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In light of the Executive Regulations of the Capital Market issued by the Prime Minister: FRA’s Chairman confirms that the Regulations localizes green economy in Egypt

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• Dr. Omran: A whole chapter for protecting minority rights and cancellation of bearer securities to confront money laundering
• Dr. Omran: Amendments to the Executive Regulations aim at facilitating and providing multiple tools for project financing and introducing new tools for commodity pricing

Ministerial decree no. 2479 of 2018 was issued regarding amending some provisions of the Executive Regulations of the Capital Market Law to put the new amendments issued last March into effect. These amendments are – the most important in 26 years – aimed at increasing efficiency and deepening the Egyptian Capital Market by introducing new financial tools that will attract more “investments. Also, there will be a variety of financial tools in Egypt that will allow the selection of the most appropriate financing tool for each entity according to its financial policies.

Dr. Mohammed Omran – FRA’s  Chairman asserted  that FRA’s Board of Directors is keen to speed up  the issuance of executive decisions necessary for putting the new amendments into effect especially in the field of futures contracts , Sukuk and short selling .

Dr. Mohammad Omran welcomed the ministerial decree to issue amendments to the Executive Regulations, noting that these amendments included the organization of several financial institutions and instruments in the Capital Market to provide financing for projects and introducing new tools for commodities and financial instruments pricing.

FRA’s Chairman stated that in the field of new instruments, the Executive Regulations regulate the issuance of sukuk through introducing Sukuk companies. The said companies will issue sukuk and use its proceeds in financing beneficiaries carrying out the implementation of projects in various fields as in many countries of the world using Sukuk as means of financing.

Dr. Omran said that the provisions of the Executive Regulations introduces green bonds as debt instruments.  He added that green bonds will provide financing for environmentally friendly projects, encourage expansion of the green economy and attract foreign investments wishing to establish green projects to be localized in the Egyptian economy in promising areas such as the administrative capital and the industrial zone of the Suez Canal axis. He noted that green projects include New and Renewable Energy projects, Climate Change Adaptation Project, Pollution Prevention Projects, green building projects, electric transport projects, and energy efficiency projects.

FRA’s Chairman emphasized that in the field of markets and institutions, the Executive Regulations has regulated both Futures Exchange and Stock Exchange. He pointed out that Futures contracts will include trading in quantities and prices of commodities agreed upon at the time of execution and delivery at a future date specified in the contract being traded. Consequently, there will be a predication of commodities and securities future prices. Besides, this will restore Egypt glories in the field of Cotton forward contracts as one of oldest bourses of forward contracts in the world. In addition, it will allow trading and regulating future markets for other commodities, notably gas and energy markets.

Dr. Omran revealed that within the framework of introducing new mechanisms to activate trading in the Stock Exchange, the Executive Regulations amend provisions of short selling and allow brokerage companies on behalf of their clients to borrow securities in order to provide a return to borrowers and those wishing to retain their securities as medium and long-term investment. On the other hand, it allows borrowers to sell and repurchase borrowed securities on time to be delivered to the lender in order to achieve a return due to the difference between selling prices of borrowed securities and repurchase rates.

He added that the amendments to the Executive Regulations set a whole chapter namely, the twelfth chapter to regulate tender offers. The chapter came in seven sections to determine the tasks and definitions associated with tender offers and obligations of people concerned with tender offers, acquisition through open market, that is besides executive procedures set  for tender offers.

In addition, tender offers chapter included regulation for mandatory tender offers to oblige the controlling security holder -in accordance with the conditions set out in the regulation- to purchase all securities of the company from the minority except for the percentage that allows keeping the company listed at the Stock Exchange. Finally, tender offers chapter include a full section on rules for protecting minority rights.

Moreover, the amendments to the Executive Regulations include issues related to anti-money laundering and introduce provisions to cancel all types of bearer securities.
 

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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