EGYPT Law and Practice Contributed by: Mohamed Hashish, Farida Rezk, Omar Aboul-Ella and Mariam Rabie, Soliman, Hashish & Partners
or transactions specifically excluded by law or the company’s by-laws that fall within the juris - diction of the general assembly which is repre - sented by the shareholders or quota-holders of the company, as the case may be. This being said, the board of directors or man - agers of the company answer to the general assembly of the company, given that the general assembly has the authority to oppose any man - agement actions, to approve any actions taken by the board of directors or managers, or to issue recommendations concerning the actions that fall within their jurisdiction. Furthermore, the board of directors is required to prepare a report on the company’s activity throughout the year, to be referred to and approved by the general assembly. Furthermore, every shareholder has the right to attend the general assembly meetings, having the right to discuss the matters on the agenda and to cross-question the board of directors, accordingly, noting that the shareholders may present whatever questions before the general assembly convenes by at least three days, and the board of directors should respond to these enquiries and cross-questions to the extent that would be prejudicial to the company’s interests. 8.2 Special or Ad Hoc Committees The board of directors may form one or more independent committees that consist of the board’s non-executive and independent mem - bers, such that each committee is assigned with specific tasks for a period of time. The compe - tent regulator in Egypt has issued circular book No 21 of 2019 regulating the formation of board committees, whereby each committee must consist of at least three members. Committees may be merged depending on the nature of the company’s activity and its needs. The board
committees shall refer their reports to the board of directors for the board of directors to take the necessary resolutions. It is worth noting that the Companies Law requires that every board member/manager who has a conflict of interest with the company must inform the board of it and record the same in the relevant minutes of the board meeting. In such a case, the conflicted board member is not permitted to participate in the vote regarding any decision relating to this matter. Furthermore, the board of directors must inform the general assembly of the aforementioned matter before it votes on such decisions. 8.3 Business Judgement Rule Generally, there is no business judgement rule that is explicitly regulated in Egypt; however, the Companies Law provides that the managers and the chair of the board of directors shall represent the company before courts. This being said, the general assembly represent - ing the shareholders of the company has the authority to oppose any management actions taken by the board of directors, or to approve any of the board’s actions, or to issue recom - mendations concerning the board’s actions. In this regard, it is worth noting that as per the Companies Law, any resolution issued for the benefit or to the detriment of a specific share - holder or to benefit a board member or others without taking the company’s interest into con - sideration may be annulled. Note that the annul - ment may be requested only by the shareholders that had objected to the resolution in the meet - ings’ minutes or that were absent for a plausible reason, and in this case, the annulment shall be effective for all shareholders.
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