Egyptian Financial Supervisory Authority

Chairman of the Board of Directors

Decision of the Board of Directors No. (132) dated 2017/10/29

Amending Decision of the Board of Directors No. (11) of 2014 Regarding the Rules for Listing and Delisting Securities on the Egyptian Exchange

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Board of Directors of the Egyptian Financial Supervisory Authority

Having reviewed 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 its executive regulations and 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 non-banking financial markets and instruments; And Presidential Decision No. (191) of 2009 on the provisions organizing the management and financial affairs of the Egyptian Exchange; And the Bylaws of the Egyptian Financial Supervisory Authority issued by Presidential Decision No. (192) of 2009; And Decision of the Board of Directors No. (11) of 2014 regarding the rules for listing and delisting securities on the Egyptian Exchange and its amendments; And the approval of the Board of Directors in its meeting held on 2017/10/29;

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Decided:

(First Article)

The following texts shall replace the texts of Articles (1 bis), the title and definition of the Offering Prospectus in Article 4, the preamble of Article 6, Article 7, the preamble of Article 8 and Item 6 thereof, Items (1, 2) of the first paragraph of Article 9 and the final paragraph of the same article, Items (a, b) of the first paragraph of Article 15, the preamble of Article 16 and Item (d) of the first of the same article, the preamble of Article 18 and Item 7 thereof, Items 24, 45, Items (1, 3) of the first paragraph of Article 48, and Article 56 of the Rules for Listing and Delisting Securities on the Egyptian Exchange, with the following:

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Article (1 bis): Registration with the Authority

Companies and entities wishing to list or delist their securities on the Egyptian Exchange are required to register in advance with the Authority in accordance with the rules determined by its Board of Directors. After registration, the aforementioned companies and entities must apply to the Egyptian Exchange for listing or delisting their securities – as applicable – within one month from the date of registration. This deadline may be extended with the Authority's approval in cases it deems appropriate.

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Article (6): Title and Definition of the Offering Prospectus

The Offering Prospectus or Disclosure Report regarding the Offering: A data and information template approved by the Authority in the event of offering securities for sale on the Egyptian Exchange, whether in a public or private offering.

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Article (6): (Preamble of the Article)

Listing on the Exchange requires prior registration with the Authority and fulfillment of the following general conditions:

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Article (7): Conditions for Listing Shares of Egyptian Companies

1. The percentage of shares to be offered shall not be less than 10% of the company's total listed shares. For the purpose of this condition, "offering" means offering the company's shares for sale on the Exchange based on an Offering Prospectus or Disclosure Report regarding the Offering, approved by the Authority based on the findings of an independent financial advisor's study on determining the fair value of the shares and the auditor's report on this study in accordance with the relevant Egyptian Auditing Standard. Either shall be published in two widely circulated daily newspapers.

2. The number of shareholders of the company after the offering shall not be less than 300 shareholders, provided that the shares allocated to them are distributed in accordance with the controls determined by the Exchange to verify that the offering is not fictitious.

3. A company shall be deemed to have fulfilled the two preceding conditions if its shareholder structure at the time of submitting the listing application ensures that at least 10% of its capital is owned by shareholders other than founders and major shareholders, with a number of shareholders not less than 300, and none of the shares included in that percentage are pledged.

4. The percentage of freely tradable shares shall not be less than 5% of the company's total shares, and their market value prior to the offering shall not be less than 10 million Egyptian pounds.

5. The company must submit financial statements for the two financial years preceding the listing application, prepared in accordance with Egyptian Accounting Standards and audited in accordance with Egyptian Auditing Standards by a certified auditor registered with the Authority's register, and approved by the company's General Assembly with the minutes authenticated by the competent administrative authority.

6. The issued capital must be fully paid and not less than 50 million Egyptian pounds or its equivalent in foreign currencies, based on the latest annual financial statements or the latest periodic financial statements accompanied by a comprehensive audit report from a certified auditor and approved by the company's General Assembly. Shareholders' equity in the latest annual or periodic financial statements preceding the listing application date must not be less than the paid-up capital.

7. Upon listing the company, undertakings must be submitted that major shareholders of the company will retain at least 51% of the shares owned by them in the company's capital, if available. If the total shares held under this condition are less than 75% of the company's issued shares, the remaining 25% shall be supplemented by contributions from board members and company founders for a period of not less than two financial years from the date of the offering on the Exchange or from the date of listing for companies that offered shares for public subscription on the primary market prior to listing. The aforementioned percentage must be maintained in any increase in the company's capital during that period, except for free shares. With the approval of the Authority and the company's Ordinary General Assembly, the ownership of the held shares – in part or entirely – may be reduced during the retention period if the buyer is a bank, insurance company, direct investment fund, or a specialized investment entity or legal person with distinguished expertise and prior experience in the company's field of activity, provided they undertake to comply with the retention condition until the end of the stipulated period.

