually trying to achieve in terms of learning from other jurisdictions. Countries that serve as safe havens for different companies and are widely perceived as having a loose regulatory framework, such as the BVI and Cayman Islands, are not the places that I believe we seek to replicate.

Dubai is currently trying to create a particular legal regime, perhaps as a supporting environment for entrepreneurship. The Dubai International Financial Center (DIFC), a Federal Financial Free Zone, is an example of a regulatory island targeting specific types of companies, but I don’t know how applicable this is in Egypt. We have had special economic zones created in Egypt and it has been suggested that we create something like this for start-ups – a start-up city with a very specific regulatory regime. I don’t know if that’s what we want, but it’s up for discussion.

Many European and Asian countries have introduced reforms to allow companies not only to start, but more importantly to remain in their country of origin. This is perhaps where we could learn and adapt relevant aspects of their approach.

32 | Q3 2017 | law ToDay

LT: How would you characterise the entrepreneurship sector or environment in Egypt?

AI: My definition of a start-up is a young company, usually in its first three years of operation. They come in different shapes, formats and stages. Many people, when they talk about entrepreneurship, are talking about technology start-ups that are high impact and high growth. But a start-up includes all kinds of businesses that are starting; it could be a traditional business focusing on manufacturing, an informal business or a micro-enterprise. Most of the discourse in the ecosystem focuses on high growth, innovative, tech-based start-ups; however, the broad term “entrepreneurship” should apply to any business that is just starting.

In terms of the tech entrepreneurship ecosystem, we have a solid growing and emerging market. There are an increasing number of organisations supporting start-ups that have been doing good work over the last five years. The number of start-ups is growing and so is the ecosystem, with accelerators, incubators, VC funds, co-working spaces all becoming stronger and more impactful.

Babson Professor Daniel Isenberg has created a useful definition of the factors that comprise the broader entrepreneurship ecosystem in any given city, as part of the BEEP (Babson Entrepreneurial Ecosystem Project). He looks quite broadly at the ecosystem, including the regulatory environment, and its ability to provide support to entrepreneurs, as well as the financial environment, government policies, supporting infrastructure and culture.

So looking at Egypt within this broader framework, I think we’re actually quite behind. Information gleaned from conducting the Global Entrepreneurship Monitor report, an expert survey, suggests that we are in the bottom 10% globally in most factors. Why is this? Because our policies and culture in general, historically, have not been business friendly. There is a prevalent, negative, cultural cliché of the corrupt, greedy businessman and

there are good reasons for why this image has been implanted in people’s minds, but it is still not conducive to creating an environment where businesses can thrive. Our educational environment is very traditional and does not support innovation, creativity or any of the behavioural practices conducive to entrepreneurship. Our infrastructure tends to target big business rather than small, emerging businesses. Our culture does not support experimentation, failure or risk taking.

If you add these things up it means that the environment is not that supportive of entrepreneurship, so, compared to other global markets, the number of new businesses established is low and private sector penetration is low. This needs to be changed and it is clear that things are happening. The government is trying to shake things up in a positive way; for example, the Minister of Education is doing a great job trying to alter a very rigid and traditional educational system. So it is not a question of blaming people; a lot of these issues are structural and historical, and they are difficult to change, so it’s a long-term transformation. However, there are small steps that can be taken over the short-term to try to reduce bottlenecks and change the culture and we can see some of them taking place: a TV show that celebrates entrepreneurship; a start-up competition; a change in policy; the introduction of new curricula in universities or schools. The burden should not be on any one entity but these are all vital steps in the right direction. LT: Do you think there are changes to the legal framework that could better help start-ups to grow or entrepreneurship to thrive?

AI: Here once again I would differentiate between the tech sector and start-up businesses in general. If we look at start-ups in general, it is relatively easy to start a company right now. Most companies face challenges when it comes to licensing, rather than during their period of registration. I know the government is

Dr. Ayman Ismail, Founder and Director of the AUC Venture Lab, is renowned for leveraging his wealth of expertise in academia, business, technology and entrepreneurship to support Egypt’s start-up ecosystem in a variety of ways. Here he discusses with Law Today how the legal and policy framework could be more supportive of an environment that is so replete with potential.

In-Depth perspectIves on the

ecosystemAymAn IsmAIl

Many people, when they talk about entrepreneurship, are talking about technology start-ups that are high impact and high growth. But a start-up includes all kinds of businesses that are starting; it could be a traditional business focusing on manufacturing, an informal business or a micro-enterprise.

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34 | Q3 2017 | law ToDay

If you talk to any foreign investor and ask what they want from the environment they are investing in, they will tell you:

1) Clear rule of law: Investors want to be operating within a legal environment where the application of the rule of law is very clear and enforceable. This is a much broader issue than making a reform to any particular law. It is about having a legal framework that is consistent, efficient and technically capable – and it’s the number one issue for any international investor of business coming to Egypt.

2) Flexibility: Investors want a flexible legal environment that will allow them to put in place all the terms that they want to incorporate, e.g., stock options and minority shareholders’ protections. This will allow the business to structure itself so as to fit within the VC model. If you have a fund that is investing minority shares but they want to take additional steps to protect their investments, such as having additional control rights and anti-dilution preferences, they want these to be embedded in the contracts and legally enforceable.

3) Foreign Direct Investment (FDI) rights: Many countries have additional protection measures in place for foreign investors because of international legal requirements, international trade and international treaties. Because of this, a local (in this case, Egyptian) investor wanting to invest in a local company may

set up his own company offshore and then come back as an FDI to invest in the Egyptian company because he wants to enjoy the same kinds of rights and protection as a French, German or British company coming into Egypt. He may then advise the Egyptian company he is investing in to incorporate in the BVI, meaning that ultimately the BVI would benefit from the Egyptian company and Egypt would not benefit from the Egyptian investor or the Egyptian company as it should. This does happen in many other countries. It is not an Egyptian phenomenon but rather becoming a global one; however, there are legal reforms that may limit or discourage this phenomenon.

So how can we change this, within the Egyptian context? I would identify three related steps.

Firstly, enable the rule of law so that people have more faith in its applicability. This is a very broad concept but it is a crucial part of overall economic development.

Secondly, introduce more flexibility in the Investment law and the Company law. This is a requirement for the niche tech market; it is not necessarily a requirement for the whole entrepreneurship sector.

Thirdly, try to provide incentives for companies to remain local rather than incorporating offshore.

In-Depth perspectIves on the entrepreneurshIp ecosystem: Dr. AymAn IsmAIl

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equally with all the other guests on the list, or with selected guests.

Step 7: Once the payment has been finalised, the venue will receive a confirmation of the payment and automatically a QR code will be sent to all the outing guest list. This allows them to avoid queuing. Once you arrive you simply show your QR code; it is scanned at the door and you don’t have to wait while the venue checks your name on a guest list. From the venue’s side, you switch from being an expected guest to an arrived guest. Meanwhile, all the other people in your group get a notification that you have arrived.

Step 8: After you have finished the outing, the deposit paid will be reduced from the venue bill. The next morning you can access your outing history, so as a guest you can evaluate the venue based on criteria such as the quality of food, music, service and sanitation.

We have worked hard to really facilitate the process, with a two-way evaluation system and a payment process designed to save our users time and effort. The algorithm we created for the payment was actually amongst the most complicated and challenging parts of designing the app.

There are other integration processes that we are still working on, including one called “drive home safely”, whereby if you feel at the end of a night out that you cannot drive yourself home, you can pick a ride through the app. This will work through integration with other existing transport apps.

LT: you are a man with extensive experience in starting businesses and supporting start-ups. What are the different things that need to be taken into consideration when starting a business?

RF: The first thing is to find the right people. Whether you are an investor or a business owner, you have to believe in the people

who are building the business and they have to believe in the product. The people building a business have to be investing their time and energy in the right way to achieve results.

You need to think very carefully about your budget and I stress this point. The financial implications of starting a business if you don’t have the budget for it are huge and you run the risk of profoundly damaging both yourself and the business if you get it wrong. Don’t be too optimistic; even the best businesses are extremely difficult to build, particularly when it comes to revenue generation. When you budget, you need to account for contingency expenses and for the unforeseen. Try as much as possible to underestimate your revenue and overestimate your expenses. This way, you will communicate to the investors and shareholders the worst, mid and best case scenarios and manage their expectations. This is crucial for building and maintaining trust and a good relationship with your investors.

Once the business has reached a certain threshold, you need to focus on marketing. Here, timing is crucial. I would not recommend starting the process of marketing too early. Don’t try to market for your product before you can demonstrate your added value and deliver on the implied promises of your marketing campaign. So, if you start marketing three or four months before launching your product you could be burning yourself, because you will have set up expectations that you cannot deliver on. If you do it one or two weeks before launching, synchronising with your launch, it will almost certainly be more effective.

