Reuters DUBAI: Egypt s capital markets regulator will introduce a takeover and acquisition code governing publicly listed companies on Nov. 1, the exchange chairman said. Hani Sarie-Eldin said the Egyptian Capital Market Authority (CMA) drafted the policy due to growing interest in Egyptian companies from regional and global investors. In 2005, nine Egyptian firms, mainly in the banking sector, were taken over by investors, he said. The policy, drafted in conjunction with global investment banks and the Cairo and Alexandria Stock Exchanges (CASE), will provide a framework of rules for takeovers in Egypt, including provisions protecting the rights of minority shareholders. I think it reflects best practices worldwide. If somebody wants to take over a listed company in Egypt, he has to go through this takeover code, Sarie-Eldin told Reuters in an interview. Right now, there are regulatory frameworks for takeovers, but I think the market is becoming more sophisticated and there is more appetite for acquisitions in Egypt, he said. The code will cover evaluation procedures, mandatory takeovers, minority shareholder protection, necessary disclosures, competitive bidding, pricing and the company s relationship with investment bankers. The CMA has been clamping down on listed companies that fail to comply with market regulations. Sarie-Eldin said that in the past six months, 60 firms were delisted from CASE, most of them for failing to comply with minimum standards on disclosure or liquidity. He said the number of listed companies has fallen to 700 from 1,200 in the past year. We have become more severe in relation to compliance, Sarie-Eldin said. I don t care if there are fewer listed companies. I would like to have 300 to 400 good-quality companies listed. This gives more credibility to the exchange and to listed companies. All listed Egyptian companies will be required by Jan. 1, 2007, to comply with international financial reporting standards and corporate governance norms outlined by IOSCO, he said. They will also be required to meet minimum liquidity levels and comply with certain profitability provisions. Sarie-Eldin said the new rules would facilitate more dual listings by Egyptian companies on international stock exchanges. Dual listings are quite helpful for these companies to raise funds and provide liquidity. The new rules will promote more of this, he said.
