Capital Market Authority Board Decision No. (94) of 2018 dated June 10, 2018 Concerning Rules and Procedures for Trading Non-Listed Securities on the Egyptian Exchange, as Amended on December 25, 2024

Capital Market Authority Board Decision No. (94) of 2018 dated June 10, 2018 Concerning the Rules and Procedures for Trading Non-Listed Securities on the Egyptian Exchange Tables, According to the Latest Amendment dated 2024-12-25

The Capital Market Authority Board,
Having reviewed the Companies Law (Joint Stock, Limited Partnerships with Shares, and Limited Liability Companies) 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, along with their amendments; And the Decisions issued pursuant thereto; And the Central Depository and Clearing 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 rules governing the management and financial affairs of the Egyptian Exchange; And the Basic System of the General Authority for Financial Supervision issued by Presidential Decision No. (192) of 2009; And the Minister of Economy and Foreign Trade Decision No. (620) of 2001; And the Capital Market Authority Board Decision No. (11) of 2014 concerning the rules for listing and delisting securities on the Egyptian Exchange and its amendments; And the Capital Market Authority Board Decision No. (17) of 2017 concerning trading, confirming transfer of ownership, and announcing it for non-listed securities on the Egyptian Exchange; And upon approval by the Board of Directors dated June 10, 2018.

Article One: The attached rules concerning the trading of non-listed securities on the Egyptian Exchange tables and procedures for transferring their ownership shall be applied.
Article Two: The Capital Market Authority supervises the trading of non-listed securities on the Egyptian Exchange tables.
Article Three: The Egyptian Exchange is responsible for supervising trading and transferring ownership of non-listed securities, with penalties stipulated in the decision for any violations.
Article Four: The Executive Director of the Egyptian Exchange is tasked with implementing this decision, in coordination with the relevant departments, and shall announce it to all concerned parties from the Authority's office.
Article Five: The Capital Market Authority Board Decision No. (17) of 2017 concerning trading and confirming transfer of ownership for non-listed securities on the Egyptian Exchange is hereby revoked, as well as any provision in other decisions conflicting with this decision. Article Six: This decision shall be published in the Egyptian Gazette and on the official websites of the Authority and the Egyptian Exchange, and shall take effect from the day following its publication in the Egyptian Gazette.

Rules and Procedures for Trading Non-Listed Securities on the Egyptian Exchange Tables and Procedures for Transferring Ownership Preamble: Since trading in non-listed securities on the Egyptian Exchange is subject to corporate governance rules, periodic/annual financial statement submission, disclosure of material events, or other disclosures applicable to listed securities under the listing/delisting rules, it is deemed necessary and expedient to establish procedures for trading non-listed securities and transferring ownership, utilizing electronic systems. Furthermore, the rules governing listed securities apply to non-listed securities regarding calculating closing/opening prices, setting trading price limits, and computing indices. However, protections for traders in listed securities are not fully available for non-listed securities unless traded via the Order Acceptance System or Transfer of Ownership Confirmation System.

Article (1): Trading Systems for Non-Listed Securities and Transfer of Ownership Procedures: Trading operations in non-listed securities on the Egyptian Exchange tables and transferring their ownership are executed according to one of two systems:
First: Transfer of Ownership Confirmation System: Executed by confirming ownership transfer and announcing it, applicable to non-listed securities listed in the following clause.
Second: OTC Order Acceptance System: Executed by trading and transferring ownership and announcing it, applicable to non-listed securities approved by the Exchange management for trading according to this system under rules set by the Board of Directors, applicable to securities delisted from the Egyptian Exchange tables and deposited in the Central Depository and Clearing System. These operations are executed according to procedures outlined in these rules.

Article (2): Transfer of Ownership Confirmation System:

1. This system confirms ownership transfer for non-listed securities where parties agree to the transfer, as follows:
2. Brokerage firms are obligated to submit forms to the Exchange for executing required operations, according to specific systems and mechanisms within brokerage firms' regulations (for Exchange members or on the updated model), valid for no more than one year from issuance, accompanied by a copy of sales/purchase orders for non-centrally deposited securities. If more than one year passes, the brokerage must submit a declaration confirming the sales order remains valid, or a signed confirmation from the selling client that it remains valid (with a new signature within one year), or a new sales order issued within two weeks.
3. The Exchange confirms ownership transfer and announces it via designated means after the brokerage firm verifies: the security is in the seller's possession or deposited under their name in the Central Depository; the buyer can pay the price; no legal restrictions on trading exist; and all documents are submitted. The brokerage firm guarantees the process, and the Exchange issues a certificate confirming ownership transfer.
4. All or related operations valued at EGP 60 million or more are presented to the Exchange Operations Committee before confirming transfer and announcing, with a no-objection certificate obtained before completion.
5. The Exchange management issues the ownership transfer certificate within three days of the operation date.
6. The Exchange establishes the necessary OTC system to operate it and enable traders and brokerage firms to access required data.

