Vision To be a World-Class, Egyptbased Exchange: the Premier Capital Market in the Middle East & North Africa Region that best serves its stakeholders. Mission The mission of EGX is to operate and develop a high quality market for the benefits of its Egyptian and international clients. EGX will serve and empower its customers by providing top notch market technology, innovative products, fair, transparent and efficient market. Values EGX system of values have a common denomination of ethics practiced with all its stakeholders :customers, members, issuers, managers, employees, regulators, the international and local investment communities.
Contents The Egyptian Exchange: The Market of Tomorrow Why Join the Egyptian Exchange? Benefits to your Company List & Trade on EGX Trading Procedures 3 7 11 19 23
2 The Egyptian Exchange:
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The Egyptian Exchange (EGX) is the premier capital market in the Middle East and North Africa, having a niche of being the most open and progressive exchange in the region. Operating since more than 130 years, EGX has always been regarded as one of the world s leading trading venues, providing top-notch market technology, innovative and flexible products and a transparent, efficient platform. EGX was first identified as the Cairo and Alexandria Stock Exchanges (CASE). It officially evolved from Alexandria s Futures Market in 1885, when the first cotton transaction took place. It was then followed by Cairo Exchange, known as equity trading platform, in 1903. After a while, the two platforms merged together, forming the Egyptian Exchange. Recognizing its regional leadership, several international renowned organizations have endorsed EGX and its chairman as essential members in their communities. In 2005, EGX has become the first Arab member in the World Federation of Exchanges. Its executive chairman is also a member of the executive committee of African Securities Exchanges Association (ASEA), the Vice Chairman of Federation of Euro Asian Exchanges (FEAS) and a founding member of the Union of Arab Stock Exchanges. As a regional top player, EGX lives up to international standards. EGX imple- EGX has become the first Arab member in the World Federation of Exchanges 4 The Egyptian Exchange:
Efficiency ments international standards that fulfill every requirement for global exchanges. It offers a dynamic trading platform to assist issuers in attracting potential investors to increase their capital with a reasonable cost, ensuring integrity and proper disclosure in the market. It has an endeavor to continuously update trading tools and mechanisms, giving more depth to the market. EGX also offers a diversified package of products for prestigious and sophisticated listing and trading. It is an efficient trading platform for equities, government/corporate bonds, and close-ended mutual funds. of its listed companies. EGX offers a pool of market sectors for its investors to choose among. Those sectors include banks, chemicals, construction and materials, food and beverage, telecommunications, travel and leisure. Dividing the market into 17 sectors is aimed at providing the investing public with a classification of the listed companies on the basis of homogeneous characteristics that relate to the companies economic activities and main business revenues. Furthermore, modest transaction and listing fees and absence of restrictions on foreign investment are among EGX advantages. However, EGX s competitive advantage stems from its unique regional diversity As a regional top player, EGX lives up to international standards. EGX implements international standards that fulfill every requirement for global exchanges. Gateway to Finance 5
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Enlisting your company in a public market is a major decision. In many scenarios, it is one of the crucial steps not only for development of the company but also to keep its institutional structure and trade mark from desertion. It also enhances the horizontal and vertical means of growth of the company. A professional market such as EGX applies the latest trading and listing technological applications. The number of listed investors on EGX reached around 2 million investors of the different segments, individuals and institutions, and investment funds. Moreover, EGX offers a wide range of benefits, including access to public capital to fund growth. Unlike private sources of capital like bank loans that are insufficient to support the expansion strategies of successful companies, listing on the Exchange enables a better support to capital and a global media profile. Being the leading market of the region, EGX ensures a balance between protecting investors and preventing overburdening companies with expensive and unnecessary obligations. Thus, maintaining quality in selecting companies to list is also considered one of the main priorities of EGX. EGX directs any brokerage firm that is not listed should abide by its corporate governance rules. A manual is set to EGX offers a wide range of benefits, including access to public capital to fund growth. 8 The Egyptian Exchange:
