EGYPT Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Khaled al-Khashab and Mounir Hany, GLA & Company
2.4 Definition of “Control” Control
• An act that leads to the ownership of less than 25% of the total voting rights or total shares or stocks of the capital of another person, if it is asso - ciated with additional factors that may suggest that the acquirer exercises an influence disproportion - ate to its shareholding, in particular by: (a) the percentage of voting rights owned by the person compared to the remaining voting rights, which enables the holder to influence the policy of another person, including its stra - tegic decisions or commercial objectives; (b) the presence of any provisions in the articles of association, the shareholders’ agreement or any other document that grant the acquirer special rights or veto rights; (c) the existence of common shareholders be - tween the acquirer and the acquired person; and (d) the presence of one or more representatives of the acquirer on the board of directors of the acquired person. “Material influence” is not established unless more than 10% of the total voting rights, shares or stocks in the capital of another person is owned, unless the acquirer is ranked among the top three shareholders or stakeholders in the acquired person. 2.5 Jurisdictional Thresholds According to Article 19 bis of the Egyptian Compe - tition Law, an “economic concentration” is subject to notification if any of the following thresholds (the “Financial Thresholds”) are met. • Domestic threshold: The combined annual turnover or assets of all the concerned persons in Egypt for the latest year of the last audited consolidated financial statements exceeds EGP900 million (approximately USD17.8 million), provided that the annual turnover in Egypt for at least two of the parties involved individually exceeds EGP200 mil - lion (approximately USD4 million) for the last year according to the last audited consolidated financial statements. • International threshold: The combined annual turnover or assets of the concerned persons worldwide for the latest year of the last audited consolidated financial statements exceeds EGP7.5
Article 2/h of the Egyptian Competition Law defines “control” as the ability of one or more controlling per - sons to exercise decisive influence, directly or indi - rectly, by directing the economic decisions of another person or persons, either through acquiring the major - ity of voting rights or the ability of the controlling per - son to block economic decisions by the person or other persons or by any other means. This includes any situation, agreement, stocks or shares ownership, regardless of their share, provided that it leads to a decisive influence on the management or decision- making. Under the ECL, “control” can be exercised, in par - ticular, through: • an act that leads to the ownership of 50% or more of the total voting rights or total shares or stocks of the capital of another person; • an act that leads to the ownership or the right to use and exploit all or the majority of the assets of another person; • an act that leads to the acquisition of rights, which confer the ability to the controlling person to appoint the majority of the members of the board of directors or “control” the decisions of the board of directors or the general assembly meetings; and • an act that leads to more than half of the mem - bers of the board of directors or the members of the general assembly meetings being the same persons in the acquiring person and the acquired person. Material Influence Under Article 2/i of the Egyptian Competition Law, “material influence” is defined as the ability to directly or indirectly influence the policy of another person, including its strategic decisions and/or commercial objectives. “Material influence” is established by any of the fol - lowing being present. • An act that leads to the ownership of 25% or more of the total voting rights or total shares or stocks of the capital of another person.
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