Prime Minister's Decree No. 345 of 2011

Amending Article (295) of the Executive Regulations of the Capital Market Law No. (95) of 1993

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Prime Minister

Having reviewed the Constitutional Declaration issued on 13/2/2011,

and the Law on Joint Stock Companies, Companies Limited by Shares, and Limited Liability Companies issued under Law No. 159 of 1981,

and the Law on Public Sector Enterprises issued under Law No. 203 of 1991,

and the Capital Market Law issued under Law No. 95 of 1993 and its Executive Regulations,

and Law No. 10 of 2009 concerning the regulation of supervision over markets and non-banking financial instruments,

and Legislative Decree No. 1 of 2011,

and Presidential Decree No. 191 of 2009 regarding the provisions governing the management of the Egyptian Exchange and its financial affairs,

and Presidential Decree No. 192 of 2009 issuing the Statutes of the Financial Regulatory Authority,

and Decision No. 7 of 2011 by the Chairman of the Supreme Council of the Armed Forces designating the Prime Minister as the competent minister for applying the provisions of Law No. 10 of 2009 concerning the regulation of supervision over markets and non-banking financial instruments,

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(Article One)

The text of Article 295 of the Executive Regulations of Law No. (95) of 1993 is replaced with the following:

The company shall re-evaluate the securities subject to margin purchase at the end of each working day according to their market value. If it becomes apparent to the company, due to a decline in the market value of these securities, that the client's debt has exceeded (70%) of their market value at the closing price announced by the Exchange, it must notify the client to reduce this ratio either through cash payment or by providing additional guarantees. The company must take this action if the ratio reaches (85%) for government bonds.

The company may take measures to sell the securities and facilitate guarantees provided by the client to bring the client's debt ratio to (50%) or less of the market value of the margin-purchased securities, or (80%) or less for government bonds, in the following cases:

• A - If the client fails to reduce their debt ratio below the ratio mentioned in the preceding paragraph within two working days of being notified.
• B - If the client's debt ratio reaches (80%) of the market value of the securities or (90%) of the market value of government bonds.

The client's debt ratio to the company shall be reduced either through cash payment or by providing one of the following guarantees placed at the company's disposal:

• A - Unconditional bank guarantees issued in favor of the company by a bank or branches of foreign banks subject to the supervision of the Central Bank.
• B - Deposits with a bank or branches of banks subject to the supervision of the Central Bank, provided that they are frozen at the bank in favor of the company and can be registered upon the company's request without requiring the client's consent, to be valued at (90%) of the original deposit amount.
• C - Securities that meet the criteria referred to in Article (293) of these Regulations.
• D - Other securities that do not meet the criteria referred to in Article (293) and are deposited with the custodian as collateral, to be valued at a ratio not exceeding (60%) of their market value.

Any security that loses one of the aforementioned criteria may be excluded from the calculation of guarantees provided by the margin purchase client, whether submitted in accordance with Article (294) of these Regulations or provided as additional guarantees pursuant to the preceding paragraph.

The provisions of this Article shall apply when the market value of the guarantees provided by the client declines.

The Authority may amend the guarantees acceptable from margin purchase clients or set specific valuation ratios according to market conditions or upon the Exchange's proposal.

(Article Two)

This Decree shall be published in the Egyptian Gazette and shall take effect from the day following its publication date.

Prime Minister
(Dr. Essam Sharaf)

Issued at the Prime Minister's Office on 5 Rabi' al-Thani 1432 AH
Corresponding to 10 March 2011 AD

A copy sent to Mr. / Chairman of the Financial Regulatory Authority

Secretary-General of the Cabinet
(Dr. Sami Saad Zaghloul)