FRA Board of Directors Decision No. 11 of 2023 Amending the 2014 Rules for Listing and Delisting Securities at the Egyptian Exchange

The Official Gazette - No. 30, Part (A) dated February 6, 2023

Egyptian Financial Regulatory Authority
FRA Board of Directors Decision No. 11 of 2023 dated January 25, 2023

Amending FRA Board of Directors Decision No. 11 of 2014 Regarding the Rules for Listing and Delisting Securities at the Egyptian Exchange

The Board of Directors of the Egyptian Financial Regulatory Authority Having reviewed Law No. 159 of 1981 on Joint Stock Companies, Limited Liability Companies and Single-Person Companies and its Executive Regulations; Law No. 95 of 1992 on the Capital Market and its Executive Regulations; Law No. 10 of 2009 on Regulating Supervision over Markets and Non-Banking Financial Instruments; FRA Board Decision No. 11 of 2014 on the Rules for Listing and Delisting Securities at the Egyptian Exchange; FRA Board Decision No. 23 of 2016 on the Rules for Issuing Bonds and Sukuk not Obtaining Credit Ratings, Subscription Rules, and Listing Conditions; And after the approval of the FRA Board in its meeting held on January 25, 2023;

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Decision

(Article One)
The following texts shall replace Articles 48 and 52 (Fifth Paragraph) of the aforementioned Rules for Listing and Delisting Securities at the Egyptian Exchange:

Article (48) - Capital or Par Value Adjustment or Company Offer: Subject to Article 17 of the Executive Regulations of the Capital Market Law, the company's board of directors shall follow these procedures in cases of increasing or decreasing its authorized and/or issued capital, adjusting par value, or modifying its purpose:

• 1. Submit to the Authority all documents required for the proposed amendment, including the disclosure report of the amendment on the form prepared by the Authority, accompanied by the board's approval to adopt the disclosure report, within two working days from the date of the board meeting.
• 2. The Exchange shall publish the disclosure report of the amendment on its trading screens after the Authority verifies that the supporting documents for the disclosure report are complete. The amendment procedures shall not proceed until this report is published.
• 3. Convoke an ordinary or extraordinary general assembly meeting, as applicable, to consider approving the increase or decrease in capital, adjustment of par value, or modification of the company's purpose within one week from the date of publishing the disclosure report on the Exchange trading screens.
• 4. If the general assembly amends the board's proposal, the company management shall be obligated to publish an amended disclosure report.
• 5. If the amendment relates to a cash capital increase for existing shareholders, the board shall be obligated to disclose at least five days before the subscription period opens for additional shares a fair value prepared by an independent financial advisor in the following two cases:

(a) If the company incurred losses according to the latest approved financial statements equal to or exceeding 50% of equity, and the increase value exceeds 10% of capital by no less than five million Egyptian pounds.

(b) If the increase equals or exceeds the issued capital or equity, whichever is lower according to the latest approved financial statements.

The company whose capital increase has been listed shall be obligated to include in the board's report presented to the general assembly at the end of each financial year for the following two years, a breakdown of how the capital increase proceeds are utilized.

Article (52 - Fifth Paragraph):
The company shall be obligated as follows: the time period from the date of publishing the announcement until the last day for trading the original shares carrying subscription rights shall not exceed seven days.

(Article Two)
New articles numbered (12 bis, 48 bis, 51 bis) shall be added to the aforementioned Rules for Listing and Delisting Securities at the Egyptian Exchange, with the following texts:

Article (12 bis) - Conditions for Listing and Continued Listing of Bonds or Sukuk not Obtaining Credit Ratings: The listing and continued listing of bonds or sukuk not obtaining credit ratings, whose trading is restricted to financial institutions and persons with financial soundness as stipulated in Article 3 of the aforementioned FRA Board Decision No. 23 of 2016, shall require the following conditions:

• 1. The remaining term of the bonds or sukuk to be listed shall be less than one year from the listing date, and no default events regarding bondholder payments have occurred.
• 2. The value of the bonds or sukuk to be listed shall not exceed the company's net assets according to the latest financial statements audited by the company's auditor.
• 3. Submission of the following documents:

(a) The Authority's prior approval to submit the listing application.
(b) The Authority-approved information memorandum.
(c) A certificate from the company's auditor confirming its ability to pay bond or sukuk holders' obligations at their maturity dates from the company's cash flows.
(d) A commitment from the company's legal representative to form a bond or sukuk holders' group within three months of the listing date.
(e) A commitment from the legal representative to pay all principal and interest due to bond or sukuk holders according to the dates specified in the information memorandum, without breaching the obligations stipulated therein.

