A New Decision by FRA Regulating th

On 31 January 2018, the Financial Regulatory Authority ("FRA") issued decision No. 139 of 2018 (the "Decision")[1] which aims to regulate the Central Depository and Registration Company's ability to issue certificates providing information on shareholders of companies listed on the Egyptian Stock Exchange or those registered under the central depository system. The Decision stipulates that a certificate shall be issued at the request of a listed company once a month. In addition it can be issued in the following cases: (1) when the general assembly of the company is invited to convene; (2) when the company distributes dividends; (3) if optional or compulsory delisting procedures are initiated; (4) when advertising the sale of the company's shares; (5) when in the process of registering the company's GRRs on a foreign exchange; (6) if the company wishes to know its free float (without acquiring the names of the stock's owners), or the number and percentage of the owners of foreign certificates corresponding to its securities abroad; or (7) other cases approved by the FRA. In cases not mentioned above, the company may obtain once monthly the data of its shareholders or holders of other securities, provided that it is limited to the name of the owner of the security, her/his nationality, her/his address, in addition to the number of securities she/he owns and their proportion to the total shares, bonds, or other securities issued by the company. Apart from the above, Article 2 of the Decision provides that the Central Depository and Registration Company may not make available data on transactions related to securities listed on the Stock Exchange or deposited in the Central Depository System. The Decision states that this shall be effective from the date of its publication on the FRA's website.

Conclusion

The purpose of issuing this Decision is not entirely clear, although its preamble implies that it aims “to protect the confidentiality of transactions of individuals in the stock market”. However, in this case, the reasoning behind the legislation contradicts the principle of transparency in the financial market because it is assumed that all participants in the market, and not the issuing company alone, have the right to know about transactions on securities in order to monitor and analyze their trades.   [1] FRA Board of Directors Decision No. 139/2018 regulating Misr for Central Clearing, Depository and Registry’s ability to issue certificates providing information on shareholders of companies listed on the Egyptian Stock Exchange or those registered under the central depository, available through this link (Arabic).