EGYPT Law and Practice Contributed by: Mohamed Hashish, Farida Rezk, Omar Aboul-Ella and Mariam Rabie, Soliman, Hashish & Partners
Furthermore, the shareholders/quota-holders represented by the general assembly shall have the right to dismiss the board members and sue them for responsibility upon the approval of the shareholders/quota-holders owning at least half of the capital of the company. 8.4 Independent Outside Advice In Egypt, directors mainly seek legal, tax and financial advice for the purpose of mitigating any risks that may be associated with their actions while pursuing the management of the compa - ny, as well as ensuring compliance with the law regarding the aforementioned. 8.5 Conflicts of Interest The Companies Law requires that every board member or manager who has a conflict of inter - est with the company shall inform the board of it and record the same in the relevant minutes of the board meeting. In such a case, the con - flicted board member shall not be 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.
• the direct or indirect acquisition of more than one-third of the capital or voting rights but less than half of the capital or voting rights; • the direct or indirect acquisition of more than half of the capital or voting rights but less than two-thirds of the capital or voting rights; • the direct or indirect acquisition of more than two-thirds of the capital or voting rights but less than three-quarters of the capital or vot - ing rights, if within 12 consecutive months the acquirer increases its ownership percentage in the tar - get company by more than 5% of the capital or voting rights. However, the obligation to submit a mandatory purchase offer applies if its owner - ship percentage at any time reaches one-third, half or two-thirds of the capital or voting rights. 9.2 Directors’ Use of Defensive Measures The Capital Markets Law and its Executive Reg - ulations prohibit defensive measures generally, as in accordance with the Executive Regulations of the Capital Markets Law, as of the date of the FRA’s approval of the initial tender offer and until its result, the board of directors of the target company and its managers are prohibited from any action or conduct that would constitute a material adverse event, which includes the fol - lowing: • increasing the capital or issuing convertible bonds if such increase or issuance would make the acquisition burdensome or impos - sible, unless the decision to do so was made at least 30 days prior to the date of publica - tion of the FRA’s initial approval of the tender offer; or • engaging in actions or transactions that would materially affect the company’s assets, increase its financial obligations, or hinder the
9. Defensive Measures 9.1 Hostile Tender Offers
The Capital Markets Law in Egypt differentiates between voluntary and mandatory/hostile tender offers based on the threshold of the shares sub - ject to the transaction. In this regard, the Capi - tal Markets Law provides for cases whereby a mandatory/hostile tender offer is obligatory, as follows:
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