Financial Regulatory Authority Board Decision No. (117) for 2021

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Decision of the Authority's Board of Directors No. (117) for 2021 dated 2021/7/18 Regarding the Rules for Forming, and Conditions and Procedures for Nominating to the Chairmanship and Membership of the Board of Directors of the Central Securities Depository and Clearing Company

The Board of Directors of the Financial Regulatory Authority, Having reviewed the Central Securities Depository and Clearing of Financial Instruments Law issued by Law No. (93) of 2000; and Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; and the Authority's Board Decision No. (96) of 2014 regarding nomination rules and criteria for the chairmanship or membership of the board of the Central Securities Depository and Clearing Company, excluding stock exchange representatives; and the Authority's Board Decision No. (100) of 2020 regarding corporate governance rules for companies operating in non-banking financial activities; and the Authority's Board Decision No. (126) of 2020 regarding ownership structure rules for companies conducting central securities and government financial instruments depository and clearing activities, and formation rules for boards of directors of such companies; and the Authority's Board Decision No. (38) of 2021 regarding board formation rules for the Central Securities Depository and Clearing Company, and nomination conditions and procedures for its chairmanship and membership; and the Authority's Board Decision No. (110) of 2021 stipulating that female representation in the boards of companies operating in non-banking financial activities shall not be less than (25%) or at least two members; and the recommendation of the General Assembly of Egypt Clearing, Depository and Central Securities Registration Company dated 2021/7/4; and after approval by the Authority's Board in its meeting held on 2021/7/18;

Has Decided:

First: Rules for Forming the Company's Board of Directors (Article One) The Central Securities Depository and Clearing Company shall, when forming its board of directors, adhere to the following rules: 1- The company's board of directors shall consist of eleven members, mostly experienced and non-executive, with at least two independent members. An independent board member is defined as per the definition in the Authority's Board Decision No. (100) of 2020 regarding corporate governance rules for companies operating in non-banking financial activities.

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

2- The company's board of directors shall serve a three-year term. 3- The chairman of the company's board and executive board members may not serve on the board for more than three consecutive or non-consecutive terms. 4- Holding both the chairman and managing director or chief executive officer positions simultaneously is prohibited, subject to applying clause (1-1-3) of the Authority's Board Decision No. (100) of 2020 regarding corporate governance rules for non-banking financial companies. 5- A member of the company's board may not simultaneously hold a position on another company's board that conducts central depository and clearing activities. 6- The company must use cumulative voting when electing board members. 7- The board formation must include at least one female member.

Second: Conditions and Procedures for Nominating to the Chairmanship and Membership of the Company's Board (Article Two) The Authority's Board Decision No. (96) of 2014 regarding nomination rules and criteria for the chairmanship or membership of the board of the Central Securities Depository and Clearing Company, excluding stock exchange representatives, shall be reinstated, insofar as it does not conflict with the provisions of this decision.

(Article Three) The following conditions must be met by the natural person nominated for the chairmanship or membership of the company's board, and by stock exchange representatives: 1- Possessing a suitable higher education qualification. 2- Demonstrating the technical competence and leadership qualities required of board members. 3- Having a good reputation and character, and not having been previously convicted by a final judgment of a felony or a misdemeanor involving moral turpitude or honesty, or one of the crimes stipulated in laws regulating non-banking financial activities, or in the Central Bank and Banking System Law, or the Anti-Money Laundering Law, or declared bankrupt within the preceding five years, unless his reputation has been restored (1).

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

4- The Authority has not issued more than one measure regarding the company during his tenure (excluding warnings) due to his breach of duties or responsibilities as a board member, and he is barred from serving on the company's board for the two subsequent terms following the issuance of these measures. In all cases, the company shall take legally prescribed measures to exclude a board member if any of the conditions in the preceding clauses are met.

(Article Four) The nominee for the company's board must have at least seven years of experience in the capital market or in one of the legal, accounting, financial, technical, or information technology fields related to the company's activities and operations. For experienced nominees eligible for the chairman or managing director positions, experience must be at least ten years in any of the aforementioned fields.

(Article Five) The nominee for the company's board must be a representative of the group of shareholder members, serving as chairman or member on the boards of companies operating in securities brokerage or custodian activities. If the custodian is a bank, the nominee must be responsible for its custodian activities. In all cases, the central depository company and its subsidiaries, or companies that are members of the central depository under the actual control of the same natural or legal person, may not submit more than one nominee for membership on the board of the Central Securities Depository and Clearing Company.

(Article Six) A committee formed by the Chairman of the Authority by decision shall examine and study nomination applications for the chairmanship and membership of the company's board. The committee shall review nominee names and lists, verify compliance with required conditions, and correspond with the company to complete documents related to nominees in light of the stipulated conditions and standards.

(Article Seven) The committee meets upon invitation by its chairman, with a quorum requiring the attendance of the majority of its members. The committee issues recommendations by a majority of attending members, and prepares a reasoned report on the final status, including results, proposed recommendations, verification of legal conditions for each nominee, and reasons for excluding those failing to meet nomination criteria. The report is submitted to the Chairman of the Authority for approval prior to being presented to the Authority's Board for ratification.

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

(Article Eight) Interested parties may appeal the Authority's Board decision approving nomination names and lists, as well as the company board election results, within five working days from notification or knowledge of the decision, before the Authority's Appeals Committee in accordance with Article (53) of the Central Securities Depository and Clearing of Financial Instruments Law. The Appeals Committee shall rule on appeals within a period not exceeding two weeks from the expiration of the appeal period. Its decision is final and enforceable, and interested parties are notified within at most two working days from its issuance.

(Article Nine) The nomination application review committee referred to in Article Six shall prepare final lists of nominees within the next two working days following the issuance date of the Appeals Committee's decision (if any), or from the expiration date of the appeal period, as applicable.

(Article Ten) For the validity of voting on the nominee list for representatives of shareholder groups in the company, two members must be selected from brokerage companies and two from entities conducting custodian activities.

(Article Eleven) The company shall align its status regarding female representation on its board in accordance with the aforementioned Authority's Board Decision No. (110) of 2021.

(Article Twelve) The Authority's Board Decision No. (38) of 2021 and Article Three of the Authority's Board Decision No. (126) of 2020, referred to above, are hereby repealed.

(Article Thirteen) This decision shall be published in the Egyptian Gazette and on the websites of both the Authority and the Central Securities Depository and Clearing Company, and shall take effect from the day following its publication in the Egyptian Gazette.

Chairman of the Authority's Board Dr. Mohamed Omran

---

Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35370430 Fax: +202 35370036 WWW.FRA.GOV.EG Building Bridges not Walls