FRA unveils new rules to enhance market efficiency, protect trader rights
Updated 2/18/2025 2:37:00 AM
Arab Finance: The Financial Regulatory Authority (FRA) has introduced new amendments to improve market efficiency and safeguard trader rights by setting clearer guidelines for delisting companies and regulating stock split approvals and asset disposals, as per a statement.
These measures are aimed at facilitating a better business environment while ensuring fairness and stability in the market.
A key provision of the new rules is the establishment of a 25-working-day limit from the date of the general assembly's decision, for the permanent delisting of companies or purchasing the shares of those affected.
This aims to expedite the process of affected traders receiving their rights and selling their shares. The resolution also allows for daily purchases of shares from those impacted in accordance with the Egyptian Exchange (EGX) rules.
In addition, the FRA has outlined specific conditions for the merger of listed and unlisted companies.
If an unlisted company's net asset value surpasses that of a listed company, the merger process will require the companies to obtain a final report estimating assets and liabilities of the companies to be merged from relevant entities. this is in addition to getting the approval of their respective extraordinary general meeting (EGM).
Post-merger, the listed company must publish a disclosure report and meet continued listing requirements, with a fair value study. If the merger results in a capital increase, the company must meet listing conditions within six months from the merger completion date.
The new amendments also mandate special purpose acquisition companies (SPACs) to freeze 51% of subscribers' shares in the capital increase resulting from such mergers for not less than 12 months from listing the capital hike. Companies are also obliged to issue financial statements on profitability and equity.
This is designed to prevent exploitation of the process, ensuring that shareholders’ rights are protected.
Moreover, the FRA has introduced quantitative and qualitative standards for approving stock splits, ensuring that such actions do not manipulate stock prices or unduly influence the market.
The changes also regulate the disposal of assets by listed companies, requiring that assets be evaluated based on consolidated financial statements.
The FRA has specified that the disposal of shares should be evaluated by a financial advisor, real estate by an appraiser, and machinery or equipment by the relevant specialist appraisers.
These amendments, outlined in FRA Resolution No. 301 of 2025, reflect the authority’s ongoing efforts to enhance the non-banking financial sector and protect shareholder interests, fostering a stable and transparent market environment.
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