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Thursday, 29 March 2018

FRA approves new listing regs that raise freefloat requirement

FRA approves new listing regs that raise freefloat requirement: The Financial Regulatory Authority (FRA) signed off yesterday on amendments to EGX listing regulations that raise the minimum requirement for the number of shares that need to be in freefloat, according to a FRA statement. Under the amended regulations, companies looking to IPO will have to choose between two options: The first will be to list at least 25% of their shares, up from 10% currently; and the second would entail listing a number of shares equivalent to 0.025% of the total freefloat capital of the EGX, provided that number is equal to at least 10% of the company’s total shares.

Already-listed companies need to comply and will have two choices: either increase their percentage of freefloat to at least 10% of total company shares, or the equivalent of 0.125% of total EGX freefloat capital (if that figure makes up at least 5% of total company shares). Companies will have until the end of 2019 to comply with the new regulations.

The amendments also cancel a directive that had required executive board members of brokerages to hold at least a 10% stake in the company.

Board members’ remuneration must be made public: The FRA’s newly-appointed board also approved yesterday regulations they say will enhance the transparency of thenation’s capital market. Those rules include provisions that will force listed companies to:

  • Provide all shareholders at every AGM with detailed reports on remuneration for board members (including salaries, bonuses, etc);
  • Require large shareholders and board members of listed companies to disclose their direct in indirect investments in other listed companies;
  • Include their governance framework in their annual reports;
  • Provide updates on planned capital increases on a semi-annual basis;
  • Share details of capital increase valuation studies with their oldest shareholders.

FRA broadens classification of SMEs seeking stock market listing: FRA has set the maximum capital required to list as an SME at EGP 100 mn, raising it from EGP 50 mn. Once listed, SMEs can continue to raise their capital until a ceiling of EGP 200 mn, after which point they are no longer classified as SMEs.

The FRA also signed off on provisions it says expand protections for minority shareholders, which include the creation of a new account in the EGX that will buy out minority stakes from shareholders who have been harmed by a company’s decision to delist from the bourse. Compliance deadline: Companies will have until the end of 2018 to adjust to the new amendments if their financial year ends on 31 December and until mid-2019 if their financial year ends on 30 June.

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