كل ما تريد معرفته عن الضوابط الجديدة لمجلس إدارة شركة الإيداع والقيد المركزي

The Financial Regulatory Authority has amended the controls for forming the Board of Directors of the Central Depository and Registry of Securities Company, as well as the conditions for candidacy for membership in the company’s Board of Directors. This comes days before the Misr Clearing, Depository and Central Registry Company announced the opening of nominations for membership in the company’s Board of Directors for a new 3-year term (2024/2027). “Youm7” presents the new controls for the Board of Directors of the Depository Company.

Q- How will nomination papers for membership in the Depository Company be accepted?

C- The Chairman of the Financial Regulatory Authority shall form a committee to examine and study the applications for candidacy for membership in the company’s Board of Directors, to ensure that the candidates meet the required conditions. The committee shall prepare a reasoned report on the final position, including the results and the extent to which the legally required conditions are met by each candidate and the reasons for excluding those who lose one of the candidacy conditions. The report shall be submitted to the Chairman of the Authority in preparation for submitting it to the Board of Directors of the Financial Regulatory Authority for consideration and approval, provided that the names of the approved candidates are published on the company’s website and the advertising screens on the Egyptian Stock Exchange.

The door is opened for grievances, whether regarding approval or exclusion from candidacy or the election results, within five working days from the date of publication of the names or publication of the election results announcement, provided that the grievance is decided within a period not exceeding two weeks from the date of expiry of the grievance deadline.

Q- What are the conditions for forming the board of directors of a depository company?

C- The formation of the new Board of Directors includes a representative of the Egyptian Stock Exchange, chosen by its Chairman, and 4 members from the company’s shareholders, including two members representing companies operating in the field of securities brokerage, and two members representing entities that practice the activity of custodians, in addition to 6 independent members from outside the company’s shareholders, including the Chairman of the Board of Directors, the Managing Director, and a member from the companies whose shares are registered in the Central Depository.

After the formation of the elected Board of Directors is completed, the new Board is called to convene under the chairmanship of the oldest member to discuss the selection of two additional independent members with experience who are not shareholders of the company to assume the position of Chairman of the Board of Directors and Managing Director from outside its elected members after the approval of two-thirds of its members. This is then presented to the General Authority for Financial Supervision for approval. If the Authority does not approve them or any of them, the Board is obligated to choose others within a week at most, and after the approval of the Board of Directors of the Authority, presenting it to the General Assembly for approval of the Chairman of the Company and the Managing Director.

Q- What are the conditions for nomination for membership in the Board of Directors of the Depository Company?

C- 7 conditions that must be met by natural persons nominated for membership in the Board of Directors of the Central Depository and Registry Company

1. To have a good reputation and conduct.

2. To have a high qualification.

3. His experience should not be less than 10 years in the field of capital market or in one of the legal, accounting, financial, technical or information technology fields related to the company’s activities and business.

4. He must have the necessary competence, technical competence and leadership qualities, as determined by the General Authority for Financial Supervision.

5. That no measure other than a warning has been issued against him or against any of the companies operating in the field of non-banking financial activities for which he was the chairman or member of the board of directors or for which he worked during the previous five years, and that was due to his breach of his duties or responsibilities.

6. The conditions included the necessity that he had not been previously sentenced to a felony, or a misdemeanor in a crime affecting honor or honesty, or in one of the crimes stipulated in the laws regulating non-banking financial activities, or a ruling declaring his bankruptcy, during the previous five years, unless his reputation had been restored, and also that no requests to initiate criminal lawsuits had been issued against him by the Financial Supervision, as a result of violations of any of the aforementioned laws, unless he had reconciled regarding them.

7. Passing the personal interview held by the Authority in this regard.

In order to continue membership in the company’s board of directors, the conditions for good conduct and reputation must continue to be met and that the person has not been subject to the aforementioned rulings.

Q- What are the conditions for the nomination of shareholders in the Central Depository Company?

C- 4 conditions that must be met by the shareholders of the Central Depository Company to nominate representatives for them on the Board of Directors

1. The candidate must have practiced the licensed activity for at least 3 years.

2. He must not have been previously convicted by a judicial ruling regarding a violation of the provisions of the Capital Market Law, the Central Deposit and Registry of Securities and Financial Instruments Law, or the Anti-Money Laundering Law during the previous five years, or that criminal lawsuits have been filed regarding a violation of any of the provisions of the Capital Market Law or the Central Deposit and Registry Law, unless he has reached a settlement regarding them.

3. He must not have been previously suspended from practicing the activity unless two years have passed from the date of the suspension’s end.

4. That no legal measures have been previously taken against him unless two years have passed since the date of expiry of the period of the measure, except for the measure related to issuing a warning to the company, mentioned in Clause (a) of Article (31) of the Capital Market Law.

The candidate for the company’s shareholder members referred to in this article must hold the position of Chairman of the Board of Directors of the company or its Managing Director and Chief Executive Officer. If the custodian is a bank, the candidate must be responsible for the activity of its custodians.

