Region

Jurisdiction

Regulator

2016-01-01

Authority Board of Directors Decision No. (54) of 2016 (Updated 2017 Version)

The Financial Regulatory Authority (FRA) of Egypt issued Decision No. (54) of 2016, updated in 2017, to exempt specific acquisition scenarios from the mandatory takeover bid requirement under Article 356 of the Capital Market Law's Executive Regulations. The decision outlines five exempted cases, including unanimous shareholder approval, state-owned holding company restructuring, cross-holding acquisitions exceeding 50% and 33% thresholds with strict asset diversification and auditor licensing conditions, treasury share purchases approved by the general assembly, and cash capital increases. It further specifies that these exemptions apply to Egyptian companies listed on the Egyptian Exchange or publicly offered, mandates publication on official websites, and assigns implementation to the Authority's relevant departments.

Egypt

Financial Regulatory Authority Egypt

Decision of the Authority's Board of Directors No. (54) of 2016 dated 24/4/2016 Regarding exemptions from submitting takeover bids for item (z) of Article (356) of the Executive Regulations of the Capital Market Law In accordance with the latest amendment dated 29/10/2017

Board of Directors of the Financial Regulatory Authority After reviewing the Capital Market Law issued by Law No. (95) of 1992 and its Executive Regulations and the decisions issued to implement them; And the Central Depository and Registry of Securities Law issued by Law No. 93 of 2000 and its Executive Regulations; And Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; And Presidential Decree No. (191) of 2009 on the rules governing the management of the Egyptian Exchange and its financial affairs; And the Basic Statute of the Financial Regulatory Authority issued by Presidential Decree No. (192) of 2009; And the Authority's Board of Directors Decision No. (131) of 2014 regarding certain exemptions from submitting mandatory takeover bids; And the ruling of the Supreme Administrative Court – First Chamber dated March 15, 2014, in Appeal No. (6410) of 58th Judicial Year; And the approval of the Authority's Board of Directors in its meeting held on April 24, 2016; Decided:

Article (One) Pursuant to the provision of item (z) of Article (356) of the Executive Regulations of the Capital Market Law, the Authority may exempt the following cases from the obligation to submit a mandatory takeover bid: -

The case of obtaining the approval of all shareholders for the takeover bid and that they have no objections to the sale. [1] The decision was amended by the Authority's Board of Directors Decision No. 142 dated 29/10/2017.
Cases of transfer of full ownership of shares owned by employee unions participating in the subsidiaries of state-owned holding companies to restructure these companies and inject additional investments into them.
Cases where a natural or legal person – alone or with its related parties – acquires a percentage exceeding 50% of the shares or voting rights of an entity that itself owns – alone or with its related parties – more than 33% of the shares or voting rights in a company whose shares are listed on the Egyptian Exchange, provided that the following conditions are met in the aforementioned entity: - a. The owning entity holds participations in other companies besides the company whose shares are listed on the Egyptian Exchange. b. The book value of the entity's other participations – referred to in item (a) – and its other assets (excluding cash) exceeds 50% of the book value of the entity's total assets, based on the entity's latest annual financial statements accompanied by an unqualified audit report from its auditor with no qualifications affecting the financial position of this entity. c. The party wishing to acquire the owning entity and its related parties do not hold any other participations or voting rights in the company whose shares are listed on the Egyptian Exchange.
Cases of the company's General Assembly approving the purchase of treasury shares if it results in an increase in the ownership percentage or voting rights of the shareholder and their related persons to the threshold requiring a mandatory takeover bid, provided that [2] the shareholder and their related persons do not vote on this resolution at the General Assembly.
Increasing the capital of companies in cash [3] or through credit balances. The exemption does not apply to the purchase of subscription rights in a capital increase. In all cases, the auditor referred to in item (b) must be among the auditors licensed to practice in the country where the head office of the entity to be acquired is located.

[2] A new item (4) was added by the Authority's Board of Directors Decision No. 142 dated 29/10/2017. [3] A new item (5) was added by adding the second paragraph and the last paragraph of Article One by the Board Decision No. 142 dated 29/10/2017.

Article (Two) The provisions contained in the cases referred to in the preceding Article shall apply to the shares of Egyptian companies that have offered their shares in a public offering or through a public listing on a trading market, in addition to companies whose shares are listed on the Egyptian Exchange.

Article (Three) This Decision shall be published on the Authority's and the Egyptian Exchange's websites, and the competent departments within the Authority shall implement it according to their respective jurisdictions.