Commercial Books
Prof. Iman Nour-Eldin
Dr. Bassem Elmaghraby
First: commercial books in the Egyptian trade
law.
Second: types of commercial books.
Outlines:
Third: the importance of commercial books and
their validity.
Fourth: sanctions for not holding books.
Fifth: commercial register.
Introduction

The main aim of every business is
to earn profit. Profit is the surplus
of Income over expenditure.

So, to calculate profit the trader
must record the incomes and
expenditure
related
to
his
business… that’s why we need
commercial books.
First: Commercial books in the
Egyptian Trade Law
◼
◼
◼
"Commercial books" are records that restrict the trader's
operations from income, expenses, rights, liabilities, and these
records show his financial position and the condition of his trade.
Trade laws in various countries have imposed an obligation on
traders to keep books, but the legislation differs in determining
the books that must be held, and some laws only require the
trader to hold books that fit his trade without specifying the types
of such books (give him the freedom to add other books
according to his trade).
Articles 21:29 of the Egyptian Trade Law included the nature and
description of the books that the trader is obliged to hold, whether
a natural or legal person.
First: Commercial books in the
Egyptian Trade Law
o
Holding commercial books is an obligation imposed by law on
anyone who has met the requirements for acquiring the status
of trader.
o
Article 21 of the Trade Act requires each trader with a capital of
more than 20,000 pounds to hold the Commercial books
required by the nature of his trade, in particular the journal and
inventory books, in a manner that shows his financial position,
rights and debts.
Second: Types of Commercial Books
1. Mandatory business books:
• Article 21 stipulates that any natural
or legal person with merchant status
must hold a daily journal or review of contracting transactions on a monthly
basis, provided that all documents with which such operations can be
reviewed on a daily basis.
•
The same article also requires that it must also conduct an annual
inventory, a copy of the balance sheet (shows assets and liabilities) and
losses and profits account shall be recorded in the inventory book. It is clear
from these two texts that the legislator has obliged each trader to hold at
least two books:
Second: Types of Commercial Books
i. Journal:
• The journal is one of the most important commercial books, a statement to
record all the trader transactions that related to his trade such as sale,
purchase, borrowing, payment, and dealing with banknotes, commercial
papers, or goods in a daily basis.
•
The first paragraph of article 22 explained that the Journal shall include all
trade transactions carried out by the trade, as well as his personal drawings,
day by day and in detail, with the exception of the personal drawings which
may be recorded in the total, month by month..
Second: Types of Commercial Books
ii.
Inventory book:
• The inventory book is the second book that law has imposed on the trader or enterprise to hold and
register, it includes the quantity and details of the goods held by the trader at the end of the fiscal
year, attached by a copy of the balance sheet (which includes two sides Assets, fixed and current,
the trader's rights before third parties from one side, and on the other side Liabilities including the
merchant's debt to third parties, as well as the capital as the first debt on it) and the profits and
losses account, which explain its position at the end of the year.
•
Article 23: Details of the goods available with the trader at the end of the financial year
are recorded in the inventory book, OR a total statement of the goods, if their details are
mentioned in separated books or statements. In this case, these books or statements
shall be considered a supplementary part of the original inventory book.
Second: Types of Commercial Books
2. Auxiliary business books:
• The legislator imposed on
the trader the obligation to keep the journal and
inventory, but the nature of the business requires keeping additional books,
where the trader may use auxiliary journals required by the nature of his trade,
so he may write his work with an auxiliary journal for purchases, sales, and
another for notes receivables…etc.
Second: Types of Commercial Books
o The second paragraph of article 22 stipulated that The trader may use an
auxiliary journal in which to record details of the different types of
commercial transactions. In this case, he will only record the total of these
transactions in the journal. if he does not follow this procedure, each
auxiliary journal shall be considered an original book.
o Among
the most prominent auxiliary commercial books are: Cash Book:
which shows the amounts that come in and out of the treasury, and the
book of purchases and sales: which records all purchases and sales.
Second: Types of Commercial Books
• The commercial paper book: In which the maturity dates of bills and
checks are recorded, whether drawn on or in favor of the trader.
• The inventory book: shows the movement of goods entering and leaving
the store.
