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An Explanatory Note Regarding the Regulatory Procedures and Measures taken by EFSA towards Brokerage Companies – Monday 19 /11/2012

EFSA Issued a Press Release Related to what has been published regarding the Partnership between EFG Hermes Holding S.A.E (“EFG Hermes”) and QInvest L.L.C. (“QInvest”) - Sunday 4/11/2012

An Explanatory Statement related to what has been tackled by some Newspapers and Websites regarding “Investors’ Insurance Fund on non-commercial risks arising from the activities of listed companies” – Sunday 30/9/2012

An Explanatory Statement regarding the Role and Scope of Work of the “Egyptian Investor Protection Fund (EIPF)” and means of its earnings’ exploitation– Thursday 1/3/2012

EFSA issued an Explanatory Statement related to what has been published by Newspapers regarding the Intention of some Persons to Announce an IPO to Establish new Companies- Thursday 27/10/2011

A Press Releas was issued regarding what has been published by some Newspapers about the reluctance of some listed Companies to disclose its Ownership Structures by 30/6/2011, and saying that EFSA did not take any administrative measures towards these companies - Thursday 21/7/2011

EFSA issued a clarification regarding the negotiations held with a name –Tuesday 3/5/2011

Explanatory Note by EFSA concerning what was published by one of the newspapers regarding the Advanced Pharmaceutical Packaging Company (APPC.CA) – Monday 11/10/2010

Explanatory statement issued by EFSA regarding what was published by a newspaper about the Advanced Pharmaceutical Packaging Company (APPC.CA) - Wednesday 8/9/2010

Explanatory Statement issued by EFSA regarding what was Released by the Officials of Orascom Hotels and Development towards EFSA Thursday 12/8/2010

Explanatory Statement Regarding the Investor Protection Fund-Sunday 4/7/2010

Explanatory Statement Regarding the OTC Dealings Settlement- Sunday 27/6/2010

Explanatory Statement With Respect to Extending the Period of Adjustment for the Positions of Administrative Service Companies in the Field of Mutual Fund Activities - Thursday 24/6/2010

Explanation Given by the Authority as to Increasing the Capital of " AJWA for Food Industries company Egypt”

An Explanatory Note Regarding the Regulatory Procedures and Measures taken by EFSA towards Brokerage Companies – Monday 19 /11/2012

Referring to what has been published in some newspapers and websites regarding the regulatory procedures and measures taken by EFSA towards Brokerage Companies, and the requests received by EFSA to increase the fines imposed on these companies, EFSA would like to emphasis the following:

First: EFSA’s terms of references and limits are restricted by the rules and laws governing its activity. As such rules and laws define the terms of references of any entity, its authorities, the activities subjected to its supervision, the measures and procedures taken by it upon violating the provisions regulating its activities. So in that regard, any entity shall not exercise any authority or issue any decision or measure that contradicts the provisions of law, or otherwise it shall be considered as an illegal act and an abuse of the granted powers.

As EFSA is supervising and regulating the non-banking financial markets and instruments, pursuant to the provisions of Law no. 10 of 2009 that regulates the non-banking financial markets and instruments, that law which governs EFSA’s activity and defines its terms of reference , EFSA is performing its supervisory and regulatory role in light of the provisions of the said law in a way that grants market’s integrity, stability and development as well as protecting the rights of dealers.

Second: According to Article 3 of Law no. 10 of the year 2009 the Egyptian Financial Supervisory Authority (EFSA) has replaced the Capital Market Authority in applying the provisions of Capital Market Law promgulated by Law no. 95 of 1992. The said Law regulates Brokerage Companies and specifying the types of its activities, the rules and conditions of establishing these companies, the needed capital , the needed experience for those who manage the companies and EFSA’s regulatory role. The Law mentioned hereinabove explained the pervious points in detail in order to subject these activities to the supervision of a specialized Authority ( EFSA), that is due to the nature of the activities performed by the Authority in order to maintain capital market’s stability and protect the rights of dealers. The said Law regulates the administrative measures and regulatory procedures taken towards these companies, in addition to the legal penalties upon committing any of the crimes stated in the Law.

