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Part One
Central Depository and Registry Operations
Chapter One
Central Depository Operations
Article one:
The following securities shall be deposited at the Company:
1- Securities listed at the stock exchange lists.
2- Securities issued by a company if it offered its securities in a public subscription.
Other securities may be deposited according to the terms established by the Company’s board of directors and as approved by the CMA.
Securities listed at the stock exchange lists or offered for public subscription before these regulations becomes effective shall be deposited within six months from that date.
Article Two:
Depositing securities submitted to its owners shall be made by one of the Central Depository Participants through an application form developed by the Company. A proof of their ownership of nominal securities should be attached to the form.
The company shall, within three days from submitting the complete documents, issue a statement for the depositing participant of the securities deposited. Such a statement shall include the type of security, the quantity deposited and the date of deposit and if these securities are pledged or under a lien.
The participant shall submit to the client a statement of his balance including the data referred to. This statement shall replace the securities debentures and temporary certificates in all transactions including attending meetings, cashing dividends, pledge and any other rights.
Trading and acquiring any rights are prohibited on securities except for through the company’s book entry system.
Article three
Entities or companies that issue securities after these regulations become effective shall issue one debenture for each issue to be deposited at the Company within fifteen days as a maximum from the date of registering at the commercial registration for shares and from the date of closing subscription for other securities.
As regards securities issued but its certicficates have not been printed till the date these regulations become effective, one certificate should be issued for each issue and should be deposited at the company within three months from that date.
In all cases, the certificate shall include the securities' basic data specifically:
Its type, quantity, nominal value, currency of issue, the last coupon due, the company’s data and its previous issue.
The Company shall not dispose (get rid of or exeute) of securities debentures deposited therewith before a related cancellation decree is issued according to the provisions of article five of the law and before the issuing company submits to the Company one debenture for each issue including the data referred to.
Certificates shall be disposed of at the Company’s headquarters, this process should be attended by a representative from the issuing entity and a related report is to be issued.
Article Four
Registering securities shall be made at the Company according to the request of the issuing company and the following documents should be attached :
a- Basic data for issued securities including: types of securities, issues of each type, issue currency, number of shares, its denomination, value, relevant amount paid and the serial number for each category of shares.
b- Statement of securities that were replaced by a new version either due to loss or damage.
c- Securities with a lien order or a pledge or suspension of trading notation and the related supporting documents.
d- A list of the names of subscribers in securities to be registered and the percentage of payment made by each of them.
Article Five
Any shareholder wishing to undertake a transaction that exceeds the percentages included in articles 59 and the following articles in the Executive Regulations of the Capital Market Law # 59 of 1992 shall notify the Company at the same time of sending a related notification to the issuing entity.
On behalf of the issuing entity and with its agreement, the Company may notify any shareholder who holds at least 1% of the shares of these companies.
The preceding regulations shall apply to the registered owners as regards the beneficiary owners dealing with him.
The Company shall suspend the settlement of any trading operations whenever it receives information that they are done in violation to the preceding provisions and shall notify the issuing entity and the CMA as well.
Article six
The Company shall maintain the securities debentures deposited therewith at safe places at its vaults or the vaults of third parties and the Company shall establish the related required systems.
Article Seven
Participants shall be responsible for the accuracy of the data they submit to the Company and the safety of securities deposited by them.
Securities issuers shall be responsible for the accuracy of data, reports and lists they submit to the Company.
Article Eight
The company shall maintain regular records for all the services related to its activities. All the participants and registered owners shall verify their records with the Company’s records whenever requested by the Company and they may request this verification.
The Company may correct or modify any incorrect data in their records whether by itself or upon a request from the CMA or from any concerned entity.
The Company shall notify the concerned persons with the corrections or modifications done within fifteen days from the date of making such correction or modification without any violation to the right of claiming compensation from the entity causing damage resulting from such incorrect entry.
Complaints from the corrections or modifications made by the company may be referred to the CMA.
In all cases, the data included into the Company’s records shall be the reference.
Chapter Two
Clearing and Settlement
Article Nine
The Company shall undertake clearing and settlement for all transactions made on securities for the benefit of central depository participants, for the purpose of determining the net rights and liabilities of each of them, settle the positions resulting from trading deposited securities and transferring its ownership.
Parties to trading operations done on securities deposited at the Company and not listed at the stock exchange shall notify the Company with the basic data of such transactions according to the system established by the Company.
Clearing shall be made on the basis of delivery versus payment and during a period that does not exceed the term specified by the board of directors for undertaking such a settlement operation. The Company shall transfer the ownership of these securities at its book entry system and shall submit to the competent entities an evidence of the settlement of such transaction on the form approved by the board of directors.
The appendix includes the operations of clearing and settlement and the procedures it includes.
