The Egyptian Financial Supervisory Authority (EFSA) has issued new regulations to organise the launching of Global Depository Receipts (GDR) that are traded in foreign markets, and to regulate the acquisition of companies that have GDRs. In a statement, EFSA said it will no longer approve acquisitions made through GDRs even if accepted by shareholders, and has set a limit for GDRs at one third of the target firm's capital. “Any acquisitions made through buying GDRs will be ignored," according to the statement. “The company targeted by the deal will be required to convert them into local securities first, and also the depository bank and its local agent must commit not to dispose of Egyptian securities kept as a cover for certificates of deposit and before making such transfers they must comply with the provisions of the Capital Market Law No. 95 for the year 1992. They also commit, along with the members of the stock exchange, to verify all customer data, including the beneficiary owner and its associated companies." GDRs facilitate the trading of shares of public companies by others by foreign companies and are commonly used to invest in companies from developing or emerging markets. EFSA committed companies listed on the Egyptian Exchange (EGX) wishing to register their shares in a foreign market to get the approval of the company's extraordinary general meeting (EGM) and to respect the provisions of the Capital Market Law and its regulations. It also ordered companies whose GDRs are traded to submit all the agreements, documents and minutes of board and general meetings related to topics or decisions relevant to trading securities in the form of GDRs outside Egypt, to the stock market authority. Egyptian companies also must commit to providing applications for conversion to and from GDRs through companies and entities that are members of the EGX. The new regulations will not be applied to the acquisition of Orascom Construction Industries (OCI) by the Dutch OCI NV through the sale of 99% of its GDRs in February, but may prevent similar deals from taking place in the future.