Third: Capital Market Law does not allow EFSA to impose fines on Brokerage Companies. The fines are being imposed by the competent court upon committing any of the crimes stated in the Law.

Fourth: There must be a differentiation between the administrative measures and regulatory procedures taken towards these companies and being defined in Articles (30, 31) Capital Market Law promgulated by Law no. 95 of 1992, and the request of investigating and filing a criminal lawsuit towards persons who commit the crimes stated in the Law and being applied by EFSA. As Articles (30, 31) Capital Market Law promgulated by Law no. 95 of 1992 defines EFSA’s authority regarding taking these measures and procedures, and it is as follows:

Article 30 of the said Law stated that the activities of the company may be suspended in case of violating the provisions of this law, its Executive Regulation and the executive decisions of the Board of Authority in implementation of the law, and in case the company loses any of the license conditions and does not remove the causes of such violation after being notified, or fulfilling all licensing conditions within the time limit and terms defined by the Chairman of the Authority. A relevant decree should be issued by the Chairman of the Authority, specifying the reasons of suspension, limiting the suspension to a period not to exceed thirty days, and specifying the measures to be taken during suspension period. The company shall be notified in writing of such a decision either by hand or by registered mail with an acknowledgment receipt. The decision shall also be published in two daily and widely circulated newspapers at the expense of the company. If the company does not remove such causes within the time limit indicated, the Chairman shall submit the case to the Authority Board for the revocation of the company’s license. In this respect, in order to apply this article the following shall be taken into account:

1-Notify the company to remove the violations attributed to it (in case of violations that can be removed) or completing the conditions of licenses within the time limit.

2- Chairman of the Authority shall suspend the company’s activities for a period of no more than one month, that is if the company does not remove the violations pursuant to the measures stated in the said Article.

3-The license shall be cancelled, if the company does not remove the violations within the suspension period.

Article 31 stated that the Authority BOD may take any of the following measures in case of an emerging danger affecting the stability of the capital market , or the company’s shareholders interest, or the interest of the people who are dealing with such company:

A) Give an admonition to the company

B)............................................................

C)............................................................

D) ...........................................................

E)............................................................

F) Obligate the infringing company to increase the amount of insurance paid.

In this respect, if EFSA’s BOD ensures the presence of the stated danger, the infringing company shall increase the amount of insurance paid. Then, the insurance shall be a mean of facing the danger stated in the said article that is pursuant to the provisions of the Law.

Fifth: Concerned parties shall contest EFSA’s decisions if there are any suspected violations. Capital Market Law no. 95 of 1992 regulates laws and procedures of contesting any administrative decisions issued by the competent minister or EFSA (EFSA’s Chairman or EFSA’s BOD ). Pursuant to Articles (50, 51 ) of Law no. 95 of 1992 a contesting committee shall be formed and headed by a deputy chairman of the State Council including membership of two counselors from the State Council to be chosen by its Chairman and an expert to be chosen by the Minister.

According to the Law EFSA shall abide by the decisions issued by the contesting committee . And pursuant to Article (32) of the same Law “Contesting the decisions shall be made within 15 days from the date of notifying the concerned party”.

Sixth: EFSA shall play its supervisory role and shall practice the terms of references stated in the said Law without being subjected to any pressures or requests filed by unspecialized persons or stakeholders or those having disputes in the market. EFSA shall proceed in examining and reviewing procedures and shall issue its regulatory and supervisory decisions without being affected by any factor. EFSA added that it shall abide by its regulatory and supervisory vision in order to maintain market’s stability and transparency and to protect dealers’ rights.

Moreover, EFSA invites those who are interested in non-banking financial markets to review the provisions of Law and its Executive Regulation and the decisions issued in that regard as well as EFSA’s regulatory role. Also, EFSA calls upon dealers to follow up EFSA’s website which is the only source of the official information. Finally, EFSA shall periodically publish several explanatory notes that will raise dealers’ awareness.