Article Ten
Without violation to the provisions of article 4 of the law, if the reason of the delay in settlement is due to the seller, the rights and privileges resulting from the securities shall be for the purchaser starting from the date specified for settlement and in consideration of the rights of the Settlement Guarantee Fund or the securities lending and borrowing system as applicable.
Article Eleven
The Company shall establish the system required to guarantee that the central depository participants execute their obligations as regards settling transactions resulting from trading securities according to the provisions of article 16 of the law.
Article Twelve
If a court ruling is issued stating the bankruptcy of one of the participants, the company shall make the clearing and settlement for the transactions the participant made before the court ruling was issued even if the related procedures got extended after the ruling is issued.
These transactions shall be made effective before any other transaction.
Article Thirteen
The Company shall establish a fund to guarantee the settlement of obligations resulting from securities transactions with all participants sharing in its capital. The participation system and rules shall be established by a decree to be issued from the CMA board of directors upon a proposal from the Company’s board of directors.
The Fund shall have a fiscal year that starts and ends with the beginning and end of the Company’s fiscal year, it shall have independent accounts and it shall be disclosed at the Company’s financial lists.
At the end of each fiscal year, the revenue shall be distributed to the accounts of the fund participants according to a related resolution from the Company’s general assembly. The distribution shall be made on the basis of each participant monetary share to the total fund’s capital, this is to be done after deducting the specified percentage for the company in return for managing the fund’s business.
In all cases, a participant may not receive any revenue from the amount paid to the fund as a delay penalty.
Part Two
Central Depository membership
Chapter One
Membership conditions and procedures
Article Fourteen
Any entity wishing to become a central depository participant shall submit an application to the Company. This application should be accompanied by the following:
First: for banks and foreign banks’ branches registered at the Central Bank of Egypt:
1- The CBE’s approval
2- A list of the names of the board of directors and those having signature authorization.
3- A copy of the bank’s by-laws.
4- A copy of the bank’s commercial registration.
5- Receipt indicating payment of membership fees..
Second: for securities companies:
1- License issued by the CMA to practice the activity.
2- A copy of the company’s by -laws.
3- A copy of the commercial registration.
4- A list of the names of the board of directors and the managers and those having signature authorization.
The company’s field of activity should be in one or more of the activities referred to in a resolution issued by the CMA.
Third: as regards foreign companies and entities exercising securities central depository activity:
1- A certificate from the CMA indicating that the foreign company or entity is subject to regulation according to the rules established by CMA’s board of directors.
2- The company’s commercial registration or its equivalent for foreign entities.
3- A statement of the names of the directors who are in charge of actual management of the foreign entity and the persons authorized to sign on their behalf.
Article Fifteen
The following conditions are required for accepting the membership application:
1- The applicant entity must have a specialized department for clearing, settlement and central depository with a full time manager with at least five years experience in working in the field of securities, and a full time deputy with at least three years experience in the same field. In addition to a sufficient number of full time employees.
2- Employees holding technical positions shall be required to pass the training courses conducted by the Company for using its systems.
3- A participant shall have all the technical tools and methods to enable him to perform his duty according to the rules established by the Company and approved by the CMA.
Article Sixteen
The Company shall make a decision concerning the membership application within two weeks from submitting a complete application.
The Company may not reject the application except for in the case of unavailability of any of the provisions stipulated in the law or in this regulations. The rejection decree should be made in writing and should include the related justifications.
In all cases, the applicant entity should be notified with the rejection or acceptance decision within one week from the date it is issued.
The applicant entity has the right to file a complain to the CMA within ten days from the date of being notified with the rejection.
Article Seventeen
Upon the Minister’s approval, the board of directors may accept the membership of natural or juridical persons provided that its turnover should have an impact on the securities market in Egypt.
Submitting the application and making a related decision shall be made according to procedures and the time frame specified in the preceding article.
Article Eighteen
The participant shall be in charge, as far as the company is concerned, with the liabilities of the entities that receive central depository, clearing and settlement services through the participant.
Chapter Two
Membership Provisions
Article Nineteen
The central depository member shall abide by the central depository related rules, systems and procedures established by the Company in application to the provisions of this law and these regulations.
The rules, systems, procedures and any related amendment made by the Company shall not be applicable except after the approval of the CMA and notifying the participants and after one week as a minimum from the date of such notification. The member shall indemnify the Company for any violation of the rules, systems and procedures referred to. The contract signed between both parties shall specify the basis and method of assessing the compensation.
Article Twenty
All participants shall notify the company with the services they provide for its clients, the timing, the method of providing such services in addition to the fees for such services.
The Company shall publish such information to the market participants in an adequate manner.
Article Twenty One
The Company may establish a maximum limit for the volume of transactions to be executed by the participant according to the system established and approved by the CMA.
The maximum limit for a participant’s volume of transactions should be related to his net capital if the financial settlement is done directly on his account.
