Egyptian Official Gazette - Issue 26, Supplement (B) on February 4, 2007

Ministry of Investment Decision No. 12 of 2007 Amending Certain Provisions of the Executive Regulations of the Capital Market Law No. 95 of 1992 Issued by Decision of the Minister of Economy and Foreign Trade No. 135 of 1993

Minister of Investment, Having reviewed the Capital Market Law issued by Law No. 95 of 1992 and its amendments; Having reviewed the Deposit and Central Registration of Securities Law issued by Law No. 93 of 2000 and its amendments; Having reviewed the Presidential Decision No. 231 of 2004 organizing the Ministry of Investment; Having reviewed the Minister of Economy and Foreign Trade Decision No. 135 of 1993 issuing the Executive Regulations of the Capital Market Law and its amendments; And based on the proposal presented by the Board of Directors of the Capital Market Authority; Decided:

(Article 1) A new chapter titled "Chapter Twelve" is added to the Executive Regulations of the Capital Market Law issued by the Minister of Economy and Foreign Trade Decision No. 135 of 1993, attached to this Decision, under the title "Tender Offers for Takeover Purposes", starting from Article No. (325) and ending at Article No. (358).

(Article 2) The text of Article (17) and paragraph (w) of Article (22) of the Executive Regulations of Law No. 95 of 1992 mentioned above are replaced with the following texts respectively:

Article (17) Capital increase shall be effected by issuing new shares, with the issue value determined based on their fair value at the time of issuance. This shall be based on a report from one of the financial advisors accredited by the Authority for this purpose. The advisor must be independent of the company, its related persons, its board members, and its auditors, and must not have any common interests with them. The report shall be issued in accordance with established procedures in this regard, under the company's responsibility. The report shall specify the valuation bases relied upon. When increasing capital under this Article, the following must be observed: (a) If the determined value exceeds the par value of the share, the increase shall be credited to the reserve account. (b) If the determined value is less than the par value of the share, the company must reduce the par value of all shares, including existing shares, to that value and calculate the capital accordingly. (c) If the determined value is less than the minimum par value of the share prescribed by law, the value of all shares, including existing shares, shall be set at the minimum, with the number of shares reduced and capital calculated accordingly.

Article (22) Paragraph (w) (w) Swapping shares owned by a subscriber in the capital of another company for the purpose of takeover or merger.

(Article 3) Articles Nos. 59, 60, 61 bis (1), 61 bis (2), 61 bis (3), 61 bis (4), 61 bis (5), and 62 of the Executive Regulations of Law No. 95 of 1992 mentioned above are repealed.

(Article 4) This Decision shall be published in the Egyptian Official Gazette and shall take effect from the day following the expiration of thirty days from its publication date. Any provision contrary to it is repealed. Issued on 31/1/2007 Minister of Investment Dr. Mahmoud Mohieddin

Chapter Twelve

Tender Offers for Takeover Purposes

(Chapter One)

General Provisions

Article (325) Scope of Application: The provisions of this Chapter shall apply to tender offers for shares and bonds convertible into shares in companies listed on the Egyptian Securities Exchanges. Its provisions shall also apply to tender offers for shares and bonds convertible into shares in Egyptian companies that have offered their shares in a public offering or during a public offering in the trading market, even if not listed on the Exchange. The Authority may, according to the controls set by its Board of Directors, exempt foreign companies listed on one of the Egyptian Securities Exchanges from the provisions of this Chapter, provided that these companies are subject to the supervision of an authority similar to the Authority at the exchange where their securities are listed.

Article (326) Definitions: The following words and phrases shall have the meanings indicated alongside each:

