Egypt’s Financial Regulator lessens minimum required shares to list on EGX

Companies looking to list shares on EGX must now offer no less than 1% of the total free-float market cap

  
Image used for illustrative purpose only. Traders work at the Egyptian stock exchange in Cairo, May 28, 2015.

Image used for illustrative purpose only. Traders work at the Egyptian stock exchange in Cairo, May 28, 2015.

REUTERS/Mohamed Abd El Ghany

The Financial Regulatory Authority (FRA) has issued new listing amendments on the Egyptian Exchange (EGX).

Under the new regulations, FRA eased the minimum required number of shares to list on EGX. Companies looking to list shares on EGX must now offer no less than 1% of the total free-float market cap. Listed companies should have a free-float market cap (the number of shares in free-float multiplied by the share price) of no less than 0.5% of EGX’s total free-float market cap.

FRA held a meeting on Sunday, to approve the amendments, paving the way for major expected offerings on the stock market, with high liquidity and huge assets, during the coming period.

Mohamed Omran, Chairperson of FRA, said that the rules of listing on EGX have set a minimum percentage of the shares to be offered, as well as a minimum percentage of free-traded shares. If these two conditions applied to major companies whose capitals may exceed tens or hundreds of billions, large financial values will be required, which may hinder or lead to some reluctance towards the listing process.

The authority’s board of directors had taken the initiative to facilitate the listing of companies and entities with large assets to encourage them to list their shares in a way that contributes to enhancing and revitalizing the liquidity rates in the Egyptian Exchange.

Omran noted that the Egyptian state had announced, mid last month, its plan to offer the Administrative Capital for Urban Development on EGX during the next two years. This measure would double the value of market cap, contribute to attracting new investors, and create a great recovery in EGX, whose impact would be seen in the Egyptian economy.

The listing and delisting rules of securities on EGX regulate everything related to companies and entities wishing to list their securities, whether Egyptian or foreign. It starts with explaining the conditions required for listing the securities of these companies and entities, the procedures to be followed in this regard, to the conditions for registration at the Authority, all the way to some of the obligations required during the period of listing in the stock exchange. They include the disclosures to abide by, the requirements of governance and protection of minority rights, the provisions of trading treasury shares, and the controls for adjusting the capital, as well as defining the cases and controls for delisting the company’s securities, whether the write-off is voluntary or compulsory.

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