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Monday, 22 April 2019

Companies up to 75% owned by the state could be reclassified as “law 159” enterprises

LEGISLATION WATCH- Companies up to 75% owned by the state could be reclassified as “law 159” enterprises: Listed companies in which the government owns up to a 75% stake would no longer fall under the Public Enterprises Act if draft legislation now being prepared is passed, Public Enterprises Minister Tawfik reportedly said, according to Al Mal.

Why this matters: Today, any company with more than 50.5% state ownership falls under the Public Enterprises Act, which restricts the ability of company execs to manage the business according to market norms. Instead, any listed company in which the state owns less than 75% would automatically have to comply with the same Companies Act (law 159 of 1981) with which any non-oil-and-gas, non-freezone company in the private sector must comply.

Background: The package of legislative amendments was drafted last October and was due to make its way to the House during the ongoing legislative session. We haven’t yet had word of the amendments making their way to cabinet for review. They would then require a further review by the Council of State to be eligible for introduction to the House.

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