Amendment to the Compliance Period

On 16 January 2019, the Financial Regulatory Authority (“FRA”) published circular No. 1 of 2019 regarding cumulative voting in the election of board members of companies with listed securities on the Egyptian Stock Exchange and of companies operating in non-banking financial activities (the “Circular”).[1] The Circular relates to the compliance period for already operating companies, such that said companies must undertake the necessary procedures to include a provision on cumulative voting in their bylaws before any board of directors’ elections are held. A previous FRA Decision No. 93 of 2018[2] set the compliance period for already operating non-banking financial companies at a year till 14 June 2019, while FRA Circular No. 7 of 2018[3] allowed both types of companies (listed and non-banking financial) that are already operating to comply either before holding board elections or within a year till 25 June 2019, whichever occurs first. The new Circular removes a set timeframe for compliance, anchoring it instead to each company’s board elections. It is worth noting that in October 2018, the FRA amended the requirements concerning cumulative voting and proportional representation in the election of the board of directors of said companies such that it removed the determination of a minimum proportional representation requirement in company bylaws while maintaining the requirement of cumulative voting for board elections in the bylaws.   [1] FRA Circular No. 1/2019 on cumulative voting in the election of board of directors for companies with listed securities on the Egyptian Stock Exchange and for companies working in non-banking financial activities, available through this link (in Arabic). [2] FRA Board of Directors Decision No. 93/2018 amending Decision No. 53/2018 regulating the issuance of licenses to companies undertaking non-banking financial activities and the rules for trading their shares, Egyptian Gazette, Issue No. 136 (cont.) (a), June 13, 2018. [3] FRA Circular No. 7/2018 on cumulative voting and proportional representation of capital in the board of directors of companies with listed securities on the Egyptian Stock Exchange and for companies working in non-banking financial activities, available through this link (in Arabic).