Register your company in EGX
Egyptian Exchange (EGX) is one of the oldest Exchanges in the world. Alexandria Stock Exchange was officially established in 1883, and then Cairo Stock Exchange in 1903.
The two Exchanges were very active in the 1940s and Alexandria Stock Exchange was ranked fifth in the World. In 1997, the legal structure of the Exchanges has been identified and one board of directors.
EGX is the only registered Securities Exchange market in Egypt. From a legal view, it is considered a public juristic person and there are no shares issued or owned by other entities as it is only owned by the government.
Although EGX is owned by the Egyptian government, it is managed as a private company under the updated administrative systems.
EGX is working through registration and trading in securities which can be defined in three types as follows: Equity or Shares (Common and Preferred), fixed income (Government and Corporate bonds), and Close-ended Mutual Funds.
Prices of the shares traded on EGX are determined by the supply and demand of the forces same as any other commodities.
How can register company in EGX?
EGX provides a well-regulated and efficient market by keeping abreast with international standards, which enables listed companies to get the required finance and enable them to expand their businesses by increasing their capital or offering part of their shares at the stock exchange via any process of offering.
EGX Listing companies process stages
The listing process requires a series of procedures consisting of three basic stages:
First stage:
The preparation for listing, preparing all required documents and submitting them to the competent department at EGX.
Second stage:
Secondly, the IPO stage by publishing a disclosure report on EGX after obtaining approvals of all concerned authorities.
Third stage:
The third stage is the final registration of the company’s shares in one of Stock markets and start the process of trading such shares.
What is the main role of the Listing Agent?
The listing agent helps the issuing companies that are seeking to be listed on EGX for the first time in finalizing the listing procedures and fulfilling the ongoing listing requirements.
The listing agent also ensures that all company’s transactions are done in accordance with the listing rules, and executive procedures as well as the decisions issued by Financial Regulatory Authority (FRA) and EGX.
EGX Listing companies requirements
In order for a company to be listed on EGX, it shall fulfill some of the financial and legal requirements included by the rules of listing on EGX.
In order for the company to start the process of listing its shares on the Egyptian Stock Exchange in its two main markets and the Nile Stock Market.
It shall legalize its legal status, implement a governance process and develop a business plan including the main objectives of the listing process, performance analysis reports, business achievement reports, financial analysis, audited financial statements, the basis used to prepare the expected business plan, and the evaluation according to applicable standards.
After completing the governance process, the company’s management shall coordinate with its Listing Agent, legal and financial advisors regarding the listing process and prepare the required documents to submit them before the competent department, then it shall obtain the approval of FRA to publish the disclosure report until the completion of the whole process.
Trading on EGX
Shares and securities can be traded through brokerage company that acts as the link between the investor and EGX.
Member Company carries out investors’ transactions whether buy or sell in return for an agreed-upon commission fee from investors, also it can provide advice to their customers based on their in-house research capabilities.
In other words, Members buy and sell securities on behalf of investors since investors are not allowed to trade directly or have access to the EGX trading system, Member firms shall have been licensed by FRA to practice such activity.
FRA is responsible for the supervision of non-bank financial markets and instruments, including the Capital Market, the Derivative Exchange as well as all activities related to Insurance Services, Mortgage Finance, Financial Leasing, Factoring and Securitization.
The important role of Misr for Central Clearing, Depository, and Registry:
Misr for Central Clearing, Depository, and Registry (MCDR) is a private company, which handles the clearing and settlement operations as well as acts as the Central Depository for all securities in Egypt. The main shareholders of MCDR are EGX, banks, and member firms.
The mission of Egypt for Information Dissemination Company:
Due to the importance of information and statistics in this sector, Egypt for Information Dissemination (EGID) was established in June 1999 as a private and fully owned subsidiary of EGX.
EGID is an information provider. EGID’s mission is to stimulate investment growth in Egypt and the Middle East by increasing the level of transparency, thus building investor confidence in the economy by making the information of EGX-listed companies available to investors, investment banks, etc. using all available delivery channels and methods to suit the needs of the different interested parties.
Types of securities
Shares of the company:
Which gives the shareholder right of ownership according to his percentages of shares, it can be traded through an Initial public offering which happens when a company sells its shares to the public at large for the first time.
This is called an initial public offering or IPO. Companies go public to accumulate capital to expand.
A private placement is whereby a company sells its shares to a select group of few investors who are usually qualified buyers who undertake due diligence before buying the company’s shares.
Bonds:
When a company needs to borrow money, it issues a bond and in this case, it owes this specific amount of money to bondholders.
When an investor buys a bond, he/she becomes a lender to the company. Bondholders expect to earn usually a semi-annual rate of return when buying bonds plus the initial amount of investment or face (par) value of the bond at the maturity date.
The mutual fund:
A pool of investments used to invest in a large diversified portfolio of securities that will be managed by professional management.
An investor in a mutual fund is a shareholder who buys shares of the fund. Each share represents a proportionate ownership in all the fund’s underlying securities.
The securities are selected by a professional investment manager to meet a specified financial goal, such as growth or income.
Differences between open-ended mutual funds and close-ended mutual funds
A close-ended mutual fund issues only a certain number of shares. After the shares are sold and the money is invested in its portfolio of securities, trading of the fund’s shares can take place.
The company is not obligated to redeem its shares or issue more shares. An investor who no longer wants to hold shares in the fund may simply sell them in the market.
Thus, a close-ended fund is traded on the Exchange or EGX. An open-end mutual fund, by contrast, is constantly offering new shares to the public and redeeming its outstanding shares.
There is no limit to the number of shares that can be issued. Open-ended fund shares are bought and sold directly through the fund itself or its agents, not over the counter or on an exchange.
Global Depository Receipts (GDRs) are negotiable certificates that usually represent a company’s publicly traded equity. They are also considered as an equity substitute for the local shares that can be used to list on a foreign stock exchange e.g. London, Luxembourg, New York, etc.
GDRs are often launched for capital raising purposes, and they are as liquid as the underlying shares since the two are interchangeable.
Several Egyptian companies have their shares traded on London Stock Exchange in the form of GDRs. Also, some Egyptian issuers have their shares traded on New York Stock Exchange and Luxembourg Stock Exchange.
Advantages of companies’ registration on EGX
Worth mentioning that the framework through which the Egyptian capital market operates, is characterized by providing various investor protection tools and mechanisms, starting from the investor’s decision to enter the Egyptian capital market (by making a code for each investor).
The brokerage companies that are members of the Egyptian Exchange, which work according to specified rules supervised internally, through performing an internal audit, and externally (in compliance with the regulations for the continuation of membership on the Egyptian exchange), and ended with the Settlement Guarantee Fund and the Investor Protection Fund against non-trading risks.
In light of the continuous technological development, EGX is keen to have a trading platform, which is based on the concept of automatic acceptance of orders (the continuous auction system), designed in a way that enables brokerage firms to link the trading system to their back-office systems, and hence allowing customers to use the software trading on the internet and smartphones, with varied timing of the trading sessions.
Neither restrictions precluding foreign participation in the market nor any rules against repatriation of profits or capital gain. Foreign issuers and foreign member firms are treated similarly to their Egyptian counterparts.
In the case of individuals, corporations, mutual funds, and international funds, no taxes are levied on dividends and capital gains.