Decision No. (108) of 2014

Dated 4/8/2014

Amending Decision No. (134) of 2010 of the Authority's Board of Directors Regarding the Rules and Procedures for the Division of Companies Listed on the Egyptian Exchange

The Board of Directors of the Egyptian Financial Regulatory Authority (EFRA):

After reviewing Law No. (159) of 1981 on Joint-Stock Companies, Limited Partnerships by Shares, and Limited Liability Companies and its executive regulations; And Law No. (95) of 1992 on the Capital Market and the decisions issued to implement it; And Law No. (93) of 2000 on the Central Depository and Clearing Company for Securities and the decisions issued to implement it; And Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; And Presidential Decree No. (191) of 2009 regarding the rules governing the Egyptian Exchange and its financial affairs; And Presidential Decree No. (192) of 2009 issuing the Basic Statute of the Egyptian Financial Regulatory Authority; And Decision No. (134) of 2010 of the Authority's Board of Directors regarding the rules and procedures for the division of companies listed on the Egyptian Exchange; And Decision No. (11) of 2014 of the Authority's Board of Directors regarding the rules for listing and delisting securities on the Egyptian Exchange; And the approval of the Authority's Board of Directors in its meeting No. (14) held on 4/8/2014;

Has Decided

(Article One)

The following texts shall replace the texts of Articles (One, Two, Three, Four, Six) of the aforementioned Decision No. (134) of 2010:

Article One:

The provisions of this Decision shall apply to the division procedures of joint-stock companies listed on the Egyptian Exchange, without prejudice to all legal rules and procedures for company establishment.

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Article Two:

For the purposes of this Decision, company division refers to separating its assets or activities, along with related liabilities and ownership rights, into two or more separate companies. Division is horizontal when the shares of the resulting companies are owned by the same shareholders as before the division and in the same ownership proportions, and vertical when it is carried out by separating a portion of assets or activities into a new, subsidiary company owned by the company undergoing division. In both cases, the division of assets and related liabilities shall be based on book value, unless the regulatory authority approves another valuation method according to its specified controls. Shareholders' rights, including capital, reserves, and retained earnings, shall be divided according to the resolution of the company's Extraordinary General Assembly. The continuing legal entity shall be referred to as the "Surviving Company," and each separate entity shall be referred to as the "Divided Company."

The division shall be implemented by the Surviving Company issuing shares based on the company's net assets post-division, either by adjusting the number of shares or their par value, and issuing new shares for the Divided Company based on its allocated share of the net assets.

Article Three:

The company's Board of Directors shall prepare the detailed division plan, specifically the assets and liabilities pertaining to the Surviving Company and the resulting companies, for presentation to the Extraordinary General Assembly, accompanied by the following:

1. Reasons for the division.
2. Method for dividing assets and liabilities.
3. Par value of the shares of the companies resulting from the division.
4. Detailed division plan, specifically the assets and liabilities pertaining to each of the resulting companies, accompanied by an auditor's opinion report.
5. Pro forma financial statements for the Surviving Company and the resulting companies based on assets, liabilities, equity, and revenues and expenses of the divided activities for two years prior to the division, accompanied by an auditor's opinion report.
6. Draft articles of association and bylaws for the Surviving Company and the resulting companies, and draft amendments to the bylaws of the Surviving Company.
7. Status of the resulting companies regarding listing or continued listing on the Exchange, and the procedure the company will take regarding dissenting shareholders in accordance with Article (135) of Law No. (159) of 1981.
8. Memorandum of the company's legal advisor clarifying the division's compliance with applicable legal rules and the company's adherence to all mandatory legal procedures.

Article Four:

The company's Board of Directors shall, prior to presenting the matter to the Extraordinary General Assembly, seek the opinion of the competent regulatory authority regarding the division method, the detailed division plan (specifically assets and liabilities of resulting companies), and the pro forma financial statements for each resulting company based on assets, liabilities, equity, and revenues and expenses of the divided activities.

Article Six:

Ownership of shares of the Surviving Company and Divided Companies shall be registered in the shareholders' register at the Central Depository and Clearing Company for Securities.

Shares of companies resulting from the division of a listed company shall be registered on the securities exchange, and the period elapsed prior to division shall be considered when calculating the duration for trading promoter shares.

Shares of the Surviving and Divided Companies shall be traded after their listing on the Exchange in accordance with the conditions set forth in the rules for listing, continuing listing, and delisting of securities. The resulting companies shall submit a disclosure report approved by the Authority in accordance with Article (138) of the Executive Regulations of Law No. (159) of 1981.

(Article Two)

This Decision shall be published in the Egyptian Gazette and on the websites of both the Authority and the Egyptian Exchange, and shall take effect from the day following its publication in the Egyptian Gazette.

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Chairman of the Authority
Sherif Salem

(Seal: Egyptian Financial Regulatory Authority - Chairman's Office)
46076

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