Financial Regulatory Authority

FINANCIAL REGULATORY AUTHORITY

Deputy Chairman of the Authority

Circular Letter No. (5) for the Year 2018
Dated 16/4/2018

Regarding the Free-Float Share Percentage for Companies Whose Shares are Listed on the Egyptian Exchange

The Authority's Board of Directors issued Decision No. (13) for the Year 2018 amending the Listing and Delisting Rules of Securities at the Egyptian Exchange, which included amending Articles (7, 9) to increase the required offering percentage for listing shares of new companies on the Exchange to 75% of the company's shares or one-quarter per thousand of the free-float market capitalization, with no less than 10% of the company's shares. And that the free-float share percentage shall not be less than 10% of the company's capital, or one-eighth per thousand of the free-float market capitalization, with no less than 5% of the company's shares. Article Four of the Authority's Board of Directors Decision No. (13) for the Year 2018 stipulated that companies whose shares were listed on the Egyptian Exchange on the date of implementation of this decision are obligated to regularize their status regarding increasing the free-float share percentage in accordance with Paragraph (3) of Articles (7, 9) of the Listing Rules, with a deadline not exceeding December 31, 2019.

In light of receiving some inquiries from listed companies regarding the limits for increasing the free-float share percentage, whether it is done in accordance with Article Four of the Authority's Board of Directors Decision No. (13) for the Year 2018, or in accordance with Article (53 bis) of the Listing Rules regarding cases where a listed company loses one of the listing and continuation conditions, including the free-float share percentage, and the Exchange contacts these companies to fulfill those conditions.

In this regard, the Authority wishes to emphasize the difference in the scope and field of application of Article (53 bis) of the Listing Rules and Article Four of the Authority's Board of Directors Decision No. (13) for the Year 2018, as follows:

• First: Article Four of the Authority's Board of Directors Decision No. (13) for the Year 2018 addresses companies that met the free-float share percentage requirement at the time of implementation of the Authority's Decision No. (13) for the Year 2018, by obligating these companies to increase the free-float share percentage to match the new percentages stipulated in Paragraph (3) of Articles (7, 9) of the Listing Rules by December 31, 2019 at the latest.

• Second: Article (53 bis) of the Listing Rules addresses cases where a listed company loses one of the listing and continuation conditions, including the free-float share percentage, and the Exchange contacts these companies to fulfill those conditions.

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In light of the above, the Authority wishes to clarify the following:

1. Companies listed on the Exchange that did not meet the free-float share percentage requirement in effect prior to the implementation of the Authority's Board of Directors Decision No. (13) for the Year 2018 are obligated to regularize their status to reach the following free-float share percentage limits (50% for companies listed under Article (7) of the Listing Rules, and 10% for companies listed under Article (9) of the Listing Rules), which shall be done in accordance with the procedures and timeframes specified in Article (53 bis) of the Listing Rules.

2. Companies listed on the Exchange prior to the implementation of the Authority's Board of Directors Decision No. (13) for the Year 2018 that subsequently lost the free-float share percentage condition after the implementation of the aforementioned decision are obligated to regularize their status to reach the free-float share percentage limits mentioned in Paragraph (1) above, in accordance with the procedures and timeframes specified in Article (53 bis) of the Listing Rules.

3. All companies listed on the Exchange prior to the implementation of the Authority's Board of Directors Decision No. (13) for the Year 2018 are obligated to increase their free-float share percentage to align with the new amendments to this percentage by December 31, 2019 at the latest (such that the free-float share percentage does not fall below 10% of the company's total shares or one-eighth per thousand of the free-float market capitalization, with no less than 5% of the company's shares), in accordance with Article Four of the Authority's Board of Directors Decision No. (13) for the Year 2018.

4. Companies whose shares will be listed after the implementation of the Authority's Board of Directors Decision No. (13) for the Year 2018 are bound by the offering percentages and free-float share percentages stipulated in Articles (7, 9) of the Listing Rules as amended, and in the event any company fails to meet these percentages, it shall be obligated to regularize its status regarding these percentages in accordance with Article (53 bis) of the Listing Rules.

The Egyptian Exchange is instructed to ensure the implementation of what is stated in this Circular and to publish it on trading screens and its website.

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Deputy Chairman of the Authority
Judge / Khaled El-Nashar

Smart Village, Building No. B-136, Giza, Egypt Postal Code: 12577 Tel.: +202 35345350 - Fax: +202 35370036 info@fra.gov.eg

Smart Village, Building No. B-136, Giza
Postal Code: 12577
Tel.: (00202) 35345350 - Fax.: (00202) 35370036 www.FRA.gov.eg

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