• Dr. Omran: Egypt jumped 61 places on the “Protecting Minority Investors indicator” within five years, consequently, FRA must exert more efforts to raise dealers’ awareness in order to improve performance and reduce disputes
• Dr. Omran: Cumulative voting grants minority shareholder the right to cumulate their votes and give it to a candidate to ensure that there will be board representation for minority shareholders
In light of FRA’s role in protecting minority investors and contributing to the dissemination of investment culture and awareness, Dr. Mohammed Omran- FRA’s Chairman revealed that the issuance of cumulative voting guide explained the concept of cumulative voting mechanism, its legal framework and its application, as well as the forms used to apply it.
FRA’s Chairman explained that the issuance of the guide represents one of the efforts exerted by the Authority to raise the awareness of companies whose securities are listed on the Egyptian Stock Exchange, in addition to the companies authorized by the Authority to practice one of the activities in the field of non-banking financial services. According to the amendment to listing and delisting rules that were issued mid of 2018, companies are required to include in their statutes the system of using cumulative voting to allow for proportional representation whenever possible, as a regulatory measure aimed at practicing good governance to develop and enhance market’s efficiency and reduce many related disputes.
Dr. Omran pointed out that the guide has simplified cumulative voting system and submitted it to the participants as a procedural system for voting within the general assembly of companies in the election of Board members only. Cumulative voting allows the shareholder to grant the voting bloc represented by his shares in the company’s capital to one or more candidate or even to all candidates for board membership.
The new system aims to enable minority shareholders to cumulate their votes and give them to one of the candidates; to ensure that there is a representative within the board, and then to participate effectively in managing the company in a way that serves their interests.
The voting mass of each shareholder shall be calculated by multiplying the number of shares owned by the shareholder in the number of board seats to be filled from among the candidates.
In this context, Dr. Omran asserted that FRA shall practice its role in spreading financial culture and awareness to non-banking financial services in order to maintain the positive results achieved in the World Bank Group’s Doing Business Report 2019. It is worth mentioning that Egypt, for the fifth year in a row, has achieved significant progress on the “Protecting Minority Investors indicator” with nine (9) places in this year’s rankings and was ranked the 72nd of 190 countries, and since 2015, Egypt has jumped 61 places on “Protecting Minority Investors indicator”.
It should be noted that the Authority issued last year 2018 a guide on corporate governance and the protection of minority rights. The guide was published on FRA’s website; to clarify to the dealers of non-banking financial activities the conditions, steps and documents required to be submitted to FRA’s Central Governance Department, excluding documents that have no legal basis, which is reflected in reducing service delivery time.