Circular Letter No. 9 of 2020 Regarding the Prohibition of Combining the Chairman of the Board and CEO or Managing Director Positions for Egyptian Exchange Listed Companies

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Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

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Deputy Chairman of the Authority

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Circular Letter No. (9) of 2020 dated 19/4/2020

Regarding the Prohibition of Combining the Positions of Chairman of the Board and Managing Director or Chief Executive Officer for Companies Listed on the Egyptian Exchange

In the context of the Authority carrying out its duties pursuant to the provisions of Law No. 10 of 2009 concerning the supervision and regulation of non-banking financial markets and instruments, and based on the Authority's responsibility to work towards the safety and stability of non-banking financial markets, and protecting the rights of shareholders in companies listed on the Egyptian Exchange;

And since the Listing and Delisting Rules for Securities on the Exchange issued pursuant to the Authority's Board of Directors Decision No. (11) of 2014 constitute the legal framework governing the conditions and procedures for listing, continuing listing, and delisting securities on the Egyptian Exchange, pursuant to Article 16 of Capital Market Law No. (95) of 1992;

And in light of the Authority's efforts to review and develop the listing and continuing listing rules to align with international best practices, as well as the requirements of international institution reports, most notably the World Bank's Doing Business report and the World Economic Forum's Global Competitiveness Report regarding corporate governance principles;

And whereas one of the most important factors leading to enhancing the efficiency and effectiveness of a company's board of directors performance, in accordance with governance principles, is primarily the effective separation between the executive function and the supervisory function of the board of directors, whereby the Chairman of the Board exercises the company's supervisory duties and delegates to the Managing Director or Chief Executive Officer the actual management duties of the company and the implementation of plans and strategies approved by the board of directors, the Authority's Board of Directors has issued Decision No. (47) of 2020 amending the Listing and Delisting Rules for Securities on the Egyptian Exchange, which added a new condition to the general conditions for listing and continuing listing of securities on the Egyptian Exchange set forth in Article (6) of the Listing Rules, stipulating the prohibition of combining the position of Chairman of the Board of the company with the position of Managing Director or Chief Executive Officer thereof.

And since the aforementioned Board of Directors Decision stipulates in its second article that it shall take effect from the day following its publication in the Official Gazette, and it was published in the Official Gazette in Issue No. (92) dated 14/4/2020, the Authority wishes to clarify in this regard that existing companies at the time of the Board of Directors Decision taking effect must align their status with it, within one year from the date of its implementation, or upon the first election of the company's board of directors.

This Circular Letter is published on the Authority's website, on the Egyptian Exchange screens, and on the Exchange's website.

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Deputy Chairman
Financial Regulatory Authority

Judge / Khaled Al-Manshar

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Note:
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