GAFI Issues a Decision Activating C

On 12 November 2018, the CEO of the General Authority for Investment and Free Zones (“GAFI”) issued Decision No. 736 of 2018 activating the decisions that were taken earlier this year concerning the depositing of shares issued by joint stock and companies limited by shares in the central depository system (the “Decision”).[1] Pursuant to Law No. 4 of 2018, Article (17) of the Companies Law No. 159 of 1981 was amended to require all joint stock and companies limited by shares established after the date of the Law’s coming into effect (i.e., beginning on 17 January 2018) to deposit their issued shares to one of the companies licensed to undertake central depository and registration for securities while allowing those already operating prior to 17 January 2018 a period of one year to deposit their securities (i.e., until 16 January 2019).[2] The new Decision by GAFI is a confirmation and an activation of this amendment. It is worth noting that the central depository system allows companies issuing securities (whether shares or bonds) – which are mainly joint stock companies but to a lesser extent companies limited by shares (which are almost non-existent in Egypt) – to register said securities in a company licensed to offer central registry and depository for securities. This allows for a continuously updated electronic registry of the ownership and transactions related to said securities, to avoid the risks of their loss, theft, or manipulation. Prior to this, Central Securities Registry and Depository Law No. 93 of 2000[3]  originally required only companies that offered its securities in public offering and a few other financial companies to deposit their securities centrally. However, given that such a central registration and depository system achieves greater guarantees and security for the ownership and transactions of securities, it has been extended to all companies, whether listed on the stock exchange and subject to public offering or not, which was an undoubtedly positive development.   [1] GAFI CEO Decision No. 736/2018 on the depositing of shares issued by joint stock and limited shares companies in the central depository system. [2] Law No. 4/2018 amending certain provisions of the Companies Law No. 159/1981, Official Gazette, Issue No. 2 (bis) (t), 16 January 2018. [3] Law No. 93/2000 on Central Depository and Registry of Securities, Official Gazette, Issue No. 20 (cont.) (b), 18 May 2000.