On January 14, 2018, an amendment to Egypt's Companies Law No. 159 of 1981 was enacted by virtue of Law No. 4 of 2018. Said amendment provided that, prior to registering any newly established joint stock company or partnership limited by shares with the commercial register, their securities (mainly shares) must be centrally deposited with the sole existing central depository company Misr for Central Clearing, Depository and Registry ("MCDR"). Further, the joint stock companies and partnerships limited by shares existing prior to the enactment of said amendment are obliged to deposit their securities with MCDR within a period of one year commencing on January 17, 2018 until January 16, 2019 (if not already registered)
What it means for you
Joint stock companies and partnerships limited by shares which were incorporated before the issuance of said amendments shall have a period of one year commencing from January 17, 2018 and ends on January 16, 2019, in order deposit their securities with MCDR.
With respect to the companies which will be/have been incorporated after the issuance of said amendments, the General Authority for Investment and Free Zones in Egypt requires that founders, or their representatives, to provide the Authority with, among other documents, a certificate from MCDR evidencing that their securities have been centrally deposited therewith, in order to register the company with the commercial register.
Thus, failure to comply with this new obligation hinders the commercial registration of such company which is obligatory for the company to perform its activities in Egypt.
Actions to take
Steps for registration in the central depository system of MCDR could be summarized as follows:
- The company - issuing the securities - fills-in the relevant registration application form of MCDR which includes therein all data and documents required for registration, which are:
- Registration request signed by the authorized signatory
- Articles of Association along with all their amendments (if any).
- Original of the latest approval issued by the Financial Regulatory Authority of the issuance of the initial shares of the company and the issuance of all capital increase shares (if any).
- Recent extract of the commercial register of the company (if the company is already existing)
- Certain undertakings as requested by MCDR
- Request to open an account.
- Evidence that the associated registration fees has been paid
- Submission of all the documents, data, and application forms to MCDR
- The registration applications are presented to MCDR securities registration committee on a weekly basis. The underlying deposition shall be approved by such committee.
- The company receives a letter approving such central depository within 15 days at most from the date of submitting all the required documents.
- The company shall announce the starting date of the central depository system in one of the widely circulated daily newspapers, one of which, at least, should be an English newspaper. Such publishing shall be made, at least, 10 days before the effectiveness of the central depository system.
- Should no materialized shares are issued, the company shall submit a list of all issued securities to have same registered with MCDR's database. Deposits of securities made by the company shall be accepted in the prescribed date or the required transfers should be fully made in case there are no printed shares instruments or temporary shares certificates.
- Should there are materialized shares issued, the deposition of such shares with MCDR shall be made through a custodian who is one of the licensed banks in Egypt to undertake such activity