A participant may execute any purchase transactions without being committed to this threshold if he deposited the value of the transaction at the clearing bank and if he sent a related notification to the Company at least one day before the execution or if he submitted a guarantee accepted by the bank.
Article Twenty Two
The Company may second any of its employees or external experts to review, at the participant’s premises, the books and records related to the services offered by the company and verify its accuracy.
The review shall be made at the participant’s premises or any other place where he keeps his books and records. It shall be made during office hours and in a way that do not hinder the work flow.
Article Twenty Three
A participant’s share in the Company’s capital shall ensure the settlement of his liabilities. Shares shall be deposited at his account at the company and any related dues shall be used for settling the liabilities resulting from dealing in securities.
The Company may request the participant to pledge the securities he deposited at his account and authorize him to borrow money guaranteed by this pledge to settle his liabilities. The participant shall respond to this request within one week from a related notification without violating the company’s right in requesting other guarantees in application to the provisions of articles 16 and 22 of the law.
Article Twenty Four
The Company’s board of directors may, upon the CMA’s approval, issue rules regulating securites lending to guarantee fulfillment of the settlement obligations resulting from securities trading in order to achieve timely settlement.
The Company may specify the guarantees required from the client who borrows the securities.
Chapter Three
Membership Suspension and Termination
Article Twenty Five
The Company’s board of directors may suspend the membership of a member if he committed a violation to the specified work rules and if he does not correct such violaiton according to the conditions and the duration specified by the Company’s board of directors.
A decree issued by the majority of members attending the board meeting justifying the suspension for no more than thirty days. The decree shall also specify the procedures to be followed during the suspension period.
The company shall notify the CMA with the suspension decree and its reasons within three days from the date it is issued.
The company shall manage the exsisting records of this member’s clients during the supsension period.
The member may have an access to the clearing and settlement services through any other member after notifying the company.
The member may send complains from the suspension decree to the CMA within one week from the date of receiving the suspension notification.
Article Twenty Six
A central depository member shall lose his capacity as a member in the following cases:
1- Bankruptcy of the member or the loss of his legal capacity of any of the membership qualifications.
2- Cancellation of the member’s license to exercise the activity as granted by the CMA.
3- Cancellation of the membership by a decree from the CMA due to the member’s violation of any of the provisions of this law or the related decrees.
4- Cancellation of membership by a decree from the extraordinary general assembly issued by the majority of three quarters of members attending the meeting.
Membership cancellation in cases of items 3 and 4 shall be effected after sending a notification with the violations he committed and his failure in correcting the situation during that period according to the terms and provisions specified by the notification.
In all cases, the member whose membership is cancelled shall send a related notification to his clients within three days from the cancellation date and shall settle all his obligations towards his clients and notify the company and the CMA with what is going on in this regard.
The membership cancellation decree issued for forfeiting the membership conditions or because of violation to the central depository rules shall not be effective except after sending a related notification to the CMA and the stock exchange. A member may complain before the CMA from the decree issued by the company for canceling his membership within seven days from the date of being notified with this decree.
Part three
Central registry Operations
Chapter one
Book Entry
Article Twenty Seven
The Company maintains records of the names of securities owners and the related dues and transactions according to the rules and electronic systems established by the Company.
The Company shall maintain ownership transfer data for a period no less than five years and the ownership related books and records for a period no less than three years unless otherwise stipulated by the effective laws. The Company shall assume responsibility for this data from the date of registry. The issuing company shall provide the Company with all the data it views necessary for the registry process or for exercising its mandates and providing its services.
Article Twenty Eight
The Company shall directly prove the ownership transfer of securities deposited therewith which had a related final court ruling and shall also transfer the ownership of securities if the legal provisions allow such a transfer without a related trading at the stock exchange.
The Company shall also record the ownership transfer of securities that are sold as a result of default of a shareholder and after verifying that the company complied with all the legal and timely procedures.
Article Twenty Nine
The Company shall make a book entry for all the securities deposited therewith including the type of security, its nominal value and the related data of the issuing entity, the nominee owner, the depository date and the date of the depository member in charge of this transaction.
Book entry means for the purpose of applying the provisions of these regulations the registration of data in the books and records prepared by the Company for that purpose including electronic records.
Article Thirty
Entities that issue securities registered with the company shall send a notification with information related to its securities after the end of the trading session of the preceding day provided that the company notifies the stock exchange to be announced on the trading screens before the trading sessions in the following day.
The information referred to means the information that should be disclosed according to the securities listing and de-listing rules as established by CASE, or the information that should be published if the company is a publicly held one.
The Company shall publish this information at its own expenses on behalf of the issuing company. Publishing such information shall guarantee transparency and publicity and should be according to the legal procedures regulating publishing reports, documents and data related to the issuing entity unless the issuing company has made a timely publication of the information according to the most up-to-date shareholders’ securities ownership structure.
