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Overview: Initial Public Offering- Egypt

Published on : 18 Oct 2020

Initial Public Offering- Egypt


The Egyptian Stock Exchange (EGX) is the registered securities exchange that handles all of the stocks to be traded in Egypt. EGX comprises of two exchanges:

  • Cairo Stock Exchange
  • Alexandria Stock Exchange

A merger in 2007 of the two exchanges resulted in the birth of EGX. The Egypt Government established The Egyptian Financial Supervisory Authority (EFSA), replacing The Capital Market Authority (CMA), The Insurance Supervisory Authority and The Mortgage Finance Authority.

In 2017, the EFSA was reestablished as the Financial Regulatory Authority (FRA). The FRA is responsible for all financial transactions excluding banking related transactions, and markets. All financial transactions in relation to banking related transactions and markets are regulated by the Central Bank of Egypt.            

Laws Applicable

  • The CM Law (Capital Markets Law No. 95 of 1992 and its Executive Regulations) which regulates the EGX and includes certain eligibility criteria and disclosure obligations in relation to the contents of the offer document
  • The Listing Rules (Decree of the CMA’s Board of Directors No. 30, which concerns itself with the listing and de-listing of securities on the EGX and all ongoing obligations once listed.
  • The Companies Law, specifically Company Law No. 159 of 1981 and its Executive Regulations which regulates incorporation and management of all entities incorporated in Egypt.

IPO Registration Requirements

Due to the extensive nature of IPO process worldwide, it is important to approach the regulators as early on as possible to ensure a smooth process with as little obstacles as possible. This also provides the company with further time to provide for any clarifications required by the Authority, if needed.

  • Licenses from the regulatory body are compulsory. Underwriters need to be licensed by the EFSA under its rules and regulations.
  • A minimum issued capital of LE 1,000,000 is required for a company to enter the IPO process, along with the authorized capital to be less than five times the issued capital.
  • According to the CMA Laws, the founders must obtain a minimum of fifty percent of the shares available.
  • Furthermore, Egyptian law recognizes a difference between retail and institutional offers and this makes it a market that allows for more specific action to be taken by the parties to market their commodities as such.
  • A company is required to inform the Authorities in regards to initiation of issuing of securities, and can start within 3 weeks of informing, provided no objections have been raised by the Authority.
  • Semi-annual activity Report and Progress Report to be provided.
  • Offering of shares shall be unconditional and immediate with no deference to a term.
  • The main difference between a retail offer and an institutional offer is that a retail offer will require a prospectus to be prepared and approved by the EFSA, whereas an institutional offer will not.
  • It is required that the corporate entity appoint investment bankers/licensed underwriters, solicitors, auditors and financial advisors

Since registering for IPO is a complicated process, it is advisable to appoint aforementioned professionals as they will help you smooth out the process of registering. Underwriters set the price for IPO offering and hence is a crucial aspect of the process.

Retail Offer

A retail offer, as with most jurisdictions, is a public offer of securities. The main practical difference between a retail offer and an institutional offer is that a retail offer will require a prospectus to be prepared and approved by the EFSA whereas an institutional offer will not.

The documents required in the case of a Public Offering:

  1. A public subscription approved by EFSA
  2. A Prospectus
  3. The shareholders' resolution with special majority
  4. Fair value report issued by the financial adviser


The Prospectus at incorporation have to disclose various details as specified for in the CML. These are:

  • Name, Legal form of the Company.
  • Purpose and Duration of the Company.
  • Date of the initial contract.
  • Date of beginning and end of fiscal year.
  • Issued and paid up capital

The information to be enclosed in the Prospectus is not limited to the abovementioned. The extensive list of details required by the CML can be found here

This Prospectus is required to be filed with and certified by the Authority and published in two popular daily morning papers, of which at least one should be an Arabic newspaper. As an extremely crucial document, a company cannot introduce IPO or start the process without the establishment of a Prospectus.

Institutional Offer    

An institutional offer may also be referred to as a Private Offer, only qualified investors are eligible to invest in such securities, the criteria for qualifying as investor herein in may depend on certain aspects like financial capability and experience in the securities market.

Further, certain requirements with respect to eligibility hereunder for natural persons and qualified investors can be found here.

Listing Rules

After the completion of the IPO procedures, the Company is required to adhere to the Listing rules of EGX. To be listed on the Official list, the Company is required to have:

  • At least 2 million Shares
  • At least 100 shareholders
  • An issued Capital of at least 20 Million EGP
  • Primary and Secondary Share Offering amounting to not less than 10% of total issued shares
  • 5% or more of the company shares to be free floating percentage 
  • Net Profit, excluding taxes for the previous fiscal year shall not be less than 5% of the paid in capital
  • Shares deposited with the Central Depository System
  • An accredited Auditor as per EFSA
  • If it is issued by the Government and offered to the public.

Further, in case the shareholders drop below 200 in a span of 3 months during the fiscal year, the shares can be subject to being de-listed and non- official list of the stock exchange. This non- official list may also contain foreign securities.


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