- 110 -The company's books and funds were handed over. One of the English shareholders approached the Consul's judge and requested that the English liquidator appointed by the company follow up on the receipt of all books and funds. The judge dismissed the request, ruling that the Mixed Courts lacked jurisdiction to invalidate an English company registered under English law.

To clarify the point of contention, we refer to a highly significant ruling by the Mixed Court of Appeal on April 29, 1908 (Collection of Legislation and Judgments, Vol. 30, p. 221). In this ruling, another English company, "Messrs. Andrew & Agricultural Lands of Egypt Ltd.," was declared null and void. We mention this ruling because the judgment in the Helwan Company case followed the general principles it established. It is useful to begin by mentioning the circumstances under which these cases first arose.

Egyptian laws stipulated that Egyptian joint-stock companies could only be formed by ministerial decree (Article 46 of the Mixed Commercial Code and Article 40 of the Native Commercial Code). Thus, the government held absolute power to grant or refuse licenses for company formation. Through this mechanism, it could impose the restrictions and conditions upon which such grants or refusals depended, as detailed in several decrees (Decree of the Council of Ministers on April 17, 1899, and June 30, 1906). During the era of great prosperity or speculation, in the years 1905, 1906, and 1907, numerous companies were established in Egypt. One of the most famous methods used by their founders for promotion was the "founder's shares" system. Some interested parties would sell the idea of a company with a brilliant and unparalleled future, claiming that the founder's shares would soon reach a high value. People were eager to subscribe. The company founders would retain all the founder's shares for themselves, offering only a small portion to subscribers relative to their investment. Meanwhile, the company's promoters would profit handsomely from their founder's shares, selling them at high prices. They were unconcerned with the company's fate because they had not invested a single dirham and their understanding of profit was based on this. Once the founders' attention shifted away from the company, the value of its shares immediately began to fall, and the market for founder's shares, which had lured the public into buying them and profiting, became stagnant. It is said that some financial experts in these lands