In the end, you cannot control the market variables and gaining and maintaining the market share as a start-up, in any industry, is difficult. Fundamentally, to do this you need to ensure that you: 1) Are creative and constantly looking for new ways to develop your product and add value; 2) Never compromise on quality; 3) Always have an edge over your competitors and predecessors.

Ramy Fahmy, Founder of Hayle Consulting and Chairman of Law Today, is a serial entrepreneur with particular expertise in planning, management and financial services. He talks about his latest initiative, My A List, an app which is set to revolutionise Egypt’s nightlife scene.

36 | Q3 2017 | law ToDay

LT: what was the drive behind creating My A List?

RF: For so long, I have witnessed the phenomenon of people in Egypt trying to make reservations in different venues and facing difficulties. Frequently you call a venue, you may or may not get an answer, and when you do get through you are asked a series of questions: what your social media platform profile is, how old you are, whether you are a couple or single. Sometimes the person you speak with promises to get back to you and they don’t. Sometimes they come back to you with a rejection because they couldn’t find you on social media. I, for example, don’t have a Facebook account. If you are trying to make a reservation for a large group of people, you will often be required to pay a deposit in person, which feels unnecessarily time consuming.

I sat with myself and thought about the issue. There are apps that already exist, but they effectively operate as a concierge service: they take your reservation details, call on your behalf and make the reservation for you. I felt that there must be an easier way to manage the process, creating a direct link between guests and venues, without the middle man.

LT: So what for you is the key thing you want to achieve with the app?

RF: The whole point of My A List is to facilitate the reservation process for guests and make it easier for venues to accept reservations without having to do a background check on social media, to check who is coming into their venues. Venues also face an issue that is little-understood from the point of view of the guests. Often when a group of people is going out they will reserve in more than one place, to make sure they secure a reservation somewhere. Then they will only go to one place on that night. So venues in their turn suffer from this, often overbooking to guarantee a full house, knowing that there will be a 30-40% no-show rate. But if the anticipated no-shows all turn up, the place will be overbooked and crowded and this is

obviously problematic. So I wanted to create an app that would help both sides.

LT: So how does it work?

RF: What we have created is a fully-integrated app that aims to take you through the whole reservation process. It has two interfaces – one from the guest side and one from the venue side.

Step 1: You have the idea of going out, so you create an outing of which you are the admin. You choose the venue from your home screen, as well as the date, time and entry/table type.

Step 2: The app allows you to choose who you want to share your outing with from your friends’ list, so when you suggest an outing, they receive a notification through the app and they can then accept or reject joining the outing. If they reject the invitation, they are out of the outing list. If they accept, you get a notification that they accepted.

Step 3: You send a reservation request to the venue with the guest list.

Step 4: The venue receives a notification with all the outings requested from it. Whomever is managing the reservations from the venue’s side can go and check the profile of each person attending any outing, on My A List itself. There are four distinct areas on which a guest could be evaluated: punctuality, appearance, spending power and attitude. The venues can see star ratings shared only between them, so this eliminates the need to background check on other social media platforms.

Step 5: If the venue sees that everything is ok, they press accept and the outing admin receives a notification confirming that the outing has been accepted.

Step 6: The outing admin has the option to pay the full required venue deposit through the app, but could also split the deposit

aN a-lISTEXPERIENCE



through the Insanyah donation gateway, where you can donate money or an in-kind item or service. The NGO will receive and manage the donations directly. So we take you through the whole process until you get a confirmation from the NGO that they received the money. The NGO is then obligated to send you a report on where your money goes.

We have partnered with many banks in Egypt in order to ensure that the process of donating runs smoothly. To comply with legal regulations, all donations are processed by the banks and go directly to the NGOs, without coming through us and without us taking any kind of commission. We are a cool interface and a platform, connecting NGOs with donors.

When it comes to processing the in-kind donations (often things like old computers or phones), usually the NGOs have volunteers who are happy to collect the items, after the connection has been made.

LT: How do you decide which initiatives you want to support?

Insanyah co-founders: We are like water; we don’t have a colour. As an organisation, we don’t support any particular religious or political perspective; what matters to us is supporting people who create real impact. At the beginning, we wanted to have thousands of NGOs working with

us but in the end this wasn’t possible. Only 16,000 of Egypt’s 45,000 NGOs are active, with the rest simply registered.

So we now require that any NGO that works with us goes through quite a tough selection process. Amongst other things, we have to see all of the legal documents that prove that the NGO is registered with the Ministry of Social Solidarity and has a licence to collect money.

We are a platform and from an ideological perspective we are open to everyone, but they have to be legally established and to have a good reputation.

One of our priorities for growing and driving social change is to ensure that our impact is felt not only in Cairo. In the first two months of this year, we travelled to nine different governorates to establish and build upon solid connections, which will offer interesting opportunities for people from different geographical locations to support each other. We were impressed with what we found and how many organisations have a relatively advanced digital presence.

LT: Are you registered as an ngo or as a company? when it comes to operating successfully in Egypt’s legal environment, what advice could you give to other initiatives working to bring about social impact?

Insanyah co-founders: When we started we had a big debate within the team, asking ourselves whether we were a non-profit or a company. Fundamentally, we see ourselves somewhere in-between the two because we are a social enterprise. Finally, we asked ourselves a simple question: are we going to take donations? The answer was no, so we registered as a company.

We wanted to promote the idea of social enterprise, that an organisation can be very profitable and create good social impact at the same time.

The best structure for us was to establish ourselves as a limited liability company (LLC), which gave us flexibility and full financial transparency with our investors. What we learned more than anything was the importance of us as co-Founders understanding the legal processes we were entering into. At the beginning we did not understand legalities and although we had a good law firm that helped us to get established, we would have been in a stronger position if we had learned about the processes - how open a tax file, how to register our formal business address to open a bank account, how to procure a commercial registration card and other things. People often think of legal processes as something small but in reality a good legal understanding is a core part of how you run your business well.

We offer two core services. The first is a free marketing service for NGOs, enabling them to have an effective online presence, so they can accept donations, find volunteers, broadcast their news and have access to a wide network.

38 | Q3 2017 | law ToDay

LT: what was the vision and inspiration behind Insanyah? How did you go from the ideation phase to making the initiative a reality?

Insanyah co-founders: Our vision is very simple: we want to connect not-for-profit initiatives with relevant resources, including donors and volunteers, to create a better society.

We were all from the same university and already quite involved in voluntary work with orphanages, organising events and collecting things they needed. One common request for help we received was to build the websites of these institutions, to help them find and manage volunteers, process donations and talk publicly about what they were doing and what they needed. Obviously large NGOs have larger budgets so it is more feasible for them to reach their donors, but we could see that smaller non-profits in Egypt were suffering from a lack of marketing.

In 2014 we decided to investigate this topic more deeply and started conducting detailed market research into how these organisations managed and marketed their projects. We learned that among the approximately 45,000 NGOs in Egypt, most invested a lot of money in advertising but did not receive a proportionate amount of donations. Their advertisements did not have the impact they ought to have had

and of course all the money being spent on marketing was money not going to their causes. 98% of these 45,000 non-profits were offline, not benefitting from the inexpensive marketing afforded by social media.

Sharaf had been working abroad but returned to Egypt and, together with Aya and Mahfouz, we founded and worked on the company, shaping it as a group effort. Our technology and methodology were driven by the market research and interviews with NGOs that had primarily been undertaken by Aya.

We started our journey at Misr el Kheir, which of course is the largest non-profit organisation in Egypt. The support they have provided us with has been significant and has included connecting us with the many NGOs they work with. Our relationship with them has become multifaceted and it is also through them that we know our work is impactful, bringing grassroots organisations online and helping to change the market.

LT: How does your model work?

Insanyah co-founders: We offer two core services. The first is a free marketing service for NGOs, enabling them to have an effective online presence, so they can accept donations, find volunteers, broadcast their news and have access

to a wide network. This free marketing extends to our website, a broad network and a mobile app which we are currently finalising and will be publishing in the near future.

Then we have a premium service, for which we charge a fee and which entitles the NGOs that subscribe to it to a range of services, including social media management, digital marketing, advertising and website and mobile app building and development. We have recently initiated an e-commerce component, so organisations can sell their products online.

We connect donors or volunteers with appropriate NGOs, based on their areas of interest. They are matched through algorithms, so as a donor or volunteer you can choose from among 30 areas of interest, including health, education, environment, childcare and women’s empowerment. In your account, you will find a newsfeed that is similar to Facebook, which provides you with updates from the NGOs working in areas that interest you. Then any volunteering opportunities are sent to both your email and to your newsfeed. So the technology does all the hard work.

