Background Paper 1 | Disclosure Requirements

All stock exchange regulators require a minimum level of shareholder disclosure from the listed companies: i.e. that either companies declare who owns their stock, or, that investors declare what stock they own. These disclosures are typically required to show investors that own stock from a certain minimum threshold: usually starting from 1%, 3% or 5% of a company’s stock. Some regulators also stipulate that related parties – investors related to one another,[1] disclose the size of each of their investments even if each holds less than the threshold. Regulators require that these disclosures are made on a regular basis: annually or quarterly, and/or once an investor breaches the minimum threshold, or, multiples of it – every 5% or 10% bought or sold.

However, this on its own is not usually enough to know the Ultimate Beneficial Owners (UBO) of the stocks, as many exchanges do not require disclosing the owners of investing companies. This is crucial in establishing related party transactions, among other transparency related regulations.

Disclosure Requirements in Egypt

For the EGX, Egypt’s Financial Regulatory Authority (FRA) passed heavily amended regulations in 2014, with some minor amendments since:[2]

• Ownership disclosure threshold at: 3% for board members, executive management, and employees, and 5% for all other investors and their related parties, as well as indirect holdings through companies where their ownership is equal to or exceeds 25% (Arts. 29,30).
• Further triggers: Any increase or decrease breaching the thresholds or their multiples (Art. 29).
• Timing: Before the start of trading on the following trading day, and regular quarterly disclosures within 10 days of the end of each quarter (Arts. 29,30)
• Related party definitions in Arabic refer to two differentiated categories (Art. 4): Related Group المجموعة المرتبطة: Any parties under actual control of the same natural or legal persons, or where a coordinated voting agreement at board or general meetings binds them. Related Party الأطراف ذات العلاقة: All those that have direct or indirect relations to the company: controlling investors, power to influence votes, with a focus on companies with similar investors, subsidiaries, or parent companies. Personal relations to investors – spouses and children (under 18), fall under the Insider الداخليين  definition, and are not defined as related parties.

Ultimate Beneficial Owner Disclosure in Egypt

Egypt passed a decree in 2020 stipulating that all companies must disclose actual beneficiaries المستفيدين الحقيقين   who have controlling interest. Other information includes their nationality and ID or passport numbers.[3]

However, the decree allows the disclosure of other legal persons or companies as actual beneficiaries, and does not stipulate that a public UBO register be established, and up until the publication of this study, none has been. The aim of the UBO disclosure is rather to aid government agencies in their anti-terror and anti-money laundering efforts, where the bylaws of the related law define the UBO and which regulatory and financial bodies should have access to that information.[4]