EGX Launches The First Guide For All the Rules And Regulations Governing The Minority Shareholders’ Rights

The Egyptian Exchange (EGX) has launched a comprehensive guide for the rules and laws regulating minority shareholders 'rights, "Minority Shareholders' Rights". This guide aims at informing investors with the legislative framework regulating their rights in each of the new Investment Law No.72 for year 2017, EGX listing rules, its amendments, and the Corporate Law No.159 for year 1981, its latest amendments and its executive regulations.  In addition to the new Capital Market Law No.95 for year 1992, its latest amendments and its executive regulations.

This guide is part of EGX contribution in raising the level of knowledge for all stakeholders related to the securities industry, as it will enlighten shareholders with their rights and obligations.

Minority shareholders or small shareholders are the shareholders who do not have a majority in terms of number of shares; therefore, they don’t have a significant share in the company's capital accordingly they have no power or authority to make a decision regarding the company’s management of the company.

This guide reviews the concept of the minority in shareholding companies where it is based on four main pillars about the means to protect the minority shareholders in many cases such as the conflict of interest, the board members misuse of corporate assets to achieve personal gain, and the abuse of rights by the majority shareholders.

The first pillar includes the pledges for the shareholders attendance and the voting system in the General Assemblies as well as the cumulative and electronic voting. It also reviews the minority rights with regards to the call for holding the General assemblies and their right to suspend the assemblies’ decisions.

The second pillar includes provisions of the disclosure and related parties, both in terms of disclosure about the netting contracts and Intangible Contracts. It also includes the rules associated with the assemblies’ approval on those contracts as well as the disclosure and surveillance of the purchase orders for acquiring listed companies only; finally, the notification of the obligatory purchase orders.  

The third pillar includes regulating the inspection and supervision on the company and the possibility of monitoring the board of directors, the right to oppose the mergers and exit decisions, the right to request inspection and dissolve the company and invalidate the netting contracts.

The fourth and last pillar focuses on the minority shareholder's opportunity to review the company's documents, records, budgets, and profit and loss accounts.
Commenting on this, Mohamed Farid, EGX Chairman, said that the guide aims at raising the level of knowledge of minority shareholders about all laws, regulations and rules governing this matter.

He continued, "Introducing investors to their rights that are delivered in the laws regulating their investments enhances the attractiveness of the Egyptian market to domestic and foreign investor. It is the main gateway for creating job opportunities, raising income and improving the living conditions".
He concluded, "The guide also emphasizes the transparency on the Egyptian business environment which is the main gear for investment flows.”
 
Minority Shareholders’ Rights Guide