The Egyptian Financial Regulatory Authority (“FRA”) issued Decision No. 1 for 2020 to amend the Rules of Listing and Delisting Securities at the Egyptian Stock Exchange issued in 2014 ("Listing Rules"). The amendment imposed new mandatory compliance requirements on companies listed at the Egyptian Stock Exchange (“EGX”).
FRA review of financial statements
Article 35 of the Listing Rules is amended to require listed companies to provide FRA with a copy of its audited financial statements at least one month prior to the annual general assembly meeting.
FRA will inspect the financial statements and notify the company with its observations if any. The company will be required to adjust the financial statement as per FRA observations and publish the adjusted one together with FRA reservations on its website as well as on the EGX Screen. Such publication shall be at least 21 days prior to the date of the general assembly meeting.
In the event that the general assembly makes any further amendments to the financial statements, the company shall publish these amendments within one week from the date at which the general assembly will approve the financial statements.
New publication requirement
Listed companies are now required to publish a summary report of their annual financial statement with the auditor’s report in one of the widely spread newspapers in Egypt in Arabic language according to the template prepared by FRA for this purpose. They will also be required to publish on the EGX screen and on their websites the periodical financial statements and the related board of directors’ reports if they are distributing periodical dividends.
Conflict of Interest Discloser
A new section was introduced to Article 40 of the Listing Rules to require insiders, including directors, shareholders, managers and their affiliates to disclose any direct or indirect conflict of interest they may have with the company. The disclosure shall include any financial benefits or transaction that would affect the activity of the company or its interests.
Insiders are also not permitted – without the prior approval of the general assembly – to participate in or contribute to any work that would compete with the company’s business.
The annual board of directors’ report must include a confirmation that the insiders have complied with the above conflict of interest and non-compete disclosers.