• Regulating EFSA’s approval in cases of ownership of specific percentages in the capital of securities companies
• Sherif Samy: Prior approval on the ownership is an applied principle in various financial activities
EFSA’s BOD decision no. 65 of 2017 was issued in the Egyptian Gazette (issue 120). The said decision includes some regulatory rules on the ownership of shares in Securities Companies. These rules stressed on obtaining EFSA’s prior approval in cases of ownership of specific percentages in the company’s capital.
EFSA’s Chairman asserted that the decision comes into effect and it stated that the natural or legal person shall submit a request to the Authority to approve the acquisition directly or indirectly, either alone or through a related group regarding the following percentages of the company’s’ capital or voting rights: 10%, quarter, third, half, two-thirds, three-four.
EFSA’s Chairman added that companies which participate in capital increase shall be exempted from obtaining EFSA’s prior approval to acquire or exceed 10% of the capital of securities companies, provided that there is no actual control of the company on one of the securities’ companies. He added that these companies shall notify the Authority within ten working days of the ownership.
Sherif Samy pointed out that indirect ownership is related to cases where the acquisition percentage exceeds 50% of the capital of an entity which owns, alone or with its associated parties – a percentage in the capital of a company operating in the field of securities. He added that in all cases, the ownership of the foreign certificates of deposit enters the field of ownership also.
EFSA’s Chairman pointed out that prior approval of ownership is an applied principle in various financial fields. As The Central Bank Law and the banking system in Egypt require obtaining the approval of the Central Bank’s BOD to acquire more than 10% or any ratio that leads to the control of a bank. The Law on Insurance Supervision and Control stressed on obtaining the Prime Minister’s approval before obtaining the same percentage in an insurance company. Moreover, the Authority considered that the prior approval is limited to acquiring an effective percentage of the company’s ownership. Accordingly, the current applicable rules are cancelled for any percentage that is less than 10%. He added that the percentage of ownership may be increased within each segment without requiring an approval in order to facilitate investors.
Sherif Samy pointed out that this decision completes the amendments to the Executive Regulations of the Capital Market Law issued by the Minister of Investment decision no. (95) of 2016, which regulated specific cases related to the approval of EFSA’s BOD to acquire more than one third of the capital of any company practicing Brokerage activity in securities or management of investment funds, represents more than 10% of the market size of both activities.