• Dr. Omran: Applying cumulative voting system upon holding elections in the General Assembly
Dr. Mohammed Omran – FRA’s Chairman revealed that at its last meeting, FRA’s BOD approved to amend listing and delisting rules, as well as amending licensing rules for companies operating in the field of non-banking financial activities. In accordance with this amendment, cumulative voting mechanism shall be applied upon holding board elections in a manner that allows proportional representation whenever possible. Noting that cumulative voting is one of the conditions required upon listing on the stock market for listed companies and one of the conditions for licensing and transferring ownership for companies operating in the field of non-banking financial activities, that is without the need to include that amendment into their statutes.
Dr. Omran said that FRA is performing multiple tasks to achieve balance in the rights of market participants and working for the safety and stability of non-banking financial markets. However, the Authority’s Board of Directors preferred to apply cumulative voting mechanism and allowing proportional representation in the membership of the Board of Directors upon holding elections in the General Assemblies.
It is worth noting that cumulative voting is a new system introduced by the Egyptian legislator according to Law No. 4 of 2018 in which the shareholder is allowed to grant the voting block represented by his shares in the capital of the company to one candidate or distribute them to more than one candidate. Also, it enables small shareholders to form alliances among themselves to obtain one or more seats on company’s Board during Board election in the General Assembly.
In the middle of 2018, FRA has already issued decisions No. (154) and (155) regarding the necessity of amending the statute of companies listed on the Egyptian Stock Exchange and companies operating in non-banking financial activities. The said decisions stipulated that cumulative voting mechanism shall be applied upon electing Board members in a manner that allow proportional representation in Board membership so as to protect small investors in those companies. Also, both decisions granted the addressed companies a deadline to reconcile their positions until 31 December 2019.