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Wednesday, 27 November 2019

Education Ministry moves to soften blow of school foreign ownership cap

Education Ministry moves to soften blow of school foreign ownership cap: The Education Ministry has set up a committee that will consider investor requests for exemptions from the recently imposed 20% cap on foreign ownership of schools, minister Tarek Shawki said, according to Al Mal. Shawki said the cap will also not be applied retroactively, being limited only to stakes purchased after the cap was introduced. He added that the main reason behind the original decisions, which were announced last month for both private and international schools, is that a stake exceeding 20% gives the owner management rights under the Companies Act. Any potential school manager should therefore be screened to ensure it will protect children from “negative consequences.”

Background: The minister said last weekend that he will consider exemptions to the limits on a case-by-case basis after speculation mounted that the cap could be raised or abolished altogether in response to investor concerns. Some foreign investors have told us they have suspended plans to invest in the sector. The cap applies to all foreigners, including dual-passport holders, funds, entities, and authorities. Investors are also now required to get prior approval before offloading stakes. Private school owners have urged the ministry to rethink its plans, fearing that the restrictions will stifle foreign investment in the sector. We took a closer look at the story in the first issue of our weekly education vertical, Blackboard, earlier this month. You can read the full story here.

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