• Tender Offer: The offer made to the holders of the securities subject to the offer, whether for cash purchase, exchange for other securities, or a mixed offer, whether mandatory or voluntary.
• Actual Control: Any status, agreement, or share ownership or stake, regardless of its percentage, that leads to controlling the appointment of the majority of the Board of Directors members or the decisions issued by it or by the general assemblies of the concerned company.
• Persons: Natural and legal persons, economic entities, unions, associations, financial groups, and all persons regardless of their formation, establishment, financing, administrative status, or nationality.
• Related Persons: Persons who have an agreement to effect a takeover or actual control over one of the companies subject to this Chapter, whether written or unwritten. Related persons include natural persons and any of their relatives up to the second degree, and legal persons, entities, unions, associations, and financial groups composed of two or more persons where the majority of shares or stakes of one are owned directly or indirectly by the other party, or where the owner is a single person. Persons subject to the actual control of another person are also considered related persons.
• Related Advisors: Any person providing financial, legal, accounting, or technical advice related to the tender offer, whether on behalf of the offeror or the target company.
• Independent Advisors: Any specialized advisory person who has not provided financial, legal, accounting, or technical advice related to the operations of the target company or its shares during the six months preceding the tender offer, and has no common or conflicting interest with the offeror, the target company, selling shareholders, or any related persons.
• Exchange: The Exchange where the target company's securities are listed in Egypt.
• Day(s): Actual working days of the Exchange.
• Material Impact on Trading or Share Prices: Sudden intensive activity in trading volume, or sudden change in prices during a trading session or multiple sessions compared to the approved averages for trading volume and price movement of the concerned share and similar shares in comparable sectors, as well as compared to trading volume and price movement in the Exchange as a whole.
• Operations: Purchase of shares or bonds convertible into shares. Any rights attached to shares or bonds convertible into shares, including call and put options, and any amendments thereto. Subscription or assignment of subscription rights in any shares or bonds convertible into shares. Exercise of the conversion right of bonds convertible into shares. Exchange of shares for securities or debts. Any other operations that may lead to an increase or decrease in the share ownership percentage in the company.
• Target Company: The company or companies making the tender offer.
• Share Swap: The transfer by owners of shares of one of the target companies in exchange for receiving shares in one or more companies owned by the offeror or any related persons, whether through direct share exchange or through capital increase in the company or companies making the tender offer.
• Swap Ratio: The swap ratio used when exchanging shares between two or more companies according to the valuation of each company.
• Material Adverse Event: Any unexpected contingent event arising after the submission of the tender offer that negatively affects the target company, its activities, or the value of its shares.
• Offeror: Any person submitting a tender offer in accordance with the provisions of this Chapter.
• Target Company: The company issuing the securities subject to the offer.
• Persons Concerned with the Offer: The offeror, the target company, independent and related advisors, related persons, their managers, and board members, as applicable. Any period referred to in this Chapter shall be calculated starting from the date of the day following the relevant action. No notice shall produce legal effects under the provisions of this Chapter unless it is delivered in writing by hand against a receipt from the competent authority, or sent via registered mail with return receipt, or sent via guaranteed express mail. If the provisions of this Chapter require publishing the notice via a specific method, that method must be followed for the notice to produce legal effects. Any obligations or restrictions imposed on persons subject to this Chapter shall apply to related persons unless the context of the text dictates otherwise. Related persons shall also be considered when calculating ownership percentages triggering mandatory tender offers or any other obligations for the purposes of this Chapter unless the context dictates otherwise. Any reference to shares shall also apply to depositary receipts unless the context dictates otherwise.

Article (327) (Objectives of this Chapter): The provisions contained in this Chapter aim to achieve the following: (a) Establishing the principle of full transparency in accordance with the provisions of prevailing laws and regulations, and international best practices in this regard. (b) Ensuring that holders of the securities subject to the offer obtain sufficient information, appropriate opportunity, and timely access to evaluate the tender offer. (c) Promoting equality and equal opportunity among holders of the securities subject to the tender offer, as well as among the persons concerned with the offer. (d) Prohibiting manipulation of the target company's share prices, and avoiding market disruption, conflicts of interest, and exploitation of insider information. (e) Safeguarding the interests of the target company, and not interfering with its operations or activities.

Article (328) General Principles: Persons concerned with the offer shall adhere to the principles of competition, freedom to submit offers, and balancing them, while ensuring equal treatment of holders of the securities subject to the tender offer. The Board of Directors of the target company shall ensure the achievement of the company's interest and refrain from any action that would restrict or prevent holders of the securities subject to the tender offer from evaluating them based on sound valuation principles. A mandatory tender offer must target all shares and bonds convertible into shares. If the mandatory tender offer is by way of share swap or a mixed offer, it must include an option for holders of the securities subject to the offer to receive or exchange for cash consideration. In cases other than those stipulated in Article (354), the mandatory tender offer must be unconditional. However, in the case of a tender offer through share swap to be issued through capital increase procedures, the offer must be conditional upon the concerned company's approval to issue those shares, and this must be clearly stated when announcing the tender offer.