 

EFSA Issued a Press Release Related to what has been published regarding the Partnership between EFG Hermes Holding S.A.E (“EFG Hermes”) and QInvest L.L.C. (“QInvest”) - Sunday 4/11/2012

Referring to what has been published on Mubasher Website on 4/11/2012 titled: Chief Executive Officer (CEO): “Completion of the deal between EFG Hermes Holding S.A.E (“EFG Hermes”) and QInvest L.L.C. (“QInvest”) this month” and what has been noted that in mid-October last year, EFG Hermes Holding S.A.E (“EFG Hermes”) gained an approval from EFSA regarding the partnership between (“EFG Hermes”) and (“QInvest”) without any reservations.

EFSA asserted that it only approved the minutes of (“EFG Hermes”) Extraordinary General Assembly subjected to the provisions of Law no. 95 of 1992 and its Executive Regulation, and held on 16/9/2012 pursuant to Article (70) of the same Law. EFSA stressed that it approved the minutes in form and within the limits of the documents presented by the mentioned company and under its responsibility. EFSA added that the minutes were reviewed from the procedural point of view only. Moreover, it emphasized that the Company’s BOD and its General Assembly are responsible for all the decisions issued in the Assembly’s minutes; adding that the company shall gain permissions and approvals from the regulatory authorities which has not been done until today.

Finally, EFSA would like to note that all the procedures related to the transfer of ownership shall be followed and all executive measures shall be met in order to gain EFSA’s approval. Consequently, that means that EFSA did not issue any approvals regarding that issue, and EFSA did not receive any requests regarding the transfer of ownership. It is worth mentioning that the entity which is responsible for the transfer of ownership is the Egyptian Exchange pursuant to Article (100) of the Executive Regulation of Capital Market Law no. 95 of 1992. The transfer of ownership shall be held through the Exchange itself or over-the-counter" (OTC) for the unlisted securities. That shall be held after gaining EFSA’s approval pursuant to the regulations issued in that regard.

 

An Explanatory Statement related to what has been tackled by some Newspapers and Websites regarding “Investors’ Insurance Fund on non-commercial risks arising from the activities of listed companies” – Sunday 30/9/2012

Referring to what has been tackled by some newspapers and websites regarding “Investors’ Insurance Fund” on non-commercial risks arising from the activities of listed companies (known in the media as Investors’ Protection Fund), EFSA would like to emphasize the following:

First: The legislator defined the role and the scope of work of the fund pursuant to Article 23 of Capital Market Law promulgated by Law no. 95 of 1992, as follows: “A special fund, with a juridical entity, shall be established, to secure investors against non-commercial risks arising from the activities of listed companies.” In this respect, Article 27 of the said Law and the ministerial decrees issued in this regard defined the types of Brokerage Securities Companies.

Second: Ministerial Decree no. 1764 of 2004 that established the Fund has defined the system of managing the Fund, its relation with the Brokerage Securities Companies, the rate of its contribution in the Fund’s resources, the rules of investing its proceeds, the kind of risks to which the clients may be exposed and the claims for compensation raised by clients. The Fund was established to face significant risks in which collective policies failed to cover. Hundreds of clients were compensated after companies failed to compensate them due to financial loss beyond the scope of trading or investing in securities.

Third: Ministerial Decree no. 1764 of 2004 regarding establishing the Fund set the method of forming the Fund’s BOD . As Article 4 stated the method of choosing the BOD members which includes a representative from investors in Stock Market (chosen by the Minister) and three members from Brokerage Companies and two representatives from the rest of members and not from Brokerage Companies (these five members are chosen according to the rules and measures being issued by a ministerial decree from Minister of Investment). In addition to a representative from EFSA chosen by EFSA Chairman, as well as a representative from the Egyptian Exchange chosen by its Chairman’s BOD, a representative form MCDR chosen by its Chairman’s BOD , two experts chosen by the majority of members mentioned in the above items. EFSA asserts that any suggestions regarding changing the method of choosing the members of the Fund’s BOD or its statute is the responsibility of the Fund’s BOD according to the decree of its establishment. EFSA sent letters to the Fund regarding suggesting some amendments that shall maximize the benefits of those who deal with the Fund and that shall achieve corporate governance rules.

