Resolution No. (124) of 2010

Dated 1/11/2010 Concerning the Rules and Procedures for the Division of Companies Listed with Securities on the Egyptian Exchange in accordance with the latest amendment (1)

The Board of Directors of the Egyptian Financial Supervisory Authority:

Having reviewed the Law on Joint Stock Companies, Commandite Companies by 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 the resolutions issued in implementation thereof; and the Central Depository and Registration of Securities Law issued by Law No. (93) of 2000 and the resolutions issued in implementation thereof; and Law No. (10) of 2009 on regulating supervision over non-banking financial markets and instruments; and Presidential Decree No. (191) of 2009 on the provisions organizing the Egyptian Exchange and its financial affairs; and Presidential Decree No. (197) of 2009 issuing the Statute of the Egyptian Financial Supervisory Authority; and the Authority Board Resolution No. (11) of 2014 concerning the rules for listing and delisting securities on the Egyptian Exchange; and the approval of the Authority Board of Directors in its meeting No. (14) held on 4/8/2014;

Provisions

(Article One)

The provisions of this Resolution shall apply to the procedures for the division of joint stock companies listed with shares on the Egyptian Exchange, all without prejudice to the legal rules and procedures governing company establishment.

(Article Two)

The division of a company, in applying the provisions of this Resolution, requires separating its assets or activities, along with associated liabilities and ownership rights, into two or more separate companies. The division is horizontal when the shares of the resulting companies are owned by the same shareholders of the original company prior to the division and in the same ownership proportions. It is vertical when achieved by separating a portion of assets or activities into a new, subsidiary company owned by the company undergoing division. In both cases, the division of assets and related items

(*) Resolution No. (124) of 2010 was amended by the Authority Board Resolution No. (108) of 2014.

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(Article Three)

The company's Board of Directors shall prepare the detailed division plan, specifically the assets and liabilities pertaining to the surviving company and the resulting companies, for submission to the Extraordinary General Assembly, accompanied by the following:

1. Reasons for the division.
2. Methodology for dividing assets and liabilities.
3. Par value of the shares of the resulting companies.
4. The detailed division plan, specifically the assets and liabilities pertaining to each of the resulting companies, accompanied by an auditor's report.
5. Pro forma financial statements for the surviving company and the resulting companies based on assets, liabilities, ownership rights, and revenues and expenses of the divided activities for two years prior to the division, accompanied by an auditor's report.
6. Draft articles of incorporation and bylaws for the surviving company and the resulting companies, and a draft amendment to the bylaws of the surviving company.
7. The status of the resulting companies regarding listing or continued listing on the Exchange, and the procedures the company will take towards dissenting shareholders under Article (135) of Law No. (159) of 1981.
8. A memorandum of the company's legal advisor clarifying the extent to which the division complies with applicable legal rules and the company's commitment to following all mandatory legal procedures.
9. Agreements regarding creditors' rights after the division between the surviving company and the divided companies, and any measures taken prior to bondholders of all types.

In all cases, the financial statements or financial position taken as the basis for the division proposal must be accompanied by an unqualified report from the company's auditor(s), and the period between the date of the financial statements taken as the basis for the division and the Extraordinary General Assembly's approval decision must not exceed one calendar year.

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(Article Four)

The Extraordinary General Assembly's approval of the division shall be issued by a majority of 75% of the votes represented at the meeting, unless the company's bylaws stipulate a higher percentage.

(Article Five)

The company's Board of Directors may, prior to submitting the proposal to the Extraordinary General Assembly, seek the opinion of the competent administrative authority regarding the division methodology and the detailed division plan, specifically the assets and liabilities pertaining to each resulting company, and the pro forma financial statements for each resulting company based on assets, liabilities, ownership rights, and revenues and expenses of the activities.

(Article Six)

The Authority's approval for issuing shares of the surviving company post-amendment and for issuing shares of the divided company shall be issued following the competent administrative authority's endorsement. The commercial register shall be annotated with the amendment to the surviving company's capital and the registration of the divided company, pursuant to the approval issued by the Authority.

(Article Seven)

The share ownership of the surviving company and the divided companies shall be registered in the shareholders' register at the Central Depository and Registration of Securities company. The shares of the companies resulting from the division of a company listed with shares on the securities exchange shall be listed, and the period elapsed from the company's age prior to the division shall be considered when calculating the duration for trading founder shares. The shares of the surviving and divided companies shall be traded after their listing on the Exchange in accordance with the conditions set forth in the rules for listing, continued listing, and delisting of securities, provided that the resulting companies publish a detailed report endorsed by the Authority in accordance with Article (138) of the Executive Regulations of Law No. (159) of 1981.

(Article Eight)

This Resolution shall be published in the Egyptian Gazette and on the websites of both the Authority and the Egyptian Exchange, and shall take effect from the day following its publication in the Egyptian Gazette.

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Chairman of the Authority Sherif Samy

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Egyptian Financial Supervisory Authority

Smart Village, Building 15 - B 84 Km 28, Cairo/Alexandria Desert Road Giza Governorate, Postal Code: 12577

Phone: (+202) 25370040 - Fax: (+202) 25345333 Email: info@efsa.gov.eg Website: www.efsa.gov.eg