Q- What are the conditions for companies to nominate a representative to the Board of Directors?

C- 4 conditions that must be met by companies whose shares are listed centrally in order to appoint a representative on the board of directors of the depository company

1. The company’s shares must be listed on one of the Egyptian stock exchanges for at least one year, and classified as one of the most active shares according to the controls approved by the Authority.

2. The company or any of its holding, subsidiary or sister companies shall not be a shareholder member of the Central Depository and Registry Company for Securities.

3. The company must meet the conditions for the continued listing of its shares on the Egyptian Stock Exchange, and the company must not have committed 3 violations that resulted in a financial obligation being imposed on it as a result of its violation of the rules for listing and delisting securities during the previous year.

4. That it has not previously been convicted by a judicial ruling regarding a violation of the provisions of the Capital Market Law, the Central Deposit and Registry of Securities and Financial Instruments Law, or the Anti-Money Laundering Law during the previous five years, or that criminal lawsuits have been filed regarding a violation of any of the provisions of the Capital Market Law or the Central Deposit and Registry Law, unless it has reconciled regarding them.

The candidate for companies whose shares are registered in the Central Depository must hold the position of Chairman of the Board of Directors of the company or its Managing Director (Chief Executive Officer).

The decision stipulates that more than one person may not be nominated as a candidate for the company’s shareholder members or companies whose shares are registered in the central depository or their related groups. The related group means companies that are subject to the actual control of the same natural persons or the same legal persons, or that are united by an agreement to coordinate when voting in the company’s general assembly meetings or on its board of directors.

Q- What are the conditions for selecting the Chairman of the Board of Directors of the Depository Company?

C- 6 conditions for selecting the Chairman of the Board of Directors and Managing Director of the Central Depository and Registry Company

1. Not to be a member of the Board of Directors of any of the company’s shareholder members or their related groups, unless he submits an undertaking to resign from membership of the Board of Directors of the aforementioned companies.

2. He shall not hold a position in any of the company’s shareholder members or their related groups, unless he submits an undertaking to resign from the position he holds immediately after the issuance of the company’s ordinary general assembly’s decision to approve the formation of its board of directors.

3. Not to be a shareholder in the capital of any of the company’s contributing members at a rate of more than (0.5%).

4. Not to be a spouse or relative up to the second degree of a member of the Board of Directors of any of the members who are shareholders in the company or its holding, subsidiary or sister companies, as stipulated by the controls.

5. He shall not have interests that conflict with the duties of chairmanship or membership of the company’s board of directors or that would affect his impartiality in deliberations or decision-making.

6. Not to be associated with a work relationship or a contractual relationship with the Central Depository and Registry Company for Securities, provided that the Chairman of the Board and the Managing Director are chosen by a two-thirds majority of the new Board members from among the shareholders’ representatives, the representative of the Egyptian Stock Exchange, and the independent members.

Provided that women will be represented on the company’s board of directors by at least two members if they are nominated, and the term of the company’s board of directors will be 3 years, calculated from the date of approval by the company’s ordinary general assembly to form its board of directors.

Q- What are the voting controls in the elections of the deposit company?

C- The validity of voting in the General Assembly meeting requires adherence to several controls, namely the selection of 4 candidates, 2 of whom are from companies licensed to practice securities brokerage, and 2 from entities that practice the activity of custodians, in addition to the selection of 4 candidates from List No. (2), one of whom must be from companies whose shares are registered in the central depository.

Voting for candidates for membership in the company’s board of directors shall be by its shareholders, through the shareholder member of the Central Securities Depository and Registration Company who has the right to vote, choosing from among the candidates representing the category to which he belongs according to the list prepared for that purpose, provided that all shareholder members of the company have the right to vote on independent candidates.

The committee formed by the head of the authority examines the applications of the candidates to ensure that they meet the required conditions, and contacts the company to complete the documents related to the candidates and meet the terms of eligibility and technical competence and pass the personal interview at the authority, in light of the established conditions and standards.

The committee shall prepare a reasoned report on the final position, including the results and the extent to which each candidate meets the legally required conditions and the reasons for excluding anyone who fails to meet one of the candidacy conditions. The report shall be submitted to the Chairman of the Authority in preparation for presenting it to the Authority’s Board of Directors for consideration and approval, provided that the names of the candidates who have been approved are published on the company’s website and the advertisement screen on the Egyptian Stock Exchange.

The right to attend and vote in elections is limited to the Chairman of the Board of Directors of the contributing member company or whoever he authorizes from among the senior management occupants of the company by virtue of an authorization signed by him on the company’s letterhead and stamped with its seal. The contributing member company may not authorize anyone else to attend or vote on its behalf in the elections.

The votes obtained by each candidate for membership in the company’s board of directors are counted, and the election results are announced by beginning with the announcement of the victory of the two women who received the highest number of valid votes on the two lists, followed by the announcement of the winners who received the highest number of votes on those two lists. If two or more candidates are equal in the number of votes, voting is repeated between these candidates on the same election day to announce the winner among them.