Article Thirty One
The Company may design an automatic voting system for the general assemblies’ meetings of the companies issuing securities registered therewith in order to enable the shareholder to express his opinion in the topics presented to the general assembly without having to attend the meetings.
The voting forms and methods shall be prepared according to this system so as to guarantee an easy and accurate voting and ensure that it is made by the shareholder or his legal representative.
Article Thirty Two
The Company shall undertake the task of dividend payment and other rights resulting from securities according to the established system and as reported to the issuing companies. The Company shall undertake the above-mentioned task free of charge.
The issuing entity shall ensure that the date of payment is at least ten days after the related announcement date. In all cases the issuing company shall provide the Company with the total value of the coupon and the rights resulting from the securities at least three days before the date specified for payment.
The Company shall notify the CMA and the stock exchange with the issuing entities that do not comply with the above mentioned provisions.
The Company shall refrain from providing services to this entity considering the rights of its shareholders.
Chapter Two
Registered owner and beneficiary owner
Article Thirty Three:
A registered owner shall enter into an agreement with the beneficiary owner to include their rights and obligations, specifically:
1- The services it provides to beneficiary owners and the commissions they get in return for such services, the sum, the terms and method of payment of such commissions.
2- Reports and statement of accounts that the registered owner shall provide to the beneficiary owner, its timing and method.
3- Make the arrangements for the attendance of the registered owner on behalf of the beneficiary owner in the general assembly of companies, where he owns shares, and voting on his behalf.
Article Thirty Four:
In case of having a registered owner and a beneficiary owner, the registered owner shall comply with the following:
Separate his transaction from that of his beneficiary owners and make an independent account for each of them.
Maintain a special file for each beneficiary owner to include all the related data, accounts and transactions. Such files and the related data shall be subject to the CMA’s surveillance.
Adhere to the regulations and systems established by the Company as applicable.
Article Thirty Five:
A registered owner shall notify the Company with the data of beneficiary owners of securities deposited and listed on his name on the form developed by the Company for this purpose within three days from the completion of securities deposit or ownership modification as applicable.
If the ownership is registered for one of the depository banks, a register should be established to record the data of beneficiary owners.
The Company may request to review this register at the headquarters of the depository bank in Egypt during official working hours; the depository bank shall provide the Company’s representative with an access to this register and get a copy there-from.
In all cases, the Company may request the registered owner to disclose any other data on beneficiary owners as required for exercising its duties.
Article Thirty Six:
The Company shall prepare a register to record the data of its beneficiary owners as acquired from registered owners. This record shall only be accessed by legally authorized entities.
Issuers of securities deposited or registered at the Company shall have access to this register as related to securities.
Article Thirty Seven:
A registered owner shall provide beneficiary owners with an access to all the rights resulting from the securities deposited or registered on their names especially financial rights including securities revenue and the related transactions revenue. Such an access should be provided within one day as maximum from the date of receiving such revenue. The registered owner shall notify the beneficiary owner in writing with all the data disclosed by the security issuer within three days as a maximum from the date of receiving the information.
Article Thirty Eight:
A registered owner shall maintain registers to include complete data on its beneficiary owners and shall notify the Company with all the data on the beneficiary owners, the volume of all kinds of securities they own, changes effected on ownership within three days as a maximum from the date of settling the transactions affecting their ownership.
The Company shall have an access to the registers referred to or receive a related printed copy or magnetic compact discs.
Article Thirty Nine:
A registered owner shall notify the beneficiary owners in writing with all the topics requiring voting at the companies’ general assemblies where they have shares in its capital at least ten days before the date of the general assembly. This notification shall include a complete statement on the nature of the topic requiring voting and all the related information.
The registered owner may, upon voting, divide the shares he represents according to the related instructions issued from the beneficiary owners.
In all cases, a registered owner may not vote except after he receives written instructions from the beneficiary owners.
Article Forty:
If a hindrance prevented the registered owner from exercising his duties, he shall notify the beneficiary owners at the day following that event and in this case the securities shall be registered at the beneficiary owner’s name who shall request the Company to change the registry to the name of another registered owner.
In all cases, changing the registry of securities according to the provisions of the article shall be free of charge.
The Company shall notify the CMA and the stock exchange with the suspension of the registered owner and the related replacement at the day following the effective date of the modification of the company’s records.
Chapter Three
Depository Banks
Article Forty One :
Registry shall be allowed for entities wishing to work as custodian banks as follows:
1- The entity requesting registry should be one of those entities related to securities and its managers should have the experience required for managers of securities companies.
2- If the application for license is submitted from a foreign entity, then its status should be liable to regulation according to the rules established by the CMA’s board of directors.
3- An approval from the Central Bank of Egypt if the applicant is an Egyptian bank or a branch of a foreign bank.
The CMA shall make a decision on the license application within fifteen days from the date of submitting complete documents. The concerned person shall be notified with the CMA’s acceptance or refusal of the registry application within one week from the date of issue.
