Chairman of the Authority

Decision of the Board of Directors No. (149) for 2022 dated 27/10/2022

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

The Board of Directors of the Financial Regulatory Authority (FRA) Having reviewed the Capital Market Law issued by Law No. (95) of 1992 and its executive regulations; and Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; and Decision of the Board of Directors No. (11) of 2014 regarding the rules for listing and delisting securities at the Egyptian Exchange; and after the approval of the Board of Directors in its meeting held on 27/10/2022; decided

(Article One)

The provisions of Articles (6, paragraph "9"), (7, first paragraph, paragraph "7", and fourth paragraph), (8), (9, first paragraph, paragraph "8"), (44) of the rules for listing and delisting securities at the Egyptian Exchange issued by Decision of the Board of Directors No. (11) of 2014, are replaced by the following provisions:

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Article (6 - paragraph "9")

• 9- The prohibition of holding both the position of Chairman of the Board and the position of Managing Director or Chief Executive Officer of the company. The Authority may grant a temporary exception to this condition based on justifications submitted by the company and accepted by the Authority.

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Article (7 - first paragraph, paragraph "7")

• 7- Submission of undertakings that the retention ratio of the company's principal shareholders and/or their replacements from other shareholders shall not be less than (51%) of the shares owned by them in the company's capital, subject to availability. If the total retained shares according to this ratio are less than (25%) of the issued share capital, the remaining (25%) shall be completed from contributions by Board members and company founders or other shareholders, provided that one calendar month has elapsed and periodic financial statements for two fiscal years have been issued from the listing date or from the date of offering shares in the public market prior to listing, with the same previous ratio maintained in any capital increase during that period, excluding free shares.

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Article (7 - fourth paragraph)

In the five cases mentioned above, the retention ratio of each principal shareholder and/or their replacement from other shareholders at listing shall not be less than (75%) of their contribution to the company's capital and not less than (51%) of the total shares, until the approval of financial statements for the year in which the conditions stipulated in paragraph (8) or/and (5), as applicable, of this Article are met, for a period of not less than (24) calendar months and the issuance of periodic financial statements for two fiscal years from the listing date, with the same previous ratio maintained in any capital increase during that period, excluding free shares.

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Article (8) Conditions for listing shares of newly established Egyptian companies that have not issued financial statements for two fiscal years

Without prejudice to the legal rules governing share trading according to the applicable legislation, shares of Egyptian companies established by offering their shares in a public or private subscription may be listed, or subsequently offered after provisional listing through a public or private subscription based on an offering/prospectus circular approved by the Authority, which have not issued financial statements for two complete fiscal years, provided they meet the following conditions:

• 1- The issued and paid-up capital of the company whose shares are to be listed shall not be less than the minimum capital stipulated in Article (7), paragraph (6).

• 2- The free float ratio shall not be less than (15%) of the company's total shares, and the number of shareholders shall not be less than 1000. In case of subsequent offering and/or subscription, a proportion of shares to a number of shareholders must be offered to meet the requirements of this paragraph.

• 3- The number of issued shares required for listing shall not be less than (20) million shares.

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Article (9 - first paragraph, paragraph "8")

• 4- The retention ratio of the company's principal and founding shareholders and/or their replacements from other shareholders shall not be less than (75%) of their shares in the company and not less than (51%) of the total shares, until the approval of financial statements for the year in which the profitability conditions stipulated in paragraph (8) of Article (7) are met, provided that (24) calendar months have elapsed and periodic financial statements for two fiscal years have been issued from the listing date, with the same previous ratio maintained in any capital increase during that period, excluding free shares.

• 5- The listing applicant company, which has not issued financial statements for at least one fiscal year, shall publish the disclosure estimate referred to in Article (138) of the Executive Regulations of Law (159) of 1981 after its approval by the Authority, or include all information specified in Article (138) in the offering/prospectus circular or information memorandum, as applicable.

• 6- The listing applicant company shall submit a study certified by one of the financial advisors registered with the Authority according to the Egyptian standards for financial evaluation of enterprises, demonstrating growth and profitability opportunities. The study shall include at least the following:

  • The company's core business activities.
  • Contracts concluded by the company.
  • Future financial projections.
  • Future profitability projections and the adequacy of financial resources generated from the company's business to achieve these profits.
  • The fair value of the share at offering.

In all cases, trading in the company's shares during the provisional listing period is permitted only with the Authority's approval. Provisional listing shall be deemed void if the company fails to fulfill the remaining listing conditions within six months from the listing date, which may be extended by the Authority in cases it deems appropriate.

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Article (9 - last paragraph)

• 8- Submission of undertakings that the retention ratio of the company's principal shareholders and/or their replacements from other shareholders shall not be less than (51%) of the shares owned by them in the company's capital, subject to availability. If the total retained shares according to this ratio are less than (25%) of the issued share capital, the remaining (25%) shall be completed from contributions by Board members and company founders or other shareholders, provided that one calendar month has elapsed and periodic financial statements for two fiscal years have been issued from the listing date or from the date of offering shares in the public market prior to listing, with the same previous ratio maintained in any capital increase during that period, excluding free shares.

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Article (44) Requirements for acquiring assets or investments

Without prejudice to the provisions of Chapter Two, Article Ten of the Executive Regulations of the Capital Market Law and Law No. (159) of 1981 and its executive regulations, a listed company wishing to acquire shares of an unlisted company or any real estate or other fixed assets representing (10%) or more of the equity of the listed company – based on its latest separate/consolidated or periodic financial statements – shall submit to the Exchange a study on the fair value of the acquired assets or shares, prepared by an independent financial advisor registered with the Authority, along with a report from the listed company's auditor and its Board meeting minutes approving the study. The Exchange shall publish a summary of this study on its website and trading screens.

Subject to the controls mentioned in the preceding paragraph, a listed company may, after obtaining prior approval from the Extraordinary General Assembly, acquire shares of unlisted companies whose fair value equals or exceeds (100%) of the listed company's market value, in cases where voting rights are restricted to shareholders other than those related to the acquisition. If the acquisition causes the listed company to lose a listing condition, it must fulfill those conditions within six months from the completion of the acquisition procedures. In all cases, the listed company must publish a post-acquisition disclosure report containing all disclosures about the company following the completion of acquisition procedures, according to the form approved by the Authority.

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(Article Two)

The rules for listing and delisting securities at the Egyptian Exchange are supplemented with a final paragraph of Article (27) and a new article numbered (47 bis), as follows:

Article (27) Final Paragraph

A listed company whose annual revenues reach two billion Egyptian pounds or more shall, with the Exchange's approval, disclose its information in accordance with the controls stipulated in these rules in both Arabic and English.

Article (47 bis)

Without prejudice to the provisions governing the convening of companies' general assemblies stipulated in Law No. (159) of 1981, a listed company shall make available electronic systems that ensure its shareholders' attendance at general assemblies, verification of their procedures, and remote voting, in addition to holding the actual assembly meeting at the place and time specified in the invitation, according to controls issued by the Board of Directors.

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(Article Three)

Companies in violation of the final paragraph of Article (27) of the rules for listing and delisting securities at the Egyptian Exchange shall regularize their status in accordance with the provisions of that paragraph within nine months from the effective date of this decision.

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(Article Four)

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.

Chairman of the Board Financial Regulatory Authority (FRA) Dr. Mohamed Fared Saleh

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