Third: The importance of commercial
books and their validity
o
The books are very important as commercial evidentiary
materials; therefore, the legislator subjected the commercial
books to a special regulation to ensure their regularity and
validity. Article 25 first paragraph: The commercial books shall
be free of any empty spaces, deletion, erasure, writing in
margins, or between the lines.
o
The second paragraph also required that “Before using the
journal and inventory books, their pages shall be numbered,
and the Commercial Register Office shall sign each page
thereof and stamp each page with the seal of the office, along
with indicating the number of the book pages.”
Third: The importance of commercial
books and their validity
o
This provisions aiming to preserve and maintain the status
of the Commercial Books from removing pages, replacing
some of its contents, or replacing the book with another
fake copy.
o
The importance of commercial books stems from several
considerations: they give an honest picture of the trader's
activity, they are considered a means of proof before the
courts, and a fair tools of estimating taxes, and the law
considers them as means of security in case of bankruptcy
and to enhance credit.
Third: The importance of commercial
books and their validity
o
How long is the legal period to keep commercial books?
o
The trader must keep the commercial books for a period of time so
that they can be accessed if necessary, and the first paragraph of
article 26 stipulates that the books and documents must be kept
for five years, and the second paragraph stipulates that they must
also keep a copy of correspondence and telegrams for five years
from the date they are sent or received.
o
Note: the books that do not take into account the legally
established conditions cannot be submitted to the judiciary and do
not have the power of proof before him in favor of those who hold
them, and the merchant is considered bankrupt by fraud if he does
not keep commercial books or keeps irregular books.
Fourth: Sanctions for not holding books
o The law ensures the respect of its rules on commercial books
by imposing civil and criminal sanctions in case of violation:
1. Civil sanctions:
• Failure to adopt irregular books before tax accounting
authorities and the judiciary in favor of the trader.
• The trader's tax exemption is subject to a tax judgment, which
is not considered to be in his favor.
• If the trader refrains without acceptable excuse from
submitting his books to review, the court may consider that as
presumption of the Validity of the facts required to be derived
from the books, in accordance with article 28, paragraph 4.
Fourth: Sanctions for not holding books
1.
Civil sanctions:
• Whoever violating the provisions related to commercial books shall
be liable to a fine penalty of not less than 100 Egyptian pounds and
not more than 1000 pounds in accordance with article 29.
2.
Criminal sanctions:
• Article 768: The provisions prescribed in the Criminal Law shall
apply to criminal bankruptcy cases.
• Article 331 of the Penal Code No. 95 of 2003 states that "a trader may
be considered guilty of the crime of bankruptcy by default if he does
not edit the books stipulated in the Trade Act, Or not to conduct the
inventory, or if his books are incomplete or irregular so that his true
financial position is not known, all with fraud.
Fourth: Sanctions for not holding books
2. Criminal sanctions:
• Article 334 of the Penal Code stipulates that the bankrupt with
negligence shall be punished with imprisonment for a period
not exceeding two years, but if this bankruptcy is the result of
fraud, Article 329 of the Penal Code stipulates the punishment
of the fraudulent and those who participated in that with
imprisonment of three to five years, and it has ruled that it is
permissible to deprive him from his Political rights for the same
period or until his rehabilitation.
FIFTH: COMMERCIAL REGISTER
o The provisions of the Trade Act stipulated that the trader,
whether an individual or a company, should be registered with
the Commercial Register and the articles of 30:33 organized
this subject as follows:
o Article 30 stipulates that " A register shall be provided at the
administrative authority concerned, in which the names of
traders shall be recorded, whether individuals or companies“.
o Article 31 stipulates that "anyone who is registered with the
commercial register shall indicate his trade name, the Commercial
Register Office in which he is recorded, and his registration number
on the signboard of his shop and in all correspondence and
publications related to his trade”.
FIFTH: COMMERCIAL REGISTER
o Article 32 stipulates that "Each person has the right to obtain a copy
extracted from the registration page from the Commercial Register
Office. In case he is not recorded, the Office shall grant a negative
certificate in respect thereof.
o The copy extracted from the registration page shall not comprise the
following:
a) The bankruptcy declaration sentences in case a court ruling has been
issued rehabilitating him.
b) The interdiction sentences if it is decided to be lifted.”
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