Chairperson of the Egyptian Financial Supervisory Authority (EFSA) Sherif Samy said that the world has become more complicated and ownership structures are becoming more complex. There are offshore investment funds and seven different roles of ownership in some companies. Each company has a goal from the complexity of the ownership structure, so that it made it important to know who the final beneficiary is.
He explained that EFSA is working on amending the transfer of ownership, acquisition, and merging procedures during the last period, in order to make the market more regulated.
In terms of the development of the quality of business in Egypt, he said that the last period has seen an improvement in Egypt’s performance of the business index “Doing Business”, especially with regards to the protection of minority rights. Samy explained that some of the required amendments to companies’ law were submitted, such as the right of shareholders to call for holding general assemblies through shareholders who have 5% to 10% of the capital.
Samy added that they worked on making a register for movable guarantees, in addition to a system for credit queries. Samy noted that EFSA’s main goal is to develop the market, but improving the ranking of Egypt on indicators seen by the world, must be taken into account.
Samy added that the market value of the Stock Exchange, worth EGP 660bn and equivalent to $37bn, is a very low number and requires great efforts to develop the market, and not only by the initial public offerings (IPOs).
Samy said that conditions allow increasing the size of the market in light of the improved liquidity. The new IPOs are important for keeping the market as it is to avoid losing its weight on the international level.
EFSA is currently working with the Ministry of Environment to launch a green bonds mechanism in Egypt, as there is a global market at a size of $50bn which Egypt can benefit from.
He noted that the cabinet approved the adoption of the financial evaluation criteria and real estate evaluation in all the actions of the state to reduce corruption, increase the credibility and strength of assessments to protect the decision-makers, and develop the system, in addition to the external communication with international investment funds, which expressed their desire to enter the Egyptian market—provided there are large relevant companies with high liquidity that can accommodate those investments.
He explained that the system of fixed income tools require being developed. He said that the amendments to be discussed on the Capital Market Law include violations sanctions in order to comply with the recent developments in terms of value. The sanctions will be linked to the violation and the value of the transaction.
He mentioned that the EFSA has recently added custom tools on the final beneficiary to deal with the complex ownership structures and to avoid companies’ frequent inquires about this item. It also added rules for the transfer of ownership of companies and determined the phases of approvals by the EFSA regarding the transfer of ownership.