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2011-01-01

Board of Directors Decision No. (81) of 2011 on Listing Rules for Securities Issued by Small and Medium Enterprises

The Egyptian Financial Supervisory Authority (EFSA) issued Decision No. 81 of 2011 to establish listing rules for securities of small and medium enterprises (SMEs) on the Egyptian Exchange. The regulation defines SMEs as joint stock companies with issued capital not exceeding 50 million EGP initially and 100 million EGP subsequently, and mandates minimum listing conditions including a 10% public float, 25% retention by founders and board members for two years, at least 25 shareholders, and 100,000 listed shares. It further requires accredited sponsor undertakings, five-year profit forecasts, full capital payment commitments, and specifies disclosure publication timelines on exchange screens and websites while repealing the previous 2007 SME listing decision.

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Egyptian Financial Supervisory Authority (EFSA)

Chairman of the Board of Directors

Board of Directors Decision of the Authority

No. (81) dated 17/10/2011
Regarding the Rules for Listing Securities Issued by Small and Medium Enterprises

Chairman of the Board of Directors of the Egyptian Financial Supervisory Authority

Having reviewed Law No. 159 of 1981 on Joint Stock Companies, Limited Liability Companies and Commandite Companies and its executive regulations and amendments,
and Law No. 95 of 1992 on the Capital Market and its executive regulations,
and the decisions issued to implement them,
and Law No. 93 of 2000 on the Central Depository and Registration of Securities and its executive regulations,
and Law No. 10 of 2009 on regulating supervision over non-Egyptian markets and financial instruments,
and Presidential Decree No. 191 of 2009 on the rules organizing the Egyptian Exchange and its financial affairs,
and Presidential Decree No. 192 of 2009 issuing the Statutes of the Egyptian Financial Supervisory Authority,
and the Rules for Listing, Continuing Listing and Delisting of Securities issued by Board Decision No. 30 of 2007 on 18/6/2007 and its amendments,
and Board Decision No. 62 of 2007 of the General Authority for the Capital Market regarding the rules for listing securities issued by small and medium enterprises,
and based on the approval of the Authority's Board of Directors in its meeting held on 17/10/2011.

Decided

Article One

For the purposes of applying the provisions of this Decision, "Small and Medium Enterprises" refers to joint stock companies whose issued capital does not exceed 50 million Egyptian pounds or its equivalent in foreign currencies at the time of submitting the initial listing application, and does not exceed 100 million Egyptian pounds or its equivalent in foreign currencies thereafter.

Article Two

The shares of small and medium enterprises shall be listed in the Exchange's trading boards subject to the following conditions:

  1. The percentage of offered shares shall not be less than 10% of the company's total shares. "Offering" in the context of these rules means selling the company's shares based on the disclosure report stipulated in Item (2) of Article 4 of the Rules for Listing, Continuing Listing and Delisting of Securities on the Egyptian Exchange.

  2. The percentage held by institutional investors and members of the company's board of directors shall not be less than 25% of its capital shares for a period of not less than two financial years from the date of the offering referred to in the preceding item.

  3. The number of shareholders in the company shall not be less than 25 shareholders.

  4. The number of issued shares requested for listing shall not be less than 100,000 shares.

  5. The company shall submit to the listing application the financial statements for a financial year preceding the listing application, prepared in accordance with Egyptian Accounting Standards and audited in accordance with Egyptian Auditing Standards by a registered auditor with the Authority's dedicated register, and certified by the company's General Assembly.

Nevertheless, the Listing Committee may accept applications from companies that have not issued financial statements for a full financial year, provided that the issuing company submits five-year business plans specifying expected profits, approved by a financial advisor accredited by the Authority.

  1. The issued capital shall be fully paid, and the company shall commit to expanding and increasing its fully paid issued capital within five years from the listing date, in accordance with the offering plan and disclosure report referred to in Item (1) of this Article, or the company's business plans referred to in Item (5).

  2. Shareholders' equity in the latest annual financial statements preceding the listing application date shall not be less than the paid-up capital.

Article Three

The small or medium enterprise applying to list its issued shares must attach to the listing application, in addition to what is stipulated in Article (4) of the Rules for Listing, Continuing Listing and Delisting of Securities on the Egyptian Exchange, the following:

  1. A signed undertaking between the company and the accredited sponsor, according to the form prepared by the Egyptian Exchange, guaranteeing the duties and obligations of the listing applicant company and the accredited sponsor towards the Egyptian Financial Supervisory Authority and the Egyptian Exchange.

  2. A declaration from the sponsor and the company to provide all required information and data regarding the listing process of their securities on the Egyptian Exchange and to fulfill the obligations arising from the listing.

  3. Five-year business plans specifying expected profits, approved by the sponsor or a financial advisor accredited by the Authority.

Article Four

The provisions of Board Decision No. 30 of 2007 and its amendments regarding the listing, continuing listing, and delisting of securities issued by small and medium enterprises shall apply to the extent not specifically addressed in this Decision, except for the provisions stipulated in Article (7) of those rules.

Article Five

Subject to the provision of Article (6) of the Capital Market Law No. (95) of 1992, the publication of disclosure reports, financial reports, and announcements issued by the company shall be done through the following:

  • The disclosure report referred to in Item (1) of Article Two of this Decision shall be published on the Exchange's trading screens for at least five days prior to the commencement of trading in the small or medium enterprise's shares, in addition to its publication on the Egyptian Exchange's website.

  • The Egyptian Exchange shall publish the periodic and annual financial statements of small and medium enterprises, along with supplementary notes, the auditor's report, and the Authority's comments thereon (if any), and all disclosure reports referred to in the listing rules on the Exchange's website on the day following their submission and for at least three days. Announcements regarding the distribution date for small and medium enterprises shall be made through the Exchange's trading screens and website.

Article Six

Decision No. 62 of 2007 of the Board of Directors of the General Authority for the Capital Market is hereby repealed.

Article Seven

This Decision shall be published in the Egyptian Gazette and on the websites of the Authority and the Egyptian Exchange, and shall take effect from the day following its publication in the Egyptian Gazette and on the Egyptian Exchange and relevant authorities, each according to its respective scope.

Dr. Ashraf El-Sharkawy
Chairman of the Board of Directors
47076

Egyptian Financial Supervisory Authority (EFSA)
Egyptian Financial Supervisory Authority (EFSA)
Smart Village, Building 15 - 84 B
Km 28, Cairo-Alexandria Desert Road
6th of October City, Postal Code: 12577
Fax: +202 2534 5333 - Tel: +202 2537 0040
Email: info@efsa.gov.eg
Website: www.efsa.gov.eg

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