The applicant may complain from the refusal decision to the CMA.
Chapter Four
Securities pledge
Article Forty Two:
The Company shall register pledge rights on securities deposited through the book entry provided that the following documents are submitted:
A copy of the pledge contract.
The approval of the debtor pledgor on the pledge.
A statement signed by creditor pledgee and debtor pledgor including the authorities granted to the creditor pledgee on the value of pledged securities and the related consequences and revenue.
A Pledge shall be registered within three days as a maximum from the date of submitting the complete documents referred to in the above mentioned paragraph.
Registering the pledge will entail the inability to dispose of the pledged securities till the pledge is written off according to the request of the creditor pledgee or its termination for any of the legally stipulated reasons.
Article Forty Three
Revenue resulting from pledged securities shall be paid to the creditor pledgee during the pledging period. The Company shall register the pledge for the benefit of the creditor pledgee on any bonus shares due on the pledged shares and shall notify him accordingly. The pledge should be recorded and each of the creditor and debtor shall be notified within ten days as a maximum from the date of notifying the Company with the bonus shares and without violation to the provisions of the pledge contract.
Article Forty Four
A registered owner may not pledge the securities owned by beneficiary owners nor entail any rights thereon or acquire a loan guaranteed by these securities unless he receives a related written approval from the beneficiary owner.
Part Four
Custodians
Article Forty Five
Custodian’s activity means any activity related to keeping, trading and managing securities including securities accounts on the owner’s name or for his benefit or on the registered owner’s name and for the benefit of the beneficiary owner. All of this activity should be done according to the clients’ instructions.
A custodian shall exercise his activity specially in the following fields:
1- Securitization of financial rights.
2- Margin trading of securities.
3- Securities lending and borrowing
4- Registered owner
According to the provisions of these regulations and the provisions stipulated in the Executive Regulations of the Capital Market Law issued by the Minister of Foreign Trade Decree # 135 of 1993 and it shall be complementary of the provisions of these provisions of these regulations and not in contradiction therewith.
Article Forty Six “1”
Only the following entities, without a license from the CMA, are authorized to exercise custodian’s activity:
Banks and branches of foreign banks registered at the Central Bank of Egypt according to the conditions established by the CMA’s board of directors.
Companies and foreign entities exercising custodian activity provided that its headquarters shall be liable to CMA’s regulation according to the rules established by the CMA’s board of directors.
Article Forty Six bis “2”
A license to exercise this activity shall be granted for securities intermediaries and companies licensed to exercise the registered owners’ activity provided that the net shareholders’ right should not be less than L.E. ten million.
Licensing conditions:
The Auditor’s report for the year preceding the licensing application should not include any material reservations that affect its financial position.
The custodian activity should be done through an independent department that is directly affiliated to one of the company’s directors, the number of full time employees should not be less than four and it should occupy an adequate location at the company’s headquarters.
A custodian activity shall have independent accounts, the auditor shall audit them separately and submit a relevant report to the CMA at least quarterly.
A custodian department shall have computer programs as per the conditions and specifications put in place by the central depository and registry company in addition to a link up line between the information system at the department and the company.
A custodian department shall have written by-laws and document cycle. The task of each employee in the department should be clearly specified specially the officer or officers responsible for receiving, recording, executing and filing clients’ orders and instructions.
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“1” article 46 replaced by the Decree of the Minister of Foreign Trade # 554 of 2002 Egyptian Gazette issue # 224 (continued) (A) in 29/9/2002
“2” article (46 bis) added by the above mentioned Decree of the Minister of Foreign Trade # 554 of 2002.
A custodian department shall have a system for storage and retrieval of clients’ instructions and the activity data and records for a period no less than five years.
The employees of the custodian department shall have a good reputation and should not have been charged in any of the crimes stipulated in article 47 of the Securities Central Depository and Registry law unless rehabilitated.
The employees of the custodian department shall pass the training course organized by the central depository and registry company or any other similar training course approved by the CMA.
Submit an evidence of the application for the central depository membership provided that such membership is acquired within fifteen days from the date the license is issued.
Deposit cash with the CMA to be used for any incident resulting from violations of any of the provisions of the Securities Central Depository and Registry Law or its executive regulations or any of the decrees issued in implementation thereof.
This cash amount is determined to be 0.0005 of the value of securities to be deposited with a minimum of L.E. 10,000 and a maximum of L.E. 500,000 and it shall be increased at the beginning of each calendar year along with the increase of the securities’ value, if any.
The CMA may request the custodian to add to what has been deducted from this amount or increase it according to the provisions of this decree.
The CMA shall manage a system to maintain the above amounts and develop the relevant discount and addition procedures. The related interest shall be credited to the CMA.
Protection against liability resulting from non-commercial loss or damage, or professional liability, or the risks of loss or damage or theft of clients’ certificate or money by a mean of protection approved by the CMA.
Settlement of disputes that may arise between parties.