If you want to connect with an NGO, you will find their contact details on their Insanyah page. Contributions can be made

Insanyah, the social enterprise that connects NGOs with the donors and volunteers who wish to support them, aims to show that it is possible to be both profitable and socially impactful. Co-Founders Mohamed Sharaf El Deen and Aya Abdelkader talk to Law Today about balancing these two core aims.

fOR THE PEOPlE



LT: Riseup has grown in no time to become a landmark event on the entrepreneurship map, attracting participants at the local, regional and global levels. How did that growth take place? what do you feel have been the core components of your success?

AS: The urge to start something was always in me. As an undergraduate I studied law and I always had a passion for innovation and entrepreneurship. After graduating, I worked for businesses that had a training and development component to their work and I worked for Injaz, having actually graduated from one of the Injaz programs.

It was at this point, working for Injaz, that I met Con (O’Donnell), who was already a very well-accomplished entrepreneur in Egypt and a champion of the sector. I had the idea of building a platform for entrepreneurship, a website that would connect start-ups with the resources available to help them. In fact this didn’t work properly at the beginning, because in order to connect digitally, you really need to first make an offline connection. We had planned to launch the website at a big event that would take place on the birthday of Talaat Harb because I have always been passionate about Talaat Harb and his story. I had a clear vision of doing something technically interesting, such as having a hologram of him talking to a group of entrepreneurs.

Con recognised that it was the event that was most badly needed in the ecosystem at that time. He and I established a partnership and Mercy Corps were the first sponsors of the first edition of RiseUp. At that time, many of the entities that have come to be the main enablers of the start-up ecosystem – Injaz, Flat6Labs, the GrEEK Campus – were still in the making; so they and others – Sawari Ventures, Cairo Angels, WAMDA, MiT Enterprise Forum, AUC – all jumped on board. They offered the time and input of their teams, as well as organising content for the first RiseUp Summit.

It was Con who introduced me to Ahmed El Alfi, who told me “I can see you’re going to hold this event no matter what. You’re crazy. I love crazy people”. So one month prior to the first edition of RiseUp, I literally moved into the GrEEK Campus to work on everything.

Suddenly it all came to life. We achieved unexpected levels of success with that first edition of the Summit, with 2000 people in attendance and the Wall Street Journal writing an article about it. It just became a movement. This was followed by another planning and reflection phase, where we asked ourselves how we could sustain this momentum. We formally established the RiseUp company, in which both Con and I invested money, and we started recruiting people.

The second edition of the Summit in 2014 had nearly 3000 people in attendance. It was a slightly better event but we still felt that the potential for doing something really big was greater than what we had at the time achieved. We invested more in the company and we started visiting other start-up ecosystems – as many as 30 or 40 in one year – trying to build connections and

relationships.

Con came up with the catchphrase “the world is coming to Cairo” and in 2015 that became the reality: the world came to Cairo. 5000 people attended that year, including Silicon Valley entrepreneurs and the biggest players in the start-up scene in Egypt and the region. It was really something special.

In 2016 we built on that success still further, with between 5000 and 6000 people attending and the Summit content itself being more focused on different industries.

Now we have reached a point where we can say we have a recognised brand and we have given a significant push to the start-up culture and community in the Middle East. Every edition, we invite around 500 journalists to cover RiseUp, and of course this is helpful in generating interest. Conceptually, we have become known and started operating as a go-to entity for entrepreneurship, so now typically investors, incubators, NGOs and universities wanting to support the space will ask us for direction or guidance.

We continue to work hard on ecosystem development. So, for example, we have started flying entrepreneurs to attend other conferences overseas and facilitating meet-ups and connections. We are trying to push things forward, but we still have only one product, and that is the RiseUp Summit.

Now finally we have reached the point where we are ready to build the online platform, which is a very important milestone in terms of the future. Its main value proposition is that it will connect each start-up with the main services and perks that it needs as an entity.

I would attribute our success to several different factors. The first was that we are constantly working to build the team and to build the institution. We’re still a new entity and we have been lucky to have amazing people of different backgrounds learning from and contributing to our growth.

Secondly – and although this is not within our control, it is a core factor of success for any business – this is the right time for this kind of movement. We saw the opportunity early and were able to capitalise upon it quickly.

Our culture and the values of collaboration that we have always insisted on have, I think, helped to change the broader environment to be more focused on partnership. We always try to be friendly and inclusive. We are a platform, so we want to work with a lot of people.

We have always taken big risks and of course this has resulted in big returns. An inevitable corollary of risk taking is making mistakes, but that in itself brings profound learning opportunities.Finally, I think the integrity and good will we have always exhibited is a key factor in our success. We want to make money but we are first and foremost purpose driven; this translates into our work and has yielded good results.

40 | Q3 2017 | law ToDay

Founder and CEO of RiseUp, abdelhameed sharara is happy to live and breathe entrepreneurship. He talks to Law Today about what four years of leading the region’s biggest entrepreneurship summit has taught him and some of his plans for even bigger things to come.



linked to the sharing economy, anything that adds efficiency, works in Egypt at the moment. A lot of people seek to be the Uber of their sectors because Uber was able to crack the payment system and really demonstrate how well an app can work in Egypt.

Then speaking more specifically, the following sectors are booming:

E-commerce, because of the overall interest in accessing markets. Fintech, because the old regulations and challenges with payments are simply not applicable to our current digital system. There need to be solutions, particularly given the high penetration of smart phones and the internet.

The creative industries; we are seeing such interesting initiatives from designers and artists at the moment. Though the challenge has always been that they are not businesspeople, they are starting to learn and prioritise developing their business acumen.

Renewables and energy in general, because we simply need energy.

Other sectors are growing rapidly and, for example, I think that food and beverage will be increasingly big in the upcoming period.

LT: what does the sector need in order to keep growing?

AS: Any positive action in the regulatory framework to keep attracting local and international investors and VCs and to enable the founders of start-ups to be comfortable with their own legal structures, would be significant and beneficial.

I used to say that the culture needed to change, but now I see so many people who are on board with the idea of entrepreneurship. Of course that makes me the happiest person in the world but we are a big country and we still have a long way to go. I don’t want 100 million entrepreneurs, but I do want 100 million people who

believe in entrepreneurship and who will foster the growth of an entrepreneurial environment.

We definitely need a stronger business infrastructure, whether that means easier access to office space, faster internet, hardware, factories or the high-tech provision of hardware/mobile labs. There must be a broad reform of the education system and I believe that the addition of management education to life in Egypt is very much needed.

LT: Back to you for one final question. Why after studying did you not choose to practice law?

AS: I loved studying law and my legal studies gave me an advantage over other businesspeople in terms of understanding frameworks, and why things are happening. Before doing anything, I will always ask myself what my reasons are for doing it. That kind of thinking literally comes from studying law, because the study of law involves the study of why laws are needed, why they are happening and what they are meant to serve. So studying law changes the way a person approaches things.

So I loved the studies but I think the best thing for me would have been to have my major in economics and minor in law, instead of doing the reverse as I did.

The academic discipline of studying law in Egypt needs a lot of reform. It is very lecture based and doesn’t really enable you to sharpen your practical skills. It also, in my opinion, needs to offer more opportunities for specialisation. In my case, it was very beneficial because it formed me as a generalist, but people need to understand what kind of law they will be focusing on - whether commercial, constitutional or any other.

For me personally, I would not have been suited to a job that is primarily a desk job. I need to combine my interest in economics, development, entrepreneurship, law – and to be mingling with different people all the time. Luckily, I have managed to do this.

42 | Q3 2017 | law ToDay

LT: what have been the most surprising learnings for you, in the last four years?

AS: There are some very interesting misconceptions about business and entrepreneurship. The idea that the hardest thing is to start a business is a complete fallacy; in my experience management is the hardest thing. How can you sustain your operations, replicate, scale, manage and retain talent? How do you maintain a steady stream of funding, how do you ensure successful market penetration?

At the beginning, I thought that once we were established and growing I would be able to rest. Now I realise this is not the case at all. Even though we have a great team of approximately 30 committed members, I still find I have to remain deeply involved in things one way or another.

Experience doesn’t matter in the way that you think it does before you begin. Talent can override experience if you are motivated at the beginning but once you are established you find that experience matters a lot.

So at the beginning I made great inroads because I have a very outgoing personality and I had a vision and enthusiasm. Now I feel there are other skills I really need to learn. I thought I was a great manager; now I recognise that I am a great leader and entrepreneur but there are plenty of things I need to develop further when it comes to day-to-day management, as well as focusing on our overarching vision and strategy.

