Board of Directors Secretariat

Decision No. 136 of 2015 of the Authority's Board of Directors

Dated 16/12/2015

Amending certain provisions of Decision No. 11 of 2007 of the Authority's Board of Directors Regarding the Executive Rules for Corporate Governance of Securities Sector Companies and Not Listed on the Stock Exchange

Board of Directors of the Financial Regulatory Authority

After reviewing the Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies Law issued by Law No. 159 of 1981 and its executive regulations; and the Capital Market Law issued by Law No. 95 of 1992 and the decisions issued in implementation thereof; and the Central Deposit and Registration of Securities Law issued by Law No. 93 of 2000 and its executive regulations; and Law No. 10 of 2009 regulating supervision over markets and non-banking financial instruments; and the Statute of the Financial Regulatory Authority issued by Presidential Decision No. 192 of 2009; and Investment Minister Decision No. 332 of 2005 issuing the Corporate Governance Code; and Investment Minister Decision No. 110 of 2015 regarding Egyptian Accounting Standards; and Decision No. 11 of 2007 of the Authority's Board of Directors regarding the Executive Rules for Corporate Governance of Securities Sector Companies Not Listed on the Stock Exchange; and the approval of the Authority's Board of Directors in its meeting No. 15 held on 16/12/2015.

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Has Decided

(Article One)

Article 1-1 Scope of Application in Part One titled General Provisions is amended by adding two new paragraphs as follows:

Part One: General Provisions

1-1 Scope of Application (Addition of Two New Paragraphs)

The obligation to form a risk management committee under Item 2-4-2-4, as stated in Item 2-4-2-4 Committees of the Board and Its Competencies, in Part Two titled Board of Directors, is limited to the following companies:

• Companies whose equity exceeds 50 million Egyptian pounds according to their latest financial statements.
• Securities brokerage companies that execute transactions valued at 500 million Egyptian pounds or more annually.
• Securities portfolio management companies that manage assets or funds valued at 500 million Egyptian pounds or more annually.

Companies referred to in the preceding paragraph may form a joint audit committee.

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(Article Two)

A new item numbered 3-1 Obligations of the Securities Sector Group is added to Part One titled General Provisions, with the following text:

Part One: General Provisions

3-1 Securities Sector Group

1-3-1

Securities sector companies subject to the provisions of this Decision and their securities sector subsidiaries – provided that the ownership percentage in them is not less than 85% – may rely on a single audit committee (or an audit committee and a risk committee as applicable) formed from members of the holding company's board of directors, as well as a single internal audit department at the holding company to perform the tasks stipulated in this Decision, subject to the following controls:

(a) The consent of all majority shareholders in each subsidiary as stated in the preceding item.

(b) The audit committee must prepare a separate report for each company, whether the holding company or its subsidiaries, and present the report and any recommendations or observations to the board of directors of the relevant company at the next meeting, with a reference to its discussion in the board of directors' minutes.

(c) The internal audit department must prepare a separate report for each company, whether the holding company or its subsidiaries, and submit the report and any recommendations or observations to the chairman of the board of directors of the relevant company and to the audit committee, with a reference to its discussion in the audit committee meeting minutes and in its report specific to the relevant company.

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(Article Three)

A new item numbered 3-5 is added to Item 2-1-3-5 Obligations Related to Disclosures Concerning Treasury Shares, in Part Five titled Obligations Related to Transparency and Disclosure, with the following text:

Part Five: Obligations Related to Transparency and Disclosure

3-5 Obligations Related to Disclosures Concerning Treasury Shares

3-1-3-5

In cases where a subsidiary purchases shares in the capital of its holding company, all treasury share rules shall apply to the purchased shares.

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(Article Four)

The Nomination and Remuneration Committee mentioned in Item 2-4-2-4 in Item 2-4-2-4 Committees of the Board and Its Competencies, in Part Two concerning the Board of Directors, is abolished.

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(Article Five)

This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the date of its issuance. The competent departments within the Authority are tasked with its implementation according to their respective jurisdictions.

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Chairman of the Authority's Board of Directors Sherif Samy

Chairman's Office 46076