Fourth: Pursuant to Article 23 of Capital Market Law no. 5 of 1992, it is a fund with a juridical entity. The ministerial decree issued in this respect stated that the Fund’s Chairman and its BOD shall manage the Fund and shall take the necessary measures to achieve the objectives mentioned in the said decree and its statute.

Fifth: EFSA as the regulator that regulates the non-banking financial market and its institutions, plays its role pursuant to the legal rules governing that issue and which include supervisory and regulatory aspects without interfering in the administrative issues of market’s institutions.

Sixth: Any member in the Fund’s BOD can exercise their legal role by submitting any proposal to the BOD. The BOD shall approve or reject it within the powers legally delegated to it.

Seventh: EFSA stresses that it will always protect the rights’ of dealers. It respects all market’s institutions and that it is interested in providing an appropriate environment to all institutions including the Egyptian Exchange, MCDR and Investors’ Protection Fund. In addition to this, EFSA asserts that all market’s institutions shall follow the best standards of corporate governance. Also, EFSA emphasizes its interest in increasing the efficiency of the Fund to confront the non-commercial risks faced by the dealers in the Stock Exchange.

Eighth: Regarding what has been tackled in the media about the total amounts available at the Fund comparing it with the compensations being paid and its limited amount compared to the amount of collected funds, EFSA would like to note that the decrease in compensation’s amount is as a result of the developed supervisory regulations and due to Capital Adequacy rules being applied on brokerage companies and resulted in reducing the risks within the scope of the Fund’s work.

Finally, EFSA would like to note that it calls upon preparing an actuarial study that will emphasize how far is the need for a change in the participations or compensations in light of the radical changes that occur in the market and the unstable environmental risks surrounding it, changes in the number of dealers in the market, number of brokerage companies, as well as the size and distribution of dealers’ investment portfolios. Recently, the Fund is studying the suggestions presented to develop the rules that shall grant the dealers more advantages from the Fund that is to increase its efficiency in protecting the dealers in light of reducing the risks and not only on the side of compensations resulted from it.

 

An Explanatory Statement regarding the Role and Scope of Work of the “Egyptian Investor Protection Fund (EIPF)” and means of its earnings’ exploitation– Thursday 1/3/2012

Referring to what has been announced in the media and different websites regarding the role and scope of work of The Insurance Fund for Securities Dealers against Non-Commercial Risks caused by Securities firms and known by “The Egyptian Investor Protection Fund (EIPF)”, in which there was some requests to extend the field of risks which the fund is covering.

And as being the authority concerned the adherence to the provisions of Capital Market Law examination, Central Depository and Registry Law and the decisions issued in this regard, EFSA emphasizes the following:

First: The legislator defined the role and the scope of work of the fund pursuant to Article 23 of Capital Market Law promulgated by Law no. 95 of 1992, as follows: “A special insurance fund, with a juridical entity, shall be established, to ensure securities investors against non-commercial risks originated from the activities of intermediary companies.”

In addition Article 27 of the said law and the Ministerial Decrees issued in that regard have defined the different kind of Securities firms.

Second: Ministerial Decree no. 1764 of 2004 that established the fund has defined the system of managing the fund, its relation with the Brokerage Securities Companies, the rate of its contribution in the fund’s resources, the rules of investing its proceeds, the kind of risks to which the clients may be exposed and the claims for compensation raised by clients.

Third: The provisions stated in the Law and the Ministerial Decree mentioned above defined the scope of risks in which the fund covers regarding the financial losses faced by the clients. Article 7 of the said Decree stated that the fund is not liable to cover all kinds of commercial risks or to reimburse the financial loss due to the change in the value of securities or the loss of investment chances committed by the funds’ members. Also, the fund is not liable to pay any compensation due to risks due to unlisted securities’ transactions.

Fourth: Pursuant to Article 3 of the said decree the money reserved in the fund was collected from the fund’ members who are practicing one or more of the following activities:

-Clearing , settlement of securities’ transactions, central depositary and registry

-Portfolio and mutual funds management

-Securities brokerage

-Bonds’ Brokerage

-Custodians

Fifth: According to Law, the money reserved in the fund shall only be used in paying compensation due to non-commercial risks result from the activities of companies members operating in securities. Due to the fact that the fund is an insurance fund facing the said risks and according to compensation basis stated in the Ministerial Decree mentioned above. So in this respect, the money shall be used for this reason only.