I have learned to think bigger than I ever would have imagined at the beginning. The first edition of the Summit was called RiseUp Egypt and the focus was on Egypt. I was subsequently invited to attend and speak at conferences in Austria and Russia. At these conferences, I asked myself why I couldn’t build a global company and model for start-ups, from Egypt to the world. So the Summit moved from being local to “glocal”, from being RiseUp Egypt to RiseUp. This was a key shift for me in terms of learning and vision.

LT: your work sets a premium on showcasing local and regional and global innovation. Is it fair to say that you see the process of building an entrepreneurship community as being an integral part of stimulating innovation as a whole? why?

AS: Of course. I believe in organic growth and creation – and in order for this to take place, there needs to be the following:

1) Networking and connections between people: this is key for a robust system.

2) Disseminating information: for the last two years, we have produced a newsletter every two weeks with aggregated news about the ecosystem in Egypt. We have about 12,000 readers and last year we expanded to the broader Middle East.

3) Pushing positive changes and developments in the culture and mindset, especially through media: we have always encouraged initiatives such as Lamis El Hadidi’s TV show and we will continue to do this. Because we have an independent and neutral role, we have been able to sit with different entities on many occasions, to discuss the development of the ecosystem.

One of the things we learned through travelling (and here by “we”, I include the entrepreneurs that we have supported to visit Sweden, the US, London, Germany) is that if there is an opportunity, you simply go after it without second guessing yourself and you have the right skills, you have good odds of succeeding. Travel has helped to break the entrenched idea that the Western world is better. This idea of the world coming to Cairo is very powerful. For an Egyptian entrepreneur to see that Cairo can be an entrepreneurship hub has an impact on ideation, planning and envisioning the future.

LT: Have you noticed particular sectoral trends when it comes to the flourishing of entrepreneurial initiatives?

AS: Speaking generally, anything that is platform based and

suddenly it all came to life. we achieved unexpected levels of success with that first edition of the Summit, with 2000 people in attendance and the Wall Street Journal writing an article about it. It just became a movement.



I. Freedom of choice and Admissibility of Arbitral Awards

All Middle Eastern and Arab legal systems recognize the principle of “freedom to contract” in which a contract forms the law governing the relationship between the parties that have entered into it; it cannot be revoked or altered except by mutual consent of the parties or for reasons provided for by law. Certain Middle Eastern and Arab arbitration laws clearly permit those who are party to a contract to concur on a forum selection clause in order to establish where and how to settle any contractual disputes.

However, in the absence of the parties’ agreement, state courts generally rely on the conflict of law rules contained in their national law to guide or govern their decisions. Interestingly, the Bahraini Arbitration Law stipulates that the provisions of the UNCITRAL Model Law shall be applicable to every international commercial arbitration, except in instances where the parties involved have agreed that it shall be subject to another law.

Enforcement of a particular arbitration award may be refused by Middle Eastern and Arab courts due to its violation of the public policy of the state concerned or its moral standards. The majority of Middle Eastern and Arab countries provide within their laws that one of the grounds for raising an action to set aside an arbitral award can be the non-existence of the arbitral agreement, its nullity or it being subject to annulment or voidness for contract expiry.

As for the arbitration award rendered, the laws governing most Middle Eastern and Arab countries provide that the competent court seized with the action for nullity shall rule sua sponte for the annulment of the arbitral award if its contents violate public policy in the designated country. Saudi Arabian Arbitration Law mentions the same, with the qualification that the award must not violate Islamic Shari’a principles. The matter of the recognition and enforcement of foreign arbitration awards is perhaps further discussed in the New York Convention, to which all Middle Eastern and Arab countries are signatories with the exception of Iraq, Libya and Yemen.

Some Middle Eastern and Arab countries exhibit reluctance towards the recognition and enforcement of arbitral awards. For example, certain countries stipulate that the enforcement of the arbitral award may not be ordered except after verifying that it does not contradict public policy in the enforcing country. Saudi Arabia and Yemen further add the provision that no foreign arbitration award shall be enforced in either country if it violates Islamic Shari’a principles, not just public policy. Prior to the issuance of the new Saudi Arabian Arbitration Law of 2012, the Saudi judicial system generally applied Saudi law even if the parties involved had consented to applying another law. Despite Saudi Arabia being a member of the New York Convention, in practice the Saudi legal system rarely recognizes or enforces the agreements of foreign jurisdictions. By contrast, Syria has adopted a more flexible approach towards the enforcement of international arbitral awards, whereby such awards are to be enforced if they were deemed final, conclusive and enforceable in the country in which they were rendered.

II. Special form Requirements

With regard to special form requirements, some Middle Eastern and Arab legal systems state, either in their arbitration or procedural laws, that the parties involved can only agree to settle their dispute through arbitration in a document, be it as a stipulation in the main contract or in a separate document. Hence,

the arbitration agreement can only be accepted if it is provided in writing.

When it comes to the structuring of arbitration agreements in certain Middle Eastern and Arab countries, national arbitration laws consider the writing requirement to be a prerequisite but may adopt a more lenient definition of “writing” than Article II of the New York Convention, where the law does not require the agreement to be signed, but nevertheless the absence of a signature will support any argument against its existence. Still other Middle Eastern and Arab countries give a special definition to the writing requirement, this being broader and more modern than that of the New York convention. Oman and the United Arab Emirates require that the language of arbitration be Arabic unless the parties agree otherwise, in which case a legalized, or official, translation of the award is to be provided.

Bahrain, Egypt, Jordan, Oman, Tunisia and Yemen have adopted, or were influenced to a large extent by, the UNCITAL Model Law in their national arbitration laws. Hence they adopted the formal requirement of writing, stipulating that if the agreement is not concluded in writing it shall be null and void. Saudi Arbitration Law also necessitates the writing requirement of the arbitration agreement, or else the agreement is void. Further, Moroccan Arbitration Law stipulates that the arbitration clause in any commercial contract should be handwritten. However case law has since superseded that requirement, after Morocco joined the New York Convention. Syrian case law considers that requiring the arbitration clause to be solely in writing makes it rather troublesome to accept other means of evidence. Subsequently, writing is a requirement for the validity of the arbitration clause but not for giving evidence thereof. The Libyan Supreme Court also necessitates such a requirement.

Algerian, Lebanese and Moroccan Civil Procedural Laws provide that an arbitration agreement must include the subject of the dispute and the name of the arbitrators or else the agreement shall be void. Meanwhile the rest of the Middle Eastern and Arab Procedural Laws state that the subject of the dispute must either be provided in the arbitration agreement or mentioned during the hearings, or else the arbitration shall be void.

One striking requirement for the formation of the arbitration agreement is that which relates to the capacity of those who are party to the agreement. The majority of Middle Eastern and Arab countries provide within their laws that one of the grounds for raising an action to not enforce an arbitral award can be admissible in case of the incapacity of one of the parties to the arbitral agreement.

With regard to the capacity of natural persons (or, for non-lawyers, individuals) to choose the applicable law for their agreement, most civil codes refer to the law of the individual’s country of nationality. Similarly, the capacity of foreign juristic persons such as companies, associations, foundations or others is governed by the law of the place where they were constituted, where their head offices are located or where they have their actual principal seat of management. If, however, a juristic person carries on its principal activities in a domestic country other than that of its principal seat of management, then the law of the domestic country applies. With regard to obligations arising from the contracts, the law of the state in which the parties to the contract reside shall be applicable (the law of domicile), and in the absence of a common domicile, then the law of the place where the contract was concluded applies, provided that the parties to the contract have not agreed upon the application of a specific law.

44 | Q3 2017 | law ToDay

aNd ITS fORMal REQUIREMENTSIN MIddlE EaSTERN

aNd aRaB COUNTRIES

Mohamed HafezPartner

TMS Law Firm

aRBITRaTION

real esTaTe & ConsTruCTionlaw in foCus


sell at a profit, but with so many people doing this there will soon be more supply than demand and people will end up losing their money and looking for other solutions, such as what we offer.

In four or five years, we as Qubix want to have established a community of homes made from containers, a community of like-minded people. We have unique designs and buildings that are environmentally friendly and cost effective. As a trend, it is picking up. At the beginning we would have to spend the first 40 minutes of any meeting just pitching our idea, but now people understand and like our concept so we can go straight into looking at how to apply it.

The uniqueness and adaptability of the idea helps it sell itself. I think the fact that our scope of work is turnkey also makes a difference. We handle everything - from the design to the layout, construction, delivery, branding and signage. This is different from any other company working in this area and we hope it makes our clients feel comfortable and that they are spending their money wisely.

