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Monday, 25 July 2016

Parliament now wants to probe minority rights in the EGX

First it was GDRs. Now the House wants to probe minority shareholder rights on the EGX? House of Representatives Speaker Ali Abdel Aal is considering approving a request by 20 MPs to form a committee to monitor what he called “the poor management” of the EGX and “the constant losses [incurred by] minority shareholders,” Abdel Aal said, according to Al Mal. No other details of the MPs’ request were given beyond acknowledging that the EGX is run by an independent authority. With the EGX up more than 6% YTD and no recent scandals that stand out in our memories, it’s unclear why the House is suiting-up to do battle on behalf of minority shareholders.

In fact, the Ismail government is already moving on that front: Investment Minister Dalia Khorshid announced back in June that her ministry would amend aspects of the Capital Markets Act on the rights of minority shareholders, while the Egyptian Financial Supervisory Authority changed listing regulations back in April to further protect minority shareholders rights. This is the second time in a week that Parliament has called for a probe of the EGX, with House Economics Committee chairman Ali Moselhy calling for closed-door hearings into the use of GDR trades to obtain FX abroad.

In other EGX news, the Investment Ministry is reportedly considering reversing regulations that force the execution of EGX deal market transactions valued at more than EGP 100K under CBE-approved banks and not brokerage firms, said Mohamed Maher, deputy head of the Egyptian Capital Markets Association (ECMA). These regulations, imposed by EGX Chairman Mohamed Omran in late May, have led to the cancellation of a number of transactions, prompting the ECMA to recommend their reversal to the Investment Ministry. Maher tells Al Borsa that litigation over the decision was unlikely. As we noted back in June, deal market transactions fall under the EGX’s over-the-counter market regulations which govern trading and transfer of the ownership of the companies not listed on EGX and for capital increases of listed companies not yet under the Egyptian Financial Supervisory Authority. Requests for exceptions are presently on a case-by-case basis.

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