Decisions

Ministry of Investment

Decision No. 45 of 2015

Amending Certain Provisions of the Executive Regulations of the Capital Market Law Issued by Decision of the Minister of Economy and Foreign Trade No. 135 of 1993

Minister of Investment

Having reviewed Law No. 159 of 1981 concerning Joint Stock Companies, Commandite Companies by Shares, and Limited Liability Companies; and Law No. 95 of 1992 concerning the Capital Market; and Law No. 17 of 1999 concerning Commerce; and Law No. 15 of 2004 concerning the Regulation of Electronic Signatures and the Establishment of the Information Technology Industry Development Agency; and Law No. 10 of 2009 concerning the Regulation of Supervision over Non-Egyptian Markets and Financial Instruments; and Presidential Decree No. 231 of 2004 concerning the Organization of the Ministry of Investment; and Presidential Decree No. 192 of 2009 Issuing the Basic Statute of the General Authority for Financial Supervision; and the Executive Regulations of the Capital Market Law Issued by Decision of the Minister of Economy and Foreign Trade No. 135 of 1993; and Minister of Economy Decision No. 625 of 2000 Issuing the Egyptian Auditing Standards; and after taking the opinion of the General Authority for Financial Supervision; and based on what the State Council has ratified;

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It is hereby decided as follows:

(Article One)

The following texts shall replace the texts of Article No. (7), item (1) and the last paragraph of (secondly), item (8) of (thirdly), Article (17), item (secondly) first paragraph, and Article (228) of the Executive Regulations of the aforementioned Capital Market Law:

Article (7)

Secondly – Regarding the issuance of shares to increase capital: 1 – The value of the increased shares shall be determined and audited by the company's auditor in accordance with the provisions of Articles (17 or 17 bis) of these Regulations if the shares are offered to non-shareholders of the company. The Authority may object to the issuance of increased shares in case the provisions of Articles (17 or 17 bis) of these Regulations are not observed, or if the documents and data stipulated in this Article are not fulfilled.

Thirdly – Regarding the issuance of other securities: 8 – A statement of capital contributions and their distributions, and whether the company is listed on the stock exchange.

Article (17), Item (Secondly), First Paragraph:

Secondly – Regarding companies not mentioned in the previous item, the determination of the fair value of their increased shares shall be either in accordance with the provisions of the previous item, or according to a study prepared by the company for this purpose under its responsibility, accompanied by the company auditor's report, adhering to the Egyptian Auditing Standards.

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Article (228)

The company shall maintain a list of all its clients' names, and a file for each client containing the data stipulated in the following article, a statement of the securities traded on their behalf, the contracts signed between them and the company, as well as the correspondence exchanged between them, for a period of five years.

The company is also obligated to retain client contracts and their account statements for five years from the date of the last transaction or account closure. Without prejudice to the provision of the previous paragraph, the company may retain electronic records or microfilm images instead of the originals, and such images shall have the probative value of originals in evidence, provided that the legal rules and controls regarding their preparation, retention, and retrieval are observed.

The term "client" refers to: any natural or legal person for whom the company has opened an account or contracted with to trade in securities.

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(Article Two)

A new Article (17 bis) and two new paragraphs at the end of Article (32), and a second paragraph to Article (229) shall be added to the Executive Regulations of the Capital Market Law, with the following texts:

Article (17 bis)

In the event of issuing bonds, financing certificates, or other securities convertible into shares, the resolution of the Extraordinary General Assembly – containing approval for the issuance of these securities – must include the conversion ratio used or the method for determining the company's share value on the conversion date, according to a study prepared by the company's management for this purpose. This shall be without prejudice to the share valuation rules stipulated in the previous article when the conversion date of the aforementioned securities into shares arrives.

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Article (32), Paragraphs (Second and Third):

Furthermore, the Extraordinary General Assembly may, upon request by the Board of Directors or the Managing Partner(s) as applicable, and for serious reasons presented by any of them and endorsed by the auditor's report, offer all or part of the increased shares in a private subscription to one or more specific persons or entities, without applying the pre-emptive rights of existing shareholders, if permitted by the company's articles of association, whether the increase is in cash or using credit balances. The reasons and justifications for this, along with the auditor's report on it and the benefits expected by the company from the private subscription, must be presented to the shareholders in the General Assembly. The percentage of shares and voting rights allocated to the subscribers of the private subscription, and their related parties – if any – shall be excluded from voting on the resolution, unless all existing shareholders agree to this subscription.

The term "related parties," according to the provisions of the previous paragraph, refers to natural persons and any of their relatives up to the second degree, and legal entities, entities, unions, associations, and financial groups consisting of two or more persons, where the majority of their shares or capital portions are directly or indirectly owned by the other party or by a single person. Persons under the actual control of another person, or persons who have an agreement to vote together at the company's General Assembly meetings or Board of Directors meetings, are also considered related parties.

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Article (229), Paragraph (Second):

In cases where the company trades in securities on behalf of clients, including foreign financial institutions operating in the field of brokerage or financial asset management, the company shall comply with the following:

(a) That the contracted foreign financial institution is obligated to trade with the company solely on behalf of clients for whom it holds data and supporting identification documents, and that it has obtained authorization from these clients to trade on their behalf and on their accounts.

(b) Acknowledgment that the contract between the client and the foreign financial institution ensures compliance with the anti-money laundering rules applicable in the institution's home country.

(c) The obligation of the foreign financial institution to provide all data regarding any client upon request by the Authority.

(d) Retention of the data referred to in item (c) for a period of five years.

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(Article Three)

This Decision shall be published in the Egyptian Gazette, and shall take effect from the day following its publication date.

Dated 31/3/2015

Minister of Investment
Ashraf Salama