LT: you have said that urban development and low-income projects are among your core goals with this initiative. How do you see that developing?

yF: Karim and I were recently speakers in

a forum organised by Engage Consultancy, which focused on establishing private-public relationships for development. We were discussing innovative ideas for urban development, with a particular focus on slum areas and it reminded me that, when we first came up with the idea of Qubix, I immediately thought of how great it would be to rebuild the slum areas using shipping containers.

The slum areas in Egypt constitute a big problem. They are not licenced, are often unsafe and built wrongly and even aesthetically they are ugly to look at. This is not how people should be living.

Because our containers are 100% built offsite, the badly constructed buildings in the slum areas could be knocked down and replaced within days or weeks with our containers, which would be built with the right infrastructure, electricity and piping - and which could even be solar panelled. We would give a different interior to people’s homes, helping them to live with greater dignity and to treat the country in a more respectable way.

Currently the country is spending billions to relocate people from slum areas to empty land that has been redeveloped, where they have built compounds for low income housing. But people can’t just be expected to relocate to a totally different area, leaving their family, social circle and livelihoods – especially

if there is no reliable and affordable public transportation. To implement an initiative like this, we would have to work with the government: the Housing and Development Bank or the Ministry of Housing. They would have to recognise it as being an unconventional way of solving a problem they have been trying to solve for years.

LT: So speaking more broadly, how do you see the future for Qubix?

yF: The truth is, the company could develop in many different directions. One area that we believe could be very exciting and full of potential is exporting. We cost twelve times less than our competitors in the US or Europe and because this industry is not yet established at the international level, there is no reason why Egypt shouldn’t be the market leader.

We offer cheaper labour and materials, we have highly qualified and competent workers, exporting is easy and obviously so is shipping – these are shipping containers!

This does not just apply to retail. We could work with the UN to provide refugee housing, which would align with the kinds of solutions they are looking for. We could build public bathrooms, schools, mobile clinics. There are so many opportunities, so many different services we could provide.

In four or five years, we as Qubix want to have established a community of homes made from containers, a community of like-minded people. We have unique designs and buildings that are environmentally friendly and cost effective. As a trend, it is picking up.

46 | Q3 2017 | law ToDay

LT: Qubix has had an astonishing growth rate for a concept entirely new to Egypt. How did it all happen?

yF: It all started in February 2016, as Karim (Rafla, Qubix co-Founder) and I were brainstorming business ideas. We knew that we didn’t want to do anything run-of-the-mill but to start our own entrepreneurial initiative. Karim told me about Container City in London, which we thought was ingenious and worth trying to replicate.

We saw a design online of shipping containers that you open by pressing a button; hydraulic pistons open the container down to the floor. We contacted Fatma (Moemen, Head Architect and Designer at RDW Architects), who helped us with the mechanics and designs. We employed a team of two workers, bought a container and some basic tools and started working – experimenting – in my backyard.

In August we had our prototype done. We hadn’t told people what we were doing, but then by chance a friend of mine disclosed that his parents were interested in building a container home on their land. They told us what they had in mind, we created designs and built the house in two months in my backyard. It was a great success and they loved it.

At this point, with nothing in the pipeline,

we started writing and sending tailored proposals to all the companies we could find contact details for. We didn’t get any replies. Through Facebook I ended up connecting with Ali Mazhar, the owner of BeFit. He responded immediately to the customised proposal I sent him and shortly afterwards we started work on his project, using two 40 foot containers.

We discovered it was going to be difficult to do this work in my backyard so we found a warehouse to rent. We faced endless logistical problems – with electricity, water, plumbing; we had seven workers and no manager or engineer on hand. Still we completed the project successfully in two months.

Once we delivered that, we were offered a project with Ski Egypt, who wanted a restaurant in the ski slope. This was also full of challenges, as we were working on a very tight schedule and they had requested a container that could be disassembled and reassembled, without any welding. This turned out to be another great learning experience.

We became more confident in our abilities and started to have more pitching meetings. Then the article that Cairo Scene wrote gave us a big boost; people started to really take notice of what we were doing and were impressed.

So at this point overall we have delivered

18 projects. Many of these have been for the food and beverage industry, because that is particularly active in the summer. Everyone loves the idea of having a fully branded, transportable container which you can move during the season. Because we also provide the logistics, it means that brands don’t miss opportunities or seasons.

Cost wise and time wise, it is very attractive to all our clients. On average it takes between four and five weeks to complete a project; really big ones may take nine weeks. So we’ve taken it from there. From our perspective, this is just a different way of building things and we are trying to serve as many different people as we can. We want to cater to private people, retailers, service providers and businesses.

LT: How receptive have people in Egypt been to this idea, especially considering the trend in the real estate sector for larger buildings?

yF: I think the trend for larger buildings will die out in time. Within certain demographics in the country, there is a trend towards minimalism and I really believe that this will only increase and that the real estate bubble will pop soon. Prices are going up, inflation is increasing, yet incomes are going down; the figures don’t add up. People buy in bulk, intending to

Qubix, the Egyptian start-up that takes discarded shipping containers and not only renovates but utterly transforms them into homes, offices, restaurants, and even gym and leisure buildings, is undertaking groundbreaking work in an industry that is still very new. Youssef Farag, Qubix co-Founder, talks to Law Today about the first steps the company has taken and the immense potential still to be realised in this field.

QUBIX:BUIlT TO GROW

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groWth through diversity:An intervieW With neW LevAri PArtner mohAmed shAAbAn

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I had worked with excellent people, that there was not an area of financial law that I had not made inroads into, that I had worked in a high-calibre environment and learned a lot. I felt it was time for a new challenge.

LT: So then how did the process of you joining Levari work?

MS: There were many reasons why it made sense for me to join Levari. I had been in conversations with Sherif (Hefni, Levari co-Founder and Partner) and Mohamed (Raslan, Levari co-Founder and Partner) since December 2016 about the prospect of joining as a third partner. We took our time, to be sure that we would come to an arrangement that would suit us all.

Levari is a very impressive law firm, with a rate of growth that has been faster and more significant than many bigger and older offices. There is a strong strategic plan in place that governs us all and there are good clear policies and procedures. It is this kind of structure that I really value, and that makes me feel that this is a place I can really work and grow in.

I am of course coming with particular experience and both Sherif and Mohamed have their own distinct areas of expertise as well. We complement each other and learn from each other as we pursue our shared goals and targets. I am very happy to work with Sherif and Mohamed; they are excellent lawyers. The prospect of coming somewhere where I can both grow and help to build the institution itself is something I am very enthusiastic about.

LT: How does the experience of being an in-house counsel vary from the role of a private practice lawyer? MS: There are many ways in which the two vary. In a private practice, obviously the nature of the cases you take on varies much more than as an in-house counsel, because the nature of

in-house work is fundamentally more specialised. In a company where you are working as an in-house counsel, there are many departments that take care of operational and organisational decisions, so these are not your area of focus. Obviously as a partner in a private practice, you are much more involved in every aspect of the business. So you communicate with your clients at an institutional level, thinking about revenue generation and the growth of your law firm.

LT: Will you be specialising in financial law now at Levari or is this an opportunity for you to expand your own areas of focus now you are in private practice?

MS: I will be working on a combination of financial and different types of law. Levari has many different kinds of international transactions that I am looking forward to getting involved with. I will of course be bringing my expertise in financial law, but then there are new things to work on and new things to learn.

LT: where and how would you like to see Levari grow from this point on?

MS: Levari is already growing quickly. We have a second branch in Cairo, in the GrEEK Campus, and have just opened a branch in Dubai as well.

I believe that we will continue to grow and open new branches both in the region and beyond. I am excited to see what the future has in store for us.

LEVARI-PARTnERS

50 | Q3 2017 | law ToDay

Having recently joined Levari in association with Pitmans LLP as a partner, Mohamed Shaaban brings over 15 years of experience in litigation dispute resolutions, mergers, capital markets, public funds investigations and public prosecution to his role. He talks to Law Today about his career so far and his plans for the future.

LT: could you give an overview of your career trajectory to date?

MS: I graduated from the Faculty of Law at Helwan University in 2002. After graduation, I worked with a private law firm for ten months, then moved to the Egyptian United Bank, where I worked as a legal adviser for around four years. Then in 2006 I started work at the United Bank, an entity that had been created as the result of a merger between the Egyptian United Bank, the Nile Bank and the Islamic Bank. This was a great opportunity because working in a merged bank afforded me good experience in various processes related to mergers.

In 2007 I joined CIB, which obviously is a top bank in Egypt and the Middle East. The Chairman of this bank, Hisham Ezz Al-Arab, is one of the kindest, cleverest and best people anyone could work with. Under his management, the bank navigated very challenging times and emerged from them stronger and more successful than ever.