Sixth: EFSA noted that we can not depend on the past period - where faltering cases were relatively solved- in defining the financial surpluses reserved in the fund to cover the required insurance coverage. That is due to different reasons which lead to the previous faltering cases which due to deviation in the companies’ management or a defect in its finance systems .

Seventh: EFSA asserts that there is an urgent need to review and evaluate the future non-commercial risks being faced by dealers at the capital market in light of the radical changes in the market, the surrounded unstable environment risk , changes in the numbers of dealers in the market, number of brokerage companies and the volume of dealers’ portfolios and its distribution . In light of this study, membership dues being paid currently shall be examined too in order to define such risks and compensation resulted from it. In this respect, EFSA addressed the Chairman of the Fund’s BOD to start preparing that study.

Finally, EFSA confirms that the money of the fund has certain usages pursuant to the provisions of law. Also, EFSA stresses that it is interested in protecting the rights of dealers in non-banking financial markets in accordance with the provisions of law and rules regulating it.

 

EFSA issued an Explanatory Statement related to what has been published by Newspapers regarding the Intention of some Persons to Announce an IPO to Establish new Companies- Thursday 27/10/2011

Referring to what has been published by newspapers regarding the intention of some persons to announce an IPO to establish new companies, EFSA would like to note that no one can announce an IPO without issuing an IPO prospectus accredited by EFSA . This prospectus shall be published in two daily widely circulated newspapers and shall be issued according to the legal provisions stated in Capital Market Law no. 95 of 1992 and its Executive Regulation, that’s to protect shareholders and others who wish to participate in the IPO and to provide the legal framework which grants their rights and defines their obligations.

EFSA states that any attempts to collect money without following the applied laws and regulations issued to protect citizens and their rights shall be a violation which may lead that person to be subjected to the legal penalties stated in Law no. 146 of 1988 regarding Companies Receiving Funds for Investment, known as “back-door money investment Law” and Capital Market Law no. 95 of 1992.

In addition, EFSA welcomes any IPO prospectus issued according to Capital Market Law no. 95 of 1992 and its Executive Regulation which includes certain data and info related to the company’s objective and its period, the issued and paid-up capital, features of the offered shares , its advantages and offering conditions, founders’ names and the volume of their participations , shares in-kind ( if present ) , names of the members of the BOD, managers and their experience , company’s plan to use the money collected by the IPO and its expectations regarding the results of using this money , places where the accredited IPO prospectus is available and other data defined by the Executive Regulations.

 

A Press Releas was issued regarding what has been published by some Newspapers about the reluctance of some listed Companies to disclose its Ownership Structures by 30/6/2011, and saying that EFSA did not take any administrative measures towards these companies - Thursday 21/7/2011

Referring to what has been published by some newspapers regarding the reluctance of some listed Companies to disclose its Ownership Structures by 30/6/2011, and saying that EFSA did not take any administrative measures towards these companies, EFSA would like to clarify the following:

- Article 16 of Capital Market Law no. 95 of 1992 stated that listing of securities on Egyptian Exchange shall be made upon the request of the issuer. Listing and De-listing of securities on the Egyptian Exchange shall be decided upon by the Egyptian Exchange, and according to the conditions set by the Board of the Authority.

- EFSA is only a legislative body which is mandated by the legislator to set listing rules at the Egyptian Exchange, these rules which regulate listing and de-listing of securities. Whereas the Egyptian Exchange is committed to implement listing rules through the listing committee which review the application of listing rules. The Egyptian Exchange shall impose penalties on the companies which violate listing and disclosure rules in accordance to what has been stated in listing rules and the agreement signed between the listed company and the Egyptian Exchange.

- Article 18 of listing rules stated that any listed company shall submit the structure of shareholders quarterly. In case of violation – either by the delay in submitting the structure or the refusal to disclose according to the form or the reluctance in sending it – the Egyptian Exchange shall impose penalties on the company through listing committee at the Egyptian Exchange according to listing rules.

