GAFI Clarifications on General Asse

Carrying on from the increased activity in the last quarter of 2018, the General Authority for Investment and Free Zones (“GAFI”) issued two circulars on company regulation dated 26 December 2018 and 9 January 2019 respectively. Circular No. 18 of 2018 clarifies a previous decision by the Ministry of Investment and International Cooperation (“MIIC”) that was covered in our Egypt Legal Update issue of Week 1 of January 2019,[1] while Circular No. 19 of 2019 refers to using a secret vote for the election or removal of board members.[2]

GAFI Circular No. 18 of 2018 Clarifying MIIC Decision No. 256 of 2018

The MIIC recently issued decision No. 256 of 2018 amending two Articles in the Executive Regulations of the Companies Law.[3] The amendment abolishes the requirement to send invitations for shareholders to attend general assembly meetings by regular mail, while retaining the obligation of publicizing the invitation in two daily newspapers. The decision also removed the condition that at least one of the managers of limited liability companies be an Egyptian national. Following that, GAFI published circular No. 18 of 2018 elaborating on MIIC’s decision. The circular clarifies that the abolishment of the requirement to send physical invitations for general assembly meetings concerns joint stock companies that have offered their shares to the public. This is in order to overcome practical difficulties in sending out individual invitations for every single shareholder given the large number of shareholders in these companies. The circular further states that companies that have not offered their shares in a public offering may elect not to publish the general assembly meeting invitation in a newspaper as long as invitations are sent to the shareholders at their registered addresses, or delivered in person against a receipt.

GAFI Circular No. 19 of 2019 on Secret Voting for the Election/Removal of Board Members

The Companies Law and its Executive Regulations mandate the application of a confidential voting system in general assembly meetings if a decision is to be made regarding the election or removal of members of the board of directors, or filing a lawsuit against one or more of them. GAFI circular No. 19 of 2019 states that the general assembly meeting minutes must specify that secret voting will be used, if an agenda item is in relation to the aforementioned matters. The company must distribute voting cards (ballots) to the shareholders attending the meeting, given that the ballot must include the following data: (1) company name and date of meeting; (2) shareholder’s name, signature, and number of shares; (3) name of board member(s) to be elected/removed/sued, and whether or not the board member is a shareholder; (4) the shareholder’s vote and the number of shares assigned to the vote if cumulative voting is employed. The auditor and vote counters must note the result and count of the vote in the meeting minutes. The company must retain the voting ballots, and submit the signed vote count report to GAFI for ratification along with the supporting documentation. A form for the secret voting ballot is enclosed with the circular.   [1] GAFI Circular No. 18/2018 clarifying Ministry of Investment and International Cooperation Decision No. 256 of 2018 amending certain provisions of the Executive Regulations of the Companies Law, dated 26 December 2018. [2] GAFI Circular No. 19/2019 on secret voting for the election/removal of board members, dated 9 January 2019. [3] Ministry of Investment and International Cooperation Decision No. 256/2018 amending certain provisions of the Executive Regulations of the Joint Stock Companies, Partnerships Limited by Shares, Limited Liability Companies and One-Person Companies Law issued by virtue of Decision No. 96/1982, Egyptian Gazette, Issue No. 295, 30 December 2018.