The licensing application to exercise the custodian activity shall be made on the form developed by the CMA for that purpose including all the data and documents as requested.
In all cases, the CMA may verify at any time the availability of the licensing provisions. In case of violation, the CMA may suspend or cancel the license or increase the amount paid thereto according to the provision of item (12) of this article or follow any the legally stipulated measures.
Article Forty Seven
Any entity submitting an application to be licensed as a custodian shall attach the following documents to its application:
1- The registration certificate at the commercial registry, date and number of registry.
2- A statement of the names of board of directors, officers in charge of actual management and their experiences.
3- Board of directors and officers shall be of good reputation and should not have been charged in any felony of misdemeanor or in any of the crimes stipulated in the law or the Companies Law, Capital Market Law and Commercial Law, nor a bankruptcy ruling is passed against him unless rehabilitated.
4- An evidence of payment of insurance value as indicated by the CMA’s board of directors’ decree.
5- An evidence that the entity has insurance against liability for non-commercial risks and damages and against professional liability, or against the loss, or damage or theft of clients certificates or money as stipulated in the CMA’s board of directors decree.
6- An approval from the CBE if the applicant is an Egyptian bank or a branch of a foreign bank.
Article Forty Eight
A decree shall be issued from the CMA’s board of directors to license custodians’ activity within fifteen days as a maximum from the date of submitting complete documents to the CMA and taking into consideration requirements and interests of the capital markets.
The refusal decree should be justified.
In all cases, competent persons shall be notified with the CMA’s decree within fifteen days from the date it is issued.
Licensed entities shall be registered in a special record prepared by the CMA for that purpose.
Appeal could be made against the CMA’s decree.
Article Forty Nine
A custodian shall sign a written agreement with his clients taking into consideration the rules established by the CMA, the agreement shall include:
The custodian’s commitment to maintain and manage securities accounts on the name of its owners and to his benefit as per his instructions.
The custodian’s commitment to exert due diligence in implementing the clients’ instructions.
Specify the custodian’s commission on the services performed.
The method of settling disputes arising between both parties. The CMA shall receive a copy of the agreement and send its comments within fifteen days from the date of being notified therewith.
Article Fifty
A custodian shall maintain a record for each client to include the following:
Name of client, profession, place of residence, legal entity and nationality.
A statement indicating whether the client is dealing on his own name and for his benefit or in his capacity as a registered owner dealing for the benefit of other beneficiary owners.
The client’s correspondence address.
Names and capacity of persons who can sign on behalf of the client of represent him at the custodian.
Confidentiality of clients’ information should be maintained and should not be disclosed to others taking into consideration the data requested by the CMA, the Company and competent entities.
Article Fifty One
In dealing with his clients, the Custodian shall observe the principles of honesty, care for his clients’ interests and equality with those having similar nature and conditions in their dealings. He shall also avoid whatever is likely to provide privilege to some of them whether directly or indirectly.
A custodian shall also comply with the rules established by the CMA and the Company for safekeeping and managing securities.
Article Fifty Two:
A custodian shall abide by the following:
Make a separation between his securities and his accounts and his clients’ securities and accounts, and maintain the required related records.
Credit, debit and manage the payments resulting from dealing in securities in each client’s account.
Return the securities to the client along with the related cash due upon his request and as per the agreement signed with him.
Maintain a list of the names of all his clients, a special file for each client to include his basic data and a statement of the securities traded on his account, contracts signed between him and the licensee in addition to the correspondence exchanged between them.
Providing the client, periodically, with a detailed statement that includes the transactions done and the clients’ balance.
Providing the CMA and the company with the data required by each of them.
The term client means any natural or juridical person to whom an account is opened and a contract is signed to maintain and manage securities under his name and for his benefit even if no transactions are done on his account.
Part Five
Central Depository and Registry Company
Chapter One
Incorporation, Licensing and Capital Allocation
Article Fifty Three
The Central Depository and Registry Company shall take the form of a joint stock company and its issued capital should not be less than L.E. 30 million to paid in full upon incorporation.
The Company’s shares may not be owned except according to the provisions stipulated by the law and these regulations. Any transactions made in violation to such provisions shall be disregarded.
Article Fifty Four
The Company shall be incorporated according to the conditions and procedures defined for the companies working in the field of securities.
The incorporation application shall include in addition to the documents stipulated in the executive regulations of the Capital Market Law referred to and in addition to the documents required by the CMA a copy of the Company’s internal rules and procedures to be followed by the Company, these rules and procedures shall include:
Forms and rules of the services provided by the Company.
A summary of the technical specifications of the computerized systems to be used by the Company.
Article Fifty Five
The company’s capital shall be allocated upon incorporation according to a decree to be issued by the CMA’s board of directors as a proportion of the trading volume of each of the capital market founders during the year preceding the Company’s incorporation. Taking into consideration that the Egyptian stock exchanges shall own 5% of the Company’s capital, the Egyptian stock exchanges shall jointly agree upon the allocation of such percentage and how to select its representative in the company’s board of directors taking into consideration the volume of securities listed at each stock exchange.