 

EFSA issued a clarification regarding the negotiations held with a name –Tuesday 3/5/2011

Referring to what was published about the negotiations held by the Egyptian Financial Supervisory Authority (EFSA) with a name for the presidency of the Egyptian Stock Exchange (EGX), EFSA assured the complete inaccuracy of it, and that there were no communications, nor statements, nor negotiations issued by it regarding this matter, and that the newspaper held the responsibility of what was published.

To be mentioned that the EFSA has previously issued an official proclamation that has been published on its website – 26/3/2011- regarding the repeated issuance of inexact declarations ascribed to sources within or outside the EFSA, as most of these declarations are incorrect or encompass erroneous data or information that don’t reflect the EFSA`s opinion leading to rumors spread accordingly leading to disorder in the non bank financial markets or inadequate effect on the market dealers, which violates the law regulating non-banking financial markets and instruments and it threatens markets’ integrity and credibility.

The mentioned proclamation also stated that the EFSA chairman is the only official speaker to be during the current stage, accordingly the EFSA recommends that media, brokerage firms and market dealers shouldn’t get carried away by the news or rumors, that would be without prejudice to the legal rights that resulted in any damage that would provoke from publishing such information and rumors.

 

Explanatory Note by EFSA concerning what was published by one of the newspapers regarding the Advanced Pharmaceutical Packaging Company (APPC.CA) – Monday 11/10/2010

With reference to what was published by El-Mal Newspaper on Sunday 10/10/2010 referred to Mr. Mohsen Adel - Director of Investors’ Relations at the Advanced Pharmaceutical packaging (APPC.CA) stating that EFSA finished the reviewing of complaints submitted by one of the shareholders against the company’s Board of Directors , and that the integrity of the financial statements was checked and it did not include any false data which is different from Tax Declaration regarding the profits m sales and the earnings retained for 2007- 2008 .

EFSA ensures that what was stated by the said person was not true and that EFSA did not issue any decision in this regard. In addition to this, EFSA is looking forward to file a criminal lawsuit against that person as well as the person responsible for the legal affairs in the company. Note that EFSA is still examining and reviewing the complaints submitted to the Authority.

In light of the results of the statement issued by the company and which lead to an increase in the share’s price to more than 10%, EFSA decided to cancel all transactions made on this company’ shares on 10/10/2010 to maintain the market’s stability and to protect the Stock Market dealers

 

Explanatory statement issued by EFSA regarding what was published by a newspaper about the Advanced Pharmaceutical Packaging Company (APPC.CA) - Wednesday 8/9/2010

A newspaper published in its issue dated 7/9/2010 a subject entitled “ EFSA approved counterfeit statements for a joint- stock company” regarding the Advanced Pharmaceutical Packaging Company (APPC.CA) a listed company at the Egyptian Exchange.

Commenting on the views expressed regarding the mentioned subject, these which may affect the price of the security, EFSA is interested to clarify the following facts to the public:

1- EFSA does not approve the financial statements submitted by the companies; however it checks the fulfillment of certain information regarding disclosure’s requirements in the offering memo and disclosure form. This information is submitted under the responsibility of the company, its auditor, legal advisor and independent financial advisor. If EFSA finds out that this information is false, it initiates a court case against the responsible person for this erroneous information.

2- EFSA has received a complaint from one of the shareholders regarding the mentioned subject issued at the newspaper. EFSA is reviewing the complaint and shall address the company concerning the complaint to follow up in case of occurred mistake.

3- The mentioned subject concluded that occurrence of a court case without verifying the authenticity of information and without waiting the complaint review by EFSA which affect the shareholders and the stock price till determining that it was mistaken.

So in this respect, EFSA appeals the media not to rush in publishing any declaration regarding the irregularities of the listed companies until finalizing the complaints review and issuing the final and obvious decision; as this may affect the stock prices and accordingly harms the shareholders rights and violates the provisions of law.