8. Submit a report on the company's business model, organizational structure, prior experience, and the government policy to be followed after listing.

9. The net profit before tax percentage for the last financial year preceding the listing application shall not be less than 5% of the paid-up capital required for listing. The company's net profit before tax must be generated from the company's practice of its activity aimed at achieving its purpose stated in its bylaws. It is required that the net profit before tax percentage, calculated annually based on the periodic financial statements confirming the capital required for listing and the subsequent periodic financial statements – if prepared – shall not be less than 5% of the weighted capital. The Offering Prospectus or Disclosure Report referred to in Item (1) of this Article shall be published before the trading of the company's shares begins. In all cases, trading in the company's shares shall not be permitted during the period from the registration date until the commencement of trading in these shares, except with the Authority's approval. Listing shall be considered void if the company fails to offer its shares within one month from the date of registration with the Authority. This deadline may be extended with the Authority's approval in cases it deems appropriate.

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Listing of shares of companies that do not meet Condition (9) is also permitted in one of the following cases:

First: The company submits financial statements for three financial years preceding the listing application, prepared in accordance with the conditions and terms referred to in Condition (5). It is required that the average annual net profit of the company generated from its main business activity before tax for the last three financial years preceding the listing application, averaged over the paid-up capital for the same period, shall not be less than 5%. It is also required that the company does not record net losses from its main business activity during any of the three financial years preceding the listing application.

Second: For companies obligated to prepare consolidated financial statements, they submit consolidated financial statements for a full year preceding the listing application, prepared in accordance with the conditions and terms referred to in Condition (5). It is required that the net profit before tax percentage generated from the practice of the company/subsidiaries' activity aimed at achieving their purpose stated in their bylaws in the last financial year preceding the listing application shall not be less than 5% of the capital as shown in the consolidated financial statements. It is also required that the net profit before tax percentage, calculated annually based on the periodic financial statements – if prepared – shall not be less than 5% of the weighted capital.

Third: Except for the two preceding cases, listing of shares of companies that do not meet Condition (9) is not permitted unless the following conditions are met:

• a. The company's net shareholders' equity shall not be less than double the minimum paid-up capital referred to in Item (6).
• b. At least half of the capital shall be owned by shareholders with distinguished expertise and prior experience in the company's field of activity, or by banks or insurance companies.
• c. The company submits a study approved by one of the financial advisors registered with the Authority's register, demonstrating growth and profitability opportunities. The study must include at least the following:
  • The activities the company has undertaken.
  • The contracts the company has concluded.
  • The company's business plan.
  • The management team's expertise.
  • Licenses and approvals obtained by the company (industrial, environmental, etc.).
  • Future financial expectations.
  • The adequacy of the company's financial resources to achieve its plan.
  • Future profitability expectations.

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Article (8): (Preamble of the Article and Item 6)

Without prejudice to legal restrictions on trading shares according to the laws governing them, Egyptian companies established by offering their shares in a public or private subscription – or those that subsequently offered their shares through a public or private offering – may be listed based on a subscription or offering prospectus, as applicable, or an information memorandum approved by the Authority, which has not issued financial statements for two full financial years.

6. The company shall publish the Disclosure Report referred to in Article 138 of the Executive Regulations of Law 159 of 1981 after the Authority verifies compliance with the requirements stipulated in the aforementioned article. It shall also submit a study approved by one of the advisors registered with the Authority's register in accordance with the Egyptian standards for financial advisors registered with the Authority's register, demonstrating growth and profitability opportunities. The study must include at least the following:

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Article (9): (Items 1, 2) of the First Paragraph, and the Final Paragraph

1. The percentage of shares to be offered shall not be less than 20% of the company's total shares. For the purpose of this condition, "offering" means offering the company's shares for sale on the Exchange based on an Offering Prospectus or Disclosure Report regarding the Offering, approved by the Authority based on the findings of an independent financial advisor's study on determining the fair value of the shares and the auditor's report on this study in accordance with the relevant Egyptian Auditing Standard, excluding the underwriter's study. It shall be displayed on the Exchange's trading screens for at least five days prior to the commencement of trading in the company's shares on the Exchange, in addition to being published on the Egyptian Exchange's website.

2. The number of shareholders of the company after the offering shall not be less than 100 shareholders, provided that the allocated shares are distributed in accordance with the controls determined by the Exchange to verify that the offering is not fictitious. A company shall be deemed to have fulfilled the two preceding conditions if its shareholder structure at the time of submitting the listing application ensures that at least 20% of its capital is owned by shareholders other than founders and major shareholders, with a number of shareholders not less than 100, and none of the shares included in that percentage are pledged. The Offering Prospectus or Disclosure Report referred to in Item (1) of this Article shall be published before the trading of the company's shares begins.

