Circular No. (1)

Issued on 18/8/2009

Regarding Deposit and Trading Rules for Reward and Incentive Shares

In light of the efforts of many companies to purchase a number of their own shares or allocate a number of treasury shares previously purchased for the purpose of implementing reward and incentive programs for their employees, the Financial Regulatory Authority emphasizes the necessity of adhering to the following procedures and controls:

First: The company purchasing its own shares or obtaining what is traditionally known as treasury shares for the purpose of implementing employee reward and incentive programs must notify the Central Depository and Securities Registration Company immediately upon completion of the purchase or allocation, as these shares must be frozen and their disposal prevented unless a decision is issued by the Supervisory Committee for the Reward and Incentive System of the issuing company in accordance with the system approved by the Authority.

Second: The company owning the reward and incentive program must, immediately upon the Authority's approval of the system, create a new code for the shares allocated to the system, including "Company Name/Reward and Incentive System".

Third: The Central Depository and Securities Registration Company shall transfer the notified shares from the account balance under the issuing company's own name to the account balance under the coded system name "Company/Reward and Incentive System", while continuing to freeze these shares. Under this arrangement, shares allocated to the reward and incentive system shall not be treated as treasury shares from the date of the Authority's approval of the system, provided that the disclosed purchase offer prior to completing the purchase of these shares states their use for rewarding and incentivizing the company's employees.

Fourth: The number of shares allocated to the reward and incentive system registered with the Central Depository and Securities Registration Company under the name "Company/Reward and Incentive System" shall be taken into account when calculating the quorum for general assemblies, and the issuing company shall notify the Central Depository and Securities Registration Company when issuing the register of shareholders entitled to attend the assembly.

Fifth: Any additional free shares accrued to the reward and incentive system shares shall be added to the reward and incentive system share balance, and Articles Third, Fourth, Fifth, Seventh, and Eighth shall apply to them.

Sixth: The cash coupons distributed on the reward and incentive system shares shall be disposed of in accordance with the provisions of the reward and incentive system approved by the Authority. In the event that the system does not specify how to handle these distributions, particularly before distributing or allocating these shares to beneficiaries, the Central Depository and Securities Registration Company is obligated to add these distributions to the system's account pending a decision by the company's Extraordinary General Assembly regarding them and after obtaining the Authority's approval.

Seventh: The issuing company of the reward and incentive system shall not have the right to dispose of the reward and incentive system shares in any manner other than what is stipulated in the system approved by the Authority, except after the Authority approves an amendment to the system allowing it to carry out such disposal.

Eighth: The Supervisory Committee for the System has the right to determine subscription to a cash capital increase in the name of the reward and incentive system, if the system approved by the Authority permits this, along with specifying the source of funding for the increased shares.

Every issuing company that has adopted a reward and incentive system from the Authority must comply with these instructions and align its status accordingly within one month of its date. The Egyptian Exchange and the Central Depository and Securities Registration Company are each responsible for ensuring its implementation.

Hesham Ibrahim
Sector Supervisor
Technical Office

---

Headquarters: Smart Village, Building 5 - 15 B
Km 78, Cairo/Alexandria Desert Road
6th of October City, Postal Code: 12577

Telephone: +202 3527 0040 - Fax: +202 3527 0041
Email: info@efsa.gov.eg
Website: www.efsa.gov.eg