 

Explanatory Statement issued by EFSA regarding what was Released by the Officials of Orascom Hotels and Development towards EFSA Thursday 12/8/2010

Commenting on the statements of Orascom Hotels and Development chairman on Wednesday 11/8/2010 regarding EFSA, and as his statement includes inaccurate information, EFSA was concerned to clarify some facts to achieve the shareholder’s interest, in this respect EFSA announces the following:

1- Regarding what was announced that EFSA delayed the documentation of the first General Assembly’s minutes which approved the offer of purchasing the shares of minorities who refused the tender offer: EFSA is not responsible to document the minutes of the General Assembly of the listed company, however the General Authority for Investment is responsible for that and it documented the minutes immediately after submitting it. EFSA objected the content of the minutes as it found out that it violates the minorities’ rights. The minutes did not include the three alternatives announced by the company in calling up for the assembly. So in this respect, EFSA obliged the company to reconvene the General Assembly to announce the three alternatives in front of the minorities to achieve their interest. Regarding the second General Assembly that was held on 29/6/2010, the company had been delayed for more than a month in documenting the minutes and applying its decisions and EFSA urged the company to document the minutes and the company started to document it actually last week.

2- Also it was announced that the company is to appoint two financial advisors, after gaining EFAS’s approval. That statement was inaccurate, as choosing the financial advisors is a matter that concerned the bidder (the company’s management in this case). The company has to choose the financial advisors from those who are listed at EFSA‘s register. Regarding the argument which states that the shares is evaluated correctly after gaining EFSA ‘s approval on that evaluation , is incorrect also , as EFSA did not approve the prepared evaluation as being the base of purchasing the share and it did not approve the prices of tender offers . Evaluation is the responsibility of the financial advisor and EFSA has nothing to do with that issue. However, EFSA is obliging the company to disclose the evaluation so as all the facts, information and opinions shall be set in front of the shareholders to take the right decision according to their free will.

3- Regarding what was announced that EFSA neglected its role in raising the awareness of minority from the risk of owning shares which loss its competency with the new listing rules. EFSA is not responsible in pushing the shareholders to give up or keep their shares, however it protects shareholders and provides them information to take the right decision. And in this respect, EFSA obliged the company to carry out adequate disclosure at all stages.

Finally, as EFSA is a regulator on the listed companies and an arbitrator between the companies and investors and it refuses to participate in that media debate. EFSA wishes that all parties shall cooperate to achieve the company and the shareholders’ interest. EFSA shall take the necessary legal procedures to protect minorities’ rights.

 

Explanatory Statement Regarding the Investor Protection Fund-Sunday 4/7/2010

Reference is made to the mass media-reported issues regarding the Investor Protection Fund and its missions. As these issues have not been correctly handled and included invalid data and information, the Authority hereby provides the following explanation:

1- The current balance of the Fund is approximately LE 700,000,000, representing the proceeds of membership contributions, regular subscriptions and relevant investment returns for a period exceeding five years since the date of establishment of the Fund; after deduction of the compensations paid to eight clients of brokerage firms whose licenses were cancelled by EFSA.

2- The Fund has an auditor annually selected by the EFSA Board of Directors among auditors whose names are recorded in the EFSA Auditors Registry.

3- The main role of the Investor Protection Fund can be defined as follows:

a) Measuring the non-commercial risks to which the clients of asset management companies , the brokerage firms and the custodians, may be exposed.

b) Studying the claims for compensation raised by clients regarding non-commercial risks, carrying out the required examination of the related applications and reviewing the grievances filed against the decisions issued by the Fund's executive administrations regarding the compensations.

c) Investing the proceeds collected by the Fund to maximize resources.

d) Studying the scope of adequacy of the funds allocated for potential compensations, in light of the trading volume, the size of duly operated investment portfolios, the value of market capital kept at the custodians.

4- The appointment of an EFSA representative in the Funds' board of directors is made according to the provisions of Prime Minister's Decree No. 1764/2004 regarding formation of board of directors. This representative plays a key role in achieving full coordination with the Authority in respect of risk management and compensation claim resolutions; given that the Fund is considered the last resort after the Authority plays its role in directing the companies, whose licenses are still valid, to compensate their clients. However, the scope of protection provided by the Fund is extended to all clients dealing with the companies operating in the field of securities and covers all non-commercial risks to which they may be exposed.