CIB was always an entity with a vision, so there was really no comparison between the experience of working there and working with any other organisation. CIB invests deeply in any employee, when it is clear that the employee is highly motivated and has potential. In fact, it is an organisation that always demands that its employees make their best efforts; you do not find mediocre people there. In 2008 I started working at CI Capital, a leading investment bank in the MENA region, as well as CIB. These were difficult times from an economic perspective, but professionally I

grew as never before. I learned new things every day; we handled cases and transactions on a scale I had not seen before.

Obviously the events of 2011 had a significant impact on this environment. A lot of large companies did not retain all their staff and many people felt unable to continue working as normal because of the situation the country was in.

During this period, Hisham Ezz Al-Arab took the decision that CIB’s approach would be to invest in its employees. During this slow period, employees would be sent to take courses to help them develop their potential while there was not much work available. This was a very smart approach because while other banks fired up to 20% of their staff, this helped us to remain fresh, to hone our skills and retain our passion for our work.

I was very lucky to have been trained in this environment, with managers who were very smart and determined that I should learn not only how to build my legal financial knowledge but also how to manage people.

The work environment at CIB was exceptionally strong. I was working as the Director of Legal, reporting directly to the Chief Legal Officer who reports directly to Hisham Ezz el Arab. My manager was always extremely supportive. The system and the broader team – including the legal, financial and operations departments – functioned so well, and we were all so attuned to one another, that in any given situation we could solve problems without needing much direct communication.

Hisham Ezz Al-Arab is really, in my view, an outstanding leader. He once wrote me an official thank you letter for a particular piece of work that I completed and for me this letter ranks among one of my greatest professional successes. When I decided to leave, it was very difficult for me on a personal level. I recognised that

MOHaMEd SHaaBaN

GROWTH THROUGHdIvERSITY

aN INTERvIEW WITH NEW lEvaRI PaRTNER

will operate in a balanced manner, you gain people’s respect. Then it is your clients who build your reputation for you. Once you gain the respect, not only of the client but of your opposing party, you find yourself in a very strong position. I have an innate sense of fairness, but I also benefitted from the training I received at that time.

Mr. Ali El Shalakany (Senior), who trained about six lawyers of our generation, taught us to be transaction lawyers. That is to say, we were not just dealing with law in its simplest form but offering advice to develop transactions and we carried the responsibility of making sure that the conditions were set for these transactions to be successful. The key to doing this is to make sure the contract governing any transaction is fair and balanced; if you do that you will always gain the respect of both parties. Your client is of course happy to have a successful transaction and the other party is happy to have the basis for a successful project because of a fair, balanced contract. This is how we were trained and we have continued that legacy.

This has enabled me and my partners in Zulficar & Partners to acquire a reputation that we can be trusted to resolve problems; we are problem solvers and not just advisers. The capital of any law firm is not calculated by reference to revenue but by reference to your professional reputation and the trust of clients, the opposing party, the court system and the community.

LT: Zulficar & Partners has become one of the Egyptian legal community’s powerhouse law firms. What do you feel were the principle lessons you learned throughout the earlier part of your career that you have since applied successfully to founding and overseeing your own firm?

Mz: There are certain principles that I have learned and learned the hard way. The ultimate challenge is to build an institution. No one or two people can serve the corporate world alone, especially because now specialisation is the key to success. So in our law firm we require each partner and lawyer to have a primary specialisation and a secondary specialisation. This is crucial because sometimes you will have a lot of work related to, for example, project finance or M&As’ and at other times

you will have a lot of settlements and rescheduling. So each lawyer needs to have two types of specialisation – but not more than that. Then there are thematic specialisations, areas like tax, labour, competition law; each is cross-cutting and doesn’t work in the same way as practice area specialisations.

How to structure your partnership is also key. The challenge is to make the partnership an institution, with rules and principles that always eliminate conflict between the personal interests of every single partner and the partnership itself, to keep everyone aligned. The problem is simply that we never have enough time for ourselves. We always advise our clients how best to do things but we never have time to advise and take care of our institutions. But of course we have to push ourselves to always deliver more and to build the institution.

Human resources of course always represent a challenge for any organisation – how to choose the best lawyers and how to help them develop, to give them real opportunities for growth, training and progress. It is not easy finding candidates of the best calibre but we work hard to do so and to nurture their talent. We are very firm on equal opportunity and so during our selection process fresh graduates will undergo both a written test and an interview with a committee of at least two partners. Lawyers cannot be evaluated just through a written test, because other skills and character are part and parcel of what makes a successful lawyer.

Historically we have worked to help law schools produce better education systems – so for instance, I played an important role in advocating for offering undergraduate and postgraduate law degrees in English and French at Cairo University in the 1990s. One of our founding partners, Dr. Mohamed Salah, was a key player in establishing the Indiana Master’s degree program at Cairo University. This program trained high calibre lawyers who have been recruited by the law firms and major corporates in Egypt.

We are trying to help in every way. Developing the legal profession helps the profession, helps our country, supports the administration of justice and of course helps our law firm.



Among my contributions were to the equal right to divorce law (Khul), including guarantees of alimony payments and financial maintenance payments, as well as the Family Courts law and the amendments to the Nationality Law. You develop such passions largely as a result of your environment.

LT: your professional expertise spans many different areas – from restructuring and M&As to drafting economic legislation to working as the Vice chair of the un Human Rights council Advisory committee. Did you always intend to pursue such diverse specialisations, or is one your particular passion?

Mz: Initially I did my undergraduate degree at the Faculty of Economics and Political Science at Cairo University, not at that point aware of my passion for law. As I was graduating I realised I wanted to be a lawyer, so I went back and did another degree in law. This turned out to be very fortuitous, as at this time the Egyptian economy was just opening up and the need for specialised lawyers who could combine an understanding of economics, political science and law was great, especially those who could speak foreign languages as 75% of our work is in English. Going to law school in the 80s wasn’t popular, and I served as an example to young men and women – especially women – that they could pursue this kind of career.

My professional expertise, developed over 30 years of practice, is specifically in banking and finance, restructuring and M&As. This type of work is a full time job and typically quite demanding and stressful.

However, I devote a lot of time and energy to working on a voluntary basis advocating human rights, women’s rights and helping to build the microfinance industry in Egypt, something I am very passionate about.

Currently, I serve as Chairperson of the Egyptian Microfinance Federation, which supports NGOs and the private sector working together to fight poverty in a sustainable manner. I also chair Al Tadamun Microfinance Foundation, which I founded over 20 years ago, and which finances micro-projects of poor women. Across the microfinance industry in Egypt, 70% of the beneficiaries are women so it is a wonderful thing to empower marginalized women economically and contribute to improvement of the quality of their lives through microfinance.

My work on human rights and women’s rights started in the

80s, as a young law school graduate. But I had grown up in an environment where these issues were prioritised. As the daughter of an incredible father, a film star and producer who featured in and produced some of the most well recognised films defending the rights of women in Egyptian and Arab cinema, and a mother who dedicated all her spare time to helping the poor and marginalized at the Women’s Health Improvement Association, I grew up with a compulsion to speak out on behalf of the disenfranchised.

My father produced and starred in a film called My Wife is the General Manager, the main premise of which is that a wife can be, in effect, the boss of her husband. Another extremely well-known film he produced starred Faten Hamama and was called I Want a Solution. It tells the story of women suffering in family courts as they try to fight for their rights – to get a divorce, to procure alimony payments, to get custody of their children. This film became a major instrument of change, helping to change family law.

So I found myself as a young lawyer working on all the issues raised by these films. Among my contributions were to the equal right to divorce law (Khul), including guarantees of alimony payments and financial maintenance payments, as well as the Family Courts law and the amendments to the Nationality Law. You develop such passions largely as a result of your environment.

Human rights, naturally linked with women’s rights, are another area for which I advocate strongly, staying on the UN Human Rights Council’s Advisory Committee for five years, for example.

LT: This trajectory must have been full of challenges!

Mz: It was very challenging. As a very young lawyer I would enter meetings with important clients, governmental representatives or the heads of banks and they would look at me as if to ask “who is this little girl?” So I had first to prove that this “little girl” had something valuable to contribute, then show that whatever I thought should be the way forward was reasonable, fair, good advice. So really I faced a twofold set of challenges.

But once you gain self-confidence and you demonstrate that you

52 | Q3 2017 | law ToDay

In Part 1 of a two-part interview series, Mona Zulficar, Founding Partner of Zulficar & Partners, shares with Law Today how her early experience has framed her work as one of Egypt’s most renowned and successful lawyers and fed into her law firm’s institutional growth.

An interview withMonA zuLFIcAR

a WOMaN’S WORld

Building an institution and managing its growth is a crucial part of commercial success, the importance of which is sometimes underestimated. The issue of sustainability, having an effective internal culture that operates independently of the personalities and presence of the leaders to enable an organisation to achieve its aims, is a key strategic factor for growth.