• 4. Publishing a disclosure report for trading offer according to the form prepared by the Exchange.

The Authority shall approve, which includes in particular the following:
(Bond or sukuk issuance conditions - Consumed position of bonds/sukuk - Yield and payment date and calculation basis - Financial indicators - Issuer's repayment intention adjusted - Granted guarantees).

• 5. Commitment to immediate disclosure to the Authority and Exchange regarding material events,
  And commitment to all required disclosures and scheduled payments throughout the bond or sukuk financing period and their dates stated in the information memorandum.

• 6. Commitment to obtaining the Authority's and Exchange's approval throughout the listing period regarding the statement of yields due to bond or sukuk holders and what is paid from them, at least fifteen days before payment.
• 7. Commitment that the issuer has at least one auditor among those approved by the Authority throughout the specified period for listing bonds or sukuk, and shall perform duties according to Egyptian audit standards, and must ensure in its report the company's compliance with bond or sukuk issuance conditions.

Article (48 bis) - Conditions for Increasing Issued Capital through a Phased Issuance Program: A company listed on the Exchange may increase its capital in cash through a phased issuance program based on authorization issued by the extraordinary general assembly, subject to the following conditions:

• 1. Preparing a study by the company's board outlining the rationale for phased increases, uses of increase proceeds, and expected returns, accompanied by a proposed timeline for capital increase to be presented to the extraordinary general assembly.
• 2. The extraordinary general assembly's decision to authorize the board to increase capital in phases up to the maximum issued capital at the time of the assembly's decision and not exceeding it according to the latest published financial statements, and taking all necessary executive procedures to complete the increase for each designated phase.
• 3. The authorization granted to the board shall not include waiving subscription rights or restricting subscriptions in the increase to specific shareholders or admitting new investors, and capital increase financing for any phase of the program shall not be funded from shareholders' credit balances unless all shareholders approve.
• 4. The increase shall not be designated to acquire assets owned by the company's shareholders, board members, or their affiliated group unless the general assembly has previously approved exchange contracts according to the rules governing this matter.
• 5. Completing the execution of capital increase phases within three years from the date of authorization. In all cases, a new authorization must be obtained from the general assembly if it wishes to execute a new program or if the three-year term expires without executing all increase phases.
• 6. Commitment that the subscription period for each phase of the program shall not be less than thirty days from the date the subscription window opens.
• 7. The board of the target company in a takeover bid shall be prohibited from using the extraordinary general assembly's authorization to increase issued capital during the period from the date of publishing the Authority's decision approving the takeover bid draft and information memorandum at the Exchange until the date announcing the bid results, in light of Articles 34 and 36 of the Executive Regulations of the Capital Market Law.

In all cases, Article 48 of these Rules must be observed before convening the extraordinary general assembly to propose a phased capital increase based on an issuance program. Furthermore, all requirements of the aforementioned Article 48 must be met before convening the company's board to decide on the increase for each phase, and the Authority may request additional documents in cases it deems appropriate, including a feasibility study on how the phase's increase proceeds will be used and their expected benefits, prepared according to recognized principles.

Article (51 bis) - Conditions for Transferring Treasury Shares to Company Shareholders: A company listed on the Exchange may dispose of treasury shares by transferring them to its shareholders as free shares, provided they have not been purchased for more than one calendar year, subject to the following conditions:

• 1. A decision by the company's ordinary general assembly approving the disposal of treasury shares by transferring them as free shares to shareholders, subject to obtaining the Authority's prior approval for convening the general assembly to make such a decision and disclosing the cash consideration paid to execute the transfer process.
• 2. The time period from the date of the ordinary general assembly until the end of the calendar year potentially following the purchase of treasury shares shall be less than thirty working days, and the transfer process shall be executed before the expiration of the aforementioned year.
• 3. Following the same procedures for announcing free share distributions and execution conditions stipulated in Article 33 of these Rules.

The transfer of treasury shares to company shareholders shall be conducted according to the conditions and executive procedures determined by the Exchange in coordination with the Central Depository and Clearing Company, and upon their approval by the Authority.

(Article Three)
This decision shall be published in the Official Gazette, and on the websites of the Authority, the Egyptian Exchange, and the Central Depository and Clearing Company for Securities. It shall take effect from the day following its publication in the Official Gazette, and repeals any provision contrary thereto.

Chairman of the Board of Directors
Egyptian Financial Regulatory Authority
Dr. Mohamed Fared Saleh

Printed by the General Authority for Royal Printing Offices Chairman of the Board Accountant / Ashraf Imam Abdel Salam Library of Congress Deposit No. 268 of 2023 25710 / 2023/2/7 - 2023/2/7 - 7.9