Article (3): Transfer of Ownership Mechanism:

1. Trading hours for this system are daily, with the Exchange specifying working hours for executing transfer operations and announcing them via screens. Operations are executed by the Exchange or brokerage firms, with a dedicated screen for the supervising officer.
2. Price limits apply, and closing/opening prices are calculated for these securities, along with computing price indices.
3. Bonds are traded using share trading procedures without discrepancies in order data.
4. Clearing and settlement operations for executed trades are conducted, particularly for securities not deposited at the Central Depository Company. The Exchange coordinates with the Central Depository Company to confirm ownership, sales, and purchases for centrally deposited securities.

Article (4): OTC Order Acceptance System:
This system enables trading and announcing for delisted securities deposited in the Central Depository Company, approved by the Exchange for trading via this system according to Board of Directors rules. Trading follows priority rules applied in the main market, with orders entered via brokerage screens or a separate program named "OTC System". If discrepancies occur in registered data, the Exchange suspends trading until approved to continue under OTC rules with supporting documents. If suspended, the Exchange removes data discrepancies from the OTC database before the next working day and announces suspension with a note that ownership transfer will proceed via the OTC system. The Exchange establishes necessary systems for operation and data access.

Article (5): Procedures for OTC Order Acceptance System:

1. Brokerage firms must inform clients of trading hours and approved securities, ensuring operations comply with laws/regulations, specifically: verifying client identity, ownership proof, capacity, and authority; ensuring trading is in sound securities free from fraud, misrepresentation, exploitation, or fictitious transactions.
2. Brokerage firms must verify client orders match Exchange templates, including related party data and non-application of listed securities' disclosure rules.
3. Trading hours follow Exchange Board decisions and Authority approval.
4. Price limits apply, with closing/opening prices calculated and indices computed.
5. Settlement for OTC trades occurs on the third day (T+3) after trading.
6. Companies trading via OTC and the Central Depository Company must notify the Exchange of any data changes affecting traded securities, with dates of such changes.
7. Clearing and settlement follow procedures for listed securities, coordinated with the Central Depository Company.

Article (6): Verification of Fulfilling Requirements for Transferring Ownership of Non-Listed Securities: The Exchange, before announcing operations under either system, must verify ownership transfer requirements related to specific activities or geographic regions per governing legislation. The Exchange also considers decisions/judgments prohibiting natural/legal persons from disposing of or trading in securities they own.

Article (7): Verification of Payment for Trading and Ownership Transfer: All brokerage firms must trade with clients via accounts at banks supervised by the Central Bank of Egypt for operations exceeding EGP 100,000, and with clients outside the company via such bank accounts regardless of value. For operations involving the brokerage's own clients, the firm must ensure the purchasing client deposits the purchase value in a company account (per previous clause). The buyer may prove deposit into the seller's bank account within three working days of requesting operation execution. Excluding transfers between spouses, subsidiaries, and branches of natural persons, brokerage firms may accept bank certificates confirming payment or court judgments/declarations, provided the firm obtains a no-objection certificate from the Authority within the submitted documents' validity. The brokerage maintains organized files of these transactions. The Authority may approve longer execution periods for buyers presenting supporting bank documents.

Article (8): Disclosure of Data Related to Trading in Non-Listed Securities: The Exchange publishes data related to executed operations and ownership transfer as follows:

1. Publishes daily bulletins with operation counts, quantities, values, security types, without calculating average/high/low prices.
2. Publishes the aforementioned data in the weekly bulletin.
3. Makes all electronic data available to the Authority on the execution day.
4. Sends data for centrally deposited securities to the Clearing Company on the execution day.

Article (9): Cases of Executing Share Transfer for Startups under Shareholder Agreements: If companies and funds investing in startups execute convertible financing instruments to shares, and shareholder agreements are signed with startup shareholders resulting in share transfer operations after a fixed period per the agreement, the Central Depository and Clearing Company may execute an agreement as an Escrow Agent to ensure trading operations are executed on the Exchange. The Authority sets necessary conditions for these operations. Such transfers are exempt from providing bank deposit documents, subject to Authority approval.

Article (10):
The Central Depository and Clearing Company must notify the Egyptian Exchange of operations executed under Articles 37 and 38 of the Central Depository Law. The Egyptian Exchange records these operations, notifying both the Authority and the Company of ownership transfer confirmation and share distribution to Central Depository members.

Footnotes:

1. Decision amended by Board Decisions No. 68 (2022/3/16), No. 174 (2022/11/30), No. 146 (2024/7/7), and No. 303 (2024/12/25).
2. Article Two, Clause (4) replaced by Board Decision No. 303 dated 2024/12/25.
3. Article Four, Paragraph 3 phrase "and the company management undertakes to take necessary measures to re-list its securities..." removed by Board Decision No. 174 (2022/11/30); Paragraph 4 removed by same decision.
4. Article Seven, Clauses (3), (4), and (6) replaced by Board Decision No. 303 dated 2024/12/25.
5. Article Nine added by Board Decision No. 68 (2022/3/16).
6. Article Ten added by Board Decision No. 146 (2024/7/7).