EFSA unifies the rules governing OTC transactions following a recent unconstitutionality ruling

Last week, the Constitutional Court of Egypt ruled against Decree no. 54 of 2009 of the Egyptian Financial Supervisory Authority (“EFSA”) due to the lack of its publication in the Official Gazette.

As a result, EFSA issued on February 8, 2017 a new Decree under no. 17/2017 (the “Decree”), which regulates the framework of trading, transfer of ownership and publication of unlisted securities in the Egyptian Stock Exchange (“EGX”).

The Decree replaces all previous decrees issued by EFSA between 1994 and 2012 in this respect, and collates all the existing regulations for the transfer of ownership and publication rules for unlisted securities.

It has divided the OTC transaction into two markets:

  1. Orders Market, regulating delisted and centrally deposited securities. Now, any trading on such securities needs to be approved by EGX.
  2. The Deals Market, regulating the transfer of ownership of all other unlisted securities and all information related to the pre-arranged deals after their execution.

The main implications of the Decree on the OTC transactions are:

  1. The Decree provides the entire regulatory framework for both unlisted and delisted securities whether by the Deals Market or Orders mechanisms.
  2. The purchase price of shares in all transactions with a value exceeding EGP 100,000 is still required to be deposited in a local bank account, except if such transaction is between two related parties (among other cases).
  3. Upon publication of the Decree in the Official Gazette, the EGX will issue the executive procedures and the special forms related to the transactions conducted under the new Decree.
  4. The Decree will be effective and applicable to OTC transactions as of the date of its publication in the Official Gazette.

If you have any questions regarding this newly issued decree or unlisted securities transactions in general, please do not hesitate to reach out to Girgis Abd El-Shahid or Michael Boutros.


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