5- There is a complete legal and financial separation between the Management of the Investor Protection Fund - which has an independent legal identity- and Misr for Clearing, Depository and Central Registry.

6- The Fund was established at the end of the year 2004 with the objective of handling imminent risks for which the collective insurance policy failed to cover. The Fund managed to compensate hundreds of the grieving clients which their companies failed to cure the damage, incurred in the process of their dealings, which does not fall in the scope of securities trading or investment risks.

 

Explanatory Statement Regarding the OTC Dealings Settlement- Sunday 27/6/2010

Reference is made to the inquiries received regarding some provisions in EFSA Board decision No (69/2010) amending a number of trading rules of ATS de-listed securities.

After consultation with the MCDR, the Authority would like to clarify the following:

• With respect to the stocks purchase transactions conducted on Monday and Wednesday, the securities shall be available for sale as of the trading session of Monday next week.

• With respect to the share-sale transactions conducted on Monday, the monetary settlement shall be made and sale proceeds shall become available at the brokerage’s firm account on Thursday next week.

• With respect to the stocks sale transactions conducted on Wednesday, the monetary settlement shall be made and sale proceeds shall become available at the brokerage firm’s account on Monday next week.

 

Explanatory Statement With Respect to Extending the Period of Adjustment for the Positions of Administrative Service Companies in the Field of Mutual Fund Activities - Thursday 24/6/2010

Reference is made to the questions received by the Authority regarding Resolution No. 88/2010 which was issued on 7/6/2010 and ruled for extending the period of adjustment for the position of administrative companies in the filed of mutual fund activities up to the end of August 2010.

The Authority would like to explain that the phrase "adjustment for positions" referred to in the said Resolution means the mutual funds' contracting with a Mutual Fund service company .

Egyptian Pound), but such increase has not been carried out. The company, after consultation with the Authority, resolved not to carry out such increase. Therefore the reported capital increase has yet been conducted.

Moreover, in response to the disclosure-related questions regarding such increase, the EFSA board resolved on 17/5/2010 to amend the EGX securities listing and delisting rules, whereby listed companies shall not carry out any capital increase except after a full disclosure statement is submitted to this effect. Article (32-bis) of the said Listing and Delisting Rules was amended to the extent that each EGX listed company is required to serve a capital increase notice in the form duly prepared by the Authority, after coordinating with EFSA, Egypt Exchange and Misr for Clearing to this effect. Such notice shall include all the data required to be stated in the capital increase prospectus.

To review the EFSA Board Resolution amending the EGX Securities Listing and Delisting Rules, please (Click Here).

 

Explanation Given by the Authority as to Increasing the Capital of " AJWA for Food Industries company Egypt”

A mass media report stated that the EFSA has approved a capital increase “ AJWA for Food Industries company Egypt” to be Billion Egyptian Pound instead of EGP Two Million. The Authority hereby confirms that this report was not accurately prepared, and would like to explain that the extra- ordinary general assembly “ AJWA for Food Industries company Egypt” has resolved on 15/11/2009 to increase the issued capital to LE 1,200,000,000 (One Billion Two Hundred Million Egyptian Pound) instead of LE 200,953,000 (Two Hundred Million Nine Hundred Fifty Three Thousand Egyptian Pound), but such increase has not been carried out. The company, after consultation with the Authority, resolved not to carry out such increase. Therefore the reported capital increase has yet been conducted.

 

Moreover, in response to the disclosure-related questions regarding such increase, the EFSA board resolved on 17/5/2010 to amend the EGX securities listing and delisting rules, whereby listed companies shall not carry out any capital increase except after a full disclosure statement is submitted to this effect. Article (32-bis) of the said Listing and Delisting Rules was amended to the extent that each EGX listed company is required to serve a capital increase notice in the form duly prepared by the Authority, after coordinating with EFSA, Egypt Exchange and Misr for Clearing to this effect. Such notice shall include all the data required to be stated in the capital increase prospectus.

 

To review the EFSA Board Resolution amending the EGX Securities Listing and Delisting Rules, please (Click Here).