Egypt’s Corporate Governance Framework: Evolution and Challenges

Overview

Egypt has made significant strides in developing its corporate governance framework, with a focus on promoting responsible business practices and ensuring transparency. The country’s regulatory and legislative authorities have taken various measures to facilitate compliance with international best practices.

Key Developments

• Holding General Assembly Meetings via Modern Communication Means: This move aims to mitigate the risk of pandemics and ensure continuity in corporate governance.
• Pre-Closing Approval for Merger and Acquisition Transactions: The Egyptian Competition Authority’s (ECA) pre-closing approval is now required for M&A transactions that constitute an economic concentration and exceed estimated turnover thresholds.
• Electronic Investment Services: Despite the lack of electronic investment services, the regulatory authorities are working to address this gap.

Corporate Governance Requirements

The following corporate governance requirements have been implemented:

• Board Composition: The board shall consist of a minimum of three members, with the chairman nominated by the board. It is impermissible to appoint a public servant as a board member without the concerned minister’s approval.
• Remuneration: The remuneration of the board shall not exceed 10% of the net distributable dividends after allocating all prescribed and required consumptions.
• Shareholder Activism: While shareholder activism is not common in Egypt, recent efforts have been made to promote corporate governance aspects.

ESG Requirements

The following ESG requirements have been implemented:

• Operations and Environmental Controls: Listed entities are obliged to provide details on their adoption of an official ESG policy, assessment of ESG risks, and recycling targets.
• Carbon Emissions: Entities must calculate their yearly carbon emissions and disclose this information.
• Electricity Sourcing: Entities must provide details on their energy consumption, sources, and saving efforts.
• Waste Management: Entities must disclose their waste production, recycling status, and volume by type.
• Data Protection: Entities must adopt a framework or measures for data protection.

Conclusion

These developments and requirements aim to promote responsible business practices, transparency, and accountability in Egypt’s corporate governance framework. The regulatory authorities will continue to work towards addressing the challenges and promoting best practices in this area.