The Egyptian Companies Law No. 159 of 1981 was amended to require all joint stock companies (JSCs) to centrally deposit their shares at Misr for Central Clearing, Depository and Registry (MCDR).
The grace period for complying with this requirement expires in 15 January 2019.
The law does not impose specific penalties for non-compliance with this requirement. However, from a practical perspective, it is expected that GAFI will block the ratification of board and shareholders resolutions of non-compliant companies. It is therefore recommended that all existing JSCs in Egypt comply with the new requirement and start the registration procedures before the expiry of the grace period.
All shareholders of a JSC must first have a Unified Code and get an account at MCDR. A Unified Code is granted upon registering the shareholders' details on the customer database of the Egyptian Stock Exchange (EGX). Shareholders of the same company receive a single Unicode. Obtaining the Unicode shall be done through a brokerage firm.
A JSC shall also hire a custodian to be able to register its shares at the MCDR. A custodian is a financial institution that holds customers' securities for safekeeping so as to minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic or physical form. Custodians could either be banks or authorised securities companies.
A first time registration fee of an amount equivalent to 1% of the company's issued capital (with a maximum of EGP 50,000) shall be payable to the MCDR. This is in addition to an annual registration fee of EGP 5000 for companies with a capital of EGP 5,000,000 or more, and 500 EGP for companies with a capital less than EGP 5,000,000.
How can we help?
Our team of corporate compliance experts would be delighted to assist you in relation to the following:
- Provide you with advice with respect to the required data for the valid registration of your shares at the MCDR.
- Provide you with any required legal advice with regard to the law and practice.
- Fill-in the application forms, prepare and collect all required documents and undertakings.
- Coordinate with the brokerage firm and the custodian for finalizing the required procedures for duly registering the shares.
5 December 2018
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.