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Tuesday, 7 May 2019

GAFI issues regs on how preferred shares work in Egypt

REGULATION WATCH- Tweaks to regulations on how preferred shares (or preference shares, if you prefer) work: The General Authority for Freezones and Investment (GAFI) has issued regulations for issuing preferred shares when establishing a new company or increasing the capital of an existing stock or shareholding company, it said in a statement. The regulations include a requirement for companies to stipulate in their articles of association the privileges enjoyed by preferred shareholders. The regulation caps preference share voting rights at 2:1 and stipulates that the granting of 2:1 voting rights need to be approved by an extraordinary general assembly.

What’s preferred stock? Preferred stock can entitle holders to extra votes, additional dividends or special treatment when a company is liquidated, among other things. So far as we can tell, companies were given the ability to create preferred stock as part of changes to the Companies Act (law 159 of 1981) back in January 2018.

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