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2020-01-01

Decision No. 176 of 2020 on Ownership Structure and Board Composition Regulations for Central Deposit and Registration Companies for Government Securities

The Financial Regulatory Authority issued Decision No. 176 of 2020 to mandate strict ownership thresholds and corporate governance standards for central deposit and registration companies handling government securities. The decree requires the Central Bank of Egypt to hold at least 50% ownership (or 100% if acting alone) and dictates that company boards must comprise five to nine members, including a majority of experienced non-executives, at least two independent directors, and at least one woman. It further prohibits dual leadership roles, caps board tenure at nine years across three terms, mandates cumulative voting, and grants existing companies a compliance grace period until the second subsequent election cycle.

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Financial Regulatory Authority Egypt

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Financial Regulatory Authority

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Decision of the Board of Directors of the Authority No. (176) of 2020 dated 16/8/2020

Regarding the Ownership Structure Regulations for the Company Conducting Central Deposit and Registration Activities for Government Securities and Financial Instruments
and the Regulations for Forming the Boards of Directors of Companies Conducting Central Deposit and Registration Activities

The Board of Directors of the Financial Regulatory Authority

Having reviewed the Central Deposit and Registration of Securities and Financial Instruments Law No. (93) of 2000 and its amendments;
and the Central Bank, Banking System and Currency Law No. (88) of 2003;
and Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments;
and Decision of the Board of Directors of the Authority No. (96) of 2014 regarding nomination rules and standards for the chairmanship or membership of the board of directors of a central deposit and registration company for securities, excluding stock exchange representatives;
and Decision of the Board of Directors of the Authority No. (100) of 2020 regarding corporate governance rules for companies operating in non-banking financial activities;
and having approved this decision by the Board of Directors in its session held on 16/8/2020;

Has Decided

(Article One)

The Central Bank of Egypt shall be the sole owner of the company conducting central deposit and registration activities for government securities and financial instruments at a percentage of (100%) if the company is established solely by it.
The Central Bank may establish the company in partnership with public law entities and/or one or more financial institutions, provided that the Central Bank of Egypt owns more than (50%) of the company's capital.

(Article Two)

Without prejudice to the conditions and regulations issued by a decision of the Board of Directors of the Authority regarding nomination for membership on the boards of directors of companies conducting central deposit and registration activities, and in accordance with Article (27) of the Central Deposit and Registration of Securities and Financial Instruments Law, companies conducting central deposit and registration activities shall adhere to the following regulations when forming their boards of directors:

  • 1 - The number of board members shall not be less than five and shall not exceed nine. The majority of board members must be experienced and non-executive, with at least two independent members. An independent board member refers to the definition provided in Decision of the Board of Directors of the Authority No. (100) of 2020 regarding corporate governance rules for companies operating in non-banking financial activities.

  • 2 - The term of the company's board of directors shall be three years, renewable for additional terms.

  • 3 - The chairman of the board and executive board members shall not serve on the board for more than three terms, totaling no more than nine consecutive or non-consecutive years.

  • 4 - Holding the positions of chairman of the board and managing director or chief executive officer of the company simultaneously is prohibited.

  • 5 - A member of the company's board of directors shall not hold membership on the board of any other company conducting central deposit and registration activities at the same time.

  • 6 - The company must use cumulative voting when electing board members.

  • 7 - The board composition must include at least one female member.

(Article Three)

The currently operating central deposit and registration company for securities is granted a compliance period for item (3) of Article Two, running from the date of this decision until the first election cycle following the next one, to implement its provisions.

(Article Four)

This decision shall be published in the Egyptian Gazette and on the websites of the Authority and the central deposit and registration company for securities, and shall take effect from the day following its publication in the Egyptian Gazette.

Chairman of the Board of Directors
Dr. Mohamed Omran

Smart Village, Building 137, Giza, Egypt
Postal Code: 110
Phone: +2027054050 • Fax: +2023070036
WWW.FRA.GOV.EG

Building Bridges not Walls
Between Bridges Not Barriers

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