When Sharkawy & Sarhan was founded in 2006, we wanted to establish an institution that would grow future leaders and to do something different in terms of the way we functioned, driven by competent team members who had genuine ownership within the organisation. I will issue a qualification: I am not saying we have reached our goal yet. Anyone who tells you they have already succeeded in building an institution is undoubtedly mistaken. Institutional growth is an ongoing process but we have always tried to undertake it consciously: growing slowly, investing in our people and selecting the right people to invest in.

This means allowing team members of different positions and seniority to take the lead when it is appropriate. On occasion, you will find our associates playing leading roles during situations where you might not expect them to. You might find an associate giving a talk at an event, for example, while the partners are just sitting and listening.

People must be allowed the space to grow, to make mistakes and to take responsibility for the outcome of particular initiatives. This is not always a smooth process and sometimes we, the partners, need to intervene if something goes wrong. However, if the person has demonstrated their competence, commitment and skill set, it is absolutely appropriate to then give them the opportunity to make decisions. We have, for example, a wonderful young team member who has made substantial contributions to our recruitment processes. Thanks to the initiative she has shown and her ability to learn quickly and effectively, the need for my personal involvement in this area has reduced considerably.

In our hiring process, we specifically look for people who we feel share our values so that we can train them to be part of our team. We will invest as much as we can in people who share those values with us. Jim Wright, one of our Founding Partners, now retired from full-time work, still dedicates a significant amount of time to managing a comprehensive training program. Every team member has a professional development check-in meeting on a monthly basis. Everyone in the firm also has the opportunity to go on secondment to one of the magic circle firms through our secondment program. As long as we have the resources, we are committed to continuing this. Organisational growth takes place both conceptually and practically. From a conceptual perspective, it requires looking at your organisation’s strategic vision and then mapping its roll-out on a practical basis. We made a very conscious decision to grow slowly because we wanted our growth to be organic and to preserve our organisational culture and values.

We don’t claim to be perfect. We all make mistakes; we are human. However, part of our organisational culture is that, if we do make a mistake, we acknowledge it and we apologise for it. We engage in self-reflection and constructive criticism, so as to ensure collective accountability. We aim to always deal with one another respectfully and if anyone contravenes that, there is space to speak out. Our open door policy means that anyone in the team can address questions and feedback

to the partners.

Although for many years we did not undertake lateral hires, we recognised at a point in time that we needed to diversify. We had a team of like-minded people because of our hiring process and, as part of our own internal self-reflection, we decided two or three years ago that it was time to bring on board team members with different backgrounds and experiences. This process is very extensive, however, as we want to be sure that those we are hiring share our values even if they have not started their career with us. It is also a key organisational value of Sharkawy & Sarhan that we will not approach lawyers working in other law firms to recruit them. We only do lateral hires when a lawyer applies to or approaches us.

Looking more broadly at Egypt’s legal ecosystem, it is evident that it is changing. The wave of entrepreneurship that is sweeping through Egypt and the region is being felt here too; more people are starting their own firms. Overseas law firms, such as those in the UK, are noticing that the quality of the legal service in Egypt has improved drastically in recent years. The situation is very different to 2006, when it was really rare to open one’s own law firm.

Clearly, there is still a prevalent culture of hierarchy and it will take time for this to change. Frankly, if I had my way I would abolish titles but I recognise that this is a very radical approach. It is perhaps more helpful to ask ourselves how we can build a culture where, in particular situations, people are empowered to take the lead irrespective of title. In my opinion, a good approach is when you don’t allocate a task to a particular person because of her seniority, but when you give the task to the person who is in the best position to take it on, and you build their skills accordingly.

We work with entrepreneurs and among the issues we have observed from an organisational point of view is the excessive focus on the personality and vision of the entrepreneur who has founded a particular initiative. This is potentially a huge hurdle. Entrepreneurs and leaders of all kinds need to think about what will happen when they are no longer around to lead their organisations, if they really want to build something sustainable. Entrepreneurs need to think about leadership in a different way; it is not just about them and what they want to achieve. If they really want to succeed in terms of positively impacting and disrupting a market, they must think about building something that goes beyond them. If their organisation falls apart when they are not around for a week, this is not a sign of success.

An entity that relies too much on the drive of one or two individuals, without giving ownership to the whole team, also ultimately contributes to a broader organisational culture of stagnation and a lack of risk taking. Ironically, entrepreneurs trying to spearhead innovation may be quashing vibrancy within their own organisations if they are not willing to invest more time and resources in building and sustaining them.

Recently we undertook an internal study, where we asked our team to think about which values we as an organisation were actually living by, and we were gratified to hear that “investing in our people” is a core value that defines us. From my perspective, this was not just a positive endorsement but an indication that we could be on the right path when it comes to building a value-based organisation whose legacy and impact will, we hope, last for many years to come.



Karim SarhanPartner, Sharkawy & Sarhan

54 | Q3 2017 | law ToDay

living By Your valuesWHY INSTITUTION BUIldING MaTTERS

fAshion: bAck to schooL

tech revieW: ArtificiAL inteLLigence, smArt cities & inteLLigent WAter in menA

restAurAnt revieW: PePenero: treAt yourseLf to some itALiAn home comforts

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Investment Piece: The SkirtThis season, surprise your friends by buying one piece you wouldn’t normally wear. Mine is the rich, full skirt which has been so prominent on the AW ’17 catwalks. As someone who does not normally venture beyond my usual staple pencil skirt, I was pleasantly surprised by the transformation when I opted for an A-line version - and to receive so many compliments from my colleagues in the Law Today offices!

Must Have: The cashmere SweaterThis season’s must-have buy is the luxurious cashmere sweater. Slightly less structured on the AW ’17 catwalks than the previously available versions, it provided a perfect balance to the sheer, floaty fabrics at Christian Dior and Victoria Beckham - and reminded us of how much we are looking forward to cooler days!

Red AleRt

FoR the Weekend

Call it the colour of love and romance, call it the ultimate shade in power-dressing; there’s no doubt that a pop of RED will always make an impact, and this season’s catwalks were positively ablaze with it.

We also got a lesson in how to wear two not-quite-matching red items together. Team a wine-red top with a bold, pillar-box-red skirt or trousers; or, as seen at Max Mara, try two contrasting textures.

We loved their cashmere top and velvet skirt combination. Not ready for a top-to-toe red ensemble? You can try on the trend with a red pair of boots - or a scarf.

The ‘back to school’ autumn days always make me thing of buying a new pencil case… or, to be more precise, its grown-up incarnation – the compact handbag! While in the past we may have turned abroad for the best lines, Egypt now boasts a host of local designers with, ahem, bags of talent. There is nothing nicer than supporting local handcrafted designs. Here are my three current favourites:• Les miniatures - proving that small is beautiful, and good things come in small packages. • Nuniz by Nadia Zarkani - celebrating Egyptian heritage, these bags are locally handcrafted in Cairo.• Sami Amin Designs - an exquisite range of bags inspired by ancient Egyptian culture. A pop of colour and a cosy mixture of

textures and fabrics on the Fall 2017 catwalks at Coach invites us to take it easy.

time FoR… A neW hAndbAg

Victoria Beckham

Hermès

www.facebook.com/lesminiaturesworld | www.facebook.com/NunizCairo | www.sami-amin.com

WISH lIST

58 | Q3 2017 | law ToDay

SchoolbAck to

Our Fashion editor Ewa Szypula compiles the season’s best looks

The holidays may have ended, but there’s no need to get all sensible all of a sudden. The lingering sunshine outside reminds us that it isn’t time to cover up with a winter coat just yet… And while the arrival of September always seems to bring to mind images of smart plain suits and a tidy desk, this season’s runway fashions have surprised us with an invitation to fantasize about our holidays a little bit longer.

The Fall 2017 catwalk looks are edged with a dreamy softness - attenuating the sadness that always accompanies the end-of-summer return to work.

Ann Demeulemeester transforms the simple menswear staple by bringing a lighter, softer, sheerer texture to men’s shirts. Look out for these sheerer fabrics, which help us feel comfy even while it is not quite the time to switch off the air-con.

Elegant but edgy at christian Dior

Boys will be boys: an off-duty look at Balmain, Givenchy and Prada A soft blushat nina Ricci

Relaxed street styleat Isabel Marant

MENSWEaR EdITTHE WHITE SHIRT

In developing countries, it is estimated that at least 45m³ of water is lost per day through ineffective distribution networks, illustrating the necessity of a smart monitoring solution to forestall the exhausting of water supplies.

