Regulatory Alerts2019-01-01
Circular Letter No. 1 of 2019 Regarding Cumulative Voting in Board of Directors Elections for Companies Listed on the Egyptian Exchange and Non-Banking Financial Companies
The Egyptian Financial Regulatory Authority (FRA) mandates that all companies listed on the Egyptian Exchange and those operating in non-banking financial activities must amend their articles of association to implement cumulative voting for board of directors elections. This requirement, aligned with FRA Board Decisions No. 154 and 155 of 2018, ensures proportional board representation and enhances minority investor participation in corporate governance. Existing companies are strictly required to update their governing documents to incorporate this voting mechanism prior to holding any future board elections.
Deputy Chairman of the Authority
Circular Letter
No. (1) of 2019
Date: 2019/01/16
Regarding Cumulative Voting in Board of Directors Elections for Companies Listed on the Egyptian Exchange and Companies Operating in Non-Banking Financial Activities
In line with the Authority's commitment to protecting minority investors in companies listed on the Egyptian Exchange and companies operating in non-banking financial activities, the Authority has mandated these companies to include in their articles of association a cumulative voting mechanism for electing board members, enabling proportional representation on the board whenever possible. This ensures minority investors have the opportunity to be represented on the boards of these companies and thereby participate effectively in their management.
In implementation of the Authority's Board of Directors Decision No. (154) of 2018 concerning the amendment of the Egyptian Exchange listing and delisting rules by adding a new condition to the general listing conditions set forth in Article (6) of the Listing Rules, companies listed on the securities exchange are required to include in their articles of association the mandatory use of the cumulative voting system for electing board members, enabling proportional representation on the board whenever possible.
In implementation of the Authority's Board of Directors Decision No. (155) of 2018 concerning the conditions for granting and renewing licenses and share ownership rules for companies operating in non-banking financial activities, a new obligation has been added to companies seeking preliminary approval for establishment or a license to conduct non-banking financial activities, requiring their articles of association to mandate the use of the cumulative voting system for electing board members, enabling proportional representation on the board whenever possible.
The Authority emphasizes that existing companies at the time of this decision's implementation must formalize their status and amend their articles of association to incorporate the cumulative voting system prior to conducting any board of directors elections.
Dated: 2019/01/16
Deputy Chairman
Egyptian Financial Regulatory Authority
Judge / Khaled El-Nashar
Egyptian Financial Regulatory Authority
Smart Village, Building no. B-136, Giza
Postal Code: 12577
Tel: (00202) 35345350 - Fax: (00202) 35370036
www.FRA.gov.eg
Smart Village, Building 136, B - Giza, Egypt
Postal Code: 12577
Tel: +202 35345350, Fax: +202 35370036
info@fra.gov.eg