Client Alert FRA Amendments Fleshed Out September 2024

Client Alert
New Amendments to Financial Regulations Issued by the Financial

Regulatory Authority (FRA)
Date: September 2024
ADSERO is pleased to inform its clients of several significant amendments introduced by

the Financial Regulatory Authority (FRA) regarding key areas in the Egyptian financial
market. These amendments are part of an ongoing effort to ensure greater transparency,
stability, and investor protection within Egypt’s capital markets and non-banking
financial sectors. Below is an in-depth summary of the key updates:
1. Amendments to Listing and Delisting Rules for Securities on the

Egyptian Exchange (EGX)
The FRA has introduced Decision No. 181/2024, which came into effect on August 28,
2024, amending the rules governing the listing and delisting of securities on the EGX.
- Voluntary Delisting: Companies seeking to delist from the EGX will now need to
establish a 'buyback account.' This mechanism is designed to protect minority
shareholders by ensuring the repurchase of their shares in the event of a delisting. If a
company fails to delist within a two-year period after declaring its intention, it will be
required to repurchase the shares of dissenting shareholders at the highest price, as
determined by either the average closing price over the previous six months or the last
valuation made by an independent financial advisor.
- Transparency and Disclosure: The amendments also emphasize the importance of

transparent communication with shareholders. Companies planning to delist are required
to publish a detailed report explaining the reasons for the delisting and the steps to be
taken to protect investors’ interests. These reports must be made available for public
review before the shareholders vote on the delisting resolution.
2. New Licensing and Continuity Requirements for Non-Banking

Financial Services Companies
Under Decision No. 177/2024, the FRA has issued updated licensing and operational
continuity requirements for companies engaged in non-banking financial activities,
effective immediately.
- Stricter Licensing Conditions: The decision reinforces the need for companies operating
in the non-banking financial sector to adhere to stringent capital and operational
requirements. New applicants seeking a license to operate must now meet higher
financial thresholds, ensuring they have sufficient resources to cover liabilities and
operate sustainably in the market.
- Continuity Requirements: Licensed companies must continuously maintain a sound

financial standing, with regular reporting obligations to the FRA. Failure to meet capital
adequacy standards or maintain compliance with corporate governance rules may result
in suspension or revocation of their license.
3. Regulations on Acquisition, Control, and Mergers in Non-Banking

Financial Companies
The FRA issued Decision No. 178/2024 to introduce stricter oversight over acquisitions,
control, and mergers within the non-banking financial sector.
- Pre-Approval for Acquisitions: Any acquisition involving more than 10% of a non-
banking financial company’s shares or voting rights will now require prior approval from
the FRA. This pre-approval requirement applies to both direct and indirect acquisitions,
as well as the purchase of foreign securities that may affect the company’s control.
- Control and Ownership Changes: Companies undergoing mergers or ownership

structure changes will need to provide a comprehensive plan, including how the
transaction will affect the company’s operations and financial standing. Shareholders
must also be informed of how the transaction will affect their rights.
- Enhanced Disclosure Requirements: The regulation aims to ensure market transparency

by requiring companies to disclose all significant ownership changes, including providing
detailed financial and operational projections following a merger or acquisition. The FRA
will assess the financial and operational viability of such changes before granting
approval.
4. Updated Financial Solvency Standards for Securities Companies

Decision No. 2132/2024 introduces updated financial solvency standards aimed at
enhancing the stability of companies operating in the securities market.
- Minimum Liquidity Requirements: Securities companies must now maintain a

minimum liquidity threshold of 10% of their total liabilities. This requirement ensures
that companies are financially prepared to meet short-term obligations, thus reducing
systemic risk in the market.
- Net Liquid Capital Calculations: The decision updates the methodology for calculating
net liquid capital, including how companies should account for margin trading and other
forms of financial leverage. The updated rules place more emphasis on maintaining
sufficient financial buffers to protect investors during periods of market volatility.
- Special Rules for Market Makers: Companies engaging in market-making activities

must meet even stricter liquidity requirements to ensure they can continue to provide
liquidity during times of high volatility. These rules are aimed at stabilizing the market
during periods of intense buying or selling pressure.
These comprehensive regulatory changes introduced by the FRA are expected to have a
lasting positive impact on Egypt's financial landscape. By strengthening the rules around
listing and delisting, enhancing licensing requirements for non-banking financial entities,
ensuring transparency in mergers and acquisitions, and tightening financial solvency
standards for securities companies, the FRA aims to foster a more secure, transparent,
and investor-friendly market environment.
At ADSERO, we are committed to helping our clients navigate these changes and ensure
full compliance with the new regulations. We encourage all affected companies to review
their operational practices and consult with our team for any necessary legal assistance.
For more information or assistance, please contact ADSERO.
ADSERO – Ragy Soliman & Partners
Leading the way in providing expert legal advice in Egypt’s evolving financial sector.

Client Alert FRA Amendments Fleshed Out September 2024

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Client Alert

New Amendments to Financial Regulations Issued by the Financial

Date: September 2024

ADSERO is pleased to inform its clients of several significant amendments introduced by

1. Amendments to Listing and Delisting Rules for Securities on the

- Transparency and Disclosure: The amendments also emphasize the importance of

2. New Licensing and Continuity Requirements for Non-Banking

- Continuity Requirements: Licensed companies must continuously maintain a sound

3. Regulations on Acquisition, Control, and Mergers in Non-Banking

- Control and Ownership Changes: Companies undergoing mergers or ownership

- Enhanced Disclosure Requirements: The regulation aims to ensure market transparency

4. Updated Financial Solvency Standards for Securities Companies

- Minimum Liquidity Requirements: Securities companies must now maintain a

- Special Rules for Market Makers: Companies engaging in market-making activities

For more information or assistance, please contact ADSERO.

ADSERO – Ragy Soliman & Partners

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