Facilities either treating or simply using large amounts of water would benefit from water management systems, which would allow operators to monitor and track water usage, water levels in tanks, acid/alkaline balance (PH), water quality, temperature and pressure. Water management systems would provide tools to both detect and prevent leakages. Pumps and motors are essential equipment that could be controlled, monitored and regulated using such systems.

AI Expert systems would provide both governments and facilities with advice and consultation on the optimal decisions to reduce costs and ration consumption. Moreover, the hardware infrastructure of facilities could be interconnected via trendy Zigbee compliant devices, which are most cost effective for IoT. These devices could send and receive operating information from a centralized automated unit. Intelligent computer systems able to make decisions based on real time data, without the interference of humans, should result in the optimal rationed consumption of water resources.

Sensors connected over a wireless network to a cloud smart monitoring system would allow for instant leakage detection. As a low energy network protocol, Zigbee offers networking capabilities just like Bluetooth and WiFi, but at much lower operational costs. That’s why IoT devices that have to stay connected for very long periods of time could benefit from this technique, to streamline zillions of bits of real-time data from sensors to intelligent expert systems.

To elaborate a little, expert systems are AI systems that have been taught all the business rules and scientific formulas for a specific domain, such as water management and treatment. Experts and consultants teach the system their cumulative know-how, positioning expert systems to make decisions just as well as human experts with years of experience. Such decisions could vary from turning pumps on to adding chemicals for water treatment; the possibilities are endless in a world moving very fast towards the automation of every single process.

With many governments racing to build futuristic smart cities, the advent of intelligent water (a term used primarily by IBM) was inevitable. Fully fledged smart cities, depending on intelligent

water amongst other smart resources for their very survival, will become ever more prevalent, giving us the chance to populate regions previously unexplored due to water scarcity.

Agriculture consuming as it does nearly 70% of our freshwater supplies, introducing intelligence to irrigation would tackle both water and food challenges. In the past, we were never too concerned about precision because we thought we had abundant supplies of water. Recognizing that this was not the case, IBM introduced smart water management software a few years ago, making use of computers for precise calculations, modeling and simulations. Big Data, a trendy field in computer science allowing computers to interpret, analyze and learn from endless streams of information from different sources such as sensors, pumps, and motors, will transform data from smart devices to concrete opportunities.

All these ideas might sound theoretical or futuristic. You may be surprised then to hear of a real life case study. Kenya never ceases to amaze ICT entrepreneurs, as its entrepreneurial landscape and ecosystem have evolved dramatically in recent years. In 2008, the Kenyan government proposed a smart city master plan named Konza, with the idea that it would serve as a case study and a benchmark for smart cities in Africa. The idea is that this technopolis shall host 230,000 habitants by 2030 and its construction is already in progress. This blueprint gives us a glimpse of the visionary plan being undertaken by the Kenyan government.

Supplying communities with fresh, clean water is a challenge that goes beyond digging a well and installing a pump.

Countries, cities, communities, utilities, farmers and individuals are all racing to better manage their water resources. Predictive analytics provide landowners with forecasts simple enough to be understood, interpreted and utilized by non-tech specialists. Such analytics allow farmers to anticipate droughts and floods, saving them a lot of trouble, as the absence of water is the main cause of a yearly loss of an estimated 40-60% of their livestock; even up to 80% in some remote areas.

The Kenyan government instigated an insurance program to monitor the vegetation levels necessary for livestock using digital image processing technologies on satellite images of drought-hit remote northern areas. The Kenya Livestock Insurance Program (KLIP) shall send notifications to farmers to start storing enough food for their herds, based on this analysis. The program is co-funded by the World Bank and covers 14,000 farmers, with a planned increase to 100,000 farmers by 2020. KLIP is based on a groundbreaking public-private sector partnership and now the Ethiopian government is considering investing in a parallel scheme. Such programs directly influence milk productivity and could help to fight malnutrition in Africa, so the KLIP program should bring relief to thousands of families plagued by hunger.

Innovative technology is therefore poised to make our cities smarter and more resilient to water challenges. Complemented by partnerships between public and private sector entities, there are increasing opportunities to bridge more gaps and allow young start-ups to introduce novel solutions.

Meanwhile, if you run a start-up in the MENA region, you may be interested in having a look at GESR – an incubator focused on tackling environmental challenges – as well as submitting a proposal to H2O Challenge and H2O Hackathon.

Mustafa Qamar-ud-Din is an entrepreneur who specializes in the use of computer technology to solve real-world social challenges. Find out more about his work by visiting the website of his start-up, mQubits: http://mqubits.com


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Mustafa Qamar-ud-Din

60 | Q3 2017 | law ToDay

Smart Cities & Intelligent Water in MENa

Water is one of our most precious natural resources, yet its availability has been severely impacted by the industrial revolution and resulting climate changes. Rain and rivers, the principle sources for drinking and irrigation, have subsequently been subject to contamination. In this article, we shall examine the role of modern computer technology in tackling water challenges and cast the spotlight on creative start-ups striving to find solutions in this pressing area. Technology holds immense promise in helping humanity to find efficient ways to manage water, treat waste, and perhaps one day even affect rainfall. Software offering insights into ways we address water challenges could empower us to make better decisions for the future of our planet.

Currently, the overlapping requirements of agriculture, food,

energy and water only compound existing problems. However, to be optimistic, we may hope that a solution to one aspect of this entangled mesh carries within it partial solutions or at least improvements to the rest. Making water readily available should affect the agricultural economics of an area, solving food scarcity. Meanwhile, the usage of water currents to generate electricity for hydroelectric dams would address energy needs.

Using the Internet of Things (IoT) and Artificial Intelligence (AI) technology, governments could be provided with tools to monitor the status and availability of water, issue relevant consumption bills and prevent the unnecessary waste of resources. A city that could effectively harness these mechanisms would be known as a smart city and would be amply supplied with the elixir of life and industry: water.


lifesTyle

62 | Q3 2017 | law ToDay

If you have never been to Italy before, understated Heliopolis bistro Pepenero provides a good alternative. Pepenero’s unobtrusive entrance is almost snuggled in amongst the surrounding buildings in the heart of busy Korba and, while this may prove confusing when it comes to actually locating the restaurant, it certainly adds to the feeling of being tucked away in what has been described as “Cairo’s best-kept Italian secret”. Pepenero specializes in bistro-fare, adapted to a Cairene clientele. Soft lights and colors help to set a cozy atmosphere indoors. With a “balcone” directly overlooking Korba’s busy streets and buildings and a bookshelf full of Italian cooking books, Pepenero allows restaurant-goers the feeling of being cocooned in a relaxed, private space while still having access to the bustling area around them. It must surely be a perfect spot for dates and gatherings.

We were greeted with two of the restaurant’s special non-alcoholic drinks: a Mojito so fresh and minty you’d forget the heat of summer and the highly recommended Passionfruit cocktail which left us in a state of “amore” with its sweetness and tropical freshness.

Italian salads have always been known for their flavor and Pepenero’s Caprese and Carpaccio Di Manzo are no different. The Caprese is a tasty combination of buffalo mozzarella cheese,

juicy tomatoes and red coral lettuce drizzled with olive oil and pesto. As for the Carpaccio Di Manzo, it’s definitely a salad for meat lovers with its mix of beef and rucola combining a sharp salty tang with fresh greenery.

The first main dish served was the Lasagna Milanese: layers of well-seasoned meat, creamy béchamel and thick tomato sauce. We also sampled the special Pepenero Pizza: a thin crispy base in the true Italian way, baked with a blend of tomato, basil and buffalo mozzarella, topped with divinely marinated chicken pieces and a final touch of black olives.

Those who are looking to satisfy their sweet tooth should definitely try Pepenero’s Nutella Calzone, a puffy half crescent-like pastry decorated with powdered sugar and a brush of nutella, filled with chocolate sauce and accompanied by crushed biscuits on the side. Simply put, no chocolate lover will be able to get enough of this experience.

With service that was helpful, generous and attentive, we found Pepenero to be a great dining experience, suitable for all kinds of meetings and gatherings. If you like your food hearty and full of flavor, with generous portions and the kind of warm service that makes you feel as though you are sitting in someone’s home in the heart of Rome, Florence or Venice, this lovely little bistro is most definitely worth a try.

Address: El-Thawra St, El-Montaza, Heliopolis, Cairo Governorate | Phone: 0101 010 1342 RATING:

TREaT YOURSElf TO SOMEITalIaN HOME COMfORTS

Farah el Deeb

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THE ENTREPRENEURSHIP ECOSYSTEM ENTREPRENEURSHIP ECOSYSTEM: ... SMEs in what is in many ways a fresh market, ... all of which of course are highly relevant for entrepreneurs seeking