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Article (9): Final Paragraph

In all cases, trading in the company's shares shall not be permitted during the period from the registration date until the commencement of trading in these shares, except with the Authority's approval. Listing shall be considered void if the company fails to offer its shares within one month from the date of registration with the Authority. This deadline may be extended with the Authority's approval in cases it deems appropriate.

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Article (15): Items (a, b) of the First Paragraph

a. These certificates shall be listed and offered for trading within one month from the date of registration of the issuing company with the Authority. The offering shall be based on a Disclosure Report regarding the Offering approved by the Authority according to the designated template. The deadline may be extended with the Authority's approval in cases it deems appropriate.

b. The total value of the certificates required for listing shall not be less than 100 million Egyptian pounds or its equivalent in convertible foreign currencies. The number of holders of Egyptian depositary certificates after the offering shall not be less than 150 certificate holders.

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Article (16): Preamble of the Article and Item (d) of the First

Listing foreign securities requires the registration of the issuing company or entity with the Authority, and fulfillment of the following conditions:

First: Foreign Shares

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Article (18): Preamble of Article 18 and Item (2)

The company or listing applicant must submit proof of its registration with the Authority. The listing application shall be accompanied by the following:

2. A copy of the Offering Prospectus or Disclosure Report regarding the Offering – as applicable – submitted to the Authority, and the implementation schedule for the offering.

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Article (26): Listing of Shares of Existing and Separated Companies

In the event that a listed company deposits its shares as share certificates or separated companies, and as a result of restructuring an existing company and one or more separated companies, the companies resulting from the restructuring shall be listed – after registration with the Authority – as an extension of the listed company after listing the companies resulting from the restructuring in the Commercial Register. This is subject to the continued fulfillment of the minimum number of shareholders, capital, total number of shares, percentage of freely tradable shares, and financial criteria stipulated in these rules according to the pro forma financial statements for the financial year preceding the restructuring/split. Trading in the shares of the existing and separated companies shall commence after publishing the Disclosure Report referred to in each of the companies resulting from the split, in accordance with Article (138) of the Executive Regulations of Law (159) of 1981. Publication shall be made in two widely circulated daily newspapers after the Exchange approves the publication.

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Article (45): Financial Statement Preparation Requirements

Financial statements shall be prepared in accordance with Egyptian Accounting Standards and the financial statement models included in those standards. They shall be audited in accordance with Egyptian Auditing Standards, and this must be explicitly stated in the auditor's report.

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Article (48): Items (1, 3) of the First Paragraph

1. Submit all documents related to the proposed amendment, including the Disclosure Report regarding the Amendment on the template designated by the Authority, accompanied by approval from the company's Board of Directors on the proposed amendment and its endorsement of the Disclosure Report.

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Article (56): Application for Re-listing

Entities whose securities were compulsorily delisted may submit a new listing application after re-registering with the Authority upon fulfilling listing requirements and conditions, and submitting their financial statements for the two financial years following the delisting date if the delisting was due to non-compliance with disclosure requirements. A company whose securities were compulsorily delisted for non-compliance with listing conditions other than disclosure requirements, or whose shares were voluntarily delisted, may submit a new listing application after re-registering with the Authority, provided it fulfills listing requirements and conditions, after submitting its financial statements for one financial year following the delisting date.

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(Second Article)

The definition of "Offering Renewal" shall be added to Article 4, a third paragraph to Article 51, a third paragraph to Article 57, and a new Article numbered 30 bis, with the following texts:

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Article (4): Definition of Offering on the Exchange

Offering on the Exchange: An offer to sell a company's shares on the Egyptian Exchange, whether through an initial public offering, capital increase, or for the purpose of diversifying ownership or expanding the ownership base.

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Article (57): Third Paragraph

The Exchange shall also, after listing and offering the reviewed securities, monitor the extent of deviation between the company's or entity's achieved results and what was stated in the independent financial advisor's report on fair value or the business plans approved by the underwriter for small and medium-sized companies, and notify the Authority in case of material deviations, taking the necessary measures according to the provisions and rules.

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Article (30 bis): Annual Disclosure Report of Companies Regarding Results Comparison and Independent Financial Advisor's Report or Underwriters' Plans

Companies are required, with the Exchange's approval, to submit a disclosure report at the end of the company's financial year demonstrating the extent to which the company achieved the results stated in the independent financial advisor's report on fair value or the business plans approved by the underwriter for small and medium-sized companies. The report must include a statement of reasons and justifications in case of material deviations from what is stated in this report or the approved business plans.