As regards companies already existing while the provisions of these regulations are in effect, its capital shall be allocated on its members in proportion with the volume of transaction of each of them with the company and according to the fees and expenses paid during the year preceding the previously mentioned date. The company’s capital shall be reallocated on its members every three years taking into consideration the volume of transactions of each member with the company during the same period. Shares' ownership shall be transferred among members according to its nominal value.
Article Fifty Six
The Company’s shares ownership shall be transferred, in application of the provisions of the preceding article, from a member to the company and he shall be notified with the completion of the ownership transfer procedures within three days as a maximum from the date of such completion.
The Company may allocate shares between its members or keep it to other new members.
In application to the provision of both of the preceding paragraphs, the transfer of shares ownership shall be at its nominal value.
The Company shall notify the CMA with the capital reallocation during one week as a maximum from its completion.
Article Fifty Seven
If for any reason a central depository member has lost his capacity as a member, the Company shall retain the ownership of his shares in its capital at the nominal value within one week from notifying the member therewith. The Company shall reallocate these shares according to the provisions of the preceding article.
Chapter Two
The Company’s Board of Directors
Article Fifty Eight
The Company shall have a board of directors comprising eleven members as a maximum. Two of them should be experienced professionals and will be selected by the Company’s board of directors. The board chairman and the managing director should be one of them provided that they should be full time members. A representative from the stock exchanges shall be appointed in agreement among them.
The Company’s articles of association specify the composition of the board of directors and the percentage of representation of the Company’s different shareholders groups in the board.
As regards companies operating at the time the provisions of these regulations are effective, the board of directors shall continue to undertake the management tasks. The reform required for the Company’s systems shall be done according to the provisions of this law and these regulations. The Board shall request the company’s General Assembly to select the board of directors according to the provisions of the law and the regulations within thirty days from the date the CMA’s board of directors' decree is issued for granting the company the license to exercise the activity after making the related reform.
Article Fifty Nine:
The CMA chairman will be notified with the decree of appointing the Company’s board of directors within thirty days from the date it is issued provided that it shall include the names, qualifications and previous experience of each of them, whether any of them is a member in another company’s board of director and the Egyptian securities he owns. The decree of appointing the board of directors shall only be valid after fifteen days from the notification date.
The provisions of the preceding article shall be applicable on any modification in the board membership.
Article Sixty
A consulting committee comprising members and others shall be formed to give its independent opinion on matters related to work systems and rules of the central depository and registry and the services provided by the company in the capital market.
The company’s articles of association shall define the composition of the committee and its work system.
Article Sixty One
Representatives of the company’s board members or its employees, spouses and minor children may not trade in securities unless they have an approval from the company’s board of directors according to the rules and procedures established by the CMA, provided that such rules and procedures include the following:
Each of the persons referred to shall deal with only one brokerage company selected by him. The Company shall be notified with the name of the brokerage firm and with a copy of the contract signed therewith.
Dealing with the brokerage firm should only be effected through the Company.
The Company shall maintain a register that includes sale and purchase transactions, name of person for whom the transaction is executed, date of executing the transaction, quantity of shares, value and price.
The Company shall maintain a complete file for each of the persons referred to including the detailed data of all their securities transaction and the related supporting documents.
The preceding rules apply to dealing with securities portfolio management companies.
Chapter three
The Company’s Financial Statements
Article Sixty Two
The Company shall have a fiscal year as specified by the system and shall have financial reports prepared according to the Egyptian accounting standards. The Company shall prepare independent annual and quarterly financial reports for each of the central depository activities including clearing, settlement, central registry and the settlement guarantee fund and shall issue a consolidated financial report for the company.
If the company’s activity resulted in profits, the percentage of profit of each activity shall be calculated to the total company’s profits and the required reserves shall be earmarked. A list of the dividend payment shall be made according to the Company’s by-laws and as specified by the General Assembly while taking the following points into consideration:
1- Employees share and the board of directors’ remuneration shall be included into the company’s total profits and it shall be deducted prorated according to the profit of each activity to the company’s total profits.
2- Upon a recommendation from the board of directors, the company’s general assembly shall distribute a percentage of the profits of the central depository activity on the members according to each member’s contribution in the company’s capital. The rest shall be distributed on the members according to the percentage of their transactions during the preceding year.
3- If any profits are realized from the central registry activity, the share of each issuing entity shall be calculated according to its volume of transaction with the company during the preceding year. The share of each issuing entity shall be earmarked at the Company to deduct there-from any dues incurred on the issuing entity during the next fiscal year.
A percentage of the Company’s net profits shall be allocated for funding the settlement guarantee fund. The Fund’s by-laws shall indicate how to determine the profits to be distributed and the distribution rules.
Article Sixty Three
Two auditors shall be in charge of auditing the companies’ accounts; the company’s general assembly shall select both auditors from the list prepared by the CMA and specify their remuneration. The Company’s accounts shall be audited according to the Egyptian Auditing Standards.
Article Sixty Four
The Company shall make use of external chartered accountants to evaluate its financial auditing methods and its internal control systems. A related report shall be developed for presentation to the board of directors on its first meeting at the beginning of the fiscal year. A copy of this report shall be submitted to the CMA along with all the procedures followed by the board of directors in this regard within a week from the meeting date.
Part Six
Surveillance, Inspection and Procedures
Chapter One
Surveillance and inspection on the Company
Article Sixty Five
The Company shall submit to the CMA the reports and lists referred to in article 45 of the law in addition to the following reports as required by the CMA:
1- A daily report on the settled trades.
2- A monthly report on the settlement guarantee fund activity.
3- A quarterly report including a statement of the securities registered with the Company.
4- A quarterly report including the number of securities deposited with the Company.
5- A quarterly report on dividend payment of securities deposited with the Company.
Article Sixty Six
The Company shall prepare a manual on the services it provides to its clients and others. Such a manual shall include a statement of these services, the related procedures, the fees received by the company for providing these services and how and when to pay these fees.
The Company has to adhere to the principles of honesty and care about its members interests. It shall avoid any discrimination between them whether directly or indirectly.
The Company is prohibited from taking any action that might cause damage to any member and has to follow all the procedures to prevent any conflict of interest between the Company and the member and among the members themselves.
The Company shall establish a system to ensure accurate trading of securities deposited therewith and that trading is done through the security’s owner or his delegate including trading through safe cards.
Article Sixty Seven
The Company shall establish the procedures that ensure full confidentiality of data and information and shall not disclose them to others except after getting a written permission from the concerned person, his delegate or heirs or the authorized person or the CMA, or in implementation of a court ruling or a request from the Public prosecution upon an inquiry underway.
The Company shall also establish the systems and programs required to maintain shareholders’ data as per the law and the executive regulations.
It shall also follow the procedures required for protecting this data from loss or damage and this includes the establishment of an emergency center for the Company at an adequate distance from the headquarters in order to deal with any potential risks or disasters. It shall also use firewalls and make regular backup of its data base during the trading day and establish a back up system for company’s shareholders data as a risk management measure.
Article Sixty Eight
A licensee who undertakes custodian or beneficiary owner or a depository bank activity may not suspend its activity except after notifying the company and get an approval from the CMA’s board of directors so as to make sure that the licensee has settled all its obligations as per the terms and procedures specified by the CMA’s board of directors.
Chapter Two
Measures
Article Sixty Nine
A custodian or registered owner or depository bank activity may be suspended in case of violating any of the provisions of law 95 of 1992 and its executive regulations or the CMA’s or the company’s board of directors decrees issued in implementation thereof, or if it no longer meets any of the licensing provisions or did not rectify a violation during the period and as per the provisions specified by the CMA chairman.
A justified suspension decree shall be issued by the CMA chairman for a period no more than thirty days and the decree shall specify the procedures to be followed during the suspension period. The CMA shall notify the competent entity with the suspension decree within one week from the date it is issued and a related announcement shall be made at the expenses of this entity.
If the suspension duration expired without rectifying the related reasons, the matter should be presented to the CMA’s board of directors to consider the license or the registry cancellation as the case may be.
The Central Bank of Egypt should be notified if the entity whose activity is suspended is an Egyptian bank or a branch of a foreign bank.
Article Seventy
The CMA’s board of directors may cancel the license granted to the company to exercise the central depository or registry activity or both of them as per the provisions of the securities central depository and registry law. This should be done after notifying the company with the violation it committed, undertaking a related inquiry with the company’s employees and giving them a chance to respond to the accusations attributed to them.
The cancellation decision shall include the following:
1- Its duration and the period specified for the company for liquidation.
2- Forming committee to make a list the company’s assets.
3- The procedures for transferring the central depository and registry services to other licensed entities.
4- Invite the company to hold a general assembly to dissolve and liquidate the company and distribute the assets among members.
5- Arrangements for transferring members’ and securities issuers’ files to other entities licensed to do the same activity.
The cancellation decision shall not be valid according to the provisions of this article except after being approved by the competent minister and published at the official Gazette.
Article Seventy One
Appeal against the decrees issued by the Minister or the CMA shall be done according to the provisions of the law and these regulations and shall be submitted to the grievance committee referred to in article 50 of the Capital Market Law # 95 of 1992 and as stipulated in article 51 of the same law. Appeal against the decisions issued by the company shall be according to the provisions of these regulations and shall be submitted to a committee to be formed by a decree from the CMA's board of directors that will specify the related appeal procedures. |
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