The Financial Regulatory Authority (FRA) has issued a comprehensive set of amendments to the rules governing the listing and delisting of securities, as per a statement.

This marks a step towards strengthening governance and transparency within listed companies, safeguarding investors’ rights, and enhancing the efficiency and attractiveness of the Egyptian Exchange (EGX).

The amendments introduce a broad package of regulatory measures designed to address structural gaps that have historically weighed on investor confidence.

The decision includes facilitations for listing newly established companies, introduces more balanced retention requirements for major shareholders, and strengthens safeguards for company assets.

It also mandates the application of cumulative voting, establishes an electronic register of insiders, and expands on-site oversight as part of what the authority described as a shift toward modern digital governance.

Mohamed Farid, chairman of the FRA, said the amendments aim to open up financing channels for promising and newly established companies, while applying strict oversight to protect company assets and shareholders’ interests.

He stressed that protecting small investors and preventing the concentration or monopolization of information remains central to the strength and credibility of the capital market, noting that transparency and field supervision are essential to enhancing the competitiveness of the EGX and attracting large-scale investments.

Farid added that the new framework marks a clear transition from traditional regulatory practices to an era of digital governance, where disclosure is no longer a procedural formality but a core guarantee of market stability.

Under the amended general conditions for listing securities, companies are now required to apply cumulative voting when electing board members in a single round and to submit board nomination applications, particularly for independent candidates, to the Nominations and Remuneration Committee.

Listed companies must also include a detailed evaluation of board performance, participation, and effectiveness in their annual board reports, and must notify the Authority in advance of any intention to change their external auditor, along with justifications and a clear handover plan.

The rules further require companies to maintain adequate electronic financial and accounting systems, operate within an effective internal control environment, and undergo on-site verification of branches to confirm compliance with listing requirements, in coordination between the authority and the EGX.

The amendments also revise the conditions for listing and maintaining shares.

Shareholders owning 10% or more of a company’s capital are now required to submit undertakings that their combined ownership will not fall below 51%, down from 75%, and that it will not be less than 25% of total shares for two years following an initial public offering.

New requirements were also introduced for companies seeking listing without having issued financial statements for two years, including minimum profitability and equity thresholds, ownership by experienced shareholders, and the submission of a comprehensive growth and valuation study certified by a registered financial advisor.

This study must cover business plans, management experience, future projections, fair value, resource adequacy, existing contracts, and detailed asset reports prepared by appraisers registered with the authority.

For continued listing, companies must now comply with the amended general listing requirements in addition to existing conditions related to shareholder numbers, share counts, and free-float percentages.

The rules also require a declaration from a company’s legal advisor confirming that no board members have faced judicial rulings in the past five years, and grant the authority and the EGX the right to request auditor confirmation of the adequacy of electronic financial and accounting systems.

To facilitate access to the stock market for newly established companies and small and medium enterprises, the Authority introduced a separate set of listing requirements.

These include higher minimum capital thresholds, a minimum free-float of 10%, at least 300 shareholders, and no fewer than 20 million shares.

Companies must also submit a fair value study supported by a detailed future feasibility assessment, in addition to the disclosure report required under the Executive Regulations of Companies Law No. 159 of 1981.

Retention requirements for major shareholders in small and medium enterprises were also amended, with each shareholder owning 10% now required to retain about 51% of their stake for two years, representing at least 25% of the company’s shares.

The amendments also introduce tighter regulations governing capital increases, changes in nominal value, or amendments to a company’s core purpose.

Companies must now submit feasibility studies justifying such changes and present detailed plans for the use of capital increases and their expected returns to shareholders at general assembly meetings, following the authority’s approval of disclosure publication.

Listed companies are further required to submit semi-annual and, in some cases quarterly, disclosures on the use of cash capital increases, supported by verification reports from auditors or independent financial advisors.

A key feature of the new framework is the establishment of a mandatory register of insiders and shareholders owning 20% or more of a company’s capital.

Listed companies must maintain and regularly update this register through the EGX’s electronic system, including detailed information on insiders, their spouses and children, national identification data, and unified codes.

Companies are also required to notify insiders in advance of blackout periods surrounding material events, ensuring compliance with trading restrictions before and after the disclosure of sensitive information.

The authority also tightened rules governing the disposal of company assets and investments.

Listed companies must now prepare fair value studies when disposing of shares in other listed entities if the transaction price deviates significantly from market prices and represents a material portion of equity.

Similar requirements apply to the acquisition of unlisted shares, real estate, or tangible and intangible long-term assets exceeding specified thresholds, with valuations to be prepared by Authority-registered advisors and appraisers.

In relation to delisting, the amendments grant the EGX’s Listing Committee the authority to postpone delisting decisions in cases of rule violations, provided a purchase offer is submitted that commits to maintaining the company’s listing and includes a fair value study and a future business plan.

The rules also allow extensions to deadlines for complying with listing requirements in cases of mandatory delisting, subject to Authority approval.

For voluntary delisting, the amendments introduce a new requirement for approval by a majority of minority shareholders present at the general assembly, with minority shareholders clearly defined as those without control over board or general assembly decisions or company policies.

The decision also assigns new monitoring responsibilities to the EGX, including oversight of compliance with electronic attendance and voting at general assemblies, cumulative voting, financial reporting deadlines, board independence, female board representation, committee reports, and environmental, social, sustainability, and climate-related disclosures.

The EGX is required to submit semi-annual compliance reports to the Financial Regulatory Authority and to coordinate with the Authority before publishing certain company disclosures.

Additional provisions address governance structures, requiring listed companies to establish a Nominations and Remuneration Committee composed of an odd number of non-executive directors, chaired by an independent member.

Companies must also clearly disclose dividend distribution policies and auditor fees in their annual reports.

The amendments further clarify merger requirements and grant listed companies a three-month grace period to comply with the new rules, with the possibility of extension subject to authority approval.

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