الهيئة العامة للرقابة المالية

• The dialogue convened representatives from listed companies, brokerage firms, and legal consulting offices, reflecting the latest amendments.
• Over two days, the dialogue fostered a consensus on the critical importance of the recent amendments, which are designed to facilitate and stimulate a supportive business environment for company growth via the capital market.
• The goal of the amendments is to simplify procedures, protect shareholders, particularly minority shareholders and increase disclosure.
• To diversify acquisition mechanisms and support SPACs in achieving their targets, FRA has incorporated merger acquisitions alongside share swaps and credit balances.
• Final delisting and share purchase from affected parties will occur within 25 working days of the general assembly’s resolution, ensuring rapid rights realization for dealers.
• FRA has established clear quantitative and qualitative criteria for assessing company share split requests, enhancing transparency and protecting both dealers and market stability.
• FRA has revoked the board of directors’ authority for voluntary delisting and vested it in the general assembly for companies acquired by 75% via a purchase offer, thereby promoting fairness and transparency in decision-making.

Building upon its ongoing commitment to stakeholder engagement across all sectors and markets under its supervision, FRA convened a two-day community dialogue. This dialogue, aimed at enhancing the investment landscape and fostering a growth-oriented business environment, brought together key representatives from the capital market. Participants included listed companies, legal consultants and brokerage firms, who engaged in discussions regarding the implementation of listing and delisting rules. These discussions centered on the latest amendments outlined in FRA Board of Directors decree No. 46 of 2025, designed to streamline procedures and ensure the effective application of the decree, thereby achieving the Authority’s strategic objectives.

Mr. Mohamed El-Sayyad,  FRA Vice Chairman emphasized that the amendments were strategically crafted to simplify processes, safeguard minority shareholder rights, enhance disclosure transparency and address practical implementation challenges.

He further elaborated that the said decree introduces merger acquisitions as a supplementary mechanism for Special Purpose Acquisition Companies (SPACs), alongside existing share swap acquisitions and credit balances. This diversification of acquisition strategies is intended to empower SPACs in achieving their defined targets. The comprehensive information memorandum, submitted by SPACs with their listing applications, details these strategies and includes critical components such as: company overview, founder and board expertise, target sectors and investment guidelines, acquisition investment plan, risk assessment, redemption protocols, capital management framework (including subscription proceeds), related party disclosures and conflict of interest mitigation measures.

The decree authorized the trading of shares subscribed during a SPAC’s capital increase at the subscription price, representing fair value and exceeding nominal value. This replaces the previous requirement of trading at nominal value post-acquisition disclosure, aligning with Article 138 of the Executive Regulations of Law 159 of 1981. Furthermore, the decree mandates that the capital increase be based on fair value, as determined by an independent financial advisor registered with the Authority.

The decree also stipulated that SPACs must publish semi-annual financial statements, within six months of acquisition, demonstrating a minimum 5% net profit and shareholders’ equity no less than paid-up capital. This replaces the previous requirement of two years of annual financial statements. These financial statements must adhere to Egyptian Accounting Standards and be accompanied by a comprehensive audit report from an Authority-registered auditor, confirming compliance with the net profit and shareholders’ equity criteria. This simplification broadens public access to SPAC share trading, moving away from exclusive trading by qualified investors post-acquisition.

Moreover, the decree mandated a 12-month lock-up period for 51% of the shares subscribed during the capital increase of a SPAC, resulting from the merger of a listed and unlisted entity. This lock-up is contingent upon the issuance of financial statements meeting profitability and shareholders’ equity standards. In return, subscribers waive their shares in the acquired company if its fair value, as determined by the independent financial advisor, exceeds the listed company’s market value. This measure aims to protect shareholders and market participants, stabilize transactions and prevent the exploitation of listed companies as exit vehicles for unlisted entities.

He clarified that the decree enables companies to fulfill the minimum shareholder number and free float percentage requirements through the publication of a prospectus or information memorandum, provided they meet these criteria via the offering. Furthermore, these shares can be publicly traded through direct trading upon the release of a disclosure report, contingent on achieving the requisite minimum shareholder number and free float percentage.

He stated that the decree restricts the 51% shareholding retention requirement to the founders and board members of the SPAC, as well as board members and managers of the acquired companies who subscribe to the SPAC’s capital increase in exchange for their shares in the acquired entities. This provision allows other subscribers to freely dispose of their newly subscribed shares, facilitating an exit mechanism for shareholders of the acquired companies and encouraging participation in SPAC acquisition operations.

Concerning the amendment to voluntary delisting rules, he highlighted that the decree establishes a maximum 25-working-day period for final delisting and the purchase of shares from affected parties, commencing from the general assembly’s resolution. This expedited process aims to accelerate rights realization for dealers and enable timely share sales. Additionally, the decree permits daily execution of share purchase transactions from affected parties, in accordance with established Stock Exchange regulations.

Concerning the voluntary delisting of listed shares, the decree mandates that a delisting resolution require the approval of 75% of the general assembly attendees. Furthermore, in cases where a controlling shareholder exists, the majority of minority shareholders, independent of the controlling shareholder, must also approve. This dual approval system ensures that the delisting resolution is passed only when both parties meet the required quorum. This amendment aligns with international best practices, aiming to ensure equitable treatment for all stakeholders by preventing the exclusion of any party from voting and avoiding the prioritization of one party’s interests over another, subject to the Authority’s verification of controlling shareholder presence.

The decree also introduces defined quantitative and qualitative criteria, which the Authority will utilize in evaluating company requests for share split procedures. This measure aims to protect market participants and maintain market stability, while also preventing manipulation and the exploitation of share split announcements to artificially influence share prices without legitimate justification.

Moreover, the decree consolidates the approval process for listed companies’ incentive and reward systems under the Authority, rather than the Stock Exchange. As the entity responsible for approving and adopting these systems, the Authority can more efficiently verify the required minimum disclosure prior to convening the general assembly for system adoption.

In a regulatory move to promote fairness and protect shareholder rights, the decree assigns voluntary delisting authority solely to the general assembly, removing the board of directors’ power. This applies to companies acquired by 75% via a purchase offer, ensuring balanced decision-making without prejudice to controlling shareholders.

The amendments incorporated within this decree reflect FRA’s strategic vision to bolster financial stability and safeguard market participant rights. This is achieved by cultivating an attractive investment environment that caters to the growth and expansion aspirations of all companies.