Pierre Loza browses through Egypt's first guide to corporate governance, published by the newly-formed Egyptian Institute of Directors The language of the nifty 29-page corporate governance guide carefully avoids the stentorian tone of legalese. "Our aims go beyond simply decreeing a few rules," says Egypt's minister of investment, Mahmoud Mohieddin. "We are seeking to create a culture that rewards good corporate governance and penalises those who violate the ground rules." The government intends to start by targeting high trade volume companies on the CairoAlexandria Stock Exchange (CASE) and banks. Established after recommendations by the World Bank the institute will monitor corporate compliance with regulatory best practice procedures. "A well structured system of checks and balances, with auditing bodies overlooking one another within a framework of transparency also limits the potential for corruption," said Mohieddin, who added that a similar guidebook outlining corporate governance for public sector companies is soon to be published. Partially funded by grants from the International Finance Corporation (IFC) and the World Bank, the institute is cooperating with the University of North Carolina in the training of its employees. Although the institute began operations a month ago, its acting director Ashraf Gamaleddin believes it has yet to develop an identity. "We are in no rush to start accepting members. We are now trying to give our people the skills necessary to discern whether a company deserves to be admitted," said Gamaleddin. With a focus on research and promoting awareness of the social responsibility of capital, the institute is seeking to establish a high public profile. Public sessions open to all companies will be complemented by private sessions providing solutions tailored to the needs of individual companies. "As our strategic partners companies must realise we are providing them with a valuable product. If a company wants a share of the international market, or external financing options, it must realise that compliance with corporate governance measures is not a choice, it is a necessity," says Gamaleddin. According to Ziad Bahaeddin, chairman of Egypt's Investment Authority, share holders will provide the impetus for companies to conform more fully with corporate governance standards. "If I was an investor I would be very interested in whether a company abides by these standards or not. And this knowledge will definitely affect my investment decisions," says Bahaeddin, who believes that the guidebook -- the region's first -- will become a model emulated elsewhere. "Although we are starting with big companies, this guide represents a roadmap which shows small to medium enterprises what they need to do if they want to grow, or possibly enter the stock market," says Bahaeddin, who believes the rules outlined in the guide book could buck the trend of family companies to keep their finances private. CASE Chairman Maged Shawqi believes the increased interest of many companies in being listed on the stock exchange will provide yet more impetus for them to reform: "They know there is no cheaper source of financing than the stock market, so why not follow the rules?" With growth levels reaching 100 per cent in dollar terms, the CASE 30 has become one of the best performing stock indexes in the world. The introduction of new financial instruments such as same day trading, margin trading and short selling, now provide investors with a diversified basket of investment options.
