The Egyptian government must revise its move and prepare a new bill only after consulting with non-governmental organisations, HRW said amid fresh fears of an intensified crackdown on civil society.
Egypts State Council – the judicial body that which examines and amends legislation– approved on Monday the draft, paving way for parliament to directly send it to Sisi to sign into law.
"Egypts parliament is trying to dodge public scrutiny by rushing into force a law that would effectively ban what remains of the country’s independent civil society groups," said Sarah Leah Whitson, Middle East and North Africa director at HRW.
"If this law passes, it would be a farce to say that Egypt allows non-governmental organisations, since all would be subject to the security agencies control."
The draft bill – submitted earlier this month – will not allow NGOs to carry out any research without a permit from the state.
It will affect around 47,000 local and 100 international groups working in Egypt, HRW warned.
It stipulates the creation of a "national authority" comprising representatives of the security services, intelligence and the army, who will oversee foreign funds and the activities of foreign NGOs.
Rights groups have repeatedly voiced concern over the draft bill, which Amnesty International called a "death warrant" to relevant organisations.
Egyptian and foreign NGOs operating in the country are governed by a stiff law which allows the government to supervise their activities and finances.
In September a court froze the assets of five prominent human rights defenders and three NGOs, who had been under investigation for allegedly receiving foreign funds in a case dating from 2011.