Process of CG in Egypt

Mohamed Omran

Vice Chairman

Cairo & Alexandria Stock Exchanges December, 13th 2006

Process of CG in Egypt

The First ROSC Exercise (2001)The First ROSC Exercise (2001)

Issuing New Listing &Disclosure Rules (2002)Issuing New Listing &Disclosure Rules (2002)

The Second ROSC Exercise (2003)The Second ROSC Exercise (2003)

Establishing The Institute of Directors (2004)Establishing The Institute of Directors (2004)

Issuing the first Corporate Governance Code (2005) Issuing the first Corporate Governance Code (2005)

Process of CG in Egypt

The First ROSC Exercise (2001)

The First step was in 2001 when the World Bank published its first assessment of corporate governance system in Egypt

Process of CG in Egypt

The First ROSC ExerciseThe assessment highlighted a number of areas where

Egypt’s corporate governance system needs strengthening in major six headings, Including:

Disclosure of ownership and control structuresDisclosure of financial and non-financial informationTraining for regulators and the private sectorRole and effectiveness of shareholders’ meetingsPractices of boards of directorsProfessional conduct of auditors.

August 2002 : The implementation of new Listing, Delisting and Disclosure rules.

Focusing on the concept of transparency through a set of obligations concerning the disclosure of significant material information.

Issuing New Listing & Disclosure Rules

Such obligations include but not limited to, that companies should notify CASE with :

The board of directors (BOD) composition and its key officers resumes and ensure that no conflict of interest exist with any of the BOD members.

Business contracts between the company and its directors, managers, shareholders and related parties.

Organizational structure of companies. Detailed capital structure including percentages of

shareholders ownerships.

Listing, Delisting & Disclosure Rules (cont’d)

All transactions between the issuer and any of its shareholders.

The existence of an audit committee, the names of its members and their duties.

The General Assembly Meetings. The internal procedures and regulations undertaken by

the issuer, which do not permit any insider trading, i.e. to buy or sell securities of the company based on insider information.

The annual and quarter financial statements.

Listing, Delisting & Disclosure Rules (cont’d)

CASE Rules concerning Financial Statements Dissemination The issuer shall review and prepare the financial statements according to

the Egyptian Generally Accepted Accounting Principles which follow the International Accounting Standards.

Publish a “Board Report” that provides an overview about the company activities during the year.

Deliver to CASE and the CMA a copy of the annual financial statements whenever approved by the company's BOD with the Auditors Report by a maximum of 90 days from each FY end.

Deliver a copy of the quarterly financial statements whenever approved by the company's BOD with the Auditors Report by a maximum of 45 days from the end of each quarter.

Listing, Delisting & Disclosure Rules (cont’d)

CASE Rules concerning Financial Statements Dissemination

Publish the issuer’s annual & semi-annual financial reports, the related footnotes, the Auditor's Reports and the CMA comments in two daily widely circulated newspapers, one of which, must be in Arabic.

Ensure all interior procedures that guarantee that there is no information leakage, specifically designated to financial analysts, financial institutions or other parties, before disclosing them to the public.

Immediately notify the Exchange with any material events occurred, such as new bonds issuance, material changes in shareholders’ structure, purchase of treasury stocks, etc.

Directors and senior managers of the issuer must inform the Exchange of their trading on the company’s shares, before the execution process.

Listing, Delisting & Disclosure Rules (cont’d)

Impact of CG on Number of Listed Companies vs. Market Cap (1997- Nov 2006)

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200

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1,4001

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19

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03

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04

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06

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100

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Number of listed companies Market capitalization

The Second ROSC Exercise

The World Bank second assessment was Published in 2003. It highlighted a number of major reforms, mostly

incorporated in new stock exchange listing rules, as well as, identifying several key next steps, including:

Building a Center for Directors that can help develop a Code of Corporate Governance.

Focused enforcement of the new listing rules and disclosure provisions.

Implementation of legislative reform to bring the policy framework into greater compliance with the OECD Principles.

Establishing the Egyptian Institute of Directors

A decree issued by the Minister of Foreign Trade in 2003.

Two boards structure: (i) Board of trustees; and (ii) Executive Board.

Process of CG in Egypt

Release of Egypt's Code of Corporate Governance in 2005.

Release of the Corporate Governance Manual for State-Owned Companies in 2006.

Currently

Reviewing the current Listing, Delisting & Disclosure Rules