Opportunities secure the understanding of the companies executives of their role in implementing corporate governance principles. The main purpose is to limit risks arising from trading activities and defining clearly the member s rights and obligations. This in return increases the confidence of the different parties, and limits the conflict of interests. Financial integrity and membership rules are also key success elements for EGX. Local and foreign members are expected to follow to access and trade in the market. The rules are periodically reviewed to guarantee the application of business ethics, professionalism, and solvency. Being the leading market of the region, EGX ensures a balance between protecting investors and preventing overburdening companies with expensive and unnecessary obligations. Gateway to Finance 9
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EGX offers a wide range of benefits that provide the company with the means to respond to key strategic plans. Gateway to Finance Through EGX, the company can access the investors community and increase the number and diversity of security holders from large institutional investors to private investors local and international. Listing on EGX grants the opportunity to respond to the companies main strategic target, which is access to finances. It takes you to the gateway of a large capital market that funds both present and future growth. Thus, listing is the keyword to pursue expansion through issuing additional securities to raise equity or debt finance. Foreign Participation by Region in 2012 * Foreign Participation by Country in 2012 * Arab 29% Europe 41% UAE 5% Saudi Arabia 15% Cayman Islands 4% Others 22% US & Canada 23% Others 7% USA 23% UK 32% * After Excluding Deals 12 The Egyptian Exchange:
Diversity Prominent Profile Being on the EGX board enhances your profile within the community of investors as there is extensive media coverage that creates a greater awareness of your products or services. This media publicity adds to your company s value and promotes the position and reputation of the company within its particular industry. This also would be favorable in terms of holding deals with suppliers, customers and potential investors. Employees incentives incentive scheme. Offering the option of awarding employees incentives of the company s shares for the high performance creates a sense of loyalty in the sense of sharing the company s growth. Company credibility (Regional Credible Profile) The Egyptian Exchange continuously seeks transparency, which is a cornerstone of its main strategy. As compared to other regional markets, EGX is considered the most transparent; thus enhancing its credibility. Even at times of crises, EGX stands firmly stable when it comes to its investor base. Listing and trading the company on EGX creates a market value for its shares. This grants company management the opportunity to further motivate its staff through the introduction of an employee Gateway to Finance 13
Similarly, the newly adopted listing rules promote corporate transparency and high disclosure standards. This facilitates for member companies and issuers to introduce comparative analysis for investors. And in turn, it boosts shareholders confidence. Qualified Market (World Class Trading Environment) EGX is always abreast with the latest international technological advancements and employs them. It has adopted new world-class trading system of Nasdaq OMX X-Stream solution, providing one of the best investment experiences to its domestic and international diverse customer base. Fulfilling its vision to serve and empower investors as one of the fair, transparent and efficient capital markets in the region and the world, EGX has also recently launched the new automated surveillance trading system from Millennium IT. It is an international best practice based surveillance system that provides an instantaneous warning mechanism the newly adopted listing rules promote corporate transparency and high disclosure standards 14 The Egyptian Exchange:
Control for any violations in the Egyptian capital market. International Presence EGX has a strong regional and international presence. It is a member of the World Federation of Exchanges (WFE), the African Securities Exchanges Association (ASEA), and the Federation of Euro-Asian Stock Exchanges (FEAS). In addition, it is a founding member of the Union of Arab Exchanges and an affiliate member of the International Organization of Securities Commissions (IOSCO). Also, EGX has signed many memoranda of understanding with other stock markets through which they can exchange experiences and increase means of cooperation. Mergers and Acquisitions The daily market trading price of the shares is a way of evaluating the performance of the company based upon its strength in the market. This evaluation is a critical component in the Mergers and Acquisitions. Thus, being one of EGX listed companies paves the way for M&A. Gateway to Finance 15
Benchmark the company As EGX has 17 sectors classifications, it is very easy for the company to be compared with its competitors. Thus, these sector indices are very significant for those who want to deeply look at the industry participants and evaluate their performance. Exit Strategy Being listed on EGX is the core of keeping and preserving the existence of the company name no matter who the shareholders are. This gives the chance for the main shareholder on their long-term strategy to plan for selling the whole company at a true value if they wish to. EGX... launched the new automated surveillance trading system from Millennium IT. It is an international best practice based surveillance system that provides an instantaneous warning mechanism for any violations in the Egyptian capital market. 16 The Egyptian Exchange:
Benefits Listing Benefits Gateway to Finance Mergers & Acquisitions Prominent Profile Benchmark the company Employees Incentives Exit Strategy World Class Trading Environment International Presence Gateway to Finance 17
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A team of EGX experts is the gateway for your company to be on EGX trading platform. It takes the company through easy stations to be on board and the first station is preparing the required documents to be submitted to the relevant department. Follows is introducing the offering prospectus in order to prepare the company to be tradable on EGX trading platform. Finally, the company s shares are traded on EGX. The minimum allowed capital to be listed is L.E 50 million or equivalent in foreign currency and it shall be fully paid for the blue ships to be listed on EGX platform. On the other hand, it is also allowed to list the small and mid capital enterprises (SMEs) whose issued and paid in capital is less than L.E 50 million or equivalent in foreign currency on its specialized platform on EGX. Main Issues You Need to Know All securities should be centrally deposited. The company s by-laws & the issuing terms should not include any restrictions on the trading of the securities to be listed. To list on EGX, the issuer must sign an agreement with the Exchange whereby the issuer agrees to abide to the listing rules and ongoing obligations of EGX. 20 The Egyptian Exchange: The company shall publish offering prospects that clarify the 10% to be offered of the company s shares. The number of shareholders after the offering shall not be less than 500 shareholders whereby the main shareholders shall hold 25% of the company s shares for 2 years from the offering date. For the small and mid cap enterprises, the number of shareholders shall not be less than 25 shareholders and the number of shares shall not be less than 100 thousand shares; for the major companies, the share to be listed shall not be less than 5 million shares.
Listing There shall be at least a financial statement for one year before the listing request issued in accordance to the Egyptian Accounting Rules. It shall also be revised by a financial advisor whereby it includes a 5% net profit of the capital that is requested to be listed and the investors rights shall not be less than the capital. For small and mid sized enterprises (SMEs) that did not issue a financial statement for a year, it can be exempted from this requirement in case it has a 5 year future plan indicating the prospected profits accredited by the nominated advisor or an official financial advisor. The company s desire to list Submit the listing documents to the Stock Exchange v Submit the disclosure report to the Stock Exchange to study Steps to List on EGX Publish the listing request Fulfilling the document and studying the listing request Sign an agreement with the Stock Exchange Publish the disclosure report on the trading system Present the prospectus on the trading system Adding the company stocks on the trading data base An approval on the listing request is issued Execute the IPO in the OPR Trading starts on the regular trading system Gateway to Finance 21
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EGX has always been an attractive financial hub regionally and internationally. Over the years, it has accumulated and maintained a massive number of investors. In 2012 alone, 22 thousand new investors were registered while in 2011, 36 thousand joined. Besides individual investors, EGX appeals to institutions especially foreign ones. Newly coded non-arab foreign institutions captured around 71% of the total number of newly coded institutions in 2012. The exchange has adapted a trading system of Nasdaq OMX X-Stream. This system supports the increasing volume of trading on EGX as well as the simultaneous trading multiple product classes including equities, debt, commodities, ETFs, futures and options. Trading starts when an investor gives an order to buy or sell a specified number of shares. The order is then queued into the trading system until it matches a sell or buy order. The company s shares always keep its value as EGX rules impose price limits that control fluctuations through a 5 to 10% ceiling. As a regional exchange, listing on the Egyptian Exchange is an aspiration for many companies. In general, the Egyptian Exchange is for ambitious and mature companies that are confident in their ability both to utilize the benefits that EGX offers, while meeting the standards of disclosure, governance and regulation that it requires. The company s shares always keep its value as EGX rules impose price limits that control fluctuations through a 5 to 10% ceiling. 24 The Egyptian Exchange:
Contact Financial District, Building B 135, Smart Village, KM 28 Cairo - Alexandria Desert Road, 6 th of October, Egypt, P.O Box 47 Smart Village Tel: (202) 35316300 / 400 4 A El Sherifein Street, Down Town, Postal Code 11513, P.O. Box 358 Mohamed Farid Cairo, Egypt Tel: (202) 23931462