EGYPT Law and Practice Contributed by: Nadia Abdallah, Zahra Ashraf, Beshoy Mounir and Yasmine Attia, Matouk Bassiouny & Hennawy
(e) make informed decisions based on sufficient information and sound judgement. • compliance and companyrepresentation: (a) comply with all applicable laws, regulations, and the company’s articles of association; (b) ensure that their authorities and signatory powers are exercised within the limits set out in the articles of association and the commercial register; and (c) the chairman or CEO represents the company before courts and administrative authorities only within their legally defined powers. • financial oversight: (a) ensure the accuracy and integrity of the finan- cial statements; (b) confirm that financial statements are prepared according to approved accounting standards; and (c) oversee the preparation of the company’s annual financial report for presentation to the ordinary general assembly. • supervisory responsibility: (a) monitor the company’s overall performance; (b) oversee management to ensure proper govern- ance and operational soundness; and (c) bear responsibility for resolutions that breach the law or the company’s constitutional docu- ments; 9.2 Special or Ad Hoc Committees In Egypt, non-listed companies are generally not legal- ly required to establish board committees. The estab- lishment of such committees is typically a matter of internal discretion or may stem from obligations con- tained in specific transaction documents as requested by certain investors (particularly, financial investors). For listed companies and companies undertaking non-banking financial activities regulated by the FRA, the establishment of certain committees is mandatory,
audit committee is responsible, inter alia, for review- ing internal policies and auditors’ reports. Non-Banking Financial Activities Companies According to FRA decrees, companies undertaking non-banking financial activities are required to estab- lish: • an audit committee as described above; • a risk committee composed of at least three board members, the majority being non-executive and independent, responsible for overseeing non-stra- tegic risk management; • a governance committee composed of at least three independent and non-executive board mem- bers, responsible for evaluating the company’s governance framework and developing internal policies, with certain duties delegated to the audit committee; and • additional committees such as remuneration, com- pliance, or IT committees, which may be formed at the board’s discretion and may include executive members or external experts. 9.3 Role of the Board Other than the general duties outlined in 9.1 Princi- pal Directors’ Duties , there are no specific require- ments for board members to participate directly in transaction negotiations or to restrict their role to merely recommending a transaction. The level of their involvement is generally determined by the sell- ing shareholder, where such shareholder is a board member, or by a designated representative appointed by that shareholder to conduct the negotiations. Challenges to board recommendations in connec- tion with share disposals are generally rare. This is because any transfer of shares is a matter reserved to the shareholders, and the board has no authority to effect or mandate such a disposal without share- holder approval. Accordingly, litigation in this context is limited. 9.4 Independent Outside Advice In M&A transactions, directors typically engage finan- cial and legal advisers to assist with both preparatory matters and the execution of the transaction.
as outlined below. Listed Companies
Under the EGX listing and delisting rules, listed com- panies must establish an audit committee composed of an odd number of non-executive board members (at least three), the majority of whom must be inde- pendent, including the committee’s chairman. The
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