FRA Board Decision No. 41 of 2021 on Rules and Procedures for Electing Representatives to the Investor Protection Fund Board

Financial Regulatory Authority

President of the Authority

Board Decision No. (41) of 2021 dated 21/3/2021 Regarding the rules and procedures for electing representatives of companies operating in the securities field and companies whose securities or financial instruments are listed on Egyptian Exchanges to the Board of Directors of the Investor Protection Fund against Non-Commercial Risks

Board of Directors of the Financial Regulatory Authority

Having reviewed the Capital Market Law issued by Law No. (95) of 1992;

And having reviewed the Prime Minister's Decision No. (2339) of 2019 regarding the reorganization of the Participants Insurance Fund against Non-Commercial Risks for the activities of companies whose securities or financial instruments are listed on Egyptian Exchanges or operating in the securities and financial instruments field;

And having reviewed the Authority President's Decision No. (742) of 2014 regarding the rules and procedures for selecting representatives of companies operating in the securities field in the Board of Directors of the Investor Protection Fund against Non-Commercial Risks;

And after approval by the Board of Directors of the Authority in its meeting held on 21/3/2021;

Decided (Article One)

The following conditions are required for securities brokerage companies and companies operating in the securities and financial instruments field (other than brokerage companies) that are members of the Fund to be eligible to participate in nominating a representative to the Fund's Board of Directors:

1. The company must have practiced its licensed activity for at least three years, and must be continuing to practice the activity at the time of nominating its representative in the election.
2. Its activity must not have been suspended previously pursuant to Article (30) of the Capital Market Law, nor must a measure stipulated in Article (31) of the Capital Market Law have been issued against it, unless two years have elapsed since the expiration of the measure's duration, except for the measure stipulated in item (a) of Article (31) of the Capital Market Law.
3. The company must not be among those that previously intervened in the Fund to cover its obligations due to failure to fulfill them within the specified deadlines, unless three years have elapsed since the date of the Fund's intervention to cover its obligations.

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Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35345350 Fax: +202 35370036 WWW.FRA.GOV.EG

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4. The company must not be among those suspended from trading by the Settlement Guarantee Fund, unless three years have elapsed since the end of the suspension.
5. The company must have paid all its dues or obligations to the Fund according to the last due date prior to the date of submitting the nomination request.
6. Membership in the Fund's Board of Directors must not be combined with membership in the Board of Directors of the Central Depository, Clearing and Registration Company or membership in the Board of Directors of the Exchange.

(Article Two)

The following conditions must be met by the natural person representing securities brokerage companies or companies operating in the securities and financial instruments field (other than brokerage companies):

1. Must hold a higher education degree.
2. Must hold the position of Chairman or Board Member of the company; and for custodians, the nominee must be the person responsible for the custodian activity within the company.
3. Must have at least seven years of experience in the capital market or insurance field, or in one of the legal, accounting, or financial fields.
4. Membership in the Fund's Board of Directors must not be combined with membership in the Board of Directors of the Central Depository, Clearing and Registration Company or membership in the Board of Directors of the Exchange.
5. Must be of good conduct and reputation, and no final judgments must have been issued against him for a felony or misdemeanor involving honor or trust, or for any of the crimes stipulated in the Joint Stock Companies Law or the Commercial Law, or for any of the serious crimes(1) stipulated in the Capital Market Law or the Central Depository, Clearing and Registration Company Law, within the previous five years, unless his reputation has been restored, and the Authority must not have initiated criminal proceedings against him for any of the serious crimes mentioned in either of the two laws, all of which is subject to the condition that he has not settled regarding them.
6. The Authority must not have issued any of the measures stipulated in Prime Minister's Decision No. (2339) of 2019 mentioned regarding the Fund during his membership in the Fund's Board of Directors - except for the two measures stipulated in items (1, 2) of Article Nineteen of the aforementioned Decision - and this must have been due to his breach of his duties or responsibilities as a board member, and he is prohibited from membership in the Fund's Board of Directors for the two subsequent terms following the issuance of these measures.

(1) Serious crimes in the application of the provisions of this Decision refer to crimes punishable by imprisonment or a fine exceeding the legal seriousness value in any of the mentioned laws.

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Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35345350 Fax: +202 35370036 WWW.FRA.GOV.EG

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(Article Three)

The following conditions are required for companies whose securities or financial instruments are listed on Egyptian Exchanges and are members of the Fund to be eligible to participate in nominating a representative to the Fund's Board of Directors:

1. Must not be companies operating in the securities field.
2. The company's securities or financial instruments must have been listed on the Egyptian Exchange for at least one year.
3. The company must meet the conditions for the continued listing of its securities on the Egyptian Exchange and must not be subject to voluntary delisting.
4. The company's securities or financial instruments must be active according to the standards adopted by the Authority.
5. The company must not have committed three violations that resulted in financial obligations being imposed on the company due to its violation of the rules for listing and delisting securities on the Egyptian Exchange during the previous year.
6. The company must not be among those that previously intervened in the Fund to cover its obligations due to failure to fulfill them within the specified deadlines, unless three years have elapsed since the date of the Fund's intervention to cover its obligations.
7. The company must have paid all its dues to the Fund.
8. Membership in the Fund's Board of Directors must not be combined with membership in the Board of Directors of the Central Depository, Clearing and Registration Company or membership in the Board of Directors of the Exchange.

The reference for calculating the periods stipulated in this Decision is the date of closing the window for receiving nomination requests, and the determination of the date of the financial obligation is the date of the decision issued regarding the violation by the Listing Committee of the Exchange.

(Article Four)

The following conditions must be met by the natural person representing companies whose securities or financial instruments are listed on Egyptian Exchanges:

1. Must hold a higher education degree.
2. Must hold the position of Chairman or Board Member of the company.

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Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35345350 Fax: +202 35370036 WWW.FRA.GOV.EG

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3. Must have held the position of Chairman of the Board of Directors or Executive Director of one of the companies operating in the securities field or one of the companies whose securities or financial instruments are listed on Egyptian Exchanges during the year preceding the date of closing the window for receiving nomination requests.
4. Membership in the Fund's Board of Directors must not be combined with membership in the Board of Directors of the Central Depository, Clearing and Registration Company or membership in the Board of Directors of the Exchange.
5. Must be of good conduct and reputation, and no final judgments must have been issued against him for a felony or misdemeanor involving honor or trust, or for any of the crimes related to influencing trading in the capital market, within the previous five years, unless his reputation has been restored, and the Authority must not have initiated criminal proceedings against him for any of the mentioned crimes, all of which is subject to the condition that he has not settled regarding them.
6. The Authority must not have issued any of the measures stipulated in Prime Minister's Decision No. (2339) of 2019 mentioned regarding the Fund during his membership in the Fund's Board of Directors - except for the two measures stipulated in items (1, 2) of Article Nineteen of the aforementioned Decision - and this must have been due to his breach of his duties or responsibilities as a board member, and he is prohibited from membership in the Fund's Board of Directors for the two subsequent terms following the issuance of these measures.

(Article Five)

Companies operating in the securities or financial instruments field or companies whose securities or financial instruments are listed on Egyptian Exchanges, and companies affiliated with any of them or companies that are members of the Fund subject to the actual control of the same natural or legal person, are not permitted to submit more than one nominee for membership in the Fund's Board of Directors.

(Article Six)

The date for starting the acceptance of nomination requests will be announced on the electronic website of the Authority, the Exchange, and the Fund, at least one week before the specified start date of nominations. The acceptance of nomination requests will continue for one week from the date of starting the acceptance of nomination requests.

The nomination request must be submitted to the Fund, signed by the Chairman of the company's Board of Directors, and accompanied by documents supporting the fulfillment of the required conditions as specified in this Decision.

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Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35345350 Fax: +202 35370036 WWW.FRA.GOV.EG

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(Article Seven)

A committee formed by the Authority President's decision shall be responsible for examining nomination requests on the day following the expiration of the specified deadline for accepting nomination requests, and shall perform the following:

First: Examine nomination requests and verify the fulfillment of conditions in the member company and its nominee, and exclude any applicant who fails to meet any of the conditions by a reasoned decision within a period not exceeding five working days from the date of expiration of the nomination request acceptance period.

Second: Notify applicants of the results of the examination via the method determined by the Authority within two working days from the date of expiration of the period mentioned in the first item.

Third: Prepare three preliminary lists of nominees: one for securities brokerage companies, the second for companies operating in the securities or financial instruments field (other than brokerage companies), and the third for companies whose securities and financial instruments are listed on Egyptian Exchanges. These lists must be published on the electronic website of both the Fund and the Authority within two working days from the date of expiration of the five working days mentioned in the first item.

(Article Eight)

Any interested party may appeal to the Authority President regarding the inclusion of any nominee in the lists of nominees for membership in the Fund's Board of Directors within one week from the date of announcement of the preliminary lists of nominees mentioned. Also, any person whose name was excluded from nomination may appeal within the same period, all before the Appeals Committee of the Authority referred to in Articles (50, 51) of the Capital Market Law.

The Appeals Committee shall rule on the appeal within a period not exceeding two weeks from the date of expiration of the appeal period. Its decision shall be final and enforceable, and the concerned parties shall be notified of the Committee's decision within a maximum of two working days from the date of its issuance.

(Article Nine)

The nomination request examination committee referred to in Article Seven of this Decision shall, within the next two working days following the date of the Appeals Committee's decision (if any) or the date of expiration of the appeal period, whichever applies, prepare and publish the final lists of nominees for membership in the Fund's Board, as follows: (a) List of nominees for securities brokerage companies. (b) List of nominees for companies operating in the securities or financial instruments field (other than brokerage companies). (c) List of nominees for companies whose securities or financial instruments are listed on Egyptian Exchanges.

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Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35345350 Fax: +202 35370036 WWW.FRA.GOV.EG

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These lists will be published, and the location and date of the election will be determined on the electronic website of both the Fund and the Authority. The election shall be held within one week from the date of publication.

(Article Ten)

A committee to supervise the election shall be formed by a decision of the Authority President as follows: (a) Two members representing the Authority, one of whom shall be chosen as Chairman of the committee. (b) Three members representing the Fund.

This committee shall be responsible for the following: (a) Preparation for the election and registration of attendance. (b) Verification that the person voting in the election is entitled to do so as specified in Article Twelve of this Decision. (c) Supervision of the integrity of voting and counting votes after excluding invalid votes. (d) Preparing a record of the election results and the votes obtained by each nominee, and announcing the results.

(Article Eleven)

For the election to be valid, one-quarter of the number of member companies of the Fund from each of the three categories of Fund members (securities brokerage companies - companies operating in the securities or financial instruments field other than brokerage companies - companies whose securities or financial instruments are listed on Egyptian Exchanges) must be present. In case of failure to achieve the quorum, the election shall be postponed to the following week. The date for the second election shall be published on the electronic website of both the Fund and the Authority. In this case, the election shall be held regardless of the number of member companies present.

(Article Twelve)

Voting shall be conducted by each person entitled to vote from the member company by selecting one nominee from the nominees representing the category to which the voting company belongs from the prepared list.

The right to vote in the election is limited to the Chairman of the Board of Directors of the member company. He may delegate the Executive Director of the company or one of its senior management officials to vote on his behalf, based on a delegation signed by him on the company's papers and stamped with the company's seal. The delegation may also be issued by the Executive Director of the company if it includes that the choice of the delegate to vote was made with the approval of the Chairman of the Board of Directors of the company.

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Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35345350 Fax: +202 35370036 WWW.FRA.GOV.EG

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(Article Thirteen)

The Election Supervision Committee shall announce the results after counting the valid votes obtained by each nominee in the three lists mentioned. The winner shall be the nominee who obtained the highest number of votes from each of these lists.

In case of a tie in the number of votes between nominees, a re-election shall be held between the tied nominees on the same day the election was held.

(Article Fourteen)

Any nominee may appeal against the election results or procedures within two working days from the date of their announcement. The Appeals Committee referred to in Article Eight of this Decision shall be responsible for ruling on the appeal against the election results or procedures within a period not exceeding fifteen days from the date of submission. Its decision shall be final and enforceable.

(Article Fifteen)

The final result of the selection of the Fund's Board of Directors members shall be announced on the day following the expiration of the period for ruling on appeals.

In the absence of appeals, the result shall be announced on the next working day following the expiration of the appeal period.

(Article Sixteen)

In the event that the license of the company represented by a Board of Directors member is canceled, or its securities are delisted from the Exchange, or the relationship between the company and its representative on the Board of Directors ends, or a Board of Directors member loses any of the membership conditions, his membership in the Fund's Board of Directors shall be terminated. He shall be replaced by the next member in the number of votes in the last election for the Board, and his term of membership shall be the remainder of his predecessor's term.

(Article Seventeen)

The Authority President's Decision No. (742) of 2014 regarding the rules and procedures for selecting representatives of companies operating in the securities field in the Board of Directors of the Investor Protection Fund against Non-Commercial Risks is repealed.

(Article Eighteen)

This Decision shall be published in the Egyptian Gazette and on the electronic websites of the Authority, the Egyptian Exchange, and the Fund, and shall be implemented from the day following its publication in the Egyptian Gazette.

Chairman of the Board of Directors